Marine Transportation System

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A Transparent FMC Strategy

In Federal Maritime Commission, Ports, Uncategorized, Vessels on September 21, 2018 at 9:08 am

The Federal Maritime Commission met this week to hear Commissioner Rebecca Dye describe her interim report on the Fact Finding No. 28 (FF28) examination of detention, demurrage and free time practices of ocean carriers and marine terminal operators (MTOs). Dye reported to Acting Chairman (and only other seated commissioner) Michael Khouri. Her report was publicly released on September 5. A final report on the investigation, prompted by petitioning cargo and drayage interests who fault carrier and terminal practices and fees, is scheduled to be delivered on December 2.

The 19-page interim report on the non-adjudicatory investigation is based substantially on information obtained through FMC “served orders comprising questions and document requests on twenty-three ocean carriers and forty-four marine terminal operators and operating ports, and solicited evidence concerning demurrage and detention practices from cargo interests (shippers and consignees).”  The FMC also held two days of hearings in January of this year. The report’s conclusion points to both a stated desire to avoid issuing regulatory prescriptions — that some have argued the FMC would not have authority to do — and an inclination to reprise Commissioner Dye’s prior experience of shepherding industry people to develop a solution that the agency has no power to require.

Based on the volume of valuable information provided by VOCCs, MTOs, shippers, OTIs, drayage providers, and others in the industry, it is apparent the industry’s demurrage and detention practices can be improved with the involvement of industry leaders.

Commissioner Dye sees the experience of the complaining parties as more widespread than episodic.

The resulting record strongly suggests that concerns about demurrage and detention in U.S. trades are not limited primarily to weather-or-labor-related port congestion in 2014-2015, a small subset of large ports, or episodic events unrelated to potentially systemic issues.

Examples are cited as to how current carrier and MTO practices vary in many respects, including even how detention and demurrage are defined. According to the commissioner, the collected data suggest “six areas to be developed” by the FMC as approaches to improve current practices in the market:

  1. Transparent, standardized language for demurrage, detention, and free time practices;
  2. Clarity, simplification, and accessibility regarding demurrage and detention (a) billing practice, and (b) dispute resolution processes;
  3. Explicit guidance regarding types of evidence relevant to resolving demurrage and detention disputes;
  4. Consistent notice to shippers of container availability;
  5. An optional billing model wherein (a) MTOs bill shippers directly for demurrage; and (b) VOCCs bill shippers for detention; and
  6. An FMC Shipper Advisory or Innovation Team.

One can’t help noting in the last item the reference only to “shipper” (cargo interest) in the FMC’s summary version. The somewhat longer version is phrased similarly, suggesting that Dye would give special status — and the agency’s ear — to shippers.

The record supports the need for continual input from U.S. shippers into issues affecting the international freight delivery system, including the potential future formation of a Shipper Advisory Board or Innovation Team after the close of the investigation. The Commission will also consider Advisory Boards or Innovation Teams comprised of Ports and FMC stakeholders as well. [emphasis added]

“Innovation team” is a reference to a tool employed by Commissioner Dye in her follow-up to the FMC’s 2015 report, “U.S. Container Port Congestion & Related International Supply Chain Issues: Causes, Consequences & Challenges.” In that instance, the commissioner invited supply chain stakeholders to participate in closed-door deliberations intended to identify both the central cause of the “congestion” problem and how to solve it. Doubtless, many participants thought it better to be in the room than not.

In her 2017 report, “The Commission’s Supply Chain Innovation Initiative,” she summarized the work of the six “supply chain innovation teams” (three each addressing import and export trades).

[T]he “Value Proposition” for increasing supply chain performance is providing visibility of critical information throughout the commercial supply chain.

~ ~ ~

[Such visibility] across the American freight delivery system was the one operational innovation that would most increase US international supply chain performance. It was not about information technology per se – but an effort to (a) achieve changes in perspective and in behavior to “harmonize” the operation of the freight delivery system and to (b) increase systemic efficiency and performance. Without the right information, supply chain actors are essentially “flying blind.”

