Over the last few days, while everybody’s attention has been focused on the dramatic Ukrainian crisis, and on the implications it will have on the evolution of the world’s geopolitical assets, the White House has taken decisive action on the organization and set up of the international maritime market, in particular, transoceanic container traffic.
The Biden-Harris administration has put the spotlight on the oligopolistic consolidation of the large shipping companies. Initially, as a reaction to the 2007 crisis, they had set themselves up as three alliances with the aim of rationalizing supply and routes in order to optimize production costs. Subsequently, from 2020 onwards, they went for a series of dramatic price increases, conditioning the lukewarm post-pandemic recovery and partly contributing to the rise in inflation on international scale.
The three Alliances did not just limit themselves to this typical oligopolist behaviour, however. They have also consolidated a strategy for expanding their market power, through a series of acquisitions in the logistics and transport sectors. In addition, they have been integrating the supply chain into the port sector, through an increasingly visible presence in the direct governance of port terminals.
Europe has responded to this organization model with ineffective regulation, first by granting and then renewing the exemption rule, which authorized the Alliances, and also allowed them major tax concessions.
Why is the United States moving in the opposite direction? Essentially, for two reasons. The first is to be found in the fact that touching the maritime oligopolists is easier for the Americans, since there are no US business interests in the sector. For several decades the shipping companies in the container sector have not been North American-owned. The last company was Sealand, which was taken over by Maersk a long time ago.
Targeting an industry in which there are no U.S. interests through regulation is easier compared to Europe, which has a strong presence in the sector.
There is another reason, however, that we should reflect on.
When the railroad oligopoly was strangling American farmers with predatory prices at the end of the nineteenth century, the Sherman Act, the first antitrust law of the capitalist economy, was introduced in 1890 after a heated debate.
Even in that historical phase, a series of monopolistic and oligopolistic organizations had been set up, not only in the transportation sector, which risked slowing widespread economic growth and only enriching the pockets of the big capitalists; the so-called ‘robber barons.’
Since the 1980s the global economy has been impacted by a tendency to verticalize economic powers, through processes of fusion and concentration that affect not only the maritime economy but the entire capitalist organization.
The transportation sector has given rise to what I call, in a forthcoming book of mine, the new ‘mobility capitalism.’
Connections have been one of the driving forces behind globalization. Now, in a particularly strong backlash, they risk being used to promote a highly verticalized market power, capable of generating very high profits for the big names to the detriment of international trade and consumers.
This is why the U.S. government’s stance is particularly significant. At issue is not just the setup of the transoceanic container market, but the role of the antitrust regulation and the overconcentration that has occurred over the past four decades in all major markets.
These days we often talk about the Russian oligarchs, and the role they may play in the Ukrainian crisis. We should broaden our horizons to see how much the influence of the oligarchs of the new capitalism has grown. Curbing excessive market power is in the interest of economic recovery, and perhaps even peace.
Translation by Giles Foster