The Disruption Report #25: The FMC Steps In, Where Are the Trucks, and the Biggest Container Shipping Companies Are…

Are Containerized Freight Companies Over-Charging? The Federal Maritime Commission Wants to Find Out.

In case you have been wondering where the government has been in the stratospheric rise in containerized freight rates, we have an answer. The Federal Maritime Commission intends to get involved…finally.

According to Freightwaves in an article by John Gallagher, “FMC to assess whether container lines are abusing market power:”

The Federal Maritime Commission plans to audit nine of the largest container carriers operating in U.S. markets to find out if they are using their market power to overcharge shippers on detention and demurrage fees.

Aside from detention and demurrage, the audit may include carrier practices related to billing, appeals procedures, penalties assessed and any other restrictive practices, according to the FMC.

Source: Statista

The companies being audited are Maersk, MSC, CMA CGM, COSCO Group, Hapag-Lloyd, ONE, Evergreen, HMM, and Yang Ming.

This activity follows the executive order from President Biden which, called for additional oversight over international shipping companies. Let’s hope that the auditing these companies will cause them to be more circumspect in adding surcharges and other crippling fees.

Which Are the World’s Biggest Containerized Freight Companies?

I am not sure we realized before the current supply chain turmoil just how vulnerable we were to the major container shipping companies. I wanted to learn more about how big these companies are and where they are headquartered.

So, I did some research, and below is a list of the worlds twelve largest containerized freight shipping companies with where they are headquartered and the number of ships they own:

1. APM-Maersk – Denmark- 721 Ships
2. Mediterranean Shg – Switzerland – 609 Ships
3. CMA CGM Group – France – 544
4. COSCO Group – China – 497
5. Hapag-Lloyd – Germany – 261
6. ONE (Ocean Network Express) – Japan – 218
7. Evergreen Line – Taiwan – 203
8. Wan Hai Lines – Taiwan – 147
9. Zhonggu Logistics Corporation – China – 106
10. Antong Holdings – China – 103
11. ZIM – Israel – 102
12. SITC – China – 95

I have to say that I am surprised that the U.S. and the U.K., two ocean-going countries surrounded by water, have no companies on the list. Compare the U.S. and U.K. to land-locked Switzerland. Their Swiss-owned Mediterranean Shg is the world’s number two shipping company with six hundred and nine ships. Go figure!

Where Are the Trucks?

A great deal of our focus has been on ocean freight. What about domestic shipping by truck here in the U.S.? According to a Bloomberg Newsletter, “The Two Charts That Show How Much Stress Is on the Trucking System Right Now,” the trucking industry is feeling the heat as well, and prices are going up. The article quotes Craig Fuller, CEO, and Founder of Freightwaves, as describing the industry’s challenges this way:

Unlike other parts of the supply chain — say, international shipping — trucking was already in a state of duress pre-crisis, grappling with extreme boom/bust cycles and a secular decline in the number of people who want to pursue a career as a truck driver. So the issues will persist in the space long after things “normalize” in the broader economy.

Due to the unprecedented demand and the limited number of available trucks, drivers are turning down loads at a record pace. Mr. Fuller says not to worry, more players are entering the industry, and the crunch should ease. It seems to me, however, that younger people are not as entranced with the open road as prior generations and may prefer looking at a screen rather than through a windshield.