In order to combat high inflation, the US shipping sector will implement the largest reform since 1998, and the situation of "high freight rates and hard to get a carton" may be reversed.

Inflation in the United States is far from peaking, with CPI exceeding expectations in May, setting a 40-year high again. In order to combat high inflation, the United States plans to implement the largest reform in the shipping sector since 1998.

Members of Congress are preparing to tighten regulation of international shipping companies, with the White House and U.S. importers and exporters arguing that high freight costs are hampering business, pushing up costs and fuelling inflation, according to media reports on Saturday.

Democratic leaders in the House of Representatives say they plan to adopt a measure already passed by the Senate next week to strengthen regulatory restrictions on shipping operations and limit the ability of shipping companies to impose special fees. The bill, known as the Ocean Shipping Reform Act, was passed by an oral vote in the Senate in March. Last year, the House of Representatives passed another version of the bill, including stricter regulations, by a vote of 364 to 60, and House leaders decided in recent weeks to accept the Senate version.

Shipping and trade officials say the Federal Maritime Commission (FMC) already has the power to implement many of the enforcement tools in the bill and the White House is planning to incorporate details into the law that will prompt regulators to take action.

The bill will make it harder for shipping companies to refuse to export goods. In the past two years, shipping companies have shipped a large number of empty containers back to Asia to earn more shipping costs, leading to a shortage of containers in North America.

Biden: one of the key ways to fight inflation is to reduce freight costs

After the release of CPI data, US President Joe Biden stressed the issue of high freight costs and called on Congress to "crack down" on ocean shipping companies. Biden pointed out on Thursday:

One of the main reasons for the rise in shipping costs is that nine ocean shipping companies have controlled the trans-Pacific market and increased freight rates by 1000 per cent.

The next day, Biden said in a speech in the port of Los Angeles:

It is time for ocean shipping companies to know that "extortion is over" and that one of the key ways to fight inflation is to reduce the cost of transporting goods in the supply chain.

Biden has long blamed high supply chain costs on a lack of competition in the shipping industry, leading to inflation at its highest level in 40 years. According to FMC, 11 companies control most of the world's container capacity and cooperate with each other under ship-sharing agreements.

The situation of "high freight rate, one case hard to find" may be reversed.

At the height of the epidemic, high freight rates and tight capacity in the transport industry afflicted American retailers, manufacturers and farmers. At the time, demand for space for container ships soared and shipping companies in Europe and Asia made billions of dollars in profits.

Us agricultural exporters say shipping companies lost billions of dollars in revenue last year by refusing to ship goods and instead shipping empty containers back to Asia, opening up more profitable eastward trade routes. Importers said they were heavily fined for failing to retrieve the container during the period when the goods were congested and refused to handle the container.

Average freight rates in the global container market rose eightfold during the outbreak, peaking at $11109 in 2021, according to FMC. A recent institutional survey shows that the shipping industry is competitive and the rapid rise in prices is driven by a "lack of shipping capacity as a result of a surge in US consumer demand".

During the outbreak, many Americans cut spending on restaurants and travel to durable goods such as home office equipment, electronics and furniture. Compared with 2019, American imports increased by 20% in 2021.

Freight rates have fallen sharply in recent months due to weak US consumer spending. The average spot freight rate for containers on congested routes from Asia to the west coast of the United States has fallen 41 per cent to $9588 in the past three months, according to the Freightos-Baltic index.

There has also been a decline in the number of container ships waiting to be unloaded at America's busiest container handling centers, such as Los Angeles and long Beach. The number of ships lined up on Thursday was 20, down from a record 109 in January and the lowest level since July 19 last year, according to the Southern California Marine Exchange.

The bill is the largest reform in the shipping industry.

The bill passed by Congress is the largest reform of shipping rules since 1998. The World Shipping Council said it would not comment on the bill until Congress passed it.

Christine Mdaniel, a senior research fellow in international trade at George Mason University's Mocates Center, said regulatory changes could have unintended consequences for the shipping industry, and she was concerned about rules designed to prevent shipping companies from unreasonably reducing exports.

Mdaniel added that to some extent, the government will tell shipping companies what they can and cannot do, or what they must and cannot do, which is the most worrying.