With Tops supermarket set to reopen soon, progressive activist India Walton says, “Buffalo is back to business as usual.”
In the wake of a white supremacist massacre, the city of Buffalo, New York, made national headlines for just a few weeks.
On May 14, an 18-year-old gunman entered Tops supermarket in East Buffalo, where he shot 10 people dead and injured three others. Beforehand, he left behind a document where he outlined his plan to “kill as many Black people as possible,” motivated by a racist idea known as replacement theory.
While political leaders expressed outrage that white supremacy continues to inspire such terror, Buffalo residents expressed fear — fear that the city would be back to “normal” once the outrage subsided and the news cameras left.
The massacre highlighted Buffalo’s deep structural inequality that allowed the massacre to take place, patterns that already played out in residential segregation, poverty, food insecurity, lead poisoning, and more.
Seven weeks have passed since the massacre, and national attention has indeed turned away. Just 10 days after the mass shooting, a gunman shot and killed 19 children and two teachers at an elementary school in Uvalde, Texas.
I talked to nurse and progressive activist India Walton, who ran for Buffalo mayor in 2021 and defeated incumbent Mayor Byron Brown in the Democratic primary, about where the city and its Black residents stand. The former mayoral candidate says that — as residents feared — the city is “back to business as usual” as Tops readies to reopen in July. Our conversation has been edited for length and clarity.
Fabiola Cineas
It’s been over a month since a white supremacist went into Tops supermarket and killed 10 Black people and injured several others. Lawmakers popped in to say their condolences and rushed to pass legislation, and the national news media seems to have looked away. What is top of mind for you right now?
India Walton
I hate that I’m pessimistic, but Buffalo is so status quo. The first thing I said when it happened was I want to see what happens when the cameras leave. I said that the people who were on NBC and CNN doing national media expressing outrage and denouncing white supremacy were the same people who likely never stepped foot in Tops on Jefferson.
The conditions on the East Side of Buffalo have been as they are for decades.
[That] an 18-year-old child — I say “child” because I’m a nurse, and I know that the human brain is not fully formed at that age, especially in the male body — was able to Google where he could find a deep concentration of Black folks, the most vulnerable Black folks, our elders, speaks to the fact that this neighborhood is overpoliced yet underprotected.
I’m exhausted. Now our elected officials are talking about whether to call it the East Side or East Buffalo — and no one gives a fuck! Can we begin to tackle the problem of concentrated poverty and disadvantage? The problem of systemically locking people out from employment, homeownership, and business loans?
Buffalo is back to business as usual. The haves are going to have and the have-nots are going to continue to not have.
Fabiola Cineas
Who is being left out of the narrative that’s being created in the aftermath of the tragedy?
India Walton
The focus of a lot of the energy of media coverage has been on the families of the deceased, and my heart bleeds for them. But there are people who were in that store who were working. There were children outside playing who saw dead bodies in the parking lot. And where’s the help for them?
There’s a young man who was waiting for his friend to get off work. He works at McDonald’s. He doesn’t get to take time off.
There are people who are questioning whether they left the store too early. Whether they turned their back on someone and should have gone back to help. There’s a woman who had the hot barrel of that gun pressed to her scalp and has burns from it. There’s very little assistance for those folks.
Already, we’re talking about the store reopening and the community has not been meaningfully engaged about what that process looks like. Decisions have been made for them as usual. My frustration is just if nothing changes, nothing changes. You could say all the words you want. Let me see some investment. Not only announcing a pot of money, but let me see what the plan is. Don’t make a plan without engaging the people who live there and already know what they need.
Fabiola Cineas
I want to get your thoughts on some of the specific reactions we’ve heard from national and local lawmakers.
In Buffalo, part of Mayor Byron Brown’s message was: “We are certainly saddened that someone drove from hundreds of miles away, someone not from this community, that did not know this community, that came here to take as many Black lives as possible, who did this in a willful, premeditated fashion, planning this.”
