Marine Transportation System

Posts Tagged ‘regulation’

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

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A Thirty-Year Project: Fixing Civil Works

In Congress, Corps of Engineers, Federal Government, Infrastructure, Leadership, Ports, President, Water Resources on March 15, 2018 at 11:35 am

The US Army Corps of Engineers took it on the chin last week.  And the bruise can’t be easily hid when delivered by a certain person in the White House.

One of the things I will be starting off the meeting with is to continue to cut regulations.  We have a tremendous way to go. I think we are probably 40 percent of the way there.  Again, statutory requirements make it where you have to give a 90-day notice and then you have to give a 30-day notice, then you have to give a six-month notice. By the time you give all these notices, time goes by.  But still in 12 months, in fact at the end of the 11th month, we cut far more regulations than any administration in the history of our country, whether it’s four years, eight years or in the one case, 16 years. So nobody’s close. But we’re going to cut a lot more. We really have a lot more to go.

Trump Mattis

And we’re working with General Mattis very much and the Army Corps of Engineers, because they have been…uh, not so fast.  And they are slowing up some jobs, so we’re going to get that taken care of.  We’ve been working on that.  The Army Corps, you know EPA gets it done, and we’re all getting it done, the Army Corps has to follow much quicker. And we have to streamline it because they are in charge of areas of the country that really have nothing to do with the Army Corps so much anymore.  General Mattis is working to streamline that procedure and some jobs are being held up because of the Army Corps of Engineers.  They are fantastic people but we’re going to have to speed that up.

The Commander-in-Chief’s words about the Corps, with Defense Secretary Jim Mattis sitting to his left, nodding affirmatively, were said to assembled reporters and cameras in advance of the March 8th Cabinet meeting. (video)

The folks at Corps Headquarters may be excused for feeling a little unloved. At two House hearings that same week, the Corps’ contribution to slowing projects was voiced by Members of Congress, including the chairman of the House Transportation & Infrastructure Committee.

Chairman Bill Shuster (R-PA) led a hearing not on the civil works program but on the president’s infrastructure proposals. The hearing’s sole witness was Transportation Secretary Elaine Chao, who dealt with committee questions about everything from the burden of electronic driver logging (ELD) on cattle transport to the Gateway passenger rail tunnel project on the northeast corridor.

During a discussion on the need to improve the permit process, which involves more agencies than just Chao’s DOT, Shuster added his own thinking.

One of the great places to start with permitting is the Corps of Engineers. I met with the Conference of Mayors and AASHTO and I always like to get a show of hands who has had a project, that they worked on…or want to work on, and that the Corps of Engineers has been a huge problem, huge challenge to the project. And every single person in the room raises their hand.  So that’s why subcommittee chairman Garret Graves and I are working now…on a water resources bill and one of the focuses will be a serious look at the Corps of Engineers and a serious look at why the [civil works missions] need to be at [the Defense Department]. Two hundred years ago it made sense. The Army Corps of Engineers was the only ones who could build a dam or roadway, but today there is no need for civil works to remain at DOD. It needs to move to a different agency. I would propose DOT. Secretary Zinke wants it to go to Interior.

In a bit of an understatement by the capable committee leader who failed have the full House consider his major aviation reform objective — moving air traffic control from the FAA — Shuster added that the taking civil works from the Corps would make for a “healthy debate.” (Watch the Shuster statement here on the hearing video.) He does have a more-than-willing partner in any effort to change the Corps. Garret Graves (R-LA) — a former staffer on the committee, then coastal program chief for Louisiana, now heads the Water Resources & Environment Subcommittee. Graves is openly critical of the Corps, will lead the writing of WRDA 2018, and is ready to make significant changes in the civil works program.

In the same building that same morning, a member of the Government Reform & Oversight Committee convened a hearing “Examining the US Army Corps of Engineers.”  Chairman Blake Farenthold (R-TX) of the panel’s Subcommittee on the Interior, Energy, and Environment said “we will discuss ways… project delivery can be stream lined” and led witnesses to address the hearing aim to “highlight ways for improved communication and interaction between the U.S. Army Corps of Engineers, localities, and the public where it conducts its work and projects.”

