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Shipping

Biden at it again - slams carriers for inflation

"Nine shipping companies who ship from Asia to the United States have raised prices by as much as 1,000%."

Biden at it again - slams carriers for inflation
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U.S. President Joe Biden has waded, yet again, into an unwarranted controversy - shipping prices.

"One of the reasons prices have gone up is because a handful of companies who control the market have raised shipping prices by as much as 1,000 percent. It's outrageous — and I'm calling on Congress to crack down on them."We were paying $3,500 a container in 2020, and then by September-October last year, we were paying upwards of $20-25,000," Hal Lawton, President and CEO, Tractor Shipping Company told Biden.

"Yeah, it's outrageous," replied Biden who went on to add that "one of the big reasons why prices are going up is the cost of shipping things across the Pacific, in particular. There's only nine shipping companies - N-I-N-E, major shipping companies who ship from Asia to the United States. These companies have raised their prices by as much as 1,000 percent.

Biden asked Lawton, "by how much have your costs gone up?" To which the reply was : "Almost by $100 million. We are not a huge company but that $100 million they passed on to us, you know, is more than our entire profit. They are depending on us to deliver those products from my farms to their countries. If we don't fix these problems, we will lose our customers."

Photo by Venti Views on Unsplash

Biden has called on the Congress to crack down on ocean shippers. "We've got to change this. I asked the Congress to pass a piece of legislation to remedy this. Democrats and Republicans voted for it. It's over to the House of Representatives. And I'm looking forward to signing it because we got to bring down prices. The underlying elements of our economy are strong, stronger than any other nation in the world. But inflation is a problem. This won't solve it all but it will solve a big piece of it."

Who do we believe?
A fact-finding report by the US Federal Maritime Commissioner Rebecca Dye last month (Fact Finding 29) had concluded that despite customer perception of collusion and lack of competition as freight rates soared, neither was actually the case.

The report, in fact, went on to suggest 12 new recommendations including:

* A new commission "International Ocean Shipping Supply Chain Program";
* Rulemaking to provide coherence and clarity on empty container return practices;
* A Commission investigation into practices relating to the numerous charges assessed by ocean common carriers and seaports and marine terminals through tariffs; and
* Rulemaking to provide coherence and clarity on merchant haulage and carrier haulage.

Where are the results?
The Biden administration had initiated a new plan - Freight Logistics Optimization Works (FLOW), "an information sharing initiative to pilot key freight information exchange between parts of the supply chain," in March to streamline the logistics system.

The move by the U.S. Congress to regulate shipping is attracting flak from carriers. "Americans continue to import goods at record levels — so much so that the U.S. ports and landside logistics workforce is unable to process all the cargo," says the World Shipping Council in its reply to the U.S. Senate discussion of the Ocean Shipping Reform Act of 2022.

Jyothi Shankaran

Jyothi Shankaran

Associate Editor, STAT Media Group. He has worked with IndiaSpend, Bloomberg TV, Business Standard and Indian Express Group. Jyothi can be reached at jyothi@statmediagroup.com


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