Gov. Kathy Hochul passed a body armor law that wouldn’t have stopped the gunman and rushed to strengthen New York state red flag laws that failed to stop the gunman from getting a firearm.
Biden in his visit to Buffalo denounced white supremacy but didn’t exactly identify steps to address systemic racism. How do these responses sit with you?
India Walton
Politics is such that those who have the microphone control the narrative. I knew very early on that they’d try to focus on the fact that this person isn’t from here. But I’ve lived in Buffalo my entire life. About 75 to 80 percent of Black people live on the East Side. It’s not by chance. It is by design. The policy of demolishing blighted properties, of disinvestment in neighborhoods on the East Side, didn’t happen overnight. All of these conditions that were created happened in Byron Brown’s tenure. The recovery from this incident is going to be longer and more difficult because of the conditions that have been created by policy at the local and state level.
Cuomo’s Buffalo Billion built up a medical campus, a Tesla factory that doesn’t employ very many people, and got us canalside. Meanwhile, we still have a severe shortage of truly affordable housing. Our rates of Black homeownership are some of the worst in the country. The housing stock is some of the worst in the country. Kathy Hochul had the audacity to announce $60 million for the Central Terminal when in that same neighborhood there are houses for much less money where we can get the lead problem abated.
We have a serious childhood lead poisoning issue in the city of Buffalo and Erie County. We prefer flashy Band-Aid solutions that sound good in the media, and we’re only covering gushing wounds. No one is doing anything to stop the bleeding.
There’s no true comprehensive plan to redevelop the East Side. And when we’re talking about denouncing white supremacy, that doesn’t only mean denouncing overt forms of racism but it also means changing the kind of restrictive banking and financial policies that hold entire communities back. We have a local nonprofit that had to start a ride share because people in that neighborhood don’t have access to a grocery store or pharmacy, a post office.
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Kent Nishimura/Los Angeles Times via Getty Images
Fabiola Cineas
Yeah, I read that following the massacre, Tops set up a shuttle to transport residents to another neighborhood for groceries. The story I read described how residents felt uncomfortable because they got stares when they were in the other store. Have you seen the shuttle or talked with anyone who has had this experience? And what are your thoughts more broadly on the fact that Black people have to be bused to a white neighborhood for groceries in 2022?
India Walton
I saw the shuttle stops. I didn’t get on the shuttle. But it must be unnerving for people. First of all, someone went into your neighborhood grocery store and shot a bunch of people down. It will be difficult to go to the grocery store in the first place. And to then have to be dependent upon a stranger to take you somewhere where you’re unfamiliar. It must be really traumatic, but what can you really do about it? People have to eat.
Fabiola Cineas
Local groups have also spearheaded efforts to create food boxes of fresh fruits and vegetables to give away and other items to encourage people to grow it on their own right now. It seems like this is in response to the massacre but also speaks to a bigger chronic issue of food insecurity in which we see grassroots movements stepping in with solutions and not the city government.
India Walton
Right. The interesting thing is that the reason why the response happened so quickly was because these things were already in place. It was already a place that didn’t have access to food. There were already food justice advocates in the neighborhood. I’m thinking about Urban Fruits and Veggies, the African Heritage Food Co-op, and Freedom Gardens. These people were already working independently of any assistance from the city.
Alexander Wright has been trying to open a brick-and-mortar food cooperative in the Fruit Belt neighborhood, adjacent to where the shooting took place, for five or six years. These are people who have already been doing this work, and the racist massacre just shined a light on what was already happening — not only on what the problems were, but that there were already people activated to provide viable solutions. And if we had supported that to begin with, maybe it wouldn’t have been this way. At the very least, folks would have still been able to access food.
I’m of the mind that in order to have a self-determined and liberated autonomous community, charity is not the thing. Charity comes and goes with the whims of funders, philanthropists, and well-meaning do-gooders. But how do we create systems? How do we improve systems? How do we make sure that these investments are made and that they are sustainable and that the community is actually in control of the resources for themselves, so that we’re not waiting for someone to come save us when something like this happens?
