June 28, 2024 • 39 mins
Topic of the Week (6/28/24):
It's an FMC round up! Let's review some of the major things I'm watching with respect to the Federal Maritime Commission.
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)
But first my, TOP THREE STORIES OF THE WEEK:
1 - INTERNATIONAL LONGSHOREMENS ASSOCIATION (ILA) and SC Ports reach a settlement over an ongoing dispute and over 160 signatories send letter to White House
https://www.joc.com/article/sc-ports-strikes-deal-ila-fully-open-leatherman-marine-terminal_20240626.html
https://www.joc.com/article/us-trade-groups-urge-bidens-help-restarting-stalled-ila-usmx-talks_20240626.html
2 - HMM will begin offering electronic bills of lading on July 8.
https://www.joc.com/article/hmm-digitizes-bills-lading-software-provider-cargox_20240627.html
3 - Two sailing vessels SINK in Newport to Bermuda Race
https://fb.watch/s_okRKrGVA/
https://turnto10.com/news/local/newport-to-bermuda-yacht-racers-rescued-as-two-boats-sink-southern-new-england-rhode-island-june-25-2024
-------------------------------
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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(00:21):
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I'm living bold this is what itlooks like.
I'm a ticket out of the world.
(00:58):
There's been a lot of movementout of the FMC recently, but
most people have been focused onthe detention and demurrage
final rule, right Rightfully so.
Let's take a quick inventory ofwhat else the FMC has been up
to.
Today.
We're reviewing what I'mwatching at the Federal Maritime
Commission.
Hi, welcome to, by Land and bySea, an attorney breaking down
the weekend supply chainpresented by the maritime
(01:21):
professor me.
I'm Lauren Began, founder ofthe Maritime Professor and
Squall Strategies, and I'm yourfavorite maritime attorney.
Join me every week as we walkthrough both ocean transport and
surface transport topics andthe wild world of the supply
chain.
As always, the guidance here isgeneral and for educational
purposes only.
It should not be construed tobe legal advice and there is no
(01:42):
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
But before we get into thediscussion of the day, let's go
through my top three stories ofthe week.
All right, story number one Twoweeks ago, we talked about the
ILA the InternationalLongshoremen's Association
releasing a statement sayingthat they were suspending
(02:02):
negotiations with the USMaritime Alliance over
automation concerns.
Well, this week there was alittle bit of good news.
A little bit of good news notnecessarily for the larger
contract discussion, but theSouth Carolina ports reached a
settlement with the ILA overdispute at their terminal
regarding jurisdictionalconcerns about state workers
versus ILA workers, dedicatedworkers at the port and this is
(02:25):
an oversimplification, but Iwanted to bring this to your
attention.
We're not going to dive too farinto it, but, as the JOC
reports, this issue has largelykept the terminal offline since
its opening in 2021.
So this was the subject of a USSupreme Court case.
Joc does a nice job ofsummarizing.
So they said.
The agreement, which followsthe ILA de facto victory in a
(02:46):
legal case that almost reachedthe US Supreme Court so almost
reached gives Leatherman's craneoperators a choice to remain
state employees or become an ILAmember, south Carolina ports
said in a statement, stateemployees at their other
container terminals can alsoelect to become ILA members or
they can remain an employee ofSouth Carolina ports.
So also in the news this weekon the ILA.
(03:08):
So that's good news, right.
Moving forward settlementdiscussion agreements right.
Those are always good things,and the fact that a port will
now be able to work moreeffectively is a great thing for
the free flow of goods right.
But also in the news this weekon the ILA there were over 160
signatories to a letterrepresenting all corners of the
(03:29):
US supply chain.
They sent a letter to the WhiteHouse asking for the
administration to provide anyand all support to the parties
so that they can reach a finalagreement, the parties here
being obviously the ILA and theUS Maritime Alliance.
They want something moved.
They are nervous about thepotential for a work stop or a
strike or anything happeningafter the expiration of this
(03:53):
master contract, september 30th.
I said this last week or a fewweeks ago.
We have a lot of time betweennow and September 30th, but we
also have a lot of politicalthings happening in the meantime
, not least of which is the USpresidential elections.
So as we get closer toSeptember 30th.
Hopefully it stays insulatedfrom the politics.
(04:13):
I mean I don't know how itcould, but hopefully it stays
insulated from the politics.
Hopefully some sort ofagreement is achieved before
they get to September 30th,expiration of this master
contract.
But we'll see.
But over 160 signatories to aletter I mean that's a lot of
people signing on saying pleasedo something.
They said provide any and allsupport to the parties so they
(04:36):
can reach a final agreement.
We'll see.
I'll keep watching this.
The entire industry is going tokeep watching this.
Hopefully maybe the pressurewill be lessened during the
summer months and they can cometo an agreement not only in
their regional agreements butalso in that master contract
before the September 30th,because I think August is going
(04:57):
to be here before you know itand then we're looking at
September and September 30thcomes quick.
So we'll see.
All right Story.
Number two we're continuing tosee a movement towards
electronic bills of lading.
This week JOC reported that HMMHyundai Merchant Marine will
begin offering electronic billsof lading to their customers
starting July 8th.
They're going to be usingsoftware from CargoX which is
(05:19):
based on Digital ContainerShipping Association's DCSA
standards.
So nine of the top 10 carrierslast year committed to using
only EBLs electronic bills oflading by 2030.
So I mean, I think we're reallygoing to continue to see,
obviously, this migration towardelectronic bill of lading use.
So what does this mean for you?
(05:40):
Start checking your own systemsright.
Are you ready for EBLs?
