Senator Warren slams shipping alliances for adding to inflation

By Brendan Murray and Laura Curtis (Bloomberg) —

Senator Elizabeth Warren has blamed rising US inflation in part on the biggest shipping companies, calling the industry’s ‘anti-competitive nature’ the root cause of skyrocketing prices for shipping goods in the global economy.

“These price spikes cause companies to pass higher costs onto customers and push out smaller companies, which cannot compete with larger companies for shrinking ship space,” the Massachusetts Democrat wrote. in letters to each of the nine largest container carriers. “It has affected every corner of the economy, inflating prices for the cost of food, durable goods and other essentials.”

Warren cited a Bloomberg News report from January that explored how the consolidation of liner shipping companies in recent years, combined with supply and demand imbalances caused by the pandemic, has contributed to a sustained increase in liner prices. containers which was beginning to fuel inflation more broadly. .

Warren’s letters are the latest salvo from Washington to a container shipping industry that has been the backbone of globalization for much of the post-war period, attracting little public attention until recently.

The US-China trade war, Covid-19 shutdowns and now Russia’s invasion of Ukraine have exposed the fragilities of distant supply chains, and shipping companies have become scapegoats policies because they carry around 80% of the world’s merchandise trade.

In his state of the union address President Joe Biden has said he is launching a crackdown on shipping companies to “overburden American businesses and consumers”. Biden specifically called on Congress to address current antitrust immunity for shipping alliances, which had not been included in broader legislation being drafted in Congress.

The World Shipping Council, which represents major container lines, argued that growing household demand is causing disruption on land and that some attempts in Congress to resolve supply chain tensions would only make matters worse. .

“Americans continue to import goods at record levels,” the council said in a statement. statement Tuesday. “Shipping carriers have deployed every available ship and container, and are moving more cargo than at any time in history, but US land traffic jams are keeping ships stranded outside US ports. “

In his letters, Warren said “Congress should act to address the high shipping costs if the administration does not have full authority to do so.” The senator asked the companies to respond to questions about announced plans to further consolidate the shipping market, and their record profits and prices, by April 6.

The shipping industry’s position – that the forces of supply and demand have driven container rates up, not lack of competition – seemed to have a prominent defender this week.

“No matter how many times administration officials suggest otherwise, it is an economic lie to assert that large increases in earnings following a collision between growing demand and inelastic supply are the evidence of excessive profit or market power,” former Treasury Secretary Lawrence Summers said. tweeted Wednesday.

“If the administration were serious about competition in shipping, they would suspend the Jones Act,” said Summers, who is a paid Bloomberg TV contributor, referring to a century-old law that prevents foreign-flagged ships to operate between US ports.

–With help from Lauren Etter.

© 2022 Bloomberg L.P.