Can global shipping be fixed? A regulator will try., Auto News, ET Auto

Daniel Maffei is a key player in the campaign to reduce inflation at once and a figure that is virtually unknown outside the confines of his victorious Washington domain.

He is the chairman of the Federal Maritime Commission, a small, traditionally ambiguous institution that has been emphasized in the designs of the Biden administration in a central role in overcoming rising prices – a threat that could determine which party. Congress controls.

The commission regulates the international shipping industry at US ports, an element of modern life that is usually overlooked but has emerged as a reason why major retailers lack popular goods, and need to renovate homes. Why are people waiting for months for the door?

Nine container shipping carriers – all foreign companies – dominate the market for moving goods between Asia and North America. For more than a year, the industry has been beset by chaos, from traffic jams closing ports to a lack of truck drivers hampering efforts to move cargo. With containers stuck on ships and piled up at docks, shortages and rising prices have become central features of the times.

Ocean carriers have multiplied their shipping rates and levied an astonishing assortment of fees. According to industry research firm Drewry, the container shipping industry is on track to make a profit of $300 billion before taxes and interest.

The White House has captured these two realities — rising prices and record profits for the carrier.

In June, on Twitter, President Joe Biden announced, “One reason for the price hike is that some companies that control the market have raised shipping prices by up to 1,000%.” “It’s outrageous – and I’m calling on Congress to crack down on them.”

A few days later, he signed into law the Ocean Shipping Reform Act, which is engineered to strengthen the Maritime Commission’s authority.

Biden assigned Maffei, a former member of the Central New York State House of Representatives, the primary responsibility of taking down a key culprit in his narrative on inflation.
Can global shipping be fixed?  A regulator will try.plan of attack
Unlike most of the official Washington colonized forts, the Maritime Commission occupies two floors of a non-descript office building. It commands an annual budget of only $32 million, even as the agency is now tasked with taking over the maritime carrier’s collection, whose profits exceed 9,000 times that amount.

Maffei, a Democrat who represents a highly contested congressional district, presents himself as a centrist and pragmatist. As the bearer of three Ivy League degrees—a Brown undergraduate, Columbia Journalism School and Harvard’s John F. Kennedy School of Government—he brings an analytical bent that tends toward shades of brown, not political condemnation of the colorful vernacular. .

Still, Biden has assigned him a steadfast populist mission: apply force to a measure the president describes as a “rip-off” of American consumers.

Mafi acknowledges the difficulties of the area. “There’s a rip-off,” he said. “But explaining where the rip-off is doesn’t fit easily into a quick speech.”

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As he describes it, high shipping rates are largely the product of market forces. Americans limited by a pandemic ordered a surprising amount of goods from factories in Asia. Demand outpaced the supply of container ships, which pushed up prices.

The pardon split from the White House on the argument that high shipping costs are primarily a result of the monopoly power exerted by ocean carriers.

According to the International Transport Forum, an intergovernmental body based in Paris, the three coalitions of shipping companies control 95% of routes in the Pacific. As shipping prices have risen and delays surround ocean transit, retailing giants such as Amazon and Walmart have chartered their own vessels, prompting complaints from smaller importers that they are at an unfair disadvantage.

Maffei expressed concern about the concentration of the market, but also resigned that heavy companies are an inevitable result of American economic forces after decades of control.

“Small and medium-sized people are boxed out,” he said. “That’s capitalism.”

The waiver smells foul of the fee that ocean carriers levy on US importers – so-called detention and demurrage fees for containers that sit uncollected or unreturned, even when truckers are denied access to ports. is denied; crowd overload; and charges for “premium” and even “superpremium” services.

The Ocean Shipping Reform Act – strictly demanded by the pardon – details a clear plan of attack.

The commission has six months to write rules aimed at forcing shipping carriers to transport more US exports. It is a redressal of grievances from farming interests that carriers have largely abandoned, depriving them of a way to ship exports, preferring a more lucrative import trade.
Can global shipping be fixed?  A regulator will try.The law directs the agency to step up enforcement while creating systems that make it easier for aggrieved shippers to file complaints. It increases the agency’s funding by 50% by 2025.

As Maffei portrays it, the details of the law matter less than the fact that Congress has taken action, sending warnings to rebel ocean carriers.

“Resistance is what it’s about,” he said. “On a day-to-day basis, we are a very small agency. We are never going to catch every instance.”

Exporters say the passage of the law has already had an effect, prompting maritime carriers to make more containers available at West Coast ports. It has also changed perceptions about the Commission’s comfortable dealings with carriers.

“They became hostages to the industry,” said Peter Friedman, a former Capitol Hill aide who heads the Agricultural Transportation Coalition, an advocacy and lobbying organization. “The commission has really turned the corner.”

On the day Congress passed the new law, the changed tone was reflected in a blatant note of protest by industry lobbying group the World Shipping Council.

