News

Coinciding with today’s announcement from the FMC and DOJ, the White House issued a Fact Monday titled Lowering Prices and Leveling the Playing Field in Ocean Shipping, detailing new steps to lower consumer prices and “level the playing field” in ocean shipping, pointing out that just three major ocean alliances have grown to “control 80% of global container ship capacity and control 95% of the critical East-West trade lines.”

President Biden also is calling on Congress to pass “robust reforms” on the ocean shipping industry, including reforms that “address the current antitrust immunity for ocean shipping alliances.”

“Since the beginning of the pandemic, these ocean carrier companies have been dramatically increasing shipping costs through rate increases and fees,” the Fact Sheet states. “They increased spot rates for freight shipping between Asia and the United States by 100% since January 2020, and increased rates for freight shipping between the United States and Asia by over 1,000% over the same period. Oftentimes cargo owners are charged fees—known as “detention and demurrage” fees—even when they can’t get access to their containers to move them. The FMC estimates that from July to September of 2021, eight of the largest carriers charged customers fees totaling $2.2 billion—a 50% increase on the previous three-month period.”

The fact sheet also draws attention to the fact that ocean carriers have experienced profit windfalls as a result of these increases.

“Estimates suggest that the container shipping industry made a record $190 billion in profits in 2021, a seven-fold increase from the previous year and five times what it made over the entire period from 2010-2020. Profit margins have increased by even larger amounts. In the third quarter of 2021, the average operating margin of the major carriers was about 56%, compared to an average operating margin of 3.7% two years earlier…”

The President is now expected to address these issues during tomorrow’s State of the Union address.