Can Global Shipping Be Fixed? One Regulator Will Try.

Daniel B. Maffei is at once a crucial player in the campaign to subdue inflation, and a figure virtually unknown outside the confines of his wonky Washington domain.

He’s the chairman of the Federal Maritime Commission, a small, traditionally obscure institution that has been thrust into a central role in the Biden administration’s designs on taming soaring prices — a menace that could determine which party next controls Congress.

The commission regulates the international shipping industry at American ports, an element of modern life that is typically ignored but has emerged as a reason major retailers are short of popular goods, and why people renovating homes are waiting months for doorknobs.

Nine container shipping carriers — all of them foreign companies — dominate the market for moving goods between Asia and North America. For more than a year, the industry has been besieged by chaos, from traffic jams choking ports to a shortage of truck drivers impeding efforts to move cargo. With containers stuck on ships and stacked on docks, shortages and rising prices have become central features of these times.

The ocean carriers have multiplied their shipping rates and imposed a bewildering assortment of fees. The container shipping industry is on track to make $300 billion in profits before taxes and interest, according to Drewry, an industry research firm.

The White House has seized on these two realities — soaring prices, and record profits for carriers.

“One of the reasons prices have gone up is because a handful of companies who control the market have raised shipping prices by as much as 1,000%,” President Biden declared on Twitter in June. “It’s outrageous — and I’m calling on Congress to crack down on them.”

Days later, he signed into law the Ocean Shipping Reform Act, which is engineered to bolster the maritime commission’s authority.

The president handed Mr. Maffei, a former member of the House of Representatives from central New York State, primary responsibility for taking on a major culprit in his narrative on inflation.

President Biden signed the Ocean Shipping Reform Act in June, giving the maritime commission more power to regulate shipping. “Deterrence is what it’s about,” said Mr. Maffei, leaning over the president’s shoulder.Credit…Pete Marovich for The New York Times

A Plan of Attack

In contrast to the colonnaded fortresses of most of official Washington, the maritime commission occupies two floors of a nondescript office building. It commands an annual budget of just $32 million, even as the agency is now tasked with taking on a collection of ocean carriers whose profits exceed 9,000 times that amount.

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

Yet the president has handed him a resolutely populist mission: Apply force to remedy what Mr. Biden describes as a “rip-off” of American consumers.

Mr. Maffei acknowledges the difficulties of the terrain.

“There is a rip-off,” he says. “But explaining where the rip-off is doesn’t fit easily into a quick speech.”

8 Signs That the Economy Is Losing Steam

Card 1 of 9

Worrying outlook. Amid persistently high inflation, rising consumer prices and declining spending, the American economy is showing clear signs of slowing down, fueling concerns about a potential recession. Here are other eight measures signaling trouble ahead:

Retail sales. The latest report from the Commerce Department showed that retail sales fell 0.3 percent in May, and rose less in April than initially believed.

Consumer confidence. In June, the University of Michigan’s survey of consumer sentiment hit its lowest level in its 70-year history, with nearly half of respondents saying inflation is eroding their standard of living.

The housing market. Demand for real estate has decreased, and construction of new homes is slowing. These trends could continue as interest rates rise, and real estate companies, including Compass and Redfin, have laid off employees in anticipation of a downturn in the housing market.

Start-up funding. Investments in start-ups have declined to their lowest level since 2019, dropping 23 percent over the last three months, to $62.3 billion.

The stock market. The S&P 500 had its worst first half of a year since 1970, and it is down nearly 19 percent since January. Every sector of the index beyond energy is down from the beginning of the year.

Copper. A commodity seen by analysts as a measure of sentiment about the global economy — because of its widespread use in buildings, cars and other products — copper is down more than 20 percent since January, hitting a 17-month low on July 1.

Oil. Crude prices are up this year, in part because of supply constraints resulting from Russia’s invasion of Ukraine, but they have recently started to waver as investors worry about growth.

The bond market. Long-term interest rates in government bonds have fallen below short-term rates, an unusual occurrence that traders call a yield-curve inversion. It suggests that bond investors are expecting an economic slowdown.

