2022 President’s Report

Bob Bauer
Association of Food Industries

I completed my 25th year at AFI in June of 2021 and my 20th as president at the year’s end. Without question, it was the most challenging time period yet – and I hope it’s never matched or exceeded!

The challenge actually started before the prior edition of this publication. Members began reaching out to me during the last week of 2020, citing an increase in shipping costs and asking that the association try to get some relief. Early callers knew there wasn’t much that could be done but wanted to make sure government officials and others were aware of the issue.

You all know what happened next: rates continued to skyrocket and remain at inflated levels. AFI was among the first to make some noise about the situation. We brought it to the attention (beginning in January 2021) of those within government agencies, members of Congress and many other trade associations.

That’s where the real challenge began. One key indicator was that as this issue unfolded, I didn’t immediately hear from attorneys offering to help us address this problem. So I reached out to many attorneys as well. One put it best: “there’s no clear path to a solution here,” he told me. The anti-trust exemption carriers enjoy and the conflicts of interest some of the law firms had because they did some business with the carriers were among the first hurdles to encounter.

I was at first puzzled by the lack of action by large trade associations – in and outside of the food industry. The large associations typically have the means to find out about issues a little sooner than most and often rally other groups to take action, many times via a coalition led by one or more of those large groups. It’s worked well over the years. The larger groups create the infrastructure needed to address the issue and the smaller groups provide specifics for their sectors – specifics those larger groups often can’t be expected to know about. This time around, there was no interest on the part of the larger groups (again, within and outside the food industry) to have any real discussions.

The reason was simple, as I noted in a blog post in May: larger shippers saw their rates go up but at smaller increments than smaller shippers. Given that, the larger shippers weren’t making much noise about the situation and didn’t seem interested in trying to find solutions. That was a message I continually conveyed to anyone I spoke to.

A couple of months later I saw this headline: “Shipping Chaos Gives Top Importers ‘Massive Competitive Edge’”. The article cited a price differential of $15,000 [per forty-foot equivalent unit or FEU] between the lowest short-term price in the [trans-Pacific] market and the top price and included this comment: “everybody’s seeing price increases but … being really big is really a massive competitive edge in this market.”

Over time, the combination of still-increasing costs and some attention first from the trade press and then mainstream media, brought the issue to the forefront, in part because some of those very large shippers wanted to protect themselves from backlash about rising prices and possible product shortages. So those shippers and associations are parts of coalitions now but those coalitions are much less aggressive than on typical issues – again, to protect that competitive advantage they hold.

So it’s been quite frustrating. I know the direct impact these costs are having on member companies. Unlike most issues where we can do some research and say something along the lines of “this is what you have to do to comply” or “we’ve contacted FDA and the agency is reviewing its policy”, there’s no quick fix here. Instead, we continue to be in contact with anyone we think can be of help and we continue to stress that any proposed solutions are not geared to help only the largest of entities. We’ll also continue to include shipping and logistics experts as speakers at AFI events to ensure we’re offering the latest and best advice. Here’s hoping we arrive at the new normal soon and that new normal is something everyone can live with.