Are you ready for electronicbills of lading?
Time to start making thoseplans?
I'd say it's 2024, and this isgoing to.
This is committed to happen by2030 for nine of the top 10
ocean carriers.
So if you deal with oceancarriers, maybe it's time to
(06:01):
start looking at your system'sability to process and use EBL.
So just a not legal advice,obviously perhaps the best
practice, or just a check intoyour system's advisory.
So all right.
Story number three this storycaught my attention this week.
I didn't see it really reportedanywhere.
(06:22):
I was only able to sourceinformation on this from the
Facebook page and Turn to 10,which is a Rhode Island-based
news company.
So last week, on June 21st youmay or may not have known, but
the Newport, rhode Island, toBermuda sailing race kicked off
the Newport to Bermuda.
They kicked off and during therace, two boats sank.
(06:47):
Two Wild stories too.
So the first one, alliance.
They think that they might'veactually hit a submerged
container.
So from the Facebook page, likeI said, but it was direct
source, I mean it was from theNewport Bermuda Facebook page
talking to the Coast Skippersand they were recounting what
(07:07):
happened.
So what they think is theyheard a loud boom on the keel
and then they heard a loudsecond boom on the rudder and
they said that the boom soundedmetallic and they said it gave
them their fatal blow and thatthey were then taking on water,
their fatal blow, and that theywere then taking on water and
(07:28):
the damage was too much thatthey couldn't fix it and the
decision was made within 20minutes I think they said 30
minutes to abandon ship.
They said they were fortunatelyrescued quickly by fellow
racing sailing vessels, but thenthis was followed by a second
sailing ship, the Gunga Din,having to abandon their vessel
80 miles from the finish.
The suspected cause of thesecond vessel taking on water
(07:49):
was not actually announced.
I couldn't find where it was.
At one point I've heard thatmaybe they both thought that
they hit containers.
I didn't find any evidence ofthat or any story recounting of
the Gunga Din on what happenedthere.
But look really interesting.
The first vessel, the Alliance.
There's an interesting 12-minutevideo on Facebook like I said,
(08:10):
I'm going to link it in the shownotes here where the
co-skippers Mary Martin and EricIrwin recounted the evening of
the collision and attributetheir preparedness to not only
their robust safety program ofthe sailing vessel but of their
training from their careers.
So Mary mentions having servedshortly in the US Merchant
Marine and was actually agraduate from Massachusetts
(08:31):
Maritime Academy.
I love to see it right MerchantMariners and Maritime Academies
.
And Eric, his experience wasactually as a naval submariner
and a retired Navy officer.
So I mean that's great.
Also, I wanted to just kind ofclarify some terminology here.
I don't think that I've stoppedand paused and explained this
(08:51):
quite, and I see that theseterms are sometimes misused, or
certainly the second term ismaybe not used, but we've been
talking a lot about ship strikesperiodically on this program
between the Baltimore Bridge andnow this collision at sea.
I wanted to take a minute toclarify those terms right.
Elysian is an incident where avessel hits a fixed object, like
(09:12):
a bridge, an elysian, and thecollision is where two moving
objects strike each other.
So the bridge accident you'veheard me refer to it as an
elysian.
That's what it was A vessel hita fixed object.
It was an elision, because itcan't be a collision, because
the bridge isn't moving either.
So it's an elision.
But the container strike right.
The sailing vessel hitting acontainer out there.
(09:33):
I mean I guess I'd mostappropriately call it a
collision because both objectswere moving.
I mean there wasn't propulsionon the container, I wouldn't
think or the alleged containerwe're still not really sure what
it was out there, but what elsecould it be out in the middle
of the ocean?
I don't know.
But they said right.
So an elision is hitting afixed point with a vessel and a
(09:53):
collision is where two movingobjects strike each other.
Just a little point ofclarification because, as you
listen to this podcast, I alwayslike to clarify and make you
better maritime-focused audiencemembers.
So, continuing on with thestory, right, they were about 80
miles from the Bermuda finishwhen the Gunga Din said that
(10:18):
they were taking on water and,like I said, it was according to
the local Rhode Island reporter, news 10 WJAR.
We'll see.
Well, this is interesting.
And, like I said, it wasaccording to the local Rhode
Island reporter, news 10 WJAR.
We'll see.
Well, this is interesting.
I'm interested to hear whathappened with the second vessel
and why they were taking onwater.
I mean, the alliance sunk.
I'm not sure exactly whatultimately happened to the Gunga
(10:39):
Din.
Information is still coming outabout that.
I mean, that only happened.
The alliance sunk on Sunday, sotwo days after the race started
, and I believe the Gunga Dinwas taking on water, like I said
, 80 miles from the finish.
Um, I think that was Tuesday,perhaps, um, but yeah, all in
(10:59):
all, this year there were 160boats in this race and it's a
636 mile race from Newport,rhode Island, to Bermuda.
So really interesting and sothankful that all members of
both sailing teams were fullyaccounted for and everybody's
safe and survived.
And what a story.
All right, well, let's get intothe meat and potatoes of the day
(11:20):
.
Here we are doing a roundup ofall the things that I'm watching
from the FMC, or at leastcertainly some of the most
prominent things that I'mwatching.
They're not necessarily movingfast, but I do think that
they're still worth watching andmentioning every once in a
while.
So let's get into it.
So the first one is thepetition for the extension of
time for the detention anddemurrage billing requirements.
(11:43):
So this is the petition of theOcean Carrier Equipment
Management Association, osema,for an extension of the
effective date of the final ruleof demurrage and detention
billing requirements.
