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June 14, 2024 44 mins

Topic of the Week (6/14/24):


Let's break down the Gemini Cooperation Agreement that was JUST filed with the FMC...

The Maritime Professorᵀᴹ presents By Land and By Sea - an attorney breaking down the week in supply chain

with Lauren Beagen (Founder of The Maritime Professorᵀᴹ and Squall Strategiesᵀᴹ)


Let's dive in...


1 - Federal Maritime Commission Maritime Transportation Data Initiative (MTDI) Request for Information (RFI) #2 is due today. 

https://www.regulations.gov/docket/FMC-2023-0016/document


2 - INTERNATIONAL LONGSHOREMENS ASSOCIATION (ILA) and UNITED STATES MARITIME ALLIANCE LIMITED (USMX) have suspended negotiations. The ILA released a statement with some fiery language. 

JOC coverage:
https://www.joc.com/article/ila-links-contract-wage-proposal-ocean-carriers-financial-results_20240613.html 


3 - United States Trade Representative Section 301 Investigations:

🔹steelworkers petition proposing a US port call fee on Chinese built ships
🔹4-yr review of China tariffs proposes adding 25% tariff on ship to shore cranes to go into effect Aug 1


-------------------------------

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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oh, oh, oh, oh, oh, oh, oh, oh,oh, oh, oh, oh, oh, oh, oh, oh,
oh, oh, oh, oh, oh, oh, oh, oh,oh, oh, oh, oh, oh, oh.
I got soul coming through.

(00:22):
Won't stop in the peace and, ontop of the world, can't walk to
the beat when you see me comingnext to you.
Everywhere I go, I'm in thespotlight.
This is a good life.
I'm living bold.
This is what it looks like.

(00:44):
I'm a ticket out of the world.
Gemini cooperation agreement hasbeen filed with the Federal
Maritime Commission.
This will be the newest vesselsharing agreement to hit the
market and I'll say though,interestingly, this isn't being

(01:07):
categorized as a global vesselsharing alliance in the FMC's
agreements library, simply avessel sharing agreement.
We'll talk more about what's inthe filed agreement, so stick
around.
Hi, welcome to by Land and byScene, an attorney breaking down
the weakened supply chainPresented by the Maritime
Professor me.
I'm Lauren Began, founder ofMaritime Professor and Squall

(01:30):
Strategies, and I'm yourfavorite maritime attorney.
Join me every week as we walkthrough both ocean transport and
surface transport topics in thewild world of supply chain.
As always, the guidance here isgeneral and for educational
purposes only.
It should not be considered tobe legal advice and there is no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.

(01:52):
So before we get into thediscussion of the day, let's go
through my top three stories ofthe week.
All right, we have a jam-packedtop three stories of the week.
So the first one is the MTDI,the Maritime Transportation Data
Initiative.
Request for information.
Number two the comments are duetoday.
We talked about this a littlebit last week.
I'm going to be watchingregulationsgov comment section

(02:13):
and letting you know when, when,what comes from the feedback
right, what, what comments aresubmitted.
But just a reminder if youhaven't submitted, today is the
day.
This is the MaritimeTransportation Data Initiative.
We talked, like I said, alittle bit about this last week
with FMC Commissioner CarlBenzel.
He's been working on this, butjust as a little bit of a
briefer, so that we're all onthe same page.

(02:35):
So Commissioner Benzelundertook this project in
December of 2021.
21.
He began holding meetings withmaritime and intermodal
stakeholders.
These were one-hour meetingsthat were held roughly every
week and they ran from December2021 to June 2022.
And they culminated with a datasummit.
So in this effort called theMaritime Transportation Data

(02:57):
Initiative, commissioner CarlBensel focused on the data
initiative under three keyobjectives it was cataloging the
status quo in maritime dataelements, metrics, transmissions
and access.
It was identifying key gaps indata definitions, classification
and it was developingrecommendations for common data
standards and access policiesand protocols.
So all of those meetings wereheld virtually and they are

(03:19):
recorded and available on theFMC's YouTube channel.
In those meetings CommissionerBensel spoke with all sorts of
people from the state, fromstakeholders, from the industry.
He talked with OTIs, so freightforwarders and NBOCCs.
He talked with ocean carriers.
He talked with large aggregates.
He talked with standards bodies.
He talked with maritime labor.
He talked with technologyplatforms, other US government

(03:40):
agencies, mtos.
You get the idea.
He covered a lot of ground withthis initiative.
So now what we're seeing is nowwe're having requests for
additional information.
Through those initiatives,through all those weekly
meetings, he created a reportthat came up with some kind of
summaries and ideas andaggregating some of the
discussions that they had beenworking on.

(04:02):
But since he has released tworequests for information, which
is trying to dive into a littlebit more of the specifics of
some of the things that he'sdiscovering in his initiative.
So in RFI number one he brokethem down into two different
categories.
It was transportation, serviceproviders, and importers and
exporters.
Excuse me, that's for RFInumber two.

