Washington, March 17 (IANS) U.S. lawmakers on Tuesday warned that growing concentration and weak oversight in the global maritime shipping industry could drive up costs and disrupt supply chains worldwide, with potential ripple effects for international trade and exporters beyond American shores.
At a House Judiciary subcommittee hearing, members examined whether a century-old antitrust exemption for ocean carriers continues to serve consumers, as three major global alliances now dominate much of international shipping.
Subcommittee Chairman Scott Fitzgerald said the industry had evolved far beyond what Congress envisioned in 1916, raising fresh concerns about competition and national interest.
“The result of the Shipping Act, as we've seen, may have unfortunately been precisely what Congress was hoping to avoid: concentration of foreign shipping companies to the detriment of American businesses and consumers,” he said.
Fitzgerald pointed to rising consolidation, noting that while the top 20 carriers controlled about 50 per cent of global capacity in 1998, that figure climbed to nearly 90 per cent by 2018.
“Today, three global shipping alliances together control nearly all transatlantic and Trans-Pacific trade,” he said.
He also flagged the dominance of foreign-owned carriers, adding that the United States depends on foreign-flagged vessels for 97 per cent of its maritime trade. This, he said, raises both economic and national security concerns.
A key focus of the hearing was the Federal Maritime Commission's (FMC) role in overseeing shipping agreements, for which it has not brought enforcement action against carrier alliances.
Fitzgerald said the agency “has never once brought a case against the powerful ocean shipping carriers that dominate shipping markets,” despite having the authority to do so.
Erika Douglas, an associate professor of law at Temple University, told lawmakers that the exemption shielding ocean carriers from antitrust laws is outdated. “This ocean shipping exemption is one of the oldest in antitrust law. It's not clear it was ever justified, and it certainly isn't. Today,” she said.
According to her, the industry shows “at least three classic hallmarks of antitrust risk,” including high concentration, extensive coordination among competitors, and past instances of collusion where exemptions did not apply.
“These factors create a perfect storm for anti-competitive conduct,” she said.
Eminent economist Richard Sicotte of the University of Vermont said alliances allow carriers to coordinate capacity and operations, which can still influence market power.
“If agreements jointly fix capacity, then they can exercise market power even though they do not explicitly collude on rates,” he said.
Industry representatives described the real-world impact of these dynamics on exporters. Tony Rice of the National Milk Producers Federation said U.S. dairy exporters remain heavily dependent on foreign carriers due to limited domestic capacity.
“With the US-flagged ocean-going fleet representing only 2.3 per cent of global shipping capacity, US dairy exporters are almost wholly dependent upon foreign entities to transport their products,” he said.
Rice told lawmakers that the COVID pandemic exposed vulnerabilities in the system, with exporters facing delays, cancelled shipments, and high costs.
“Our industry lost over $ 1.5 billion due to missed sales opportunities, reduced product values, and sharply higher costs associated with unreliable shipping services,” he said.
He added that fewer carrier options reduce exporters' negotiating power and create scheduling uncertainty, particularly for perishable goods.
Democrats on the panel questioned the timing of the hearing, arguing that broader economic pressures such as tariffs, fuel costs, and inflation were more urgent concerns.
Ranking member Jerrold Nadler said, “A hearing to examine maritime shipping rules does not exactly meet the moment,” pointing to rising costs facing American households.
Despite political differences, witnesses broadly agreed that the current framework warrants closer scrutiny. Douglas said repealing the exemption would allow antitrust authorities to step in where regulators have not acted.
--IANS
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