A web-based portal for the sharing of cargo status information was the suggested solution by the import teams. The kind that is being tested in the San Pedro ports now.

Note the similarity of the commissioner’s conclusion in the above 2017 report and the direction that her new interim report on terminal and carrier practices is taking. Both look for transparency and standards. Both aim to corral [one or more] stakeholders to have them devise a potentially system-wide solution.

At the FMC meeting this week, Commissioner Dye wrapped up her oral report by asking and answering, “how will the investigation proceed?” She said the commission wants to “determine how to ensure that reasonable notice of cargo availability and reasonable opportunity to pick up cargo can be achieved.” In developing the final report, she said she “will not be repairing to a regulatory ivory tower to reflect in solitude on these issues” but will seek input from the practitioners.

Dye will look for those who have been “most helpful and thorough” during phase one of the investigation. She said she already has heard from “quite a few” carriers and MTOs who want to help, and she firmly indicated she want to hear from people. To emphasize her availability, the commissioner will post her travel schedule to facilitate outreach by persons outside the Washington Beltway.

Acting Chairman Khouri followed Dye’s remarks by encouraging stakeholders to participate. He said that any recommendation for a rulemaking would be “premature,” but he isn’t ready to rule one out.

[That is not] a first choice but…at the end of the day, if there are persistent practices that are found unjust and unreasonable, and stakeholders do not want to listen and proactively adjust business practices for other stakeholders, it will remain on the list.

One hears both commissioners issue more than a cordial invitation to stakeholders to help them bring the FF28 examination of carrier and terminal practices to a satisfactory conclusion. Their message is clear. Fix it — (we’ll gladly facilitate) — or be regulated.

Carriers and terminals consider detention and demurrage fees, and free time practices, to be wholly a matter of the commercial relationship. Nothing the FMC need involve itself in. Regardless of whether they have the necessary statutory authority to regulate this aspect of the commercial relationship, the commissioners have hit upon a non-regulatory way. They are empowered with the expectation that the concerned parties, terminal operators and carriers included, will be willing to address supply chain problems as Rebecca Dye’s report depicts them.   Pbea


The Rush/No-Rush to Replace SAFETEA-LU

In Infrastructure, Politics, Surface Transportation Policy, Uncategorized on May 26, 2011 at 4:39 pm

You’d think that Congress and the Administration are proud of SAFETEA-LU.

That’s the “bridge-to-nowhere”, 6000+ earmark, strangely named measure that was signed into law in 2005 and immediately trashed on the front page of Parade (yes, Parade!), on editorial pages of all stripes, and by interested interest groups.

Freight stakeholders were grossly disappointed by the final product of a seemingly endless process born of a White House that didn’t seem to care, a Congress that seemed to care only about taking home projects, and policy makers who, for the most part, would have stumbled in answering the question: what is the underlying national policy and purpose?

In retrospect, the SAFETEA-LU experience was just what the doctor ordered.  Like the “Pirates of the Caribbean” franchise that premiered with a ridiculously entertaining first film and epitomized wretched excess by its third iteration, the “TEA” surface transportation bill franchise was not well served in 2005.  Time for a change.

The policy commissions (#1 and #2) authorized in SAFETEA-LU to look to the future and make recommendations for the next-go-round were among a comparatively small number of “LU’s” insightful provisions.  The resulting reports and recommendations emanating from think tanks and other organizations are urgent calls for reform.  A common assessment was that SAFETEA-LU does not address the pressing needs of the nation. The case is been made in the reports:

  • The National Interest (my caps) was lost in the flood of 6000+ earmarks.
  • The Highway Trust Fund is structurally flawed and is losing revenue.
  • Capital needs of our transportation system are greater than current funding levels.
  • American competitiveness is at risk if we ignore the problems facing a growing goods movement sector.
  • Too many discrete surface transportation programs limit the ability to focus funds on greater needs.
  • Metrics–performance measures–would help judge where Federal investments can have greater effect.

