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The United States will investigate the three major shipping companies, MSC raises objections

Time:2022-03-10 Publisher:Kevin Num:3124

Now that the world is raging amid the Russia-Ukraine crisis, the White House has raised questions about prices and competition in the liner industry.

Some time ago, the Biden administration in the United States condemned the phenomenon of indiscriminate charges by liner companies, and delivered a speech to rectify the global liner industry.

It is reported that the US Congress has established two monitoring groups, Maersk, CMA CGM and Hapag-Lloyd have launched an investigation into the three shipping companies, and said that these shipping companies' arbitrary charges may have exacerbated inflation.

At present, the top ten shipping companies in the world control nearly 85% of the world's container shipping capacity, the commission said. Taking advantage of this market power, their increased shipping rates in 2021 appear to far outweigh any cost increases.

Chairman James Clyburn said: "Affordable freight rates are critical to ensuring SMEs can continue to operate, while delivering goods and services to consumers at affordable prices.

The commission also noted that Maersk's operating costs increased by only 21% last year, while the average freight charges collected increased by 83%. The impact of these price increases on the U.S. economy has been particularly severe.

At the same time, another shipping giant, CMA CGM, also made nearly $10 billion in profits, more than the company’s profits in the previous 10 years combined.

Hapag-Lloyd is also making substantial profits during this period of skyrocketing freight rates. The board of inquiry noted that the shipping company had increased freight rates to 75.3 percent and revenue had also increased by about 70 percent.

WSC expresses firm opposition

The World Shipping Council (WSC) also responded to the matter, saying the U.S. government was misinterpreting the facts. Competition among international shipping companies is very active, as is the case for major U.S. trade-related routes;

More and more carriers are operating ships on trans-Pacific routes, which shows that shipping companies are causing freight rates to rise in response to increased demand.

The WSC added that the outbreak had a significant impact on the entire supply chain, and supply chain disruptions were caused by a surge in demand. But some claim that this is due to the intense competition in the container shipping industry is incorrect.

Another spokesman said container prices were transparent and influenced by supply and demand in the market. However, there is a serious deviation in the current supply and demand relationship, which is the main reason for the increase in freight costs.

In the past, freight rates were relatively low, and the shipper was in a dominant position, but now it is the opposite. But there is currently no clear evidence of illegal competition in the liner industry.

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