Calls for the US government to regulate the shipping industry in response to costly disruptions are misguided because conditions are the result of overwhelming consumer demand and unusual supply volatility, Walter Kemmsies, managing partner of The Kemmsies Group said.
“You’ve got an industry in freight movement that grows 3%-5% a year. Suddenly you have this surge of 20% in volumes. There’s no way this industry could have ever increased the capacity that much.”
The US Department of Justice and the FMC are closely examining the behavior of foreign ocean carriers for potential anti-competitive behavior, in response to allegations of overcharging, unreasonable fees and refusal to service exporters to favor more profitable imports.
Meanwhile, a coalition of 152 companies and trade associations representing US importers, exporters, transportation providers and other supply chain stakeholders announced support for the Ocean Shipping Reform Act of 2021. They argue that the current law needs updating after 20 years to reflect carrier consolidation, the growth of alliances and new chassis ownership.
Inflation will begin to roll back by the middle of next year, Kemmsies said, and remain low because companies continue to outsource production, contrary to some assessments of large-scale manufacturing relocation to the US.
“As long as the stuff people are spending a lot of money on continues to outsource to cheap labor places there’s a downdraft on inflation,” he said.
“Currently we have a lot more supply side volatility and we have a tsunami of consumer spending on retail goods. And the combination of those two things is why it looks like we’re not rightsized to serve world trade,” he said.