The Shipping Cartel's Manufactured Crisis
Let's follow the trail of 'excess capacity': FIRST INSTANCE: The Ocean Shipping Cartel Act (1916) One might wonder why the shipping industry has historically been prone to 'instability.' The answer, for decades, lay in plain sight: the Shipping Act of 1916 (U.S. Federal Trade Commission, 1916) . This seemingly innocuous piece of legislation effectively legalized cartels in the shipping industry,
allowing companies to fix prices, pool cargo, and allocate routes without fear of antitrust prosecution. This isn't theoretical; it was explicitly designed to 'stabilize' rates by limiting competition. The justification was always about preventing 'destructive competition,' which invariably meant ensuring steady profits for a few dominant players, not necessarily efficient service for consumers.
The 'excess capacity' argument was routinely trotted out to justify calls for further consolidation or price agreements. REPETITIONS: The Trans-Atlantic Rate Agreements (1960s-1970s) & P&O Nedlloyd (2000s) Fast forward to the mid-20th century, and the Trans-Atlantic Rate Agreements were still going strong, dictating freight rates and effectively squeezing out smaller players. Whenever new, more
efficient ships were introduced, or global trade slowed, the narrative of 'excess capacity' would resurface, leading to calls for stricter adherence to rate agreements or even capacity reductions. In the early 2000s, before Maersk acquired P&O Nedlloyd in 2005 (Maersk Press Release, 2005) , container lines were already facing pressure from oversupply. The 'solution?' Consolidation, which