High ocean freight rates of recent years were caused by the market forces of supply and demand in a supply chain challenged by the COVID-19 pandemic and an unprecedented surge in consumer demand.
That’s the OFFICIAL finding from the U.S. Federal Maritime Commission, which has carried out a two-year investigation into the ocean shipping industry.
On March 31, 2020, the US FMC instructed Commissioner Rebecca Dye to carry out the Fact Finding 29 investigation into the US supply chain.
Based on her investigations, the Commissioner discovered that “notwithstanding certain misconceptions,” that the current market for ocean liner services in the Trans-Pacific trade is NOT concentrated and is only minimally concentrated on the Trans-Atlantic.
“Competition among ocean common carriers, among the three major alliances, and among the members in each of these alliances is vigorous,” Fact Finding 29 asserts.
“Competition among ocean common carriers, among the three major alliances, and among the members in each of these alliances is vigorous”
Fact Finding 29, U.S. Federal Maritime Commission
In her report, Commissioner Dye also noted that “based on the information gathered, the Fact Finding Officer [i.e. Commissioner Dye] believes that the most productive path forward for shippers and ocean carriers alike would be to enter into mutually enforceable and binding service contracts — true “meeting of the minds” — that are enforceable commercial documents”.
Shipping Australia CEO Melwyn Noronha commented: “throughout the COVID crisis, there have been many voices asserting – quite without evidence – that there was some kind of collusion that was driving up freight rates. Such commentators also argued that the existence of alliances proved that there was collusion. After a thorough two-year investigation, it has been revealed that these unjust, unsubstantiated, and groundless allegations against shipping lines were exactly that: unjust, unsubstantiated, and groundless.
“It is also therefore pleasing to see that it is now official recorded and confirmed that the recent maritime issues were simply a result of market forces – as the shipping industry has been reporting all along”.