Condemning the “disconnect between hard data and inflammatory rhetoric”, the statement said, “We are shocked by the continued mishandling of the industry by representatives of the US government.”

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For now, the industry is in schmooze mode, sending delegations to meet with apologies, other commissioners and members of Congress. With headquarters in places like China, South Korea, Taiwan and Denmark, carriers — many of them state-owned — aren’t accustomed to understanding the strange workings of American politics.

Apologies presents himself as the voice of reason, the seeker of the middle path in an age of political blame.

The Accidental Chair
The 54-year-old is also on the pardon commission, which seems to be a coincidence.

Growing up in Syracuse, New York, he never saw the ocean until the age of 11. He worked as a local television reporter before moving to Washington, DC to work for the censors. Bill Bradley and Daniel Patrick Moynihan, followed by a stint on the staff of the powerful House Ways and Means Committee.

In the summer of 2015, after losing his bid for re-election, Maffei found himself about to be casting for the next stage of his career. He didn’t want to be a lobbyist. He approached friends of the Obama administration for advice.

They told him about an open seat on a commission. His ears pierced. Consumer Product Safety Commission? This could be interesting. No, they told him, the Federal Maritime Commission.

“I said, ‘Okay, well, I think I’ve heard of them,'” recalls Apologies. “‘I’m already ahead of the game.'”

He took a seat in July 2016 and was reappointed by President Donald Trump. When Biden took over, he promoted him to the chair of the five-member body.
Can global shipping be fixed?  A regulator will try.On a recent morning, Maffei enters the commission’s offices just before 9am, wearing a New York Yankees baseball cap and brown polo shirt. He takes the elevator to the 10th floor and enters his spacious suite, which is adorned with models of giant container ships and ancient nautical clocks. He changes into a dark blue suit and tie decorated with a nautical anchor pattern.

The morning commission meeting quickly descends into turmoil. Maffei takes his place on the wooden stage, facing an audience of two dozen people – mostly lawyers and lobbyists representing shipping companies.

Within minutes, he learns that others watching the proceedings from afar cannot hear the audio, so he postpones the session while waiting for a corrective who never arrives.

“We’re trying to fix the hearing room,” Maffei said. “You can tell it’s very old.”

He organizes the meeting from his office via a clunky videoconferencing platform, which is rife with delays. He uses a hefty bound amount of Marine Rules to operate his laptop. He keeps his coffee mug as a gavel.

His staff members detail the new law, section by section. They are investigating reports of non-compliance by maritime carriers when recruiting enforcement staff.

“It’s the law of the land,” said Maffei. “If you have a complaint about it, we can send you to Congress or the White House.”

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After lunch in a conference room with his staff – roast chicken from a nearby Peruvian restaurant – he meets behind closed doors with a delegation representing a carrier based in France.

Then he calls Bethan Rooney to head to the Port of New York and New Jersey, the largest container shipping hub on the East Coast.

In a tone of weary indignation, she tells him about the devastation that surrounds her facilities.

The port is running out of places to stash containers, as the docks are empty of over 200,000. Carriers are not sending enough ships to collect them, she said, preferring to deploy their ships to Asia to bring in more imports.

Everything is backed up. Local truck drivers can’t get an appointment to return containers, yet carriers are charging them a fee for keeping the boxes.

Maffei absorbs this while sitting in a wingback chair, facing a wall with an oil painting by a 17th-century Dutch artist displaying two ancient sailboats caught near cliffs in crashing surf.

Would it be helpful for him to visit the port? Their presence may signal to carriers that they should take action. Yes, said Rooney. A visit couldn’t hurt.

‘We need to do something’
The next week, under a scorching summer sun, Maffee arrives at the Port Administration Building in Newark as tractor-trailers rumble, carrying clattering containers to and from the docks.

Inside a conference room, he slows down around a long table, shaking hands with dozens of heads of local trucking companies.

Truckers are filled with disgust at the fee they’ll have to pay to hold the container – $150 per day per box. Carriers will not leave their goods until the invoice has been paid. This is the ransom, said one.

“Our port is gridlocked,” said Tom Heimgartner, president of the Association of By-State Motor Carriers, which represents local trucking firms. “This is an emergency. We need to do something here.”

Apologies graciously listens to a study in constituent service, writing notes in a pocket-sized journal. Truckers urged them to force carriers to hold off on fees until the congestion is resolved.

The commission does not have the authority to do so, explains the apology. But carriers can voluntarily agree to one. He and other commissioners could have put pressure on him.

He said carriers are violating the Shipping Act by effectively forcing truckers to store their containers without compensation — a potential avenue for enforcement.

But the truckers will have to file a formal complaint with the commission.

Traditionally, truck drivers have been reluctant to file cases for fear of offending carriers. Perhaps the climate of contempt has changed that account.

“It looks like they are treating you like such filth,” Mafi said. “I’m not sure you have anything to lose.”