Is the US still a capitalist country where the shipping act is designed to rob?

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Source: trendy meditation (id:xinchaochensi)

Author: Zuo Qianhu

On June 16, 2022 local time, US President Biden officially signed theocean Shipping Reform Act of 2022, which means that the act has become law.

The bill was unanimously passed by the US Senate on March 31 this year. It was passed by the US House of Representatives on June 13 with 369 votes to 42.

The Biden administration believes that the maritime Reform Act “is to create a fairer environment so that both U.S. importers, exporters and carriers can play a role in the competitive environment”. Will become a powerful weapon against historical inflation

In fact, the maritime Reform Act implemented in the United States this time has foreboded well. Since the outbreak of SARS, the world container shipping prices have skyrocketed. U.S. exporters are generally dissatisfied with the carriers and believe that the rising sea freight prices and the shortage of containers have seriously infringed on the interests of U.S. exporters.

In his first state of the Union address since taking office on the evening of March 1, 2022, US President Biden accused liner companies of monopolizing transport capacity through shipping alliances and raising shipping prices. The United States Congress is urged to pass legislation to address this issue.

Based on this background, the newly issued maritime transport reform act mainly includes the following contents:

Transfer the burden of proof on the reasonableness of demurrage (d& d) from the shipper to the liner company; It is prohibited for liner companies to unreasonably reduce the export capacity and class space of the United States, which shall be determined by the Federal Maritime Commission (FMC) in the new regulations; The liner company is required to report to FMC the total import and export tonnage and the number of TEUs (including empty and heavy containers) of each ship docked at the U.S. port every quarter; It is prohibited to retaliate against the shipper or threaten to reject the goods.

After the promulgation of this bill, danielmaffei, chairman of the Federal Maritime Commission of the United States, said: “the changes brought about by the new legislation will benefit American shippers. We will quickly take necessary measures to enable shippers to enjoy the benefits brought about by this legislation, starting with the formulation of export freight rules.”

Through this legislation, the United States hopes to ensure that liner companies will no longer directly transport empty containers back to Asia, but give priority to the transportation of American exports.

The Biden administration believes that the maritime Reform Act “is to create a fairer environment so that both U.S. importers, exporters and carriers can play a role in the competitive environment”.

The United States tries to solve market problems by legal means

The author’s first reaction is: is the United States or is it not a capitalist country?

In the ocean shipping business, container capacity is a commodity traded, the carrier of the liner company is the capacity supplier, and the importer or exporter of the United States purchases capacity from the liner company as the buyer. Capacity is directly related to price. The capacity is dynamically allocated by the liner company according to the current trade volume and the sea freight price. That is, the “invisible hand” in the theory of market economy plays a role.

Specifically, when the price of a certain route rises, the liner company will allocate its capacity to make profits. There is a set of price rule system within the liner company. If the transport capacity provided by a certain ship is not enough to carry all the goods, that is, whoever has a high price will be loaded, and the goods with a low price will be crowded out.

The current situation is that the supply side liner companies reduce their supply from the United States to Asia and increase their supply from Asia to the United States due to price problems, and do not violate any existing laws, which is a completely legitimate market behavior. In fact, ships on the route from Asia to the United States follow a pendulum like round-trip route. As much capacity as there is from Asia to the United States, there is as much capacity as the United States returns to Asia. Now according to the United States, liner companies would rather take empty containers without any freight back to Asia than spend some time waiting for American exports to earn freight. If U.S. exporters want to increase U.S. export supply to Asia, it should be to raise freight prices. As long as the money is enough, the liner company will not be willing to let the ship run empty, so the transportation capacity is not a problem.


Ranking of global container ports in 2021, and ranking of Chinese ports.

When the United States introduced the Hart act in 1893, it was just when the United States surpassed the former overlord Britain. The rules established by the United States promoted the development of the industry. As the US Navy surpassed Britain, the US rules gradually dominated the world. China today is somewhat similar to the United States in 1893.

Then at that moment, just like this moment.


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