(04:27):
For RFI number one he alsobroke it down, but for RFI
number two the one that'scurrently open and closing today
he had transportation, he hadvessel operators and marine
terminal operators as onecategory and he had importers as
the other category andexporters as another.
And basically in this RFInumber two he wanted to look at
some of the specifics of datadissemination and diving into

(04:50):
some more tricky areas.
So there's some questions aboutearly return date in here.
But then he also has acatch-all for any metrics or
pieces of information that arenot clearly defined or missing
entirely from the maritimesupply chain, of information
that are not clearly defined ormissing entirely from the
maritime supply chain.
I'm going to be watching thesecomments filed pretty

(05:11):
interestingly.
I think that this wholeinitiative is really interesting
.
We talked about that, like Isaid, last week with
Commissioner Bensel.
In that discussion, one of thethings that I raised is just the
existence of this MTDI.
This Maritime TransportationData Initiative, has been, I
would say, a success becausehe's created the conversation
where, prior to this MTDI andmaybe it was just happening, but

(05:36):
I think that he created this Inthis MTDI discussion it created
a larger conversation arounddata and the cataloging of data
and the dissemination of data,and I really think that
Commissioner Bensel should becommended for his efforts on
doing this.
I think that this has been agreat thing.
I've been loving to see theengagement with the industry and
I think that this is just areally interesting initiative.

(05:58):
So, reminder again today is thelast day to file comments.
However, last time he acceptedlate filed comments.
I can imagine that that mighthappen again.
Who knows for sure?
But I can imagine that thatmight happen again, because what
he's really looking for here isengagement with the industry.
Right, he wants to have thesequestions answered, because he
wants to learn more from theindustry on how, what's going on

(06:21):
out there, and so how better todo that than have that
engagement?
And so, while he needs to betimely with the comments coming
in, I can imagine, in theinterest of the continued
conversation, he'll probablyaccept the late file comments.
I don't know that for sure.
I don't know that for sure.
So get them in today, if youcan.
All right, story number two sothis week the ILA, the

(06:44):
International Longshoremen'sAssociation, released a
statement saying that they weresuspending negotiations with the
US Maritime Alliance.
So this is the labornegotiation that's happening on
the East Coast and Gulf, themaritime labor discussion.
It's the InternationalLongshoremen's Association and
the US Maritime Alliance.
This is the labor discussionthat is expiring September 30th.

(07:06):
It has previously been said bythe ILA that they would not work
past a September 30thexpiration, but it seemed like
things were going pretty good,right?
They said that the regionalagreements were closing up by
May.
What was it?
May 17th, I believe it was.
It seemed like it was goingpretty good, but this week the
ILA released a statement sayingthat they were suspending the

(07:28):
negotiations, and in thestatement there were some pretty
fiery things said which, look Idon't want to overdramatize
this I still think that this isa hiccup.
I think that this is not acomplete annihilation of all the
negotiations here, but I don'tknow, right, I'm not on the

(07:48):
inside of the negotiation.
I think that there are a lot ofthings at play, but I did want
to read some of the comments andsome of the things that were
put in that statement, just sothat you know some of the
language that was coming out ofthe ILA, just so that you know
some of the language that wascoming out of the ILA.
So ILA President Harold Daggettsaid there's no point in trying

(08:09):
to negotiate a new agreementwith USMX, that's US Maritime
Alliance, when one of its majorcompanies continues to violate
our current agreement with thesole aim of eliminating ILA jobs
through automation.
So that's always the concern,right, is that the ILA it
doesn't want to see robotsreplace humans.
It's essentially it boils downto that right but basically they

(08:31):
don't want to see automation.
Take ILA human jobs and USMaritime Alliance.
I don't think that they'renecessarily trying to push for
all this automation, but they'retrying to streamline and
expedite some of these systems,and so automation is one of
those things.
So it says in this statement.
It also says the ILA will notmeet with USMX until the auto

(08:53):
gate issue is resolved.
Additionally, the union is stillwaiting on results from an
audit for jobs created out ofnew technology, a report that
they have been anticipating foralmost two contract periods.
The ILA has observed anincreasing number of IT
personnel on marine terminals,with concerns that APM and
Marist's IT departments inCharlotte, north Carolina are
encroaching on theirjurisdiction.
He said the ILA is not takingthis lightly and the ILA is

(09:16):
monitoring and keenly aware ofAPM terminals and Marist Line's
repeated attempts to circumventILA master contract and cut ILA
jobs through the introduction ofautomation and semi-automation
equipment.
I mean so they're stoppingnegotiations for now.
They're suspending negotiations.
They're pointing out specificconcerns and specific problems

(09:39):
that the ILA sees in some of theactivity that's happening in
some of the ports, in some ofthe terminals.
Look, there's a lot of timebetween now and September 30th
and I'm only pausing becauseit's also an election year,
right, and so that's somethingthat's also playing into this,
but there is a lot of timebetween now and September 30th.

(10:00):
But look, in the announcementthere was also some really fiery
statements made.
They quoted back to theirannual convention, the ILA's
annual convention last year,where they said who the heck
they didn't say heck is aforeign company like Maersk to
come onto American soil andbuild fully automated terminals.
The ILA leader asked in a fieryspeech to hundreds of ILA

(10:24):
delegates at that July 2023convention, continuing on in the
.
This is the post that ILA made,quoting their own comments at
their own convention last year.
So continuing on this foreigncompany, marist, tries to shove
fully automated terminals downour throats.
And for what reason?
To eliminate good payingAmerican jobs, ila jobs.
So that's what the ILA said atthe convention.

