LOS ANGELES (CN) — President Joe Biden took aim Friday at the foreign-owned ocean carriers that dominate trade routes between Asia and the U.S. in a speech at the Port of Los Angeles to discuss inflation and supply-chain challenges.
The nine major ocean-line shipping companies have raised their prices by as much as 1,000%, the president said in his speech. At the same time they have raked in $190 billion in profits, a seven-fold increase in one year, Biden said, calling on Congress to pass litigation to crack down on these companies and lower shipping costs.
"One of the key ways to fight inflation is by lowering the cost of moving goods through the supply chain," Biden said. "This is about reducing costs for families."
Inflation reached 8.6% in May, the Labor Department reported Friday, the highest rate in four decades and defying optimism that price increases might be tempering. The biggest increases were in energy and food prices, what Biden's referred to as "Putin's tax," as the Russian invasion of Ukraine has disrupted global oil and wheat markets.
Fighting inflation is the administration's top economic priority, Biden said.
Consumer prices had already been going up prior to Russia's invasion in February. Rampant U.S. consumer demand combined with equipment and labor shortage throughout the supply-chain overwhelmed the ports, railroads and warehouses last year. This in turn drove up transportation costs for retailers and wholesalers to bring in merchandise from Asia and ultimately for consumers.
The ocean carriers' huge price hikes last year is something that made him "visceral angry," Biden said, "like when you had the person in front of you, you'd want to pop him."
"It's a big deal," Biden said. "People while at home trying to make it paycheck-to-paycheck and wondering what in God's name do nine shipping companies have to do with it. Well almost everything you're doing, everything from what you're eating to what you happen to drive, to what you need in your home relates to the supply chain and what's coming from abroad."
The White House in February announced an agreement between the Justice Department and the Federal Maritime Commission to make antitrust lawyers and industry experts available to each other to ensure that large ocean freight companies won't "squeeze" American businesses and consumers. Congress meanwhile is considering legislation that would address the current antitrust immunity ocean carriers and their alliances enjoy.
The nine biggest ocean carriers, including Denmark's Maersk and China's Cosco, control about 80% of all global container ship capacity and 95% of the East-West freight traffic. The nine carriers have formed three alliances that collaborate on utilization of ships, sailing schedules and itineraries, containers and use of joint terminals.
Biden's swipe at the freight carriers comes while the West Coast longshore union, representing the workers at the ports, are in the middle of labor talks with the organization that represents the ocean carriers and terminal operators. The negotiations have already sparked anxiety with retailers and other importers about new disruptions at the ports.
Biden was introduced by a speaker from the International Longshore and Warehouse Union at Friday's speech.
The ports of Long Beach and Los Angeles, the biggest container port complex in the nation, have already seen a record number of imports from Asia arriving through the first three months of the year. Retailers have been bringing in as much goods as they can to, among other reasons, build up inventory ahead of any possible slowdowns or shutdowns at the ports.
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