Shippers worldwide faced several challenges during the pandemic years, including the lack of capacity in the market to ship their goods when the demand surged. Similarly, carriers received a heightened number of shipping requests and had to turn down requests that did not seem very lucrative in that period.

Now that the demand waned, shippers from the US are calling for legislative reform, claiming that carriers did not carry out their business based on competition.

One recently proposed legislation in the US is the Ocean Shipping Antitrust Enforcement Act, which calls for scrapping carriers’ exemption from federal antitrust laws. This exemption was offered to carriers in order to facilitate vessel-sharing agreements among alliances, which – according to analysts - help optimise the use of available capacity and keep rates down.

The World Shipping Council (WSC) objected to the bill, saying it would have an adverse effect on businesses, ports and consumers. “Being able to share space on ships allows more carriers to provide more services more efficiently to more ports than carriers could provide individually. That is good for shippers, ports, consumers, and all of the workers that keep the global supply network running,” stated the WSC in a press release.

JOC analyst and shipping expert Lars Jensen believes that “no regulatory reform would have prevented the shortage of capacity, and nor will it going forward.” In an op-ed article published recently, he highlighted that the capacity challenges seen during the pandemic era would have emerged with or without a regulatory change.

“In any market with a shortage of capacity and an inability to quickly bring in more capacity, this will result in prices increasing until demand is reduced to meet capacity. At least in markets operating as free and competitive,” wrote Jensen. “The main way to prioritize whether cargo would be accepted was the commercial attractiveness to the individual carrier.”

Commenting on the proposed act, Jensen stated that it would not address the high freight rates charged by the carriers during the market upturn. He explained that the sudden surge in demand caused a shortage of capacity, which dictated the market situation at the time. “In any market with a shortage of capacity and an inability to quickly bring in more capacity, this will result in prices increasing until demand is reduced to meet capacity,” he added.