While the surging rates represent a profit bonanza for container lines including Copenhagen-based A.P. Moller-Maersk A/S and China’s Cosco Shipping Holdings Co., they’re making it more difficult for importers to absorb higher costs. Some are raising retail prices, adding to inflationary pressures that
worry central banks, while Covid-related supply bottlenecks are also holding back economic activity.

The push against consolidation is part of a forthcoming executive order on competition that President Joe Biden is expected to sign in the coming days. Other elements of the action are expected to include new rules governing airline fees, non-compete clauses, right-to-repair, and food labeling. In recent weeks, senior Transportation Department officials have been meeting with port officials, shipping industry players and retailers to try to address port congestion and long-term infrastructure challenges.

Eoin Treacy's view

There is not a lot the USA can do about rising shipping costs. It does not manufacture ships and the majority shipping companies are domiciled outside of their waters. Imposing regulations on the global sector will divert ships away from the USA and increase costs so it is much more likely that any measures introduced will focus on domestic considerations.

That suggests railroads will be a focus on antitrust deliberations. Norfolk Southern pulled back in a dynamic manner today suggesting a peak of at least near-term significance.

Meanwhile one of the primary reasons California has been so successful in fostering private equity is because they do not enforce non-compete clauses. That allows employees to leave large companies and set up on their own with whatever novel interpretation of the market they choose. Removing the time lag means new companies have a better change of capturing the zeitgeist of funding rounds. If that were applied to the whole country it would be a significant boost for the pace of innovation.

The right to repair is much more of a hot button topic for companies. Apple charges a tidy sum to replace a phone screen and encourages consumers to buy Apple care immediately on purchase of an item. The failure rate for consumer goods is built in.

I became aware of that a few years ago when talking with a mechanic. He told me the story of old Audi parts that look identical to newer parts but will not code to the onboard computer so the sensors won’t work. That ensures a consumer can only have their car repaired at a dealer.

These kinds of hidden fees push the up the total cost of ownership for everything and represent significant cashflows for companies. Depending on how this law is framed it would have significant knock-on effects for a wide number of industries.