(10:50):
They also in this announcement,talking about the convention and
talking about some of thethings that were happening right
now.
They're saying the ILA leaderexpressed criticism of President
Joe Biden and lawmakers forturning a blind eye to
automation and its devastatingeffect on American workers.
So then they quote PresidentDaggett where he says how can
this administration allow aforeign company like Maersk and

(11:12):
other foreign shipping companiesto get away with this?
These were from the convention,right?
So?
So I only I'm restating some ofthe comments that he made
because I mean these are, theseare fiery things.
Some of the comments that hemade because I mean these are
fiery things.
But on the other hand, alsoconsider when he said it, where
he was saying this this is attheir convention, right?

(11:33):
So he was trying to rally thetroops and obviously they are
opposed to automation, very,very opposed to automation.
But this is I mean, this is theannouncement that was released
just this week hearkening backto that convention and some of
those comments made.
So you know, he also said wewant an ironclad, we want

(11:54):
ironclad language and the actualintent of the language in
writing.
He told ILA conventiondelegates last July, years after
we signed a contract.
Everyone seems to get amnesia,so they're also kind of
expressing this concern thatdespite negotiated master
contracts they still see aslippery slope of automation in

(12:16):
the terminals.
So what he does say here that Iwant to also before I I stopped
repeating most of what he saidhere, but I was I want to also
mention this part.
He said um, the uh, therelationship between, or the
relationship with USMX is not asit appears.
Um, and so that is just alittle bit concerning because I

(12:40):
think that the message, themedia message, seemed to be that
the ILA and the USMX weregetting along for the most part,
that they were moving forward,that things seemed pretty good.
I think everybody always kindof holds their breath, but I
think things seemed pretty good.
But now they're saying therelationship with USMX is not as
it appears, is not as itappears, and it just feels like

(13:08):
they're taking a positional moveagainst USMX and maybe digging
their heels in, and you neverlike to see that right.
Look, I thought that they werecloser than they were with the
regional agreements closing upby mid-May.
It felt like they were wellunderway, right and, like I said
from the get-go I don't want toover-dramatize this I think
that there's probably a littlepolitical posturing here too.
There's a lot of calls for theadministration to get involved
and with that presidentialelection coming up, we'll see if

(13:30):
the Biden administrationengages, and maybe faster than
they did with the ILWUdiscussion where they had the
acting secretary of labor go in.
This has always had a potentialto get contentious because of
all the different things goingon.
Because the ILWU just closed uptheir their negotiation last

(13:52):
year and because thepresidential election is coming
up I mean we will see we couldalso see the Biden
administration engage fasterthan the ILWU because perhaps
they want the ILA vote or theendorsement.
That might be something also atplay here.
That might be some of the callsto the Biden administration to
get involved from the ILA.

(14:13):
We'll see how this all goes,but I want to bring it to your
attention.
It certainly was was a hottopic this week was a hot topic
this week, but it was a littlebit to me it felt a little bit
posturing.
So which and no disrespect tocertainly what the ILA is saying
here, but with how strongly andfiery the language came out of

(14:33):
this.
I'm interested to see wherethis ultimately ends up, if it
really is as contentious as itwas purported to be by some of
this strong language this week,or if this was just a hiccup.
I'm still considering this tobe just a hiccup.
I think that they will comeback together, hopefully sooner
rather than later, rightSeptember 30th, all right.
Story number three, so this one.

(14:55):
For this story, we'rerevisiting Section 301 tariffs
at the United States TradeRepresentative's Office, ustr.
We've talked about these before, but I wanted to bring them up
because there were some veryconcerning things happening here
that I really encourage peopleto start paying attention to.
If you haven't been payingattention before, I really think
that you should.
This could potentially impacteverybody in the supply chain

(15:18):
that services the United Statesor works in the United States or
is in the United States, evendown to consumers.
So okay, so what's happening?
So we have two different USTRSection 301s that we're looking
at here.
The first one is shipbuilding.
This is the SteelworkersPetition.
So Section 301, investigationof China's acts, policies and
practices targeting the maritime, logistics and shipbuilding

(15:40):
sectors for dominance.
We talked about this as theSteelworkers Union petition.
Right, this was the UnitedSteel, paper and Forestry,
rubber Manufacturing, energyAllied Industrial and Service
Workers Industrial Union, theAFL-CIO, clc, the International
Association of Machinists andAerospace Workers, the
International Brotherhood ofBoilermakers, iron Shipbuilders,

(16:00):
blacksmiths, forgers, aerospaceWorkers, the International
Brotherhood of Boilermakers,iron Ship Builders, blacksmiths,
forgers and Helpers, theInternational Brotherhood of
Electrical Workers, and theMaritime Trades Department,
afl-cio, filing their petitionwith the USTR on March 12, 2024.
So I call this the SteelworkersUnion.
It's clearly a whole bunch morethan that, but I call this the
Steelworkers Union petition.