So this one we talked about, itwas filed close to the
effective date of the May 28thand it was asking for an
extension of time, sayingbasically, look, once they had,
(12:06):
once the FMC had clarified thefinal rule and made those
amendments, they said that theyonly had what?
19 days to review that andchange their systems.
So comments were requested inthis petition and so far the
comments I mean there weren't aton, they were maybe less than
10, maybe six, I believe.
They didn't show a lot of lovefor the extension of time and
(12:31):
I'm going to be bringing in afew of the quotes that were said
.
So Container Port Group said,and I quote extending the
compliance window at this pointwould just lead to massive
confusion and create an adminnightmare for all parties
involved.
Ok, and, like I said, these arejust some of the commenters.
(12:51):
Right, this isn't necessarilyeverybody out there and all that
, all that they feel, butcertainly these are the comments
that are filed and, as I alwayssay, if you don't file comments
, you can't have your voiceheard here.
So if you feel differently thanthe comments that I'm going to
be quoting here certainly getthose comments in.
It's important.
It's important to stay engagedin the process, especially when
(13:11):
comments are requested.
San Antonio Broker Services saysas an owner of a trucking
company that services the ports,I feel that any extension of
time to the Ocean CarrierEquipment Management Association
is unnecessary and uncalled for.
When we, as truckers, ask foran extension of time from when
they never gave us any, rather,they shut us out so that they
could hurt us financially aswell as put us in a position to
(13:34):
not only lose our customers butalso our business.
Enough is enough.
The date should stand.
That's San Antonio BrokerServices.
Mallory Alexander InternationalLogistics says that they
strongly oppose any extensionsand urges the FMC to allow the
final rule requirements toremain in place.
The alleged confusion over thefinal rule cited by Osema was
clarified by the FMC prior tothe rule taking effect.
(13:56):
The claim that ocean carriershave only had 19 days to review
and revise their billingpractices fails to recognize
their failure to takeresponsibility.
Despite several years ofongoing discussions surrounding
their unfair billing practices,despite pleas from motor
carriers documenting thosepractices and the clear
directive put forth in OSRA 22more than two years ago, they
have had more than enough timeto figure out how to bill fairly
(14:18):
and accurately.
That was a quote from MalloryAlexander International
Logistics.
I mean, these are kind ofscathing.
You can tell that there's someemotions involved here, right,
certainly unhappy with pastthings that have happened, but
ultimately they're saying, look,they oppose these extensions.
The last one that I'm going toread here is the Bi-State Motor
(14:38):
Carriers Association where itsays the Bi-State strongly
opposes any extension and urgesthe FMC to reject a seamless
petition allowing the final rulerequirements to remain in place
.
So I'll continue to watch thisright.
I said previously I'm notexactly sure, especially because
this final rule has alreadygone into effect.
It would be a big thing topause it.
(15:01):
But what Osema might be askingfor is if they're found to have
any noncompliance, perhaps theycould be justified in
noncompliance if the FMC, kindof post-hack, puts a extension
for that effective date.
So like, let's say, somethinghappened on May 30th where the
effective date was May 28th.
(15:22):
If the FMC were to say look, wethink that you well, not the
FMC really, but the Court ofAppeals here if the court were
to decide that Osema should havehad an extension of time,
that's where it couldpotentially play in is how I
maybe see it being effective.
I don't think the entire ruleis going to be paused but there
(15:45):
potentially might be a look.
We're going to backdate theeffective date out to June 15th
or whatever, to kind of affordfor any inconsistencies in that
time.
We'll see, we'll see.
I mean we're still.
We are one month from theeffective date.
Today is June 28th.
We are one month from thateffective date of the detention
(16:05):
and demurrage rule.
I kept saying once we hit that30-day mark, once we hit that
one month mark, it's going to beinteresting.
I think that this is going tobe an interesting next few weeks
when we start to hear about howall of that 30 days, issuance
of invoice and dispute filingand website dispute information
(16:30):
and instructions this is wherewe're going to start to see the
rubber meet the road.
But we'll see.
We'll see this petition stayingon message right.
So this petition for theextension of time for ASEMA
we'll see.
The comments filed so far arecertainly not favorable to the
petition as I read them, butwe'll see where that goes.
(16:51):
The other petition that we'rewatching right is the petition
in the US Court of Appeals forthe DC Circuit.
This is the World ShippingCouncil's petition against the
FMC's rule?
There's not.
We brought this up quite a bit.
There's not much movement onthis, other than there was a
request to include an emailexchange between the FMC's
general counsel, chris Huey, andthe World Shipping Council CEO,
(17:12):
john Butler.
Sees General Counsel Chris Hueyand the World Shipping Council
CEO, john Butler.
It's a pretty interestingexchange but at this point we
haven't heard much from thecourt and that's really what I'm
waiting for.
The exchange is really kind oftalking about the ability to
issue invoices to motor carrierswhen they might be directly
contracted or part of theoverall.
(17:33):
The World Shipping Councilessentially said that there
wasn't jurisdiction here for theFMC and that basically a
petition against the whole finalrule, but also clarification
for that part of it on issuinginvoices to motor carriers and
how motor carriers are part ofthose direct contractual
(17:55):
relationships, or theexplanation in the preamble,
which is ultimately where theFMC made their rule correction
right.
So the FMC as we've talkedabout before and please go back
to some of the old episodes onthat but the FMC issued their
final rule correction, but theyonly issued that in the preamble
and the discussion.
(18:15):
So I'm really still waiting allthis to say.
I'm still waiting on the courtto say something.
There were some proceduraldeadlines around the May 20th
date.