Fabiola Cineas
There seems to be this pervasive feeling from Black residents that things would get worse once the cameras left. But it sounds like self-reliance and the community coming together in whatever ways it can has played a role in helping people make it through this tough time.
India Walton
Yeah. I think that, all of the other complexities and issues aside, I am very proud of the way our community responded. Despite the fact that there was all this national attention on it, what I felt and what I still know is that the people who are doing the hard work are folks that are from here. They are people who are doing things with their personal money. There are organizations that are already struggling with limited budgets and staff.
The response from the community and from our community-based organizations and individuals has been incredible. We’ve been checking on one another, because it’s been hard. It’s very, very difficult, especially being one of the handful of people that people turn to for answers. There are many of us in this community who are the problem-solvers, the noisemakers, the activists and advocates of this community. And what we’re up against is being the people who want to help but who don’t always have the resources or the decision-making power. I have to tell people, I’ll do what I can, but a lot of this is not up to me.
Fabiola Cineas
You mentioned how the gunman was able to just look up a zip code based on racial makeup, and was motivated by his mission to kill as many Black people as possible. About 80 percent of Buffalo’s Black residents live on the East Side. In light of this and how you’ve seen the community impacted over the past month and a half, what specific housing policies would be most effective to help Buffalo’s Black residents and to break up the city’s extreme segregation?
India Walton
I co-founded a community land trust that started in the Fruit Belt neighborhood, and before I exited my position as executive director, the membership voted to make it into a citywide thing. A citywide land trust that is municipally supported could provide permanently affordable housing for homeownership so people can live wherever they want in the city. The city of Buffalo is the largest property realtor in the city. There are more than 1,000 vacant parcels of land that could be built on the East Side and in other parts of the city. There are vacant homes that can be sold for little or nothing to people to be rehabbed and lived in and put them back on the tax roll.
I had a very well-researched and comprehensive plan for development and increasing homeownership in closing the racial wealth gap. I don’t have any insight into what’s happening now. But, as it stands, there hasn’t been a public plan to change anything like that. The governor gave $600 million to trillionaires to build a football stadium. I was riding through the East Side yesterday and there are city-owned lots [where] the grass was up to my waist. They just don’t cut it. They just don’t care. There’s, like, no trash cans. People litter because they don’t have anywhere to dispose of trash. Simple things like that — there’s just no thought being put into providing and carrying forward our community in the way that it deserves.
Fabiola Cineas
I keep thinking about what you said about the people who were not killed in the massacre but got caught up in it, whether their life was spared or they witnessed something because they were close by. How should the city be trying to help them?
India Walton
I think that I’m not the person to have that answer. They are. They all have individual and unique needs. They should be engaged on an individual basis. I think that one thing that has to happen is that there needs to be widespread access to mental health services.
And it needs to be in a way that the delivery is personalized and that we’re not expecting a person to necessarily leave their house to go get it. Because there are some people who are afraid to leave the house. If we can get them telehealth visits, that could possibly be helpful.
It brings up so many other issues, with every layer we pull back. Even if we were to offer a person telehealth visits, do they have internet or a computer in their house? We assume that everyone has a smartphone but they don’t. This is a neighborhood that was already in a position of economic insecurity and precarity.
There was a young man at Tops who was a McDonald’s worker. He should have gotten some paid time off. I worked at McDonald’s, and I don’t know how much things have changed in the last 20 years, but I didn’t have health care when I worked there . Even if this young man wanted to go seek help, can he? Aside from that, he’s already working a job that is probably not paying a living wage. And now, to deal with trauma on top of living the daily trauma of being a working-class Black person. What do you do for folks like that?
Fabiola Cineas
And with Tops reopening this summer, why do you think there hasn’t been a wider effort to engage the community on the store’s future?