(16:20):
So this petition is what wepreviously talked about.
Right, this was filed March12th 2024.
This has to do with theshipbuilding and, like I said,
the title is that China's acts,policies and practices targeting
the maritime logistics andshipbuilding sectors.
So one of the actions this iswhat I want you to pay attention
to One of the actions proposedby the petition was a call to

(16:41):
impose a port fee onChinese-built vessels calling at
US ports.
That's concerning to me.
It was a call to impose a portfee on Chinese-built vessels
calling at US ports.
So what does the petitionsuggest as the remedy?
Exactly what are they saying?
So this is from the petition Toobtain the elimination of
China's acts, policies andpractices to dominate global

(17:03):
maritime trade and logistics.
Ustr should impose a fee onevery Chinese-built vessel that
docks at the United States port.
Every Chinese-built vessel thatdocks at a US port.
Yes, that's potentially almostall of them out there, right?
That's quite a few vessels.
They continue in the petition.
It says the port fee should bebased on the tonnage of the

(17:25):
Chinese vessel docking in theUnited States, with larger and
heavier ships that presumablybenefit from greater government
support, bearing a greater costto dock in the United States.
To create an incentive forChina to eliminate its unfair
practices, the fee should alsotake into account the age of the
vessel, with the fees assessedon newer vessels being higher
than the fee on older vessels.
To the extent that China doesnot eliminate its interventions

(17:47):
to support domestic shipbuildingand other reasonable practices
unreasonable practices the feeshould also be set to increase
at regular intervals in order toprovide a greater incentive to
the government of China todiscontinue such practices.
So they're saying we should beimposing this port fee any
Chinese built vessel thatservices a US port, based on how

(18:09):
old it is, based on how longthe activity of China doesn't
change.
They're saying basically, likethis should be an increasing
port fee and it should also bebased on like the newer ones
will be penalized more.
So they also talk about thehypothetical number for the fee.
Right, we're talking about afee per vessel, calling it a US

(18:29):
port.
They said a hypotheticalmillion dollar port fee on a
20,000 TEU cargo ship.
So their justification is that,look a million, a hypothetical
million dollar port fee on a20,000 TEU cargo ship may only
impose a cost of about $50 percontainer.
So, look, I'm not exactly surehow this would.

(18:50):
They're saying roughly look,spread out per container, it's
going to be less, it's only $50per container.
I mean, that's if the vessel'stotally loaded up and I don't
know.
This gets a little sticky and Idon't love the idea of a
million dollar or otherwise,right, increasing port fee for a

(19:12):
US port for a Chinese builtvessel.
And I was looking through someof the filed comments this USTR
section 301 investigation.
The comments have closed.
So there was a hearing, therewere open comments.
The comments have closed.
But I was looking through and Ireally like the explanation,
trying to kind of why did I notlike this US port fee as much as

(19:33):
I don't know why was I havingsuch a strong reaction?
What am I trying to say here?
I was looking through thecomments.
The International Chamber ofShipping put together some
pretty good comments that I tendto agree with and I'm just
going to talk about it.
I'm just going to read from itin talking about the US port fee
.
So this is from theInternational Chamber of
Shipping.
So they said not only wouldsuch a fee fail to

(19:53):
disincentivize the policies andpractices of China in the
maritime sector, but it woulddamage US import and export
market competitiveness, increasecosts for US consumers and, in
our view, fail to achieve thepetitioner's stated aim of
revitalizing US domesticshipbuilding capacity.
They continue in their filedcomments imposing a fee cannot
disincentivize Chinese acts,policies or practices.

(20:14):
Leveraging a port fee onvessels built in China but which
are often owned and operatedoutside of China and which call
at US ports, cannot act todisincentivize Chinese
subsidization of shipbuildingcosts.
Imposing a fee against vesselsalready produced and serving the
US market will have no impacton the financing structure of
Chinese shipyards, nor willimposing a fee on those vessels

(20:35):
which are under construction butfor which ship owners have
already committed payment.
Importantly, china's currentshipyard order book accounts for
50% of the future globalmerchant fleet capacity, with
27% of the world's future LNGcarriers, 50% of rover vessels,
61% of crude tankers, 56% ofcontainer ships and 70% of the
world's future chemical tankerson order to be built in China.

(20:57):
They continue on and say a portfee leveraged against the
vessel to be built in China.
They continue on and say a portfee leveraged against the vessel
which is already built or paidfor in construction will at best
fail to disincentivize Chineseacts, policies or practices of
the petitioner's concern and atworst actively hinder the US
market's access to vessel typesvital to maintaining its energy
and economic security.
So that's what I also hadconcerns with right this port

(21:22):
fee might disincentivize callingat US ports.
I mean I don't see the directconnection because there isn't
the ship building capacity inthe US yet that these vessels
that are built in China aren'tstill necessarily owned or

(21:45):
operated by Chinese companies.
And that was something that,continuing to look through the
comments, the National RetailFederation posted comments by
John Gold, so I'm going to readthrough their comments as well.
I thought that they did a goodjob of kind of summarizing this.
It said the petition allegesthat Chinese subsidies to its
shipbuilding industry are thecause of the lack of
international competitiveness ofthe US shipbuilding industry.