We didn't hear much out of thecourt.
I was thinking maybe if we weregoing to hear something, that
would have happened then,meaning eight days before that
rule was supposed to go intoeffect.
It did go into effect.
(18:36):
We didn't hear anything fromthe court.
I'm still looking at the docket.
I don't see a lot happeningfrom the court perspective,
certainly filings back and forthand that sort of thing.
But I'm going to keep watchingthis.
I'm not exactly sure, similarto the other petition for the
extension of time, where thatmight have a little bit more
likelihood because it might notimpact the industry.
(18:58):
I don't think that this courtwould want to stop a rule that's
already gone into effect fullstop, right?
I mean, that's kind of what'sbeing asked here, especially
since it's such a significantupdate to how detention
demurrage invoices are issuedand the contents of those
invoices, right.
I mean, so this rule has reallybeen lauded as trying to
clarify what has happened or howdetention to merge is
(19:22):
approached from an invoicingperspective.
Right, the billing party, thebilled party.
I'm going to keep watching thispetition.
I think that it's interesting.
I think that this has somepotential for significant
impacts.
If the court were to decide tosomehow stop, delay, pause or
overturn this final rule ondetention and demurrage and I
(19:50):
say that because the FMCclarified what the World
Shipping Council was asking forclarification on that might have
made some significant changes.
We'll see.
We'll see, but, like I said,there was some discussion about
including an email exchangewhere they were talking about
(20:13):
the questions that the WorldShipping Council had on this
final rule with respect to themotor carriers.
Still watching this.
I'm going to keep watching this.
I periodically check into thedocket and I think that this is
an interesting one.
The other thing that we'rewatching is the chassis
investigation cases.
Right, so I'm still watching.
After the FMC announced thatthey would be investigating
(20:33):
possible failure to comply withchassis provisioning orders.
So, off of the announcementfrom the Federal Maritime
Commission, it said the FMCopened an investigation today to
determine if the Ocean CarrierEquipment Management Association
, or SEMA, and its members arecomplying with a decision issued
earlier this year establishingthe right of shippers and
truckers trucker choice inchassis provisioning for
merchant haulage in four key USmarkets.
(20:56):
As the FMC explains, thecommission initiated the
non-adjudicatory investigationin response to reports that
chassis providers in Los Angeles, long Beach, chicago, memphis
and Savannah are not complyingwith a cease and desist order
issued by the commission onFebruary 13th 2024.
In the case, case intermodalmotor carriers conference
(21:17):
American Trekking Associationversus OSEMA Ocean Carrier
Equipment Management Associationthat's docket number 20-14.
In case anybody wants to go intothe FMC's reading room, you can
actually look at the docket andsee what's been filed.
What's going on the decisionthat was determined at that
point or the partial decisionthat was determined filed.
What's going on?
The decision that wasdetermined at that point or the
partial decision that wasdetermined.
So the announcement continueson.
(21:38):
The investigation will beconducted by the Commission's
Bureau of Enforcement,investigations and Compliance
and will examine whether OSEMAand its members have altered
their policies and practices asrequired by the cease and desist
order.
Non-adjudicatory investigationsprovide BEIC that's that Bureau
of Enforcement, investigationsand Compliance with subpoena
powers as a discovery tool.
Evidence of wrongdoinguncovered by BEIC may be used by
(22:00):
the commission to seek aninjunction in federal district
court.
Beic can also use any evidenceof wrongdoing to initiate its
own enforcement action and seekcivil penalties for
non-compliance with thecommission order.
So this all comes from thisongoing case, this Intermodal
Motor Carrier Conference,american Trucking Association,
osema versus OSEMA.
One interesting update here onthat case that docket the DOJ,
(22:24):
the Department of Justice, fileda motion for leave to file a
brief amicus curiae.
So that's essentially a rightamicus curiae, a friend of the
court, offering additionalinformation or perspective on
this case, and so what the DOJsaid in their filing was that
they wanted to quote help toclarify two issues that have
risen in this matter One, thedivision's business review
procedure and two, what weight,if any, the commission should
(22:46):
give to a business review letterthat the division issued in
2014 to independent equipmentproviders, flexivan Leasing and
Direct Chassis Link.
I'm going to keep watching thisone.
There are a lot of issues goingon here, certainly one issue
being the jurisdictionalauthority of the FMC over
chassis and chassis pools.
Right, I mean, that's partlywhat some of the contention is
(23:06):
here.
There's a gray area on theFMC's jurisdictional authority.
Certainly, there's a movetoward and, depending on who you
ask, right saying that the FMChas jurisdictional authority
over through bills of lading andthrough bills of ocean
shipments, but is regulating thecompetition or perhaps the
anti-competitive actions inchassis part of that right?
(23:29):
That's where I say that this isgoing to be.
Hopefully the FMC will weigh inon that gray area jurisdiction
and I mean they've certainlysaid that in some of their
initial decisions or partialdecisions here.
But this is going to be aninteresting one.
Also, the chassis side ofthings, right, the chassis pools
and the anti-competitive impactthat the FMC has said that
(23:53):
those pools in merchant haulagehave.
We've gone into that case alittle bit more in previous
episodes.
I encourage you to go look atthose.
But as we learn more from this,it's getting legally
procedurally interesting,confusing, complicated.
So I'm going to keep watchingthis and ultimately, as you know
(24:14):
, I try to break things down, Itry to oversimplify them so we
can all understand what's goingon this one, I want to wait a
little bit more because I thinkthat there is so much contention
here that I want to make surethat I don't miscategorize or
misexplain what I'm seeing inthese chassis cases.
