Can US regulations fixed the global shipping industry?

Daniel B. Maffei has been at the center of the Biden administration’s plan to curb inflation. His Commission regulates international shipping in American ports. It’s a factor of modern life that’s usually ignored, but it’s emerging as the reason why big retailers lack popular products and why home remodelers wait months for doorknobs.

All foreign shipping companies dominate the goods transportation market between Asia and North America. For more than a year, the industry has been plagued with chaos, from traffic jams choking ports to a shortage of truck drivers hindering cargo movement. Shortages and rising prices are central features of this era as containers are loaded onto ships and loaded into docks.

Related story: Urgent call on EU to review Container shipping sector

Dewry Container Shipping Index

According to industry research firm Drewry, the container shipping industry is set to hit $300 billion in profits before taxes and interest. In June, President Biden tweeted, “One of the reasons prices went up is because a handful of companies that control the market have raised shipping rates by 1,000%.” “It’s outrageous. I urge Congress to crack down on them.” 4,444 days later, he signed into law the Maritime Reform Act, which was intended to strengthen the powers of the Admiralty Commission.

The White House has capitalized on both these realities: rising prices and record profits.

The president has put Mr. Maffei, a former Congressman from central New York, in primary responsibility for taking on the primary culprit in inflation.

Unlike the columnar fortifications of many of Washington’s official offices, the Admiralty Board occupies his two-story, unremarkable office building. With an annual budget of just $32 million, he is now tasked with buying a shipping company that is profiting over 9,000 times. A Democrat representing a highly competitive congressional district, Mr. Maffei calls himself a centrist and a pragmatist. The president gave him a resolute populist mission. It’s about fixing what Mr. Biden calls a “rip-off” of American consumers by force of arms. “There are rip-offs,” he says. “But explaining where the rip-off is doesn’t easily fit into a brief speech.”

As he explains, rising transportation costs are largely a product of market forces. Locked down by the pandemic, Americans ordered vast quantities of goods from Asian factories. Demand has outstripped containership supply, pushing up prices.

Maffei disagrees with the White House’s contention that rising shipping costs are largely the result of a monopoly by shipping lines. Her three alliances of shipping companies control 95% of the routes across the Pacific, according to the International Transport Forum, an intergovernmental organization based in Paris.

Related story: Container shipping rates have peaked

Retailers have started charting their own ships

With shipping costs skyrocketing and delays plaguing sea freight, retail giants such as Amazon and Walmart are charting their own ships, unfairly disadvantaged by smaller importers. Mr. Maffei, who has voiced concerns about market concentration, has resigned after decades of deregulation, saying that giant corporations are an inevitable byproduct of America’s economic power. has also expressed. “Small and medium-sized people are out of scope,” he says.

“This is capitalism”

But the chair believes there is fraud in the fees that shipping companies charge US importers. So-called detention and delinquency fees when containers are not picked up or returned even if truck drivers are denied port access.

Congestion surcharges; charges for “premium” or even “super-premium” services?

A new law to reform shipping, which Mr. Maffei has been vigorously promoting, lays out a clear plan for the attack. The European Commission has six months to make rules aimed at compelling shipping companies to ship American exports. This is a remedy to complaints from agricultural advocacy groups that shippers are denying their ability to ship exports and prioritizing more favorable import deals. The law directs authorities to step up enforcement while creating a system that makes it easier for affected shippers to file complaints.

As the Speaker points out, the details of the law matter less than the fact that Congress has taken action and sent warnings to rebellious shipping companies. “It’s about deterrence,” says Maffei. “In everyday life, we are too small an agency. We don’t record every case.” He said he urged him to provide a container for Perceptions of the European Commission’s once-comfortable approach to shipping companies have also changed. “They have taken the industry hostage,” says Peter Friedman, a former Capitol Hill employee who heads the advocacy and lobbying group Agricultural Transport Coalition.

Related story: Urgent call on EU to review Container shipping sector

Protests

The change in tone was reflected in a violent protest memo unleashed by industry lobby group the World Shipping Council on the day Congress passed the new law. statement said it was “appalled by the continued misunderstanding of the industry by U.S. government officials” and denounced “the disconnect between hard data and inflammatory rhetoric”.

The industry is now in talkative mode, sending delegations to meet with the Speaker, other Commissioners and Members of Parliament. Airlines (many of which are state-owned companies) headquartered in countries like China, South Korea, Taiwan, and Denmark are not used to having to understand the bizarre workings of American politics.

Related story: Maersk shipping issues a warning

Exorbitant costs while be held ransom

Truck drivers are disgusted by the fees they have to pay to maintain the containers (up to US$150 per day per box he has). The carrier will release the shipment only after the invoice has been paid. They say it’s a ransom. “Our ports are at a standstill,” laments Tom Heimgartner, president of the Bilateral Motor Carriers Association, which represents local shipping companies.

Shippers appear to be violating shipping laws by effectively forcing truck drivers to hold containers without compensation. However, the truck driver must file a formal complaint with the Commission.

Traditionally, truckers have been reluctant to file lawsuits for fear of upsetting them. Perhaps the atmosphere of contempt changed this reckoning. “They treat you like garbage,” says Mr. Maffei. “I don’t know if you have anything to lose.”

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Source: New York Times