(22:07):
We believe there is no actualdemonstration of that causal
relationship offered as part ofthe petition.
One of the proposed remedies afee imposed on all Chinese ships
docking at US ports is inreality, a thinly veiled effort
to create a pot of money torestore US shipbuilding
subsidies Again.
Notably, the petition offers noclues as to what level a port
fee would generate theappropriate value of total

(22:29):
subsidies to make the USindustry internationally
competitive.
This petition, rife with gapingholes of key information, has
now launched an investigationthat threatens to upend US
supply chains and foist stillmore unnecessary costs on
American businesses, workers andfamily.
They said right simply, statedNRF, in their filed comments,
said a fee on Chinese shipsdocking at US ports is not

(22:50):
sufficient to raise the moneyneeded and will damage the US
economy.
And I tend to agree with that,because what they did say right
is that they wanted to imposethis fee so that they could
start creating a fund for therevitalization of US
shipbuilding.
Possibly, but I really thinkthat the unintended effect maybe

(23:10):
it was intended, but probablyunintended effect is that it is
going to hurt supply chain, notjust for imports but also for
exports, right, you need avessel calling at a US port in
order to take the exports aswell, and if we're dinging these
vessels with fees, that couldbe problematic.
So look, these are kind of mygeneral thoughts.

(23:33):
I'm certainly still lookinginto this.
The comment period has closedfor this, but I'm going to
continue to watch this because,at least on first blush, this is
what it seems like to me.
It seems like this is a bigproblem that US port calls by
happen-to-be Chinese-builtvessels could be charged this

(23:58):
fee.
The other USTR 301 issue that Iwant to bring up that is also
very concerning to me is theship to shore cranes, and so
there is a second.
This is not the same thing.
There is a second USTR section301 investigation going on.
It can be a little confusingbecause, honestly, for a little

(24:19):
bit I thought that they might'vebeen the same thing too.
They are two separateinvestigations.
So there's the shipbuilding onewith the US port calls.
There's a different one whichis shipped to shore cranes.
This one is proposedmodifications and machinery
exclusion process in the Section301 investigation.
China's acts, policies andpractices relating to technology
transfer, intellectual propertyand innovation.

(24:39):
This is the second issue atUSTR that I'm bringing up, and
it's a proposed increase from 0%tariff to a 25% tariff on
ship-to-shore cranes.
So this is related to the Trumpera Section 301 tariffs, and
now they are undergoing theirfour-year review and so in this
review so this is basically acontinuation of the Trump era

(24:59):
Section 301 China tariffs theywere a major thing right in 2018
, 2019, 2020.
And so here it is, thefour-year review of those China
tariffs, the Section 301 tariffs, in that report.
In this four-year reportreleased by USTR, their findings
were as follows the USTR saidthat they found that Section 301

(25:21):
actions have been effective inencouraging China to take steps
toward eliminating some of itstechnology transfer-related acts
, policies and practices andhave reduced some of the
exposure of US persons andbusinesses to these technology
transfer-related acts, policiesand practices.
They go on to say look, chinahas not eliminated many of its
technology transfer related acts, policies and practices.

(25:42):
Economic analyses generallyfind that the duties have had
small negative effects on USaggregate economic welfare.
Positive impacts on USproduction in the 10 sectors
most directly affected someexpansion here, and so, based on
these findings, it said theUSTR recommended to the

(26:03):
president that Section 301tariffs be covered.
Uncovered products bemaintained.
To further encourage China toeliminate the investigated acts,
policies and practices, theUSTR recommended enhancing the
effectiveness of the tariffactions by adding or increasing
Section 301 tariffs on certainproducts.
The listed products are a wholebunch of different things,
right?
I mean they are listing medicalproducts, they're listing solar

(26:23):
panels, electric vehicles, butthey're also listing ship to
shore.
So, it said, taking intoconsideration the USTR's
findings and recommendations, onMay 14, 2024, the president
issued a memo that directed theUSTR to quote maintain, as
appropriate and consistent withthis memo, the ad valorem rates
of duties and lists of productssubject to the actions taken

(26:45):
under the Section 301investigation and to further
encourage China to eliminateacts, policies and practices at
issue and to counteract theburden or restriction of these
acts, policies and practices.
The trade rep shall modify theactions taken in the
investigation to increaseSection 301 ad valorem rates of
duty for certain specifiedproducts of China.
So they're saying, look, we'regoing to add some more.

(27:06):
This is currently open forpublic comments.
This is open for publiccomments, and so USTR has said
that they're inviting commentsfrom interested persons with
respect to the proposedmodifications.
Comments are due June 28, 2024.
And what they are asking is notonly about the ship to shore
cream uh increase from a 0% to a25% tariff.