There's a legal procedurethat's happening, there's an
(24:37):
investigation on the cease anddesist order, there's attempts
at appeal and I say attempts atappeal because technically the
full docket isn't final butthere's this one decision that
is, and so I just want to makesure that we get a little bit
more of the full picture here.
As you know, I'd like to stayfair and just explain what's
(24:57):
happening from a neutral lens,and that's what I want to make
sure that I'm doing here.
So I've covered that before.
I'll continue to watch it andcertainly cover it in more
detail as we get moreinformation on the chassis cases
.
We also have a string ofstore-to-door cases right.
These are the Samsung, flexportand Peloton.
Look, we've talked aboutPeloton versus Flexport.
(25:21):
We've talked about Samsungversus a few different carriers
that they filed against.
But this is basicallystore-door movements and the
argument hinging on theincentivization principle,
saying that the complainant sothe one filing the lawsuit
understood that they were undera store door arrangement and
that they had no control overthe movement of the goods, and
(25:42):
so what that means is that theythought that whoever they're
contracting with was going tomove it all the way from the
warehouse to their door, and soanything in the meantime really
was not under their.
Whoever contracted for themovement of the goods, it was
not under their control, and sowhy should they be?
This is their argument.
Why should they be responsiblefor detention and demurrage
(26:04):
charges when they had no reasonto be assessed?
Those because they had no, theyhad no um control over the
movement of the goods.
And and ultimately, if detentionand demurrage should be, as the
FMC has said a few times, basedon the incentivization of the
movement of the goods, right, Imean you could go with the
Evergreen case they're sayingwhere they said that weekends
(26:27):
and holidays, because you can'tactually move the goods during
that time period, that the FMChas said that dampens or that
what's the word I'm looking forhere that creates an
impossibility of movement, right, which goes against that
(26:48):
incentivization of the movementof the goods.
And so what they're saying islook, it was impossible for us
to do anything to move thosegoods and so there is no
incentivization for us to movethose goods because we weren't
supposed to be part of it.
Distillation of what Samsung issaying and what Peloton is
saying.
In these store door movementsthey're saying, look, they could
not control the incentivizationof the movement, they could not
(27:08):
control the movement of thestuff at all, so why should they
be responsible for thosecharges for things not moving?
Right, detention or demurrage,some of the Flexport complaints,
as we've talked about before,but Flexport said, or some of
the Peloton complaints thatPeloton said against Flexport,
saying Flexport assessed thedetention demerge charges
against Peloton and Pelotoncontainers and circumstances
(27:30):
where Peloton was not the partyresponsible to pick up, move or
return those containers.
And also they said Peloton saidFlexport assessed the D&D
charges against Peloton andPeloton containers and
circumstances where chargingPeloton detention to merge
charges did not incentivize thepickup of the cargo or primarily
function to promote cargofluidity.
So the ultimate question on thesecond part being if the BCO
(27:52):
ship are now under the detentionto merge rule, as the build
party is not responsible for themovement of the goods at that
stage and the assessment ofdetention to merge would not
have the effect of incentivizingthe movement of the goods
because the shipper couldn't orwasn't supposed to do anything
about it, then can the carrieror whoever was contracted the
NBOCC properly charge detentionto merge back to that customer,
(28:14):
back to that shipper?
We'll see, we'll see.
We'll see.
Based on what the FMC haspreviously said, especially
about that incentivization rule,it seems like the answer might
be no right, that this shouldn'thave been charged back to the
person who, under theircomplaint filing, had no control
over the movement of the goods.
(28:34):
But we'll see.
And I want to be careful herebecause, as I've said before and
as I'm going to say now, thisis just one side.
We have had motions to dismissfiled in almost all of these
cases.
There's been some interestingconversations in those motions
to dismiss.
But I'm going to.
I'm most interested here inwhat the FMC has to say about
these cases.
So I'm going to wait on theseas well.
(28:54):
Like I said, I want to bring upthings that I'm watching and
the reason for kind of notdiving into them more fully yet
as a discussion.
But at this point I'm mostinterested in what the FMC has
to say about these and we're notgoing to be there for a kind of
collective case law decision onhow things can be applied, how
(29:20):
this incentivization principlemoves in the D&D world and who
it moves on right, who thesecharges are for.
So we'll see.
Going to continue to watch, allright.
The other thing that I'mwatching minimum quantity
commitments and theenforceability of service
contract terms, right?
So remember, we talked aboutthis when we were contract
(29:41):
commitments to Bed Bath Beyondagainst the carriers that they
were filing against.
They were saying that thedetention of urnage assessed for
(30:06):
periods of time in which BedBath Beyond's ability to pick up
containers at the ports orreturn empty containers promptly
was constrained due tocircumstances outside the
control of Bed Bath Beyond, suchas congestion policies
implemented and that sort ofthing.
But then the third allegationthat Bed Bath Beyond at least
had in these cases wasintroducing Bed Bath Beyond to
enter into premium ratecontracts as a precondition to
(30:28):
carry out just a fraction of thequantity, scooting them to spot
market right.
That's what this kind of hingeson.
They were alleging that theyhad minimum quantity commitments
on an annual basis thataveraged out to per month.
And this is where I think thatI'm most interested to follow
these is the enforceability ofservice contracts, because when
(30:49):
you get into and I don't want togo into a full contract
discussion in the legal world,but when you get into service
contract commitments, you getsometimes a better rate based on
a commitment of a certainnumber of TEUs 20 equivalent
units.
So that's a container right.