India Walton
You know, I don’t know. This is how things are done. The corporation decides, and the electeds decide what the narrative is going to be. They say that they have engaged with the community. They choose who the leaders are and steamroll any voices of dissent in the meantime. I hear that there are renovations and “upgrades’’ being made to the store.
Fabiola Cineas
There’s also something particularly devastating about not wanting to shop at a “renovated” place where Black people were massacred but then having no choice because this is the only local supermarket where you can get your food.
India Walton
So many people have no choice. When we talk about peeling back the layers, we can also talk about access to public transit. A third of households in East Buffalo don’t own a vehicle. Buffalo is really a mess. I can say this operating from a place of extreme privilege. I have a car. I have a job. I can go where I want. I can afford Instacart. I don’t even have to go into a store. That is not the same experience of the majority of people who live in this city.
I want people to remember that this is not an isolated tragedy. Racism and white supremacy have created conditions of cyclic disadvantage. It’s not just about guns and it’s not just about access to food or about charity. This is about making real investments in our community that are going to correct and undo the history of harm that has been done to tons of Black people over generations.
Meet the Ukrainian fighter jet pilots hobnobbing with Washington influencers.
At a white-tablecloth dinner on the second floor of an Italian bistro in Dupont Circle, two Ukrainian fighter pilots took a break from the battlefield to describe facing off with Russian jets above Kyiv to a rapt group of reporters.
The four journalists chimed in with questions. Do the Ukrainians really want MIGs, the outdated Soviet-designed fighter jets? What was their message for an American audience more concerned with high oil prices than Russian threats, one that might even blame gas prices on US support for Ukraine?
“Um, this is a tricky one,” an American PR executive interjected, “but answer carefully.”
“You tell me if it’s off the record,” one of the pilots said, to laughs.
“It’s just that Russia is a really big threat,” he continued. “If it’s not stopped right now, right here in Ukraine, on the ground, and with the sanction pressure, the rest of this democratic world could find themselves in a much, much worse situation.”
“Well said, bravo,” the PR executive said.
Ukraine has unleashed an incredible influence campaign in Washington. There’s a lag to the filing of lobbying disclosures. But even in the lead-up to the war last year, Ukraine’s lobbyists made more than 10,000 contacts with Congress, think tanks, and journalists. That’s higher than the well-funded lobbyists of Saudi Arabia, and experts on foreign lobbying told Vox they expect that this year’s number will grow much higher.
This spring, I’ve been invited to an elegant dinner with a parliamentary delegation and morning briefings (no breakfast, just coffee) at think tanks with Ukraine’s chief negotiator with Russia. Foreign policy reporters in DC have been inundated with requests. A journalist from another outlet, who asked for anonymity to be blunt, concurred: It’s been “a nonstop cycle” of Ukrainian visitors in Washington, they told me, “And think tanks that have basically become lobbyists but with a nonprofit status.”
Ukraine’s ambassador to Washington and other parliamentarians pop up at foreign policy events. Their express purpose has been amplifying support for bigger weapons packages for Ukraine. The requests are very specific and have evolved as the war goes on: Right now, Kyiv wants F-16s and drones, more artillery and armored vehicles. The messages conveyed by Ukrainian politicians and members of the armed forces are remarkably disciplined.
Visiting officials and meals with journalists are part of how Washington works, and there’s an ecosystem of experienced power brokers operating largely within — but sometimes in the gray zone — of US laws regulating foreign influence. And Ukraine, of course, is under siege and has mobilized its most eloquent advocates to speak with Washington influencers. But the sheer intensity and coordination of the effort reveal how Ukraine views the US as an active participant in the war, and at times pushes the legal boundaries around foreign lobbying.
In the case of the Italian dinner, a public affairs firm called Ridgely Walsh hosted and paid for the event and assembled the journalist guest list. The fighter pilots, who go by their call signs, Juice and Moonfish, to protect themselves and their families, had also met with members of the House and the Senate, the Department of Defense, and the Department of State. The two pilots were quoted widely in news media, and appeared on CNN alongside actor Sean Penn, before returning to their units the following Monday.
