Rising surcharges, shrinking competition: A warning for US supply chains

In recent months, ocean carriers have imposed new surcharges in response to the war in Iran, which has resulted in greater instability from the start. Some increases may be justified by longer routes or higher fuel costs. But too often, these fees appear untethered from actual conditions. Members of our alliance report surcharges applied even on routes far removed from the conflict, with little explanation for how those charges are calculated or why they persist. 

The numbers tell a stark story. A $650 fuel surcharge per container. An additional $480 for inland transport once the cargo reaches a port. More than half of our members say they are experiencing delays of more than a week, and more than 9-in-10 report chemical shortages. These are not marginal inconveniences. They are systemic pressures that reverberate through various supply chains, including factories, farms, hospitals, and more.

When costs rise unpredictably at the foundation of the supply chain, they do not stay there. They show up in higher prices, slower production timelines, and tighter margins for American businesses already navigating a volatile global landscape.

To their credit, federal regulators are paying attention. The Federal Maritime Commission and the Surface Transportation Board have signaled that they are monitoring surcharge practices and broader market dynamics. We thank these agency leaders for their vigilance and their willingness to engage at a moment when oversight is urgently needed. Their role is indispensable in ensuring that temporary disruptions do not become permanent distortions.

But the pressure does not end once cargo reaches American ports. 

Our members rely heavily on the freight rail network to move essential products across the country, and here too, costs and uncertainty are mounting. Rail service challenges and the prospect of further consolidation are creating new concerns for shippers already stretched thin.

The proposed Union Pacific–Norfolk Southern merger raises serious alarm bells about diminished competition, increased risk of service disruptions, and higher costs that would ultimately be borne by American shippers and consumers. By consolidating control over key routes and interchange points, the combined company would wield outsize influence over pricing and service terms, leaving shippers with fewer alternatives.

For the chemical distribution industry, which relies on both ocean and rail networks to move essential products, this is a compounding risk. Rising surcharges at the port and from freight rail providers meet shrinking freight rail options, and the squeeze tightens.

Congress can play a constructive role by reinforcing the oversight already underway. By staying closely engaged, lawmakers can support regulators’ efforts to assess surcharge practices and promote greater transparency. Likewise, they can press the STB to reject a mega-merger that would consolidate market power and pass commonsense rail safety reforms to make freight rail accountable for its declining service.

Supply chains do not fail in a single moment. They weaken when pressure builds across multiple points — when costs rise without transparency, when delays become routine, when competition gives way to concentration.

As we meet with policymakers this week, our message is straightforward: Do not let a global crisis become an excuse for unchecked costs, and do not allow consolidation to further tilt the playing field against small businesses. Maintaining a resilient supply chain demands a comprehensive approach that recognizes how pressures across ocean shipping, rail transportation, and other parts of the network accumulate over time. Steady oversight and a strong commitment to competition can make all the difference — not just for our industry, but for the many sectors that depend on the safe and effective delivery of chemical products.

Eric R. Byer is president and CEO of the Alliance for Chemical Distribution.