US President Joe Biden says he has identified a new culprit helping fuel America's skyrocketing prices - ocean carriers' unseemly profits, reports the New York Times.
Shipping prices have soared since the pandemic, as rising demand for food, couches, electronics and other goods collided with shutdowns at factories and ports, leading to a shortage of space on ocean vessels as countries competed to get products from foreign shores to their own.
The price to transport a container from China to the west coast of the United States costs 12 times as much as it did two years ago, while the time it takes a container to make that journey has nearly doubled. That has pushed up costs for companies that source products or parts from overseas, seeping into what consumers pay.
Mr Biden has pledged to try to lower costs by increasing competition in the shipping industry, which is dominated by a handful of foreign-owned ocean carriers. He has cited the industry's record profits and directed his administration to provide more support for investigations into antitrust violations and other unfair practices.
Congress is also considering legislation that would hand more power to the Federal Maritime Commission that polices international ocean transport on behalf American companies and consumers.
The bill, which has bipartisan support, would authorise the commission to take action against anticompetitive behaviour, require shipping companies to comply with certain service standards and regulate how they impose certain fees on their customers.
President Biden is pushing lawmakers to add a provision that would allow the commission and Justice Department to review applications for new alliances between companies for antitrust issues, and reject those that are not in the public interest.
The House passed its version of the bill in December; it must be reconciled with a Senate version.
But it's unclear to what extent more government oversight and enforcement will actually bring down shipping costs, which are being driven in large part by soaring consumer demand and persistent bottlenecks. Global supply chains are still plagued by delays and disruptions, including those stemming from the Russian invasion of Ukraine and China's broad lockdowns in Shenzhen, Shanghai and elsewhere.
'As a standard matter of economics, if you have inelastic supply and experience a surge in demand, you will see a rise in prices,' said Phil Levy, the chief economist at Flexport, a logistics company.
The effect is expected to worsen in the coming months. Shipping rates typically take 12 to 18 months to fully pass through to consumer prices, said Nicholas Sly, an economist at the Federal Reserve Bank of Kansas City.
SeaNews Turkey
Shipping prices have soared since the pandemic, as rising demand for food, couches, electronics and other goods collided with shutdowns at factories and ports, leading to a shortage of space on ocean vessels as countries competed to get products from foreign shores to their own.
The price to transport a container from China to the west coast of the United States costs 12 times as much as it did two years ago, while the time it takes a container to make that journey has nearly doubled. That has pushed up costs for companies that source products or parts from overseas, seeping into what consumers pay.
Mr Biden has pledged to try to lower costs by increasing competition in the shipping industry, which is dominated by a handful of foreign-owned ocean carriers. He has cited the industry's record profits and directed his administration to provide more support for investigations into antitrust violations and other unfair practices.
Congress is also considering legislation that would hand more power to the Federal Maritime Commission that polices international ocean transport on behalf American companies and consumers.
The bill, which has bipartisan support, would authorise the commission to take action against anticompetitive behaviour, require shipping companies to comply with certain service standards and regulate how they impose certain fees on their customers.
President Biden is pushing lawmakers to add a provision that would allow the commission and Justice Department to review applications for new alliances between companies for antitrust issues, and reject those that are not in the public interest.
The House passed its version of the bill in December; it must be reconciled with a Senate version.
But it's unclear to what extent more government oversight and enforcement will actually bring down shipping costs, which are being driven in large part by soaring consumer demand and persistent bottlenecks. Global supply chains are still plagued by delays and disruptions, including those stemming from the Russian invasion of Ukraine and China's broad lockdowns in Shenzhen, Shanghai and elsewhere.
'As a standard matter of economics, if you have inelastic supply and experience a surge in demand, you will see a rise in prices,' said Phil Levy, the chief economist at Flexport, a logistics company.
The effect is expected to worsen in the coming months. Shipping rates typically take 12 to 18 months to fully pass through to consumer prices, said Nicholas Sly, an economist at the Federal Reserve Bank of Kansas City.
SeaNews Turkey