Shipping carriers push back White House price controls

File image courtesy of World Shipping Council

Posted on Jul 12, 2021 1:17 AM by

The maritime executive

Shipping carriers are pushing back White House pressure to examine the pricing power in the container shipping industry.

Last week, as part of a broad executive order targeting anti-competitive business practices, the Biden administration called on the Federal Maritime Commission to use its enforcement powers to crack down on charges of excessive detention and demurrage. This effort is already well advanced: FMC has been investigating these accusations since the previous administration, and several of its members have already signaled their intention to take enforcement action.

Even more troubling to shipping lines was the White House rhetoric: the ordinance characterized the ocean freight industry as a highly concentrated and anti-competitive industry. “The global container shipping industry has consolidated into a small number of dominant foreign lines and alliances, which may disadvantage US exporters,” wrote President Joe Biden.

A White House fact sheet accompanied the fact that the ten largest shipping companies held only 12 percent of the global market share in 2000. The composition of the group has changed in the intervening years, as has the level of concentration. The top ten now handle around 80% of the world’s containerized freight, “leaving domestic manufacturers who need to export goods at the mercy of these large foreign companies,” the administration said.

White House order comes amid skyrocketing freight rates on major Asia-US routes, with Drewry’s Shanghai-LA index setting new record at nearly $ 10,000 for a 40-foot box last week. Anecdotal reports suggest that some shippers pay $ 15,000 or more to ship their cargo with fast loading at Chinese ports. US importers and consumers have historically benefited from much more affordable shipping rates of less than $ 1,500 per FIRE, and the further increase in costs is one of the factors behind the rising inflation rate. in the USA.

The World Shipping Council, which represents the ocean freight industry, has sought to push back against the concept that rising tariffs are somehow tied to concentrated market share. The WSC noted that all available vessel capacity is being deployed, that America’s largest seaports are saturated with cargo, and importers are struggling to unload and return containers – all due to a “huge increase. and sustained US imports “. He highlighted recent developments which indicate the functioning of a competitive ocean freight market, such as new entrants, new services and massive ship orders to increase supply.

“The current supply chain disruptions are the result of a historic increase in Americans’ demand for goods from overseas. congestion problems. Only standardized demand and the end of operational challenges related to COVID will resolve supply chain bottlenecks, ”said John Butler, President and CEO of WSC. “This is not the fault of any actor in the supply chain. Supply chains simply cannot effectively handle this extreme increase in demand, resulting in delays, disruptions and capacity shortages. felt throughout the chain. “

The rate hike is also coming under scrutiny in Europe, where shippers now pay more than $ 12,000 per FIRE for containers from Asia. Drewry has forecasted a peak of nearly $ 20,000 in some routes as peak season approaches. Last week, a spokesperson for the European Commission told Bloomberg that the EC “is closely monitoring” the shipping industry and examining “any possible intervention that could facilitate a return to normal operations.”

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

*