By Amin Kef (Ranger)
In a surprising revelation, President Joe Biden of the United States has pointed the finger at nine major shipping companies that dominate the global ocean shipping industry, accusing them of being responsible for the recent surge in fuel prices and subsequent commodity price hikes.
President Biden’s remarks shed light on the actions of these shipping giants, who, he claims, exploited their dominant position during the COVID-19 pandemic to increase the rates for their services. This sharp rise in shipping costs has had a cascading effect on global commodity prices, as importers have had no choice but to pass these additional expenses on to consumers.
The President highlighted that these shipping companies also play a significant role in transporting fuel internationally. With shipping rates skyrocketing by an astounding 1000%, it was only a matter of time before the price of fuel followed suit. This substantial rate hike translated into an astonishing $190 billion profit for the shipping conglomerates in 2021 alone, a sevenfold increase compared to the previous year.
“Nine major shipping companies, consolidated into three alliances, control the vast majority of ocean shipping in the world. Each of them is foreign-owned, and during the pandemic, these carriers increased their prices as much as 1000%. While families and businesses struggle around the world, these carriers made $190 billion in profit in 2021, seven times higher than the year before, and the cost got passed on, as you might guess, directly to consumers, sticking it to American families and businesses…” President Biden stated.
The ramifications of this situation are not limited to the United States. Less developed countries, like Sierra Leone, which heavily rely on imported goods and food items, have been hit particularly hard by the soaring fuel prices. While many in Sierra Leone initially attributed the fuel price hikes to the Government’s fiscal policies, President Biden’s revelation points to a different underlying cause.
Economic analysts contend that as a result of increased demand for dollars in countries like Sierra Leone, demanded by businesses seeking to import goods, including fuel, the higher shipping prices set by the carriers, has contributed to the rise in fuel prices. This demand for dollars, they argue, has been exacerbated by the shipping companies’ 1000% price hike, even when the international fuel market may not have experienced such a drastic increase.
Petroleum marketing companies need dollars to purchase fuel and cover transportation costs to countries like Sierra Leone. Consequently, they must contend with both the international fuel price and the exorbitant shipping fees imposed by the dominant industry players. To break even, oil marketing companies (OMCs) have no choice but to pass these costs on to consumers, as witnessed in Sierra Leone.
The repercussions of increased fuel prices extend to the overall cost of living in Sierra Leone. Fuel serves as a linchpin for economic activities and social life, and any surge in its price negatively impacts the livelihood of the population. With Sierra Leone heavily reliant on imports, including essential items like food, the price hikes imposed by the nine shipping companies have rippled throughout the economy, exacerbating the challenges faced by its citizens.
President Biden’s assertion that these companies increased their prices by an astounding 1000% underscores the global ramifications of their actions. While the United States has felt the effects, countries like Sierra Leone, which depend heavily on imports, have been even more severely affected. The revelation challenges the belief that the economic crises faced by Sierra Leone are solely the result of its Government’s policies, shedding light on a larger global issue.
The US President emphasized that while events like the war in Ukraine and the COVID-19 pandemic have contributed to economic challenges, the primary driver of the current crisis is the monopoly held by these nine shipping companies in the shipping sector. Had it not been for this unprecedented 1000% increase in shipping costs, commodity prices, including fuel, might have remained more manageable, preventing the global economic downturn currently being witnessed.
The revelation by President Biden provides an explanation for the plight faced by Sierra Leone and other nations. It points to a global challenge brought about by the greed of nine shipping companies, who prioritize profits over global economic stability. The fact that these companies are foreign-owned raises questions about the feasibility of exerting control over their actions.
As countries grapple with these new economic challenges, it is clear that addressing the impact of both COVID-19 and geopolitical conflicts will require careful consideration of the actions of these shipping industry giants. The global community must come together to find a solution to the detrimental impact of exorbitant shipping rates on the world’s economies.