U.S. Seeks to Lower Spiking Shipping Costs With Competition
(Bloomberg) -- The Biden administration is set to ask regulators to promote competition in the ocean shipping and rail industries after consolidation led to spikes in prices, according to a person familiar with a pending executive order.
Foreign-owned shipping alliances now control more than 80% of the market and mergers have left many local rail routes monopolized, pushing the White House to call on federal agencies to take steps to protect American exporters from increasing costs.
The White House will also urge the agencies to work with the Justice Department to investigate and punish anticompetitive conduct.
The moves come as shipping costs continue to rise around the world.
Railroad shares tumbled on the news, lagging broader U.S. market indexes. Kansas City Southern, which is in merger talks with Canadian National Railway Co., paced the selloff with a decline of as much as 8.7%, the worst intraday slump since April 2020.
The cost to ship a boxload of goods to the U.S. from China edged close to $10,000, up 5% from the previous week and 229% higher than a year ago, according to the Drewry World Container Index published Thursday. A composite index, reflecting eight major trade routes, rose to $8,796, a 333% surge from a year ago. Drewry said it expects rates to increase further in the coming week.
While the surging rates represent a profit bonanza for container lines including Copenhagen-based A.P. Moller-Maersk A/S and China’s Cosco Shipping Holdings Co., they’re making it more difficult for importers to absorb higher costs. Some are raising retail prices, adding to inflationary pressures that worry central banks, while Covid-related supply bottlenecks are also holding back economic activity.
In recent weeks, senior Transportation Department officials have been meeting with port officials, shipping industry players and retailers to try to address port congestion and long-term infrastructure challenges.
The Wall Street Journal first reported on the pending moves on shipping prices.
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