In President Biden’s State of the Union address on Mar. 1, the commander in chief blamed the surge in inflation partially on companies that operate in a market with little competition, like the shipping industry.

                By                    Josephine Nesbit

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“We see it happening with ocean carriers moving goods in and out of America,” he said. “During the pandemic, these foreign-owned companies raised prices by as much as 1,000% and made record profits.”

“Tonight, I’m announcing a crackdown on these companies overcharging American businesses and consumers,” Biden added. 

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Bloomberg noted that the biggest issues are the three main shipping alliances, where Asia- and Europe-based rivals share vessel capacity on major trade lanes and are able to evade U.S. antitrust laws. The World Shipping Council’s argued that “market dynamics are influencing prices — not carrier alliances.”

The U.S. Department of Justice has been pushing Congress for decades to dispose of the antitrust immunity, saying that it undermined a free-market economy, according to a separate Bloomberg report.

The Federal Maritime Commission (FMC) and the Antitrust Division plan to form a task force to investigate ocean shipping lines for potential violations to the Shipping Act and other U.S. laws, the White House said in a Feb. 28 statement, as reported by S&P Global.

Citing research from the Kansas City Fed and the European Central Bank, the White House stated that these shipping cost increases are expected to contribute to a 1% increase in consumer prices over the next year.

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“Meanwhile, the ocean carrier companies are experiencing elevated profits and soaring profit margins,” the White House said. “Estimates suggest that the container shipping industry made a record $190 billion in profits in 2021, a sevenfold increase from the previous year and five times what it made over the entire period from 2010-2020.”