According to the Foreign Agent Registration Act (FARA), anyone working for a foreign entity must register, whether or not they’re being paid. Indeed, there’s been a major trend of PR and lobbying firms doing pro bono work for Ukrainians. In part because it is good PR.
Ridgely Walsh, according to Department of Justice filings, had not registered, and in response to Vox’s inquiry, the firm said it would change its status. “As a prudential matter, we’re gonna go ahead and register immediately to represent the Government of Ukraine on a pro bono basis,” Juleanna Glover, the founder and CEO of the firm, told me.
FARA is a peculiar law that requires voluntary disclosure, and it wasn’t all that well understood or enforced until the Trump era when some of then-President Donald Trump’s inner circle got caught without registering — Michael Flynn working for Turkey, Paul Manafort and Rick Gates lobbying for pro-Russia interests in Ukraine, and Tom Barrack allegedly acting as an unregistered agent of the United Arab Emirates.
“The very small group of FARA lawyers who have been doing this for a long time were shouting from the rooftops to everyone: beware,” Joshua Rosenstein, a lawyer at Sandler Reiff Lamb Rosenstein & Birkenstock, told me, “because FARA is more broad than you think.”
To understand the scale of Ukraine’s lobbying, it’s useful to review the history of a law that was meant to bring transparency to international activities at a time when, according to some metrics, there are more foreign agents registered than ever.
FARA: From obscurity to the front page
FARA was enacted in 1938 to combat Nazi propaganda and Soviet influence. It doesn’t regulate or censor speech as such, whether an individual represents the best of regimes or the worst of them.
It’s just registering and disclosing those interests, but any “informational materials” disseminated — like articles — must include a conspicuous statement of that work. The scholar Daniel Rice, who has registered to advise the Ukrainian president on a pro bono basis, is legally bound to add something like this to his articles: “This material is distributed by Daniel Rice on behalf of the Ukrainian Armed Forces. Additional information is available at the US Department of Justice, Washington, DC.”
The 50 years before 2016 saw only seven criminal prosecutions for FARA violations. But during the Trump years, the once-obscure area of law became a front-page story. “Before that, you know, we were probably a little naive,” says Virginia Canter, the chief ethics counsel of the nonprofit Citizens for Responsibility and Ethics in Washington. “You start seeing how foreign government interests and other foreign entities are trying to influence US policy.”
David Laufman is a partner at Wiggin and Dana who oversaw FARA enforcement at the Department of Justice from 2014 to 2018. “It quickly became apparent to me, by as early as early 2015, that we were not fully meeting our enforcement responsibilities under FARA,” he told me. “So I set about energizing enforcement of FARA, and it has built upon itself steadily since then.”
The Justice Department now is likely paying more attention to unfriendly governments and potentially unregistered lobbying, according to Rosenstein. “I would imagine that doing lobbying work, for example, on behalf of, say, a Chinese entity is given more scrutiny than lobbying work on behalf of a Canadian company,” he said.
The FARA unit has grown to five attorneys, five analysts, two support staffers, an intern, and an FBI agent detailed to it, but it still has “finite resources,” a Department of Justice official familiar with its workings, speaking on the condition of anonymity, told me. “Certainly, the scope of the potential national security threat is always going to drive our choices.”
It’s not yet clear what renewed enforcement of FARA will mean for the army of Ukrainian lobbyists in Washington, especially since the DOJ likely doesn’t see Ukraine as a “potential national security threat.” But the US government does have the power to make sure readers and viewers have clarity about foreign interests. “One of the beautiful things about FARA and how we run things is everything goes online. So you’re seeing what we’re seeing,” another DOJ official said.