(27:30):
They're also asking about and Ithink that this is getting not
enough coverage.
They're also asking thatcommenters are invited to
comment on the scope of theproduct description to cover
ship-to-shore cranes under thesubheading, which may include
transporter cranes, gantrycranes and bridge cranes.
And so that last one I want youto, that piece I want you to

(27:53):
pay attention to in thecurrently open comment period
currently open.
They are asking if they shouldexpand or if they should cover
these types of cranes in theshift to shore crane category to
include those transportercranes, gantry cranes and bridge
cranes.
This is a big deal becausethese tariffs, this 0% to 25%,

(28:23):
is proposed to go into effectAugust 1st, august 1st.
So really any port that has Imean, if they do expand it
transporter cranes, gantrycranes or bridge cranes, in
addition to these ship-to-shorecranes that are already being
proposed, in addition to theseship-to-shore cranes that are
already being proposed, portsmay find themselves with an
additional 25% tariff tacked on.
Look, don't sit on this right.
Usdr arguably isn't in thebusiness of terminal operations,
so that's why it's importantfor the industry to engage,

(28:45):
right?
We need to let them know thatthis is a big deal and could
potentially have major impacts.
The intention here is to reallycounteract the Chinese dominance
in the market.
There's currently not reallyany alternatives for many of
these cranes in the US,certainly for the ship-to-shore
cranes, as I understand it right.
So without options, this justbecomes an additional cost for
our own domestic ports that needthese cranes, and if this goes

(29:06):
into effect August 1st, this isa big deal because most of those
cranes are already almostfinished, if not, they are
finished and they're justwaiting for delivery.
As I understand it, if theyarrive at our shores on or after
August 1st, they're subject tothis 25% tariff, which I mean
grains are not cheap, right,they could be tens of millions
of dollars and 25% it's a couplemillion bucks.

(29:29):
That was not anticipated in the.
I can imagine that was notanticipated in the overall cost
of these brains.
So look, if nothing else, ifthis is going to impact you, I
urge you to take a closer look.
Talk with your attorneys, talkwith whoever you need to talk
with.
This is not legal advice.
I'm just general educationalguidance and information.

(29:52):
Take a look at these.
This is concerning.
Maybe submit comments if youthink that this is going to
affect you, because USTR needsto know.
This is on a list of things thathave nothing to do with
otherwise maritime operations,so they're putting it on.
This was originally on theTrump era tariffs.
It was totally eliminated fromthe list.
Then, if you remember, ship toshore cranes were on the Trump

(30:13):
era tariffs.
It was totally eliminated fromthe list.
Then, if you remember,ship-to-shore cranes were on the
lists when the China tariffs of2018 and all of that.
They were totally eliminatedfrom the list at that time in
the Section 301s.
It's back.
And what the proposed productdescription says ship-to-shore
gantry cranes configured as ahigh or low-profile steel

(30:34):
superstructure and designed tounload intermodal containers
from vessels with couplingdevices for containers,
including spreaders or twistlocks.
And now they're also sayingthis might be expanded.
Or they want commenters to talkabout transporter cranes,
gantry cranes and bridge cranes.
If this has any impact to you,take a look, because you might

(30:54):
find yourself 25% tariff tackedon.
All right, let's get into themeat and potatoes of the day.
Something a little bit lighter,something kind of fun to cover
the Gemini Cooperation Agreement.
So the Gemini CooperationAgreement has been filed with
the FMC.
We've been waiting for this.
You know I was talking.

(31:15):
I didn't know if maybe theyweren't going to file it, maybe
they didn't want the limitedantitrust, the limited antitrust
protection that the ShippingAct provides.
But it turns out they havefiled this agreement with the
FMC, so it's the Geminicooperation agreement.
The synopsis is the agreementauthorizes the parties to share
vessels in the trades betweenthe United States, asia, the

(31:37):
Middle East and Europe, and itwas filed May 30th 2024.
And the effective date, shouldnothing pause it or happen in
the meantime, is set to be July15th 2024.
So the Federal MaritimeCommission posted a news release
just the other day saying thatthey opened a 12-day comment

(31:57):
period allowing interestedmembers of the public to respond
to Maersk and Hapag-Lloyd'snewly filed vessel sharing
agreement, the GeminiCooperation Agreement.
So the two parties right Maerskand Hapag-Lloyd FMC said
instructions for submittingcomments are included in the
notice of agreements filedpublished in the Federal
Register and the deadline forsubmitting those comments is
Tuesday, june 18th.

(32:18):
So you have next week.
You have a good four calendardays from now, right.
Today's the 14th.
So comments are due June 18th.
Comments submitted areconfidential and subject to the
exceptions noted there.
The agreement will allow Maerskand Hapag-Lloyd to globally
coordinate their vesseloperations.
The parties propose operatingunder a structure whereby major

(32:38):
ports of call will be serveddirectly they're calling that
the mainline network and otherports will be served by a
shuttle service called theshuttle network.
Activities conducted underagreements filed with the
commission and in effect are notsubject to federal antitrust
laws.
If the commission takes noaction, the Gemini agreement
will become effective on July 15, 2024.
So this is that was reading offof the press release from the

(32:59):
FMC.
This we've talked about beforein some of my Alliance 101
conversations on the podcast.
But the FMC can't necessarilydeny agreements that are filed.
They can file an injunction tostop them in the Federal Court
of Appeals, the DC Circuit, butafter 45 days the agreements

(33:24):
just become effective.
And that's what the FMC issaying here.
If the commission takes noaction, the Gemini Agreement
will become effective on July15th.
So they don't approve it andthey can't deny it.
They can stop it, but only withthis pretty big hill of filing
an injunction against it, whichI mean I can see both sides
right.
We've talked about that before.

