Congressional committees press carriers on profitability
Box lines are being asked to explain why shipping rates have hit such high levels while costs were static. ‘The committees are further concerned that shipping companies may be utilising this temporary price spike to lock in long-term contracts at inflated price rates, ensuring corporate windfalls continue at the expense of consumers for many years to come’
Container carriers are coming under increasing regulatory pressure in the US. The latest investigation accuses lines of ‘predatory’ practices during the pandemic
CONTAINER lines are facing further calls to explain their profitability following President Joe Biden’s scathing attack on box shipping in his State of the Union address.
The chairmen of the US Congress’ Select Committee on the Coronavirus Crisis and Sub-committee on Economic and Consumer Policy have written to Maersk, CMA CGM and Hapag-Lloyd requesting information on freight rate rises and reports of “exorbitant fees and surcharges”.
Representatives James Clyburn and Raja Krishnamoorthi said the fees had led to increased costs throughout the supply chain, contributing to inflation and “hurting US consumers and businesses”.
“Affordable shipping rates are critical to ensuring that small- and medium-sized business owners can continue to make a living and provide goods and services to consumers at reasonable prices,” they said. “We are deeply concerned that Maersk, CMA CGM, and Hapag-Lloyd may have engaged in predatory business practices during the pandemic, making scores of essential goods needlessly expensive for consumers and small businesses.”
Their argument is predicated on the fact that while container line profits have risen sharply to a collective $150bn in 2021, costs increased by only a fifth in the same period.
“Our committees are concerned that the world’s largest shipping companies appear to have raised shipping rates far above costs, generating enormous corporate profit at the expense of shipping customers and the broader American economy,” the representatives wrote in letters to the carriers’ chief executives.
“The committees are further concerned that shipping companies may be utilising this temporary price spike to lock in long-term contracts at inflated price rates, ensuring corporate windfalls continue at the expense of consumers for many years to come.”
The letters request that the carriers explain why their rate increases have “significantly exceeded” operating cost rises on the east-west trades and what steps are being taken to lower rates, including fees and surcharges, in the year ahead.
They also request comprehensive information on rates charged to customers, revenues and corporate actions such as share buybacks, dividends and executive remuneration, customer contract details and other investigations that are being conducted into the companies.
Maersk North America spokesman Tom Boyd confirmed the carrier had received an information request from the committees.
“We look forward to answering the committees’ questions and detailing our efforts to support our more than 100,000 customers, both large and small, around the world through these extreme market conditions,” he said.
CMA CGM said that it had a “longstanding commitment to fair practices”.
“We have received the House Oversight Committee Majority’s document request, and we are working to provide the appropriate information,” a spokesman told Lloyd’s List.
“With tightened supply chain conditions around the world, the group has implemented a number of measures to ease the burden on customers and facilitate end-to-end solutions so that American consumers receive the products they need.”
Hapag-Lloyd told Lloyd’s List it had no comment on the letter, but referred to carrier lobby group the World Shipping Council’s responses to President Biden’s speech in the past week.