As he describes it, higher shipping rates are largely the product of market forces. Americans confined by a pandemic ordered astonishing quantities of goods from factories in Asia. Demand overwhelmed the supply of container vessels, pushing up prices.

Mr. Maffei diverges from the White House on its contention that higher shipping costs are primarily the result of monopoly power amassed by ocean carriers.

Three alliances of shipping companies control 95 percent of routes across the Pacific, according to the International Transport Forum, an intergovernmental body based in Paris. As shipping prices have soared, and as delays have besieged ocean transit, retailing giants like Amazon and Walmart have chartered their own vessels, prompting complaints from smaller importers that they are at an unfair disadvantage.

Mr. Maffei expresses concern about market concentration, but also resignation that enormous companies are an inevitable outgrowth of American economic forces after decades of deregulation.

“The small and medium-sized folks are boxed out,” he says. “That’s capitalism.”

Containers stacked on docks and stuck on boats have become central features of the global shipping fiasco.Credit…Ashley Gilbertson for The New York Times

But the chairman smells foul play in the fees that ocean carriers levy on American importers — so-called detention and demurrage charges for containers that sit uncollected or go unreturned, even when truck drivers are denied access to ports; congestion surcharges; and fees for “premium” and even “superpremium” services.

The new Ocean Shipping Reform Act — vigorously sought by Mr. Maffei — details an unambiguous plan of attack.

The commission has six months to write rules aimed at forcing shipping carriers to transport more American exports. That’s a redress to complaints from farming interests that carriers have largely forsaken them, depriving them of a way to ship exports while giving priority to the more lucrative import trade.

The law directs the agency to bulk up enforcement while creating systems that make it easier for aggrieved shippers to file complaints. It increases the agency’s funding 50 percent by 2025.

As the chairman portrays it, the details of the law matter less than the fact that Congress has mustered action, sending a warning to recalcitrant ocean carriers.

“Deterrence is what it’s about,” Mr. Maffei says. “On a day-to-day basis, we’re too small an agency. We’re never going to catch every instance.”

The passage of the law has already had an impact, say exporters, prompting ocean carriers to make more containers available at West Coast ports. It has also changed perceptions about the commission’s once-cozy dealings with the carriers.

“They became hostage to the industry,” says Peter Friedmann, a former Capitol Hill aide who heads the Agriculture Transportation Coalition, an advocacy and lobbying organization. “The commission has really turned the corner.”

The changed tone was reflected in the blistering note of protest unleashed by the World Shipping Council, an industry lobbying group, on the day Congress passed the new law.

“We are appalled by the continued mischaracterization of the industry by U.S. government representatives,” the statement declared, condemning a “disconnect between hard data and inflammatory rhetoric.”

For now, the industry is in schmooze mode, sending delegations to meet the chairman, other commissioners and members of Congress. With headquarters in places like China, South Korea, Taiwan and Denmark, the carriers — many of them state-owned — are unaccustomed to having to grasp the odd workings of American politics.

Mr. Maffei offers himself as a voice of reason, the seeker of the middle path in an age of politicized blame.

Mr. Maffei met in Newark with representatives of trucking companies last week to hear about problems caused by backlogs of containers.Credit…Ashley Gilbertson for The New York Times

The Accidental Chairman

That Mr. Maffei, 54, is even on the commission seems a quirk of happenstance.

Raised in Syracuse, N.Y., he never saw the ocean until he was 11. He worked as a local television reporter before going to Washington to work for Senators 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, having lost his bid for re-election, Mr. Maffei found himself casting about for the next phase of his career. He did not want to be a lobbyist. He approached friends in the Obama administration seeking counsel.

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

“I said, ‘Well, OK, I think I’ve heard of them,’” Mr. Maffei recalls. “‘I’m already ahead of the game.’”

He took a seat in July 2016 and was reappointed by President Donald J. Trump. When Mr. Biden took office, he elevated him to chair of the five-member body.

On a recent morning, Mr. Maffei enters the commission’s offices just before 9, wearing a New York Yankees baseball cap and a brown polo shirt. He rides the elevator to the 10th floor and enters his capacious suite, which is adorned with models of giant container ships and antique maritime clocks. He changes into a dark blue suit and a tie decorated with a maritime anchor pattern.