And there were more.

So you’d think the policy makers would be in a hurry to fix the problem,get “LU” off the books and put in its place a new stimulus for the lagging economy.

You’d think.

It doesn’t help that the public and their electeds are tax-talk shy.  That was a main reason why the White House delayed putting together a proposal for a new bill.  It is the reason why few in Congress are willing to talk even about adjusting the existing tax in order to plug the gaping hole that is draining the trust fund tank.  Formal appeals and press releases by stakeholders calling for action pile high.

Reading the signs as to where the key actors may be headed in recommending a 6-year bill…the Administration has budgeted a $556 billion without stepping onto the thin ice of tax talk.  The Senate is looking at $339 billion, which will require around $75 billion in undefined additional revenue.  The House appears rigidly set in whatever revenue the Highway Trust Fund fairy will collect in fuel and the other excise taxes currently in effect.

Like just about everything else in this town, it’s the talk about spending–or silence about revenue–that is governing the legislative agenda.

It’s not that key actors don’t want to get a bill written and made law.  They really do.

They understand the potential for claiming and real job creation.  They want to shake off the dust of inaction.  They actually want to solve problems.

Chairman Barbara Boxer and her Republican counterpart met the press this week. Chairman John Mica frequently and convincingly voices his intent to produce a bill this year.  And the President outlined, in greater detail than the others thus far, his policy direction when issuing his FY 2012 budget.  There are other signs of what passes for progress in Washington.  Freight related bills have been introduced and await movement by the lead committees.  However a good many seasoned observers do not expect a bill will be signed into law until after the 2012 election because of tax issue avoidance.

But let’s stay optimistic.  Next we need to hear from the tax committee chairs.  Because, in more ways than we might want to admit, it’s all about the money.   Pbea

In Uncategorized on July 20, 2009 at 2:02 pm

TRANSpolicy ends and MTS Matters begins.  This blog is taking on a new look and a bit clearer focus.  The title better reflects my interest area–the marine transportation system–and what, for the most part, I have been bringing to the reader’s attention.  The new host (WordPress) offers more features and better serves an issue oriented blog and its readers.  Thanks for checking in on TRANSpolicy.  Come visit   Pbea

The Sound of a Falling Container Trade (2008)

In Uncategorized on July 2, 2009 at 1:00 am

USDOT’s Bureau of Transportation Statistics (BTS) issued “America’s Container Ports: Freight Hubs That Connect Our Nation to Global Markets."   It’s a look at the container trade in 2008 and it’s effect on US ports.  The stats, including the early years of containerization, are sliced, diced and tapped for potentially usable information.

The Sound of a Falling Container Trade (2008)

Spending Billions…And More To Come

In Uncategorized on June 30, 2009 at 1:20 pm

In February House Transportation Chair Jim Oberstar (D-MN) pledged periodic progress reports on the spending of ARRA, a.k.a. economic stimulus, appropriations for transportation projects.  Transportation related appropriations in the $750 billion stimulus package totalled $48.1 billion.  On June 25, 2009 subcommittee Peter DeFazio (D-OR) chaired the oversight hearing as to how well USDOT and the grant recipients have managed the transportation pot 120-days since enactment of ARRA.  As of June 15, USDOT reported that $47.5 billion was “announced” and $17.5 billion has been obligated.  Progress has been made on implementing the highly anticipated multimodal TIGER discretionary grants that is a new program managed in the Secretary’s office.  The $1.5 billion in grants will be awarded by next February; applications are due in September.  The link takes you to the taped hearing.