Most containers that we seethese days are 40 equivalent
units of 40 feet long, butthey're still mostly measured in
(31:12):
kind of that TEU 20 equivalentunit, which is like a half size
of what we mostly see on vesselsand on the road and I say on
the road when a ocean carrierbox.
It's different than what's on atruck.
The ocean carrier box sits on achassis and gets pulled behind
a truck, but really they usuallydon't go too far, a hundred,
(31:35):
maybe 200 miles away from a port, but like, the trucks you see
in the middle of the country arenot the same boxes obviously
that you would see on a vessel.
Okay, so minimum quantitycommitments and service
contracts right.
So that saying they might have,in this case, right, it was
2100 FEUs annually.
So 2100 FEUs annually.
They said it worked out to bean average of 175 FEUs, but I
(31:58):
mean, really it's annually.
So what's the term, what's theperiod of time that those FEUs,
the 40-foot equivalent units,were supposed to be moving, and
how can you enforce that?
So you get to the end of theyear.
Are they supposed to move 2,100FEUs in December?
I mean no, right.
I mean that's probably notfeasible.
(32:20):
There was no like, if theydidn't move anything in April,
can you come after them for that?
Because they didn't necessarilysay that a certain number had
to be moved in the month ofApril or even on the day of
April 16th, right?
So if they had said you need tomove 50 boxes on April 16th,
that's something you can enforce, right, that has that
(32:41):
enforceability.
But if you say, during the year2020, you were supposed to move
2,100 FEUs, that's the questionhere.
That's something that I thinkthe potential of the string of
(33:05):
cases has the potential to serveand to provide clarity.
So we'll continue to watchthese Minimum quantity
commitments right in the servicecontract enforceability.
The last thing that we're goingto watch these Minimum quantity
commitments right and theservice contract enforceability.
The other, the last thing thatwe're going to be mentioning
here today, because we'vealready been talking for quite a
while, but the last thing thatI want to highlight is the MTDI.
Right so, the MTDI there werecomments required, or there were
(33:29):
comments due last week or twoweeks ago.
They're in, they're in andthose comments have been filed.
I'm still working my waythrough them, but I wanted to
let you know that there arecomments filed.
This was on the request forinformation.
Number two, and just as aoverall background of the MTDI,
because we just talked toCommissioner Bensel a few weeks
(33:49):
ago.
Commissioner Bensel, inDecember 2021, began holding
meetings with maritime andintermodal stakeholders.
These were one-hour meetingssometimes a little bit longer
that were held roughly everyweek and they ran from December
2021 to June 2022.
And they culminated with a datasummit.
These one-hour meetings thatran for I think it was 18
(34:10):
different sessions are on theYouTube page of the FMC.
Go check them out.
You don't have to look at allof them, but go check them out.
And they are broken intoindustry sectors and it's so
interesting to hear I mean, itwas, it was what four years ago
now, or three years ago, two tothree years ago so not that long
(34:31):
ago but they're still relevant.
These conversations are stillrelevant.
Some companies have have longsince gone away, but there are
still relevant.
Some companies have long sincegone away, but there are still
quite a few companies that arestill there and still building
that.
I think that hearing from theperspective of the companies on
data exchange and maritime datainformation is still relevant
(34:53):
and that was kind of thefoundation, the building blocks
to this larger conversation thatwe're having as a supply chain
ecosystem and certainly as acountry, but as a supply chain
ecosystem internationally.
It could, at least in part, bebased on the conversation
started with these videorecordings.
So if you haven't yet, Istrongly urge you to go check
(35:16):
out these videos.
They're so interesting.
But yeah, so this effort wascalled the Maritime
Transportation Data Initiativeand Commissioner Bensel said
that he focused on threedifferent objectives with this
initiative.
So, and it continues on rightCataloging the status quo and
maritime data elements, metrics,transmissions and access,
identifying key gaps in datadefinitions and classifications.
And developing recommendationsfor common data standards and
(35:40):
access policies and protocols.
So go check out those videos.
They were OTIs freightforwarders, nvoccs, ocean
carriers, which includedHoppag-Lloyd, msc, one, costco,
zim, large aggregators, flexportand CH Robinson.
Maritime labor standards bodies, including DCSA and NIST.
Technology platform providers.
(36:00):
We had NYSEX, we had Cargologic, we had other US government
agencies, usdot, cbp Commerce,usda railroad stakeholders, mtos
.
I mean, you get the idea.
He covered a lot of ground withthis initiative, and so what
are we talking about now?
Of ground with this initiative?
And so what are we talkingabout now?
The RFI?
Number two the request forinformation.
(36:23):
Number two he was asking foradditional information from the
shipping public to expand theinformation gathered from the
MTDI sessions and addressadditional topics related to
data availability, accuracy andexchange.
This is just.
There's so much value.
There's so many gold nuggets inthis entire process.
So go, take a look, stayengaged.
Much value, there's so manygold nuggets in this entire
process.
So go, take a look, stayengaged, pay attention here.
(36:44):
This is all really interesting.
So those are the big thingsthat I've been watching.
So I'm going to continue towatch.
We'll do larger, deeper divesas the stories start to develop
and there's more of a completepicture.
But I did want to raise todayall of the things that I'm
watching and raise these back tothe top, because while the
detention to merge final rulecertainly is important, there's
a lot of things happening aroundit.
(37:05):
But then there's a lot ofthings happening that have the
potential to set precedentthrough the FMC cases.
I've said this before the FMCreally prefers, when they do
rules and regulations, to stayin the guardrails right.
