Shipping article(s)
June 17, 2022

Ocean carriers hit the narrative being pushed by the United States (US) government in pushing the passage of the Ocean Shipping Reform Act — and attempts to "demonize ocean carriers" maintaining that shipping lines have always been a strictly monitored and competitive industry.


The World Shipping Council (WSC) — the primary industry trade association representing the international liner shipping industry — made the comment after US President Joe Biden signed the measure into law last June 16.


"Recent weeks have seen several attempts to demonize ocean carriers by deploying 'us versus them' rhetoric. That is not only inaccurate but dangerous, as it undermines the ability to understand and work towards solving the root causes of America's supply chain problems," WSC said.


"Ocean carriers are the longest link in the global supply chain that delivers vital supplies to American business, government, and consumers. The supply chain is not foreign; it is global," it added.


The trade association with members including the world's biggest ocean carriers such as MSC, Maersk, CMA CGM, the COSCO Group, Hapag-Lloyd, among others, noted that it is "understandable" that regulators ask questions given the current market conditions  — and carriers "have answered and will continue to answer those questions."


WSC also said that liner shipping is a "very closely monitored industry."


"The fact is that ocean carriers actively compete against one another in the global marketplace, including on the shipping lanes most relevant for US trade," it added.


The trade association explained that the expert US regulator that oversees international shipping – the Federal Maritime Commission (FMC) – just completed a two-year investigation into the international ocean supply chain, finding that ocean carrier competition is 'vigorous' and that while ocean freight prices are high, they are "exacerbated by the pandemic, an unexpected and unprecedented surge in consumer spending particularly in the United States, and supply chain congestion, and are the product of the market forces of supply and demand."


"The FMC also stated that 'competition officials of the European Union, China, and the Federal Maritime Commission regularly discuss our ocean shipping markets and we have, to date, observed no indication that the current prices for liner shipping are a result of collusive or illegal conduct on the part of the major ocean carriers in our markets," WSC added.


Competition among ocean carriers cited


"The worn-out talking point that 'there's only nine major ocean shipping lines who ship from Asia to the United States' is also untrue," the trade group said, pointing out that while nine lines in and of itself "evidence of competition and not concentration," there are an additional thirteen ocean liner companies that operated over 30% of the sailings from Asia to the US so far this year.


"In fact, competition increased during the pandemic, with new shipping services entering the market and the share of the largest alliances dropping," WSC said.


In its statement reacting to the signing of the Ocean Shipping Reform Act, the WSC added: "The FMC investigation also reports that 'the individual ocean carriers within each alliance continue to compete on pricing and marketing independently and vigorously. Individual ocean carriers within alliances continue to add and withdraw vessels from trades both inside and outside the alliances in which they participate and, particularly in the transpacific, new entrants have been entering the trade. The transpacific is a highly contestable market."


"There is no dispute that carriers, after two decades of low or no margins and cheap and abundant capacity for shippers, are actually making profits. These profits are invested in building capacity for the future on land and sea," the trade association further said.


It noted that in 2021, carriers ordered 561 vessels worth US$43.4 billion, and 208 vessels worth US$18.4 billion have been ordered year-to-date in 2022.


"But as long as America's ports, railyard, and warehouses remain overloaded and unable to cope with the increased trade levels, vessels will remain stuck outside ports to the detriment of importers as well as exporters," WSC said.


"Ocean carriers continue to move record volumes of cargo for our country and have invested heavily in new capacity – America needs to make the same commitment and invest in its landside logistics infrastructure," it added.


Biden's signing of the measure came three days after the US House of Representatives passed the bill on June 13. 


The US Senate already approved the measure last March.


The US government expects the Ocean Shipping Reform Act to help ease export backlogs in the country's major ports.


Among others, the bill would give the FMC more investigative power and promote business openness. This means that the agency will be allowed to investigate ocean carriers' common business practices and take enforcement action as it deems appropriate.


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