How Ukraine lobbies
The number of firms registered to lobby on behalf of Ukrainian clients has exploded this summer. Six new firms registered in June alone, bringing the total to 24 firms or individuals now registered to lobby on behalf of Ukrainian clients, up from 11 registered to work for Ukraine last year.
Ben Freeman, a researcher at the nonpartisan Quincy Institute for Responsible Statecraft, says that current Ukrainian efforts rank among the most active foreign government lobby he has ever analyzed.
He is particularly surprised that major lobbying and comms shops in DC are giving their services away. “That’s just unheard of in the foreign lobbying space,” says Freeman, who authored the book The Foreign Policy Auction. “There’s no such thing as a free lobbyist in DC.”
That’s because there may be a business motive behind gratis lobbying.
Take, for example, Mercury Public Affairs, a prominent consulting and PR group based in Washington. It’s now doing pro bono work for GloBee International Agency for Regional Development for Ukraine. Prior to that, Mercury worked for Russian firms. In January of this year, Sovcombank, one of Russia’s largest banks, hired Mercury for $90,000 monthly in the hope of preventing new sanctions against it. On February 25, a day after Russia’s invasion, Mercury dropped Sovcombank as a client.
Qorvis, another powerhouse communications firm, is now working for Ukrainian aid relief groups after years representing Russian interests in Washington. “In a matter of months, they’re sort of switching sides on who they’re representing in this lobbying fight,” Freeman said.
Shai Franklin is a lobbyist at Your Global Strategy who worked closely with Ukrainian groups before the Russian invasion in February. He registered as a pro bono lobbyist for Ukraine and has been connecting Ukrainian mayors with American mayors, and has also been working for GloBee. “The first week I was doing the work, I realized I better file,” he told me. “And that brought its own publicity, which was great, because it shows that Washington people are standing up for Ukraine.”
The negative association with registering as a foreign agent has perhaps made some less interested in registering. The American Bar Association recently recommended changes to the law, including replacing the phrase “‘agent of a foreign principal’ with a term that elicits less stigma.” As Franklin put it, “I tell foreign clients that there’s no shame in filing under FARA, but some of them are still pretty spooked by it, because of what happened over the last few years, because FARA has been associated with a crime.”
Even working for those who seem like heroes requires registration. “When it comes to foreign governments lobbying or lobbying on behalf of foreign interests, people have to realize that whether it’s a foreign interest we see as a good guy or a bad guy or an ugly guy, that’s not the US interest,” said Freeman. There is a narrow humanitarian carveout that exempts some from registering, and those lobbying on behalf of foreign companies register under the Lobbying Disclosure Act.
The Ukrainians were savvy to send fighter pilots to a country that made the film Top Gun twice. Over risotto drizzled with asparagus puree and saffron fondue, they talked about flying low over the country on risky missions last month, making eye contact with Ukrainian farmers on tractors in the fields of grain and waving to agricultural producers who they see as also fighting on the front lines. But the purpose of their trip was not merely to raise awareness about the plight of Ukrainian farmers amid an emerging global food crisis.
“Our main goal is self-explanatory,” Moonfish said. “We’re meeting media and lawmakers in order to push the weapon flow to Ukraine.”
Biden is cracking down on the ocean shipping industry.
Everything from children’s toys and furniture to guacamole has gotten more expensive, so it’s not surprising that inflation is top of mind for many Americans. But with the midterm elections drawing closer — and Republicans hammering the White House about rising consumer prices — President Joe Biden thinks voters should direct their frustrations elsewhere. He says they should be angrier at a critical, but often forgotten, part of the US economy: the ocean shipping industry.
“There are nine — nine — major ocean line shipping companies that ship from Asia to the United States. Nine. They form three consortia. These companies have raised their prices by as much as 1,000 percent,” Biden declared in a speech at the Port of Los Angeles, the country’s largest port, in June. “There’s no better place to start it than right here in the port, and letting those nine foreign shippers understand the rip-off is over.”
