News
The U.S. House of Representatives' Committee on Oversight and Reform has sent letters to three of the world's largest ocean freight carriers - A.P. Moller Maersk, CMA CGM Group and Hapag-Lloyd - requesting information about dramatic increases in the prices for shipping containers and reports of exorbitant fees and surcharges, which have led to increased costs throughout the supply chain, contributing to inflation and hurting U.S. consumers and businesses.
The House Committee is the main investigative committee in the U.S. House of Representatives. It has authority to investigate the subjects within the Committee's legislative jurisdiction as well as ''any matter'' within the jurisdiction of the other standing House Committees.
According the committee, ten foreign-owned ocean freight carriers, including Maersk, CMA CGM, and Hapag-Lloyd, which control nearly 85% of the world's shipping capacity, appear to have raised shipping rates in 2021 far more than any increase in costs, resulting in $150 billion in annual profits—nine times greater than profits in 2020.
The opening of this investigation follows President Biden's announcement in his first State of the Union address of a crackdown on shipping companies overcharging American businesses and consumers.
The letters cited staggering increases in profits for all three companies. While Maersk's operating costs only increased by 21% last year, the company increased its average shipping rates by 83%, resulting in total profits of more than $18 billion in 2021 - more than the company made in the previous nine years combined. CMA CGM recorded total profits of more than $11 billion in the first nine months of 2021 - more than the company made in the prior decade combined - and paid out nearly $900 million in dividends to its shareholders throughout the year. Hapag-Lloyd increased its average shipping rates by 66%, with rates for certain routes - such as its Transpacific route, which carries U.S. imports from Asia to the West Coast - increasing by as much as 75.3%. As a result, the company generated profits of $6.6 billion in the first nine months of 2021 - approximately ten times what it generated during the same period the previous year.
In the letters, the committee requested documents and information from each company explaining their decision to increase shipping rates well beyond their costs, as well as any known U.S. investigations related to these rate increases. The companies are asked to respond by March 16, 2022.