They want to kind of providethe guardrails around the
industry and they want the caselaw to determine the specifics,
(37:26):
the details, that application,because then you get an actual
fact pattern and then you canapply the application right of
that rule or whatever it is tothose cases, to those fact
patterns, and that's what we'restarting to see here.
I also want to bring up we havethe unreasonable free-to-deal
and negotiate with respect tobustle space accommodations.
(37:47):
That rule is still ongoing.
That has the potential for somesignificant impact in the
industry.
Although it still is guardrails, there are some definitions in
that rule that I alwaysencourage you to take a look at.
Comments have closed on that.
We're expecting a final rule,probably a final rule on that in
the next few months, maybe nextfew weeks.
The FMC chairman, dan Ruffet,has mentioned a few times that
(38:11):
he expects that final rule to beout, so we're still waiting on
that.
That'll probably come out,hopefully sometime this summer.
That one has potential to bereally impactful for the
industry and he said that it's atricky rule that they need to
get right.
So I'm going to continuewatching that as well.
But, as always, the guidancehere is general and for
(38:31):
educational purposes.
It should not be construed tobe legal advice directly related
to your matter.
If you need an attorney,contact an attorney, but if you
have specific legal questions,feel free to reach out to me at
my legal company, squallStrategies.
Otherwise, for the non-legalquestions the e-learning, the
general industry information andinsights, the employee
trainings come find me at theMaritime Professor.
If you like these videos, letme know, comment, like and share
(38:52):
, and if you want to listen tothese episodes on demand or if
you missed any previous episodes.
Check out the podcast by Landonby Sea.
If you prefer to see the video,they live in my YouTube page by
Landon by Sea, presented by theMaritime Professor.
And while you're at it, checkout our website,
themaritimeprofessorcom.
Until next week.
This is Lauren Began, theMaritime Professor, and you've
just listened to by Landon bySea.
See you next time.
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, oh, oh, oh, oh, oh, oh, oh,oh, oh, oh, oh, oh, oh, oh, oh,
(00:21):
oh, oh, oh, oh, oh, oh, oh, oh,oh, oh, oh, oh, oh, oh, oh, oh,
oh, oh.
Oh, I got Good night.
I'm living bold this is what itlooks like.
I'm a ticket out of the world.
(00:58):
There's been a lot of movementout of the FMC recently, but
most people have been focused onthe detention and demurrage
final rule, right Rightfully so.
Let's take a quick inventory ofwhat else the FMC has been up
to.
Today.
We're reviewing what I'mwatching at the Federal Maritime
Commission.
Hi, welcome to, by Land and bySea, an attorney breaking down
the weekend supply chainpresented by the maritime
(01:21):
professor me.
I'm Lauren Began, founder ofthe Maritime Professor and
Squall Strategies, and I'm yourfavorite maritime attorney.
Join me every week as we walkthrough both ocean transport and
surface transport topics andthe wild world of the supply
chain.
As always, the guidance here isgeneral and for educational
purposes only.
It should not be construed tobe legal advice and there is no
(01:42):
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
But before we get into thediscussion of the day, let's go
through my top three stories ofthe week.
All right, story number one Twoweeks ago, we talked about the
ILA the InternationalLongshoremen's Association
releasing a statement sayingthat they were suspending
(02:02):
negotiations with the USMaritime Alliance over
automation concerns.
Well, this week there was alittle bit of good news.
A little bit of good news notnecessarily for the larger
contract discussion, but theSouth Carolina ports reached a
settlement with the ILA overdispute at their terminal
regarding jurisdictionalconcerns about state workers
versus ILA workers, dedicatedworkers at the port and this is
(02:25):
an oversimplification, but Iwanted to bring this to your
attention.
We're not going to dive too farinto it, but, as the JOC
reports, this issue has largelykept the terminal offline since
its opening in 2021.
So this was the subject of a USSupreme Court case.
Joc does a nice job ofsummarizing.
So they said.
The agreement, which followsthe ILA de facto victory in a
(02:46):
legal case that almost reachedthe US Supreme Court so almost
reached gives Leatherman's craneoperators a choice to remain
state employees or become an ILAmember, south Carolina ports
said in a statement, stateemployees at their other
container terminals can alsoelect to become ILA members or
they can remain an employee ofSouth Carolina ports.
So also in the news this weekon the ILA.
(03:08):
So that's good news, right.
Moving forward settlementdiscussion agreements right.
Those are always good things,and the fact that a port will
now be able to work moreeffectively is a great thing for
the free flow of goods right.
But also in the news this weekon the ILA there were over 160
signatories to a letterrepresenting all corners of the
(03:29):
US supply chain.
They sent a letter to the WhiteHouse asking for the
administration to provide anyand all support to the parties
so that they can reach a finalagreement, the parties here
being obviously the ILA and theUS Maritime Alliance.
They want something moved.
They are nervous about thepotential for a work stop or a
strike or anything happeningafter the expiration of this
(03:53):
master contract, september 30th.
I said this last week or a fewweeks ago.
We have a lot of time betweennow and September 30th, but we
also have a lot of politicalthings happening in the meantime
, not least of which is the USpresidential elections.
So as we get closer toSeptember 30th.
Hopefully it stays insulatedfrom the politics.
(04:13):
I mean I don't know how itcould, but hopefully it stays
insulated from the politics.
Hopefully some sort ofagreement is achieved before
they get to September 30th,expiration of this master
contract.
But we'll see.
But over 160 signatories to aletter I mean that's a lot of
people signing on saying pleasedo something.
They said provide any and allsupport to the parties so they
(04:36):
can reach a final agreement.
We'll see.
I'll keep watching this.
The entire industry is going tokeep watching this.
