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Biden in harsh criticism of container carriers: Freight rates are “outrageous”

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NEW YORK : US President Joe Biden once again levels a sharp criticism at the global box carriers dominating the seaborne transportation between Asia and the US, he recently spoke by phone with several retailers and farmers to discuss ocean shipping costs and the impacts of those costs on their businesses. In a Twitter post that included excerpts of those calls, he said: “One of the reasons prices have gone up is because a handful of companies who control the market have raised shipping prices by as much as 1,000%. It’s outrageous.”

“One of the reasons prices have gone up is because a handful of companies who control the market have raised shipping prices by as much as 1,000 percent. It’s outrageous — and I’m calling on Congress to crack down on them.”We were paying $3,500 a container in 2020, and then by September-October last year, we were paying upwards of $20-25,000,” Hal Lawton, President and CEO, Tractor Shipping Company told Biden.

“Yeah, it’s outrageous,” replied Biden who went on to add that “one of the big reasons why prices are going up is the cost of shipping things across the Pacific, in particular. There’s only nine shipping companies – N-I-N-E, major shipping companies who ship from Asia to the United States. These companies have raised their prices by as much as 1,000 percent.

Such increases raised costs for Jo-Ann Stores by almost $100m, said Wade Miquelon, CEO and president of the company. “We’re not a huge company, but that $100m increase that they passed on to us is more than our entire profit,” he noted.

Biden asked Lawton, “by how much have your costs gone up?” To which the reply was : “Almost by $100 million. We are not a huge company but that $100 million they passed on to us, you know, is more than our entire profit. They are depending on us to deliver those products from my farms to their countries. If we don’t fix these problems, we will lose our customers.”

Vincent Duvall, President of the American Farm Bureau Federation, fears losing customers overseas if challenges persist for agricultural shippers.

Biden has called on the Congress to crack down on ocean shippers. “We’ve got to change this. I asked the Congress to pass a piece of legislation to remedy this. Democrats and Republicans voted for it. It’s over to the House of Representatives. And I’m looking forward to signing it because we got to bring down prices. The underlying elements of our economy are strong, stronger than any other nation in the world. But inflation is a problem. This won’t solve it all but it will solve a big piece of it.

The president has called on Congress to crack down on the global liners. “We’ve got to change this. I asked the Congress to pass a piece of legislation [the Ocean Shipping Reform Act of 2021] to remedy this. Democrats and Republicans voted for it, it’s over in the House of Representatives. I expect it to be voted on fairly shortly, and I expect it to pass. And I’m looking forward to signing it, because we’ve got to bring down prices.

A fact-finding report by the US Federal Maritime Commissioner Rebecca Dye last month had concluded that despite customer perception of collusion and lack of competition as freight rates soared, neither was actually the case.

The report, in fact, went on to suggest 12 new recommendations including:

* A new commission “International Ocean Shipping Supply Chain Program”;
* Rulemaking to provide coherence and clarity on empty container return practices;
* A Commission investigation into practices relating to the numerous charges assessed by ocean common carriers and seaports and marine terminals through tariffs; and
* Rulemaking to provide coherence and clarity on merchant haulage and carrier haulage.

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