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US President Joe Biden takes the container shipping industry to task for driving up consumer prices through steep rate increases in his State of the Union Address on Tuesday night (Washington time)
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The White House vows to pursue antitrust investigations into the industry for forming global alliances that control nearly all of the world’s critical East-West trade lines
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World Shipping Council Biden’s allegations that “demonize the industry factually incorrect”
The World Shipping Council criticized US President Joe Biden’s claims that the container shipping industry “is highly concentrated and uncompetitive” in his State of the Union Address on Tuesday night.
The President is expected to hammer the industry for climbing consumer prices that his administration blames squarely on international container shipping companies when he speaks before both Houses of Congress.
His administration on Monday vowed to pursue antitrust investigations into the industry for forming global alliances that control nearly all of the world’s critical East-West trade lines.
These companies have drastically raised their shipping rates since the pandemic began, the White House said in a statement. But the group that oversees the industry said Biden’s allegations are “factually incorrect.”
“It is unfortunate that the President is demonizing ocean carriers, the industry that is the backbone of the US and global economy and that has been working around the clock through the pandemic to move more cargo than at any time in history,” the WSC said in a statement issued before Biden’s speech.
Container shipping rates had risen to US$9,789 for 40-foot equivalent units (FEUs) on Feb. 25, up from US$1,358 roughly two years ago, according to the Freightos Baltic Index, a weighted average of global shipping routes.
The White House said ocean carriers have charged customers billions in fees for delays in retrieving their cargo, increasing their profit margins.
“Allegations that the container shipping industry is highly concentrated and uncompetitive are factually incorrect,” the WTC said.
“Ocean carriers actively compete against one another in the global marketplace, including on the shipping lanes most relevant for US trade, while concentration levels in many other US industries are markedly higher than those in container shipping.”
The council said that in a clear sign of a competitive market responding to increased demand, more ships operated by a larger pool of carriers serving the trans-Pacific trade entered the industry.
“The bottom line is that container shipping is a very competitive industry – this is what the numbers show. Regulators in the US and Europe have repeatedly and recently confirmed that this is the case,” WTC said.
The council said the deeply flawed Ocean Shipping Reform Act passed by the US House of Representatives will not solve the massive logistics breakdowns that are causing America’s supply chain problems. In fact, the legislation as written would make existing congestion worse and stifle innovation, WSC said.
“Policymakers must, instead, address the root cause of the logjam by seeking real solutions that take a comprehensive, forward-looking view of the supply chain, further strengthening the intermodal transportation system that has supported the US economy throughout the pandemic,” WSC said.