The subcommittee members and witnesses were not antagonistic toward the Corps but made clear how bureaucratic slowness extends project timing and costs. James Dalton, the top career civil servant at Corps Headquarters was also at the witness table. He pointed to process improvements made in recent years, but also acknowledged more should be done. Witness Sean Strawbridge, the new executive director at the Port of Corpus Christi, which is in Farenthold’s south Texas district, told a story that other port execs could cite as their own experience.

Starting with the initial congressional approval of a feasibility study, the Corpus Christi deepening project (45′ to 54′ ) has been in the Corps’ study-planning-construction process for 28 years…so far. Strawbridge noted in his statement that the project finally found a place in the Corps construction budget that the White House sent to the Hill last month.

When Garret Graves assumed the chair of his subcommittee, his press release stated he would have an expanded “role in shaping legislation to limit the scope and economic damages of agency regulations, shorten the time it takes for projects to be completed and bring efficiency to how the government works.” His Louisiana experience shaped a determined policymaker.

“Untangling the decades of bureaucracy and the culture of delay within the Corps, EPA and other agencies will take time, but we’re committed to helping lead the transformative change that has to occur to fix what’s broken in government operations. We’re going to work toward making Louisiana’s coast and the state’s need for hurricane and flood protection a case study on how it should be done – instead of another story of government failure.”

“The stupidity of spending billions of dollars after disasters instead of millions on prevention beforehand has to end,” Graves continued. “In the decades it takes the Corps to study projects, homes and businesses flood, vulnerable coastal communities disappear and taxpayers’ dollars are completely wasted. It’s time to partner with the private sector and turn dirt instead of talking and ‘studying.’”

The truth is that even as the Corps of Engineers takes a beating from its Capitol Hill critics, most Members of Congress probably still like having this military-led organization taking their orders for favored public works. But Congress also has had a role in creating and prolonging the problem. Both Congress and White Houses have managed to burden the engineers’ hands, programmatically and budgetarily. The policymakers write laws that the Corps and other agencies are charged with implementing, through guidance and regulation. Members of Congress add to workloads, including by pushing projects into the civil works pipeline, thereby creating a demand for greater dollar resources that the Corps is denied on an annual basis.

Will the Corps of Engineers’s responsibility for civil works be given to another part of government as Shuster suggests? It is very unlikely. But the threat of it could help Garret Graves set the table for some meaningful changes in policy.  Will the president’s pokes result in anything? Possibly. No doubt, his Defense Secretary passed the message down the chain of command to the desk of the new Assistant Secretary of the Army for Civil Works, R.D. James.

In the mid-80s, when the Reagan White House and legislators set their sights on instituting new user fees and project cost-sharing as prerequisites for enactment of what became WRDA 1986, port authorities and other navigation project stakeholders said, okay, but also do something about the Corps process that made improvement projects 25-year undertakings. Over 30 years later — about the time it will take to get the Corpus Christi project completed — we are still talking about it.    Pbea

 

Searching for Common Sense in the Gulf

In Environment, Federal Government on August 3, 2010 at 8:34 am

Around the time that the Clinton Administration tried to tackle the abundance of red tape in Washington, with VP Al Gore in charge of the regulatory reform effort, a great small book was published.   It is Philip K. Howard’s “The Death of Common Sense: How Law is Suffocating America.”

Philip Howard’s book came to mind when I listened to this Marketplace story on the radio.  The piece by Stephen Beard is about Dutch expertise, a Dutch approach to addressing an oil spill, and how that compares to what took place in Gulf waters.

No, I’m not leaping aboard the SS Anti-Jones Act whose crew thought they found a rhetorical goldmine in the Gulf.  (Nor am I a JA apologist.)  For an intelligent discussion on what role US cabotage law did or did not play in the Gulf response look here.

The Marketplace piece is not just about oil skimming equipment and berm building.  It is about taking charge.  It is about being prepared.  It’s about bringing all the smart people and into the room and all available resources to the task.  And maybe it is even about giving a little less attention to the default positions (litigation potential and fine points of regulation) when a prompt response to a crisis is required.  If that didn’t happen it’s a shame.   Pbea