Break up the monopolies to save society
Just a quarter of a century ago, the maritime industry was heavily regulated. Until a certain powerful cartel led by the three biggest ship owners in the world shook things up by convincing the American authorities to change the rules of the game. However, the 20th century had judged the maritime transport to be a public utility that required regulation as it transported accessible goods quickly and efficiently, benefitting all its users and consumers across the planet. Admittedly, maritime freight companies were free to work together to fix prices and also share certain routes. Nevertheless, this process took place in a transparent manner, and above all with equity and without geographical discrimination or preferential tariffs granted to friends of whatever origin or nature. In fact, the whole chain of actors – including of course the transporters themselves – shared in unison a similar position – that being a moral and pragmatic one – where commercial exchanges were to prosper thanks to affordable-for-all tariffs.
But alas, an abrupt sea change was imposed upon this happy medium thanks to – or rather with no thanks to – the Ocean Shipping Reform Act of 1998 voted in by the US Congress that led to a triad of companies quickly gaining dominance over maritime transport in the way of nearly 85%. Today, it is almost impossible not to go through one of them when shipping, whatever or wherever it might be, in a world where confidential, perhaps even secret, “deals” are now the rule and no longer the exception. And it gets worse, because since the beginning of 2021, power relations have become so unbalanced as to be outrageous. Now, getting a container is like navigating an assault course, with certain goods and merchandise import-export companies having to wait up to 7 weeks before being able to get their hands on this commodity that has now become a rarity. Also, port-to-port delivery times have increased accordingly, from 60 days to 120, and there has been an added sprinkling of prices doubling over the last few years according to data adjusted for variations in energy prices.
In summary, this trio that has profited greatly and squirreled away as much as possible from the deregulation, has now become an almighty monopoly that is seeing surreal, offensive amounts of profit in a market where competition no longer exists, because the market is them and them alone! This is why, for example, the giant Maersk is seeing its best profits in 117 years. So, it begs the question: are these companies in the least bit bothered – or worried – with product and supply chains or are they just obsessed with their own interests? It’s a legitimate question when containers sent from China to the US often come back empty, having not bothered to load any agricultural or merchandise products to supply the countries along its return route, so lucrative is this route between China and the USA.
It must be recognised that this cartel has for twenty years benefitted from open public support or, to be politically correct, from an astronomical, highly favourable convergence. Its cargo ships can now therefore only unload their goods in certain ports that are built specially for them, leaving certain countries unable to deliver their goods because they don’t have enough nearby local trucks or drivers to do so. As for railway transportation, that could perfectly well have stepped in to deliver these goods to warehouses and distributors, it has been systematically dismantled in the sophisticated and consumer-giant country that is the United States. Wall Street put extreme pressure on rail, asking for other types of monopolies control and dismembering it in order to maximise profits and to make their share values soar, all the while under the complicit watch of the authorities.
The monopolies and their lust for profit that is as massive as it is immoral are therefore tearing our economy apart at the seams and draining away our purchasing power to dangerous levels. The shortage of semiconductors, a crucial component for our vehicles, tells exactly the same story. Weren’t the United States one of the biggest manufacturers of them, until the federal government allowed Intel (at the time the market leader in the US) to buy out basically all of its American competitors, and then delocalise the majority of its production in the aim of reducing costs? Intel’s share price then rocketed up to the satisfaction of its happy investors. But the company was unable to meeting global demand when its factories in Asia had to close due to Covid. So it’s still the same old story, with the price of semiconductors – as well as of our cars and mobile phones – soaring because of their scarcity orchestrated by a monopoly. The situation is identical for meat in the USA – a vital industry for the American public who are big meat eaters – with 85% of the market being controlled by 4 companies and with little to no regulation. The result? Tariffs on beef, pork, and chicken consumption increasing by 25% in the US since Autumn 2020, profits for this monopolistic quartet soared by 300%.
Extreme concentration, monopolies, and financialisaton are now taking supply chains hostage, and it’s not a hike in interest rates from our central banks that will remedy this widespread increase in prices that is now taking a worrying hold everywhere. There was once a time when monetary policy was in fact the conventional and preferred means of combatting inflation. Today, we need to wage merciless war on these monopolies to protect our way of life.