Right now, the cost of sending goods across the Pacific is still more expensive than it was before the pandemic. This price surge is a product of not only the delays and bottlenecks in the supply chain created by Covid-19 but also the huge increase in demand for consumer goods that followed. This demand was far greater than what shipping companies or American ports could handle. As a result, the price of shipping went up, creating increases in costs for importers and retailers within the United States. Those costs have now been passed on to consumers, which is partly why many everyday items are more expensive lately. (Surging gas prices, the war in Ukraine, and pandemic-era financial policies may also be driving inflation.)
Experts told Recode it’s unlikely that Biden’s crackdown on the shipping industry will significantly reduce the cost of products, even if it will make some meaningful improvements to operations at America’s ports. The small group of companies that dominate the shipping industry remain extremely powerful: They still benefit from longtime exemptions from antitrust laws and continue to wield enormous power.
The situation serves as a reminder that, while specific segments like the ocean shipping industry can play a massive role in influencing the prices of everyday goods, they’re also participating in the much larger economic system of supply and demand. This system involves everyone from the companies that build ocean vessels that shipping companies use to parents desperately trying to buy Barbie Dreamhouses for their kids. This complexity can make price increases extremely hard to rein in, even if you’re the president.
Ocean shipping, explained
By design, the shipping industry isn’t supposed to have a significant impact on the price of everyday goods. Many companies make their products outside the United States, in places where manufacturing is cheaper. This approach only makes economic sense if these companies know they can ship finished goods to their customers at a low cost.
This is where the major ocean carriers come in: Nine companies, including firms like Maersk, Cosco, and Hapag-Lloyd, handle the vast majority of shipping across the Pacific Ocean. These companies have been granted limited immunity from certain antitrust laws, and form powerful shipping alliances that coordinate on routes and even share their vessels. A single ship can stretch hundreds of meters long, and some can carry more than 20,000 shipping containers. These ships may travel between ports in several countries, picking up raw materials, parts, supplies, and finished products throughout their route on behalf of different carriers.
To make sure these ships are filled to the brim, carriers play their own version of Tetris. Because carriers share their vessels, several companies can sell transportation services on the same ship. Companies have to figure out which shipping containers should go where, based on where they’re coming from and where they’re going. Once cargo arrives at its destination, powerful cranes lift these containers from ships so they can be loaded onto trucks and trains traveling inland, and quickly fill the open space on the ship with a new container. Normally, this makes international freight shipping a skillfully choreographed operation, one that has made sending an item across the Pacific a negligible part of the cost of many products we buy every day.
But then came the pandemic. Factories, understandably, closed because of Covid-19, and that created manufacturing delays, threw schedules off course, and ultimately led to shortages of all sorts of products. The pandemic also meant that people spent more time at home, stopped buying services, and cut back on travel. As a result, they started to spend a lot more on consumer goods, goods that typically needed to be shipped to the US from abroad, primarily from countries in Asia. Shipping became harder to provide and much more in demand — which sent shipping prices skyrocketing.
Now these shipping companies are facing a lot more scrutiny as well as growing concern that they’ve used their longtime antitrust immunity to profit during a crisis. Before the pandemic, these carriers had an average operating margin of just under 4 percent, but during the third quarter of last year, that margin grew to more than 50 percent. This has made importing goods in the US much more expensive: At the end of June, it costs nearly $7,600 to rent a 40-foot shipping container traveling across the Pacific compared to about $1,300 in early 2020, according to one shipping industry index.
“Today, the top nine companies control 85 percent of the trade. Go back 15 years ago, the top 10 companies controlled 50 percent of the trade. They basically ran companies out of business and bottom up,” Sal Mercogliano, a maritime history professor at Campbell University, said. “They were in a pretty vicious rate war, and then all of a sudden Covid happens and rates go through the roof.”