Spending Billions…And More To Come

In Uncategorized on June 27, 2009 at 2:16 pm

What does the Maritime Administration know about highway and mobility issues?  Should MARAD or some of the non-modal administrations at USDOT be given a vote on “intermodal” projects as the new Surface Transportation Amendments Act (STAA) directs? Both fair questions.   And the answers are (drum roll please): 1) More than you think they know, and 2) maybe it’s about time. ~  That part of the bill sets up a high ranking intermodal post and a program mechanism for judging projects for funding.  The purpose is to give the Secretary the input of the other parts of the department when making a decision on an intermodal project even when an agency might have less expertise in, say, an airport connector to an urban transit system.  However, in doing so it may start to dismantle…or at least lower…the modal silos and their sense that “what’s mine is mine and I don’t much care about yours."  And when those walls are lowered–or start to include windows and doors–it can foster an "ours” sense of fitting pieces together as well as an enhanced professional capacity in all areas of the department.  ~  As it happens, it’s the port maritime sector that may have the stronger sense of intermodalism and belief in the notion of seamless connections between all modes.  Take a look at a modern marine terminal today (the NY Container Terminal is our visual aid) and see how they are all about bringing ships to the rails and roads and the closer the better.  They are about moving cargo with increasing efficiency and reliability and getting it to and from the distribution centers.  The ports are about intermodalism.  So while the Maritime Administration does not have a history of managing large grant programs like their larger sister silos it has spent time giving attention to ports where the connections are made…and where they may be lacking.  Knowing that and then doing something about it is good for the system. – Pbea

In Uncategorized on June 26, 2009 at 2:16 pm

Chair Oberstar’s surface transportation bill….otherwise known as “Skipping the LU”

Caution: Slow Down MOVEMENT

In Uncategorized on June 25, 2009 at 2:16 pm

Rep. Laura Richardson (D-CA) apparently returned to Congress in January convinced she had a basically sound idea when the very new congresswoman from Long Beach introduced a bill last year to pay for port-related goods movement infrastructure projects with a $20/TEU container tax.   Of the revenue, 90% would go to freight related projects mostly within 40 miles of port, 7% would be allocated to projects mitigating environmental “damage,” and 3% would support homeland security projects.  When she introduced HR 2355–the MOVEMENT Act–in May 2009 she did so with some tweaks.  Most significantly is a switch of the revenue mechanism from a container tax to existing Harbor Maintenance Tax and with a leap from its current 0.125% of cargo value to 0.4375%.  The 0.3125% increase would be dedicated to this new purpose.  The basic intent of the bill to provide resources for gateway related infrastructure is a good one but venturing into HMT territory is a descent into troubled waters.  By all indications the U.S. port sector and the shippers who would pay the tax think the bill is flawed, some think it seriously so.  Then there is the risk of triggering a complaint to the WTO by U.S. trading partners.  Meanwhile advocates of a fix to the Harbor Maintenance Trust Fund see only complications with the proposed tampernig of a Federal charge that today is not fully utilized for the unmet demands of port navigation infrastructure.  In its current form, the bill is unlikely to garner support to let it move. – Pbea

Caution: Slow Down MOVEMENT

Freight Stakeholders Settled on Their Platform

In Uncategorized on June 24, 2009 at 4:02 am

The Freight Stakeholders Coalition “believes that the next surface transportation autohrization bill must maintain a strong federal role and provide for the creation of a national freight program."  With that as their starting point the coalition hammered out 10 planks in their platform, skipping the issues of fees and whether there should be a freight trust fund.  It’s a pretty good consensus document for a rather broad based group representing twenty public and private sector associations, coalitions and industry groups, one of which is a client.  – Pbea

Freight Stakeholders Settled on Their Platform

Adam Smith on the Cost of Freight Mobility

In Uncategorized on June 23, 2009 at 2:41 am

Adam Smith–no, different guy–reintroduced his proposal for a charge on the cost of moving freight in the U.S.  The Democrat congressman, who can see the Port of Tacoma from his home, would raise revenue from the equivalent of a 1 percent tax on ground transportation moves beyond 50 miles.  Like competing fee schemes introduced by other Members the receipts in Smith’s bill would go toward making freight related infrastructure improvements.  None of the three bills tossed in so far are palatable to the freight community but some see Smith’s as being a bit more reasoned. – Pbea

Adam Smith on the Cost of Freight Mobility