Ocean carriers respond to antitrust threats

The World Shipping Council, the premier trade association representing ocean carriers, responded March 1 against what it called “unfounded allegations” of anti-competitive practices coming from President Joe Biden and his administration, claiming punitive moves could “upend” trade.

Agricultural producers in the United States have complained for years about container movements and fees that they say unfairly penalize agricultural cargoes, especially the practice of sending empty containers back to Asia to collect more lucrative electronic and retail cargoes while stranding or delaying agricultural cargoes like chilled meat or bagged export grains.

In his State of the Union speech, Biden singled out ocean carriers, saying, “I’m a capitalist, but capitalism without competition isn’t capitalism. It’s exploitation—and it drives up prices. When corporations don’t have to compete, their profits go up, your prices go up, and small businesses and family farmers and ranchers go under. We see it happening with ocean carriers moving goods in and out of America. During the pandemic, these foreign-owned companies raised prices by as much as 1,000% and made record profits. Tonight, I’m announcing a crackdown on these companies overcharging American businesses and consumers.”

Biden’s speech came days after the Justice Department announced two new steps based on a memorandum of understanding signed with the Federal Maritime Commission in July 2021. The Justice Department agreed to provide the FMC with antitrust attorneys, and the FMC will contribute maritime law experts to a task force examining alleged violations of the 1983 Shipping Act.

John Butler, president and CEO of the World Shipping Council, said, “[T]he claims made by President Biden during his speech are not indicative of the industry or market dynamics. 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. It is disappointing that unfounded allegations are being levied against an industry that is moving more cargo right now than at any time in history in order to meet the unprecedented demand for imported goods during the pandemic.”

Butler blamed “market dynamics, not carrier alliances” for the supply chain issues. “These vessel sharing agreements are purely operational compacts that enable carriers to share space on one another’s ships, which increases efficiency and supports more service to more ports than would otherwise be the case. Importantly, the operational agreements do not include commercial cooperation. Each member of a VSA or alliance determines its own commercial terms, including prices, which are not discussed between alliance members. Every VSA is filed, reviewed, and continuously monitored by the FMC.”

“The legislative proposals currently before Congress would upend the global transportation system, reducing service for U.S. importers and exporters and raising costs for American consumers and businesses. 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.”

David Murray can be reached at [email protected].