(33:46):
But having a big hurdle for afederal agency to stop industry
movement and business movementhurdle for a federal agency to
stop industry movement andbusiness movement.
Okay, but the other thing isthat they also don't have the
authority to deny it and they'rethe subject matter experts here
.
So it said the Geminicooperation agreement is
available for public inspectionin the commission's online
agreements library and Maris andHoppe-Gloyd are not currently

(34:08):
parties to the same vesselsharing agreement.
So, yes, you can go on to theFMC agreements library and see
pretty much all of these vesselsharing agreements that are
filed.
The alliances certainly are onthere, but now we're going to
have the Gemini cooperation alsothere.
So I wanted to take a look andsee what was on there and we can
talk about that today.
So it said the agreementstructure the agreement will

(34:30):
operate using an approachwhereby major ports of call are
served by direct call ofmainline services the mainline
network and other ports areserved by shuttle services the
shuttle network.
Initially, only one service inthe shuttle network will call in
the US, which shall be subjectto review from time to time.
So I'm going to skip around alittle bit here because I'm just
kind of picking out some of theinteresting pieces that I
thought were interesting.

(34:51):
Agreement authority of themainline network.
It said the parties areauthorized and this is an
agreement.
So the language in thisagreement was created by the two
parties and agreed to by thetwo parties.
So they're setting their ownterms here and then it's filed
with the FMC, as we know, andopen for public comment right
now.
So agreement authority mainlinenetwork the parties are

(35:12):
authorized to discuss and agreeon the size, number and
operational characteristics,including age and speed, of
mainline network vessels to beoperated here under and the
number of vessels to becontributed by each party.
Initially, the mainline networkin the trade shall consist of
approximately 123 vessels, withnominal capacities ranging from
approximately 3,700 TEUs toapproximately 16,000 TEUs.

(35:35):
It says, without furtheramendment here too, the parties
are authorized to operate up to175 vessels on the mainline
network in the trade, each witha capacity of 24,000 TEUs.
So that's interesting.
We've talked about that before.
These vessel sharing agreementsand these alliances often get a
bad rap.
Certainly when they were cominginto public purview in the 2020

(35:57):
and 2021 timeframe, people weresaying oh, these are giant
companies, how can they be inthese alliances?
These must be monopolistic.
Well, this was part of thehinge that people weren't
necessarily understanding isit's not their entire fleets
that are assigned to ordedicated to these vessel
sharing agreements, and that'swhy I want to point out this

(36:17):
piece Right.
They're saying the mainlinenetwork of the trade shall
consist of approximately 123vessels, going up to 175 vessels
.
That's not their entire fleets,or I would assume that that's
not their entire fleets, or Iwould assume that that's not
their entire fleets.
It also says that the partiesare authorized to discuss and
agree upon the possible futuredevelopment deployment of new
buildings in the trade.

(36:37):
The parties are authorized todiscuss and agree on the ports
of call, port rotation,itineraries, service speed and
all other aspects of thestructure and scheduling of the
services to be operated,including the criteria and
procedures for permanent and adhoc schedule adjustments.
So I'm bringing all this up alsoto point out there's some
specificity here and they'resaying what they are agreeing,

(36:58):
that they are allowed to do.
So where the FMC comes in isthey're reviewing this agreement
as well and if there's anyanti-competitive or monopolistic
concerns, that would besomething Anti-shipping Act,
that would be something that theFMC could take to the Federal
District Court of the Court ofAppeals and enjoin or try to

(37:20):
stop this agreement.
But that would be, that would.
That's where the FMC comes in,right, they can't just agree to
anything and they can't justagree to monopolistic behavior,
because it's not anall-encompassing or blanket
antitrust under the Shipping Actyou're not protected a full

(37:42):
blanket.
But the FMC if they're seeingproblematic things here, or if
the public sees problematicthings that they submit to the
FMC saying, look, you're notthinking of this?
That's a reason why this mightbe enjoined.
But I mean, I'm just lettingyou know some of the specificity
that's also included in todayin this agreement.

(38:03):
So Article 5B, under theagreement agreement authority,
all vessels in the shuttlenetwork.
So it was the mainline networkbefore and this is the shuttle

(38:27):
network.
They're saying all vessels inthe shuttle network are going to
be contributed by Maersk andthat they may substitute vessels
and they only need two weeksprior notice to Hoppag-Lloyd for
those substitutions.
And then they also sayinitially the shuttle network in
the trade shall consist of oneservice of two vessels with
nominal capacities ofapproximately 2,800 TEUs,

(38:51):
without further amendment.
Here too the shuttle networkand the trade is authorized to
operate up to three servicevessels of up to three vessels
each, each such vessel having acapacity of up to 5,000 TEUs.
Those are all on the Maristside.
So now it also says Hoppe-Gloydshall have the option to time
charter vessels to Marist fordeployment in the shuttle
network and Marist shall havethe option to call for

