The JOC 2024 Annual Review and Outlook Executive Commentary - Dr. Anil Vitarana

Container carriers will certainly not be posting gaudy bottom-line figures in the ensuing years, unlike during the pandemic years. A slower global demand for goods, geopolitical tensions and over tonnaging triggered by billion-dollar profits has changed the equilibrium in favor of shippers. The greater concern for carriers is the backlash from regulators — pressured by shippers and governments unhappy with carrier behavior during the pandemic, when the unprecedented rate increases contributed to spiraling costs of consumer goods and an uptick in inflation. 

The EU’s decision not to renew the Consortia Block Exemption (CBER) when it expires April 25, 2024, together with the announced divorce of the 2M Alliance between Mediterranean Shipping Co. and Maersk, could lead to the demise of the remaining THE and Ocean alliances. 
In my ARO commentary in 2019, I wrote, “Allowing CBER to expire would be a costly mistake — negatively impacting both shippers and carriers.” My views have changed dramatically since. I was one of the early critics to allege price gouging by carriers and the need to dismantle carrier alliances. As a consultant to small BCOs and NVOCCs, I witnessed firsthand the egregious behavior of the carriers and as a consumer — the impact on the public. 

OSRA-22 has the US Federal Maritime Commission flexing its muscles, but carriers may be saved due to the likelihood of OSRA 2.0 stalling in Congress consequent to the distractions in an election year. The loss of antitrust immunity sought by OSRA 2.0 together with the lapse of CBER would place carriers in a delicate position, even if the alliances continue, as joint actions such as blanked sailings for commercial reasons could well run afoul of antitrust laws. 

The joyride for carriers is certainly over but on reflection the more than $400 billion in combined profits in 2021 and 2022 may be seen as worthwhile, notwithstanding the backlash. 

The United States and US consumers remain highly vulnerable, with 99% of ocean borne international commerce in consumer goods carried by foreign ocean carriers. Alas, rebuilding the national merchant marine remains a pipe dream.