Experts say shipping cost increases are a key driver of high retail prices and inflation.
In a video released by the White House on Thursday, President Joe Biden announced his intention to sign legislation currently pending in Congress aimed at reforming ocean shipping regulations.
The Ocean Shipping Reform Act passed the Senate on March 31; Biden says in the video, "Democrats and Republicans voted for it, it's over in the House of Representatives, I expect it to be voted on very shortly, and I expect it to pass. And I'm looking forward to signing it, because we've got to bring down prices."
The video shows Biden speaking with representatives of the retail and farming industries, who discuss how their businesses have been impacted by recent increases in shipping costs. Biden notes that the costs have been passed on to the consumer and that experts have connected shipping costs to inflation.
"As you know, one of the big reasons why prices are going up is the cost of shipping things across the Pacific, in particular," Biden says. "There's only nine shipping companies, nine, N-I-N-E major ocean line shipping companies who ship from Asia to the United States. These companies have raised their prices by as much as 1,000%."
Other factors that have contributed to global inflation are Russia's war on Ukraine, which has put stress on global supplies of food and fuel, and the ongoing effects of the COVID-19 pandemic, which has impacted the supply chain for goods to and from China and other countries.
If enacted, the Ocean Shipping Reform Act would give the Federal Maritime Commission new powers to investigate fees charged by ocean shippers and prohibit retaliatory actions such as carriers and marine terminals refusing to to fill available cargo space, resulting in port congestion, delays, and additional costs.
Sen. Amy Klobuchar (D-MN), who co-sponsored the legislation, said in a statement in April, "This legislation will help American exporters get their goods to market in a timely manner for a fair price. By passing this bill, we are one step closer to leveling the playing field for American manufacturers and consumers."
The bill has the support of the American Association of Port Authorities, which represents over 130 port authorities across the United States, Canada, the Caribbean, and Latin America.
"As shovels start hitting the ground for port capacity expansion, thanks to the Bipartisan Infrastructure Law, the Klobuchar-Thune bill will further help the system by prioritizing cargo fluidity and increasing access for American businesses and consumers," Chris Connor, president and CEO of the association, said in a Feb. 14 statement.
In the video released by the White House, Wade Miquelon, CEO and president of Jo-Ann Stores, said that due to shipping cost increases the company has seen its costs increase "by $100 million dollars."
Tractor Supply Company president and CEO Hal Lawton told Biden his company has seen shipping costs go from "$3,500 a container in 2020" to "$20,000 to $25,000" by the end of 2021.
Zippy Duvall, president of the American Farm Bureau Federation, also spoke to Biden.
"As I told the President today, estimates suggest we've lost out on more than $25 billion in agricultural exports over the past six months due to ocean shipping constraints. That's unacceptable," Duvall said in a statement.
The White House cited research conducted by the Federal Reserve Bank of Kansas City and the European Central Bank that indicates shipping price increases lead to increased costs for consumers, and said that "shipping cost increases are expected to contribute to approximately a 1% increase in consumer prices over the next year."
A March report from the International Monetary Fund reached similar conclusions, noting, "Studying data from 143 countries over the past 30 years, we find that shipping costs are an important driver of inflation around the world."
Americans have called inflation their top concern, with 70% of respondents to a May poll conducted by Pew Research describing it as "a very big problem" and 23% described it as a "moderately big problem."
Last month, Biden said in a speech, "I know that families all across America are hurting because of inflation. ... I want every American to know that I'm taking inflation very seriously and it's my top domestic priority."
Published with permission of The American Independent Foundation.