The World Shipping Council (WSC) today firmly rejected claims made by President Joe Biden that ocean carriers colluded to enrich themselves by astronomically raising freight prices during the pandemic period.
The WSC was responding to the announcement made Tuesday by President Biden during his State of the Union address that the United States intends to launch legal action against shipping companies. The Justice Department (DOJ) will name a chief prosecutor for pandemic fraud.
The shipping industry body affirmed the Biden administration’s claims do not reflect industry and market realities.
“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,” said John Butler, president and CEO of the World Shipping Council (WSC).
“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.”
Under the new initiative, DOJ is providing the Federal Maritime Commission (FMC) with lawyers and economists from the Antitrust Division for enforcement of violations of the Shipping Act and related laws.
In his address, President Biden had alleged: “Lowering your costs also means demanding more competition. 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.”
Mr. Biden further claimed that during the pandemic, the foreign-owned carriers raised prices by as much as 1,000 percent and made record profits.
A White House backgrounder elaborated on this claim: “Three global alliances, made up entirely of foreign companies, control almost all of ocean freight shipping, giving them power to raise prices for American businesses and consumers, while threatening our national security and economic competitiveness.”
The White House also accused shipping lines of refusing to carry US exports – “preferring to speed back to China with an empty ship to make a quick turnaround rather than transport American exporters’ cargo or dock at American ports.”
The WSC took issue with this charge as well. “The truth is that with demand for ocean transportation services into the U.S. at record levels, market dynamics are influencing prices – not carrier alliances. These vessel sharing agreements (VSA) 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,” Mr. Butler said.
The operational agreements do not include commercial cooperation, the WSC indicated. Each VSA member determines its own commercial terms, including prices, which are not discussed between alliance members. Every VSA is filed, reviewed, and monitored by the FMC.
The WSC concluded: “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.” (White House photo)