The State of Jobs in the United States

Employment gains in July, which far surpassed expectations, show that the labor market is not slowing despite efforts by the Federal Reserve to cool the economy.

  • July Jobs Report: U.S. employers added 528,000 jobs in the seventh month of the year. The unemployment rate was 3.5 percent, down from 3.6 percent in June.
  • Care Worker Shortages: A lack of child care and elder care options is forcing some women to limit their hours or has sidelined them altogether, hurting their career prospects.
  • Downsides of a Hot Market: Students are forgoing degrees in favor of the attractive positions offered by employers desperate to hire. That could come back to haunt them.
  • Slowing Down: Economists and policymakers are beginning to argue that what the economy needs right now is less hiring and less wage growth. Here’s why.

The morning’s commission meeting quickly descends into fiasco. The chairman assumes his place on a wooden dais, facing an audience of two dozen people — mostly lawyers and lobbyists representing shipping companies. A few minutes in, he learns that others watching the proceeding remotely cannot hear the audio, so he adjourns the session while waiting for a corrective that never comes.

“We’ve been trying to get the hearing room fixed,” Mr. Maffei says. “You can tell it’s kind of old.”

The port at Newark is having to accommodate more than 200,000 empty containers.Credit…Ashley Gilbertson for The New York Times

He conducts the meeting from his office, via a clunky videoconferencing platform that is rife with delays. He uses a thick bound volume of maritime regulations to prop up his laptop. He wields his coffee mug as a gavel.

Members of his staff detail the new law, section by section. They are investigating reports of noncompliance by ocean carriers while recruiting enforcement staff.

“This is the law of the land,” Mr. Maffei declares. “If you have a complaint about it, we can direct you to the Congress or the White House.”

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 Bethann Rooney, the head of the Port of New York and New Jersey, the largest container shipping hub on the East Coast.

In a tone of weary indignation, she briefs him on the mayhem besieging her facilities.

The port is running out of places to stash containers, because the docks are crammed with more than 200,000 empties. The carriers are not sending enough ships to collect them, she says, preferring to deploy their vessels to Asia to bring more imports.

Everything is backed up. Local truck drivers cannot get appointments to return containers, yet carriers are charging them fees for holding on to boxes.

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

Would it be helpful for him to visit the port? His presence could signal to the carriers that they must take action.

Yes, Ms. Rooney says. A visit could not hurt.

Lucille Marvin, the maritime commission’s managing director, joined Mr. Maffei on his visit to Newark.Credit…Ashley Gilbertson for The New York Times

‘We Need Something Done’

The next week, under a pounding summer sun, Mr. Maffei arrives at the port administration building in Newark as tractor-trailers rumble by, hauling clattering containers to and from the docks.

Inside a conference room, he walks a slow turn around a long table, shaking the hands of the dozen people assembled, the heads of local trucking companies.

The truckers are seething with disgust over the fees they must pay for holding containers — up to $150 per day per box. The carriers will not release their cargo until invoices are paid. This is ransom, one says.

“Our port is gridlocked,” complains Tom Heimgartner, chairman of the Association of Bi-State Motor Carriers, which represents local trucking firms. “It’s an emergency. We need something done here.”

Mr. Maffei listens earnestly, a study in constituent service, while jotting notes in a pocket-size journal.

The truckers urge him to force the carriers to place a moratorium on fees until the congestion is resolved.

The commission lacks the authority to do that, Mr. Maffei explains. But the carriers could agree to one voluntarily. He and other commissioners could apply pressure on them.

He says the carriers appear to be violating the shipping act in effectively forcing truckers to store their containers without compensation — a potential avenue for enforcement.

But the truckers would need to lodge formal complaints at the commission.

Traditionally, truckers have been reluctant to file cases for fear of angering the carriers. Perhaps the atmosphere of contempt has changed that calculation.

“It sounds like they are treating you like such dirt,” Mr. Maffei says. “I’m not sure you have anything to lose.”

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