Importers and exporters have also accused these shipping companies of taking advantage of supply chain chaos, which has left them paying exorbitant detention and demurrage fees — fines charged to shippers that don’t pick up and drop off containers on time. Normally, these fees act as an important incentive to make sure shipping stays on schedule, but some logistics companies and importers say that the ocean carriers have made it almost impossible for them to pick up and drop off cargo on time. And ultimately, the cost associated with paying the fees gets passed on to customers.
The cost of shipping is coming down
Inflation isn’t something the president directly controls, and it’s not something that can easily be fixed. Meanwhile, most Americans say the top problem facing the country is rising consumer prices, which means it’s all but certain to become a major issue in the upcoming midterm elections. These elections will determine whether Democrats retain control of the House and the Senate, and will shape what Biden will be able to accomplish in the second half of his presidential term.
With voters acutely aware of the issue, the president is looking to cast the blame for inflation on entities far away from the White House. In this case, he’s pointing a finger at the small but powerful group of international companies that control shipping in the Pacific. Biden also wants to appear to be taking action on the problem, especially since it’s one that consumers notice in their everyday purchases.
“We have socks and plastic buckets, and things like that, being shipped around the world because it costs next to nothing to ship them,” Marc Levinson, a historian of the container shipping industry, explained. “Now, if the cost of shipping for a pair of shoes has gone up from 10 cents to 50 cents, that can actually be significant because there will be a further markup at every stage along the supply chain.”
Enter the Ocean Shipping Reform Act, which the president claims will lower costs and help fight inflation. The law, which was signed by Biden in June, empowers the Federal Maritime Commission, the agency that regulates shipping into the US, to investigate carriers’ practices and help craft new rules. The government will also create a more formalized way to track chassis, the metal frames that are used to carry shipping containers at the ports, and expand the commission’s powers when the ports are extremely congested. Finally, the law targets the increasingly common practice of ocean carriers transporting empty containers back across the Pacific instead of waiting to fill their cargo with American exports, including agricultural products that American farmers have sold to customers in Asia.
While all of these measures sound like progress, there’s no guarantee they will do much to lower prices overall. Again, many other factors are also driving inflation.
“It’s not like furniture is suddenly going to be cheaper overnight, right away. That’s not the way the system works, and frankly, it’s not the way the economy works,” Daniel Maffei, the chair of the Federal Maritime Commission, said. “Everybody would like a silver bullet to inflation.”
The Ocean Shipping Reform Act does set the groundwork for addressing growing concerns that carriers are engaging in harmful, anti-competitive behavior. (A recent investigation by one of the agency’s commissioners found no evidence of illegal behavior or collusion that had contributed to high shipping prices.) The legislation comes as the FMC ramps up its efforts to investigate carriers, including a push to crack down on unfair fees that the commission began last year, and a new partnership with the Justice Department announced in February.
But the law, which was not as aggressive as another proposal in the House, doesn’t change the fact that shipping is still dominated by just three alliances, despite mounting calls to curtail their power. Nor does it give the FMC the ability to set the price of shipping. Perhaps most importantly, it doesn’t deal with one of the primary issues that drove the high cost of shipping: surging demand for products that need to be shipped. Gene Seroka, the executive director of the Port of Los Angeles, told Recode that whether the legislation would help lower prices is “to be determined.”
“Declining demand will help,” Willy Shih, a management professor at Harvard Business School, said. “If we go into a recession, then demand will drop and then that’ll give everybody time to catch up, and even things out more.”
The global supply chain is made up of many different countries, companies, and people, which means that the price of a single good is influenced by myriad factors that are incredibly hard to control. That means that, for now, you shouldn’t expect Joe Biden’s mounting effort to regulate the shipping industry to have an immediate impact on the price of the stuff you buy.
In reality, the best way to lower the cost of shipping is for people to stop buying so many things that need to be shipped. Given that the economy doesn’t seem to be in a great place right now, that just might happen sooner rather than later. For what it’s worth, imports to the US seem to be declining, and American consumers appear to be returning to their pre-Covid spending habits.