US President Joe Biden promised a “crackdown” on liner operators during his State of the Union address on Tuesday, prompting another round of denunciations from the industry.
During the president’s annual address to Congress, Biden said ocean carriers are an example of businesses that do not have to compete, driving up prices and hurting small businesses and family farms.
“During the pandemic, these foreign-owned companies raised prices by as much as 1,000% and made record profits,” he said.
“Tonight, I’m announcing a crackdown on these companies overcharging American businesses and consumers.”
Biden did not go into detail on what further actions he might take.
The line reiterated his concerns about competition issued last summer in an executive order amid worldwide supply chain congestion. Since, his administration has empowered the Federal Maritime Commission (FMC) — the agency responsible for regulating ocean shipping in the US — to investigate and punish companies judged to have “unjust and unreasonable” business practices.
The FMC has since launched investigations into the practices of liner operators the charges they levy on shippers, while shippers have brought their own complaints, alleging exorbitant fees related to detention and demurrage.
Also, Congress is considering the Ocean Shipping Reform Act which would force liner operators to justify detention and demurrage charters, force them to establish service standards and prevent them from declining US exports “unreasonably”.
The bill passed the House of Representatives last month and currently sits in the Senate. Should it pass that chamber, it would go before Biden to be signed into law.
The Washington-based World Shipping Council has been outspoken against the White House’s interest in container shipping and in a statement after the speech blamed market dynamics.
The group’s chief executive John Butler said it was disappointing Biden was taking aim at an industry working to meet unprecedented worldwide demand.
“Here are the facts: container shipping is a competitive industry with multiple ocean carriers actively challenging one another in the global marketplace and on the shipping lanes most relevant for U.S. trade,” Butler said.
“The truth is that with demand for ocean transportation services into the US at record levels, market dynamics are influencing prices – not carrier alliances.”
He said things like vessel sharing agreements help increase efficiency and do not include commercial cooperation, with companies party to vessel sharing agreements or alliances setting their own terms and prices.
Vessel sharing agreements are monitored by the FMC, Butler said.
He further argued the Ocean Shipping Reform act would “upend” the global transportation system and hurt US shippers and consumers.
“We urge the administration and Congress to enact measures that will relieve the current congestion and set America’s supply chain up for long-term success,” he said.
