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US President Biden blamed inflation on shipping companies and called on them to reduce freight rates

Time:2022-06-15 Publisher:Kevin Num:3305

At present, the global shipping boom continues, and the sea freight is still at a high level. And this makes American importers and exporters feel very painful.

To this end, US President Biden made a phone call with local retailers last week. Retailers have expressed frustration and dissatisfaction with the current high sea freight.

Wade Miquelon, President and CEO of Jo Ann stores, a retail company, said that the cost of their company increased by nearly $100million due to the rise in freight.

Hal Lawton, President and CEO of Tractor Supply Company Tractor Supply Company, said: as early as 2020, the transportation price of a container was only $3500. By 2021, the container price had risen by more than 500% to $20000.

Biden said in a statement that the problem of high ocean freight was related to the lack of competition in the market. In particular, the trans Pacific route has only nine shipping companies.

The nine major shipping companies made a profit of US $190billion last year. However, this makes importers and exporters have to bear high costs.

Biden also said that the main reason for the serious domestic inflation is that the shipping companies have made excessive profits. By implication, shipping companies should be responsible for the current high inflation in the United States.

He also urged the US Congress to pass legislation to reduce transportation costs.

In fact, as early as March this year, President Biden criticized the shipping companies for charging DEMURRAGE FEES indiscriminately. It called on the US Congress to pass strong reforms to the ocean shipping act.

(Related reading: Biden administration condemns shipping companies for institutional charges, and demands lower freight rates)

Biden said in Los Angeles that one of the key ways to combat inflation is to reduce the transportation cost of goods. At the same time, he called on importers and exporters to unite and jointly fight against the profit squeeze from shipping companies.

According to the data from the Federal Maritime Commission (FMC), during the epidemic period, the average price in the global shipping market increased nearly 8 times.

This is related to the rising import demand of the United States. Compared with 19 years, the import volume in 20 years has increased significantly. This caused a large number of container ships to rush to American ports.

It is understood that the ocean transportation reform act of 2022 is expected to be passed as soon as next week. Once the act is passed, Biden will sign it into law.

The industry believes that this legislation can not only expand FMC's regulatory power over container carriers, but also promote U.S. exports.

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