(39:16):
Hoppe-Gloyd to time chartervessels to Maersk for deployment
in the shuttle network andMaersk shall have the option to
call for Hoppe-Gloyd to timecharter vessels to Maersk for
deployment in the shuttlenetwork.
So they're saying Hoppe-Gloydcould put time charter vessels
for the deployment in theshuttle network but right now as
it kicks off it's only going tobe Maersk vessels.
So this next part I thought wasinteresting.
With that knowledge right, withthat understanding that Maersk
is feeding the shuttle network,hapag-lloyd shall receive a slot

(39:38):
allocation on the shuttlenetwork as agreed by the parties
, with the remainder of thespace being for the use of
Maersk, including subchargers byMaersk to third parties.
Hapag-lloyd shall compensateMaersk for the use of slots on
the shuttle network on suchterms and conditions as the
parties may agree from time totime.
So Habeck-Lewitt iscompensating Maersk for the use
of these shuttle network vessels.

(39:58):
I don't know, I just thoughtthat that was an interesting
piece because Maersk is onlyproviding the vessels for the
shuttle network.
They also talk about blanksailings, which I thought was
interesting.
Agreement authoritymiscellaneous.
The parties are authorized toagree to blank or in other words
it says skip sailings of themainland network and or the
shuttle network during ChineseNew Year or Chinese Golden Week,

(40:21):
provided such agreement isreached no later than 12 weeks
prior to the scheduled date ofsailing.
So saying they can blank, theycan blank sailings, but they
have to give each other 12 weeksprior notice if they're going
to do it during Chinese New Yearor Chinese Golden Week.
They also say parties areauthorized to blank sailings of
the mainline network or theshuttle network when vessel

(40:41):
utilization is likely to fallbelow such thresholds as may be
established by the parties fromtime to time.
Any proposal to blank a sailingmust be notified from one party
to the other not less than sixweeks prior to the scheduled
departure of the sailing fromthe turnport for the relevant
service.
The other party shall respondto such proposal within three
working days, provided, however,that a failure to respond shall

(41:01):
not constitute consent for theblanking proposal.
So they're saying look, as longas they give each other six
weeks prior notice of a blanking, they can blank, and then they
have three working days torespond.
But if they don't respondthey're not locked in and that's
not acquiescing or consentingby not responding.
I just think that's interesting, right, six-week notice or

(41:24):
12-week notice?
I want to bring that to yourattention.
Dissolution of the agreement.
This is usually the part thatwe especially since 2M was
dissolving that we've beenwatching on the different
alliances.
How do these allianceagreements dissolve?
Notwithstanding anythingcontained elsewhere, either
party shall have the right toterminate this agreement at any
time, without financial or otherpenalty, by issuing no less

(41:45):
than 12 months written notice oftermination, provided that such
notice may not be given before36 months have elapsed, after
February 1st 2025.
So saying, look, you have threeyears from 2025 and then you
have to give 12 months notice.
So we're looking at a February1st 2028 before either party can
get out, and then, even so,they'll have to have a year's

(42:07):
notice that we're looking at2029.
It does say there are some otherways that they can terminate it
.
So it says Marist may terminatethe agreement at any time by
giving Hoppe-Lloyd six monthswritten prior notice if APMT
terminates the existingagreement between APMT and
Hoppe-Lloyd and Hoppe-Lloyd mayterminate this agreement at any
time by giving Marist six monthsprior written notice if

(42:29):
Hoppe-Lloyd terminates the APMTagreement.
So it's just an interestingagreement I like going through.
I like that the FMC has theseon their agreements libraries
that you can actually go throughand see what the agreements
that are being determined oragreed to in these vessel
sharing agreements, right?
The interesting part, like Isaid, is that this is not being
categorized as a vessel sharingalliance or global alliance.

(42:53):
It's just on the agreementslibrary as a vessel sharing
agreement.
So no significance other than Imean it's been called an
alliance, but this specificagreement seems to be the Gemini
cooperation instead of beinglisted as the Gemini alliance.
So I don't know.

(43:14):
I'm still waiting to see if thatmatters or if it's just a
difference of words.
So there's still time to submitcomments if you feel so
compelled.
They are due on June 18th.
But, as always, the guidancehere is general, for educational
purposes.
It should not be contributed tolegal advice directly related
to your matter.
You need an attorney, contactan attorney.
But if you have specific legalquestions, feel free to reach

(43:35):
out to me at my legal company,squall Strategies.
Otherwise, for the non-legalquestions, the e-learning and
general industry information andinsights, come find me at the
Maritime Professor.
If you like these videos, let meknow, comment, like and share
If you want to listen to theseepisodes on demand or, if you
missed any previous episodes,check out the podcast by Land
and by Sea, and if you prefer tosee the video, they live in my
YouTube page by Land and by Sea,presented by the Maritime

(43:55):
Professor.
While you're at it, check outthe website MaritimeProfessorcom
.
So until next week.
This is Lauren Began, theMaritime Professor and you just
listened to by Land and by Sea.
See you next time.
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