Hopefully maybe the pressurewill be lessened during the
summer months and they can cometo an agreement not only in
their regional agreements butalso in that master contract
before the September 30th,because I think August is going
(04:57):
to be here before you know itand then we're looking at
September and September 30thcomes quick.
So we'll see.
All right Story.
Number two we're continuing tosee a movement towards
electronic bills of lading.
This week JOC reported that HMMHyundai Merchant Marine will
begin offering electronic billsof lading to their customers
starting July 8th.
They're going to be usingsoftware from CargoX which is
(05:19):
based on Digital ContainerShipping Association's DCSA
standards.
So nine of the top 10 carrierslast year committed to using
only EBLs electronic bills oflading by 2030.
So I mean, I think we're reallygoing to continue to see,
obviously, this migration towardelectronic bill of lading use.
So what does this mean for you?
(05:40):
Start checking your own systemsright.
Are you ready for EBLs?
Are you ready for electronicbills of lading?
Time to start making thoseplans?
I'd say it's 2024, and this isgoing to.
This is committed to happen by2030 for nine of the top 10
ocean carriers.
So if you deal with oceancarriers, maybe it's time to
(06:01):
start looking at your system'sability to process and use EBL.
So just a not legal advice,obviously perhaps the best
practice, or just a check intoyour system's advisory.
So all right.
Story number three this storycaught my attention this week.
I didn't see it really reportedanywhere.
(06:22):
I was only able to sourceinformation on this from the
Facebook page and Turn to 10,which is a Rhode Island-based
news company.
So last week, on June 21st youmay or may not have known, but
the Newport, rhode Island, toBermuda sailing race kicked off
the Newport to Bermuda.
They kicked off and during therace, two boats sank.
(06:47):
Two Wild stories too.
So the first one, alliance.
They think that they might'veactually hit a submerged
container.
So from the Facebook page, likeI said, but it was direct
source, I mean it was from theNewport Bermuda Facebook page
talking to the Coast Skippersand they were recounting what
(07:07):
happened.
So what they think is theyheard a loud boom on the keel
and then they heard a loudsecond boom on the rudder and
they said that the boom soundedmetallic and they said it gave
them their fatal blow and thatthey were then taking on water,
their fatal blow, and that theywere then taking on water and
(07:28):
the damage was too much thatthey couldn't fix it and the
decision was made within 20minutes I think they said 30
minutes to abandon ship.
They said they were fortunatelyrescued quickly by fellow
racing sailing vessels, but thenthis was followed by a second
sailing ship, the Gunga Din,having to abandon their vessel
80 miles from the finish.
The suspected cause of thesecond vessel taking on water
(07:49):
was not actually announced.
I couldn't find where it was.
At one point I've heard thatmaybe they both thought that
they hit containers.
I didn't find any evidence ofthat or any story recounting of
the Gunga Din on what happenedthere.
But look really interesting.
The first vessel, the Alliance.
There's an interesting 12-minutevideo on Facebook like I said,
(08:10):
I'm going to link it in the shownotes here where the
co-skippers Mary Martin and EricIrwin recounted the evening of
the collision and attributetheir preparedness to not only
their robust safety program ofthe sailing vessel but of their
training from their careers.
So Mary mentions having servedshortly in the US Merchant
Marine and was actually agraduate from Massachusetts
(08:31):
Maritime Academy.
I love to see it right MerchantMariners and Maritime Academies
.
And Eric, his experience wasactually as a naval submariner
and a retired Navy officer.
So I mean that's great.
Also, I wanted to just kind ofclarify some terminology here.
I don't think that I've stoppedand paused and explained this
(08:51):
quite, and I see that theseterms are sometimes misused, or
certainly the second term ismaybe not used, but we've been
talking a lot about ship strikesperiodically on this program
between the Baltimore Bridge andnow this collision at sea.
I wanted to take a minute toclarify those terms right.
Elysian is an incident where avessel hits a fixed object, like
(09:12):
a bridge, an elysian, and thecollision is where two moving
objects strike each other.
So the bridge accident you'veheard me refer to it as an
elysian.
That's what it was A vessel hita fixed object.
It was an elision, because itcan't be a collision, because
the bridge isn't moving either.
So it's an elision.
But the container strike right.
The sailing vessel hitting acontainer out there.
(09:33):
I mean I guess I'd mostappropriately call it a
collision because both objectswere moving.
I mean there wasn't propulsionon the container, I wouldn't
think or the alleged containerwe're still not really sure what
it was out there, but what elsecould it be out in the middle
of the ocean?
I don't know.
But they said right.
So an elision is hitting afixed point with a vessel and a
(09:53):
collision is where two movingobjects strike each other.
Just a little point ofclarification because, as you
listen to this podcast, I alwayslike to clarify and make you
better maritime-focused audiencemembers.
So, continuing on with thestory, right, they were about 80
miles from the Bermuda finishwhen the Gunga Din said that
(10:18):
they were taking on water and,like I said, it was according to
the local Rhode Island reporter, news 10 WJAR.
We'll see.
Well, this is interesting.
And, like I said, it wasaccording to the local Rhode
Island reporter, news 10 WJAR.
We'll see.
Well, this is interesting.
I'm interested to hear whathappened with the second vessel
and why they were taking onwater.
I mean, the alliance sunk.
I'm not sure exactly whatultimately happened to the Gunga
(10:39):
Din.
Information is still coming outabout that.
I mean, that only happened.
The alliance sunk on Sunday, sotwo days after the race started
, and I believe the Gunga Dinwas taking on water, like I said
, 80 miles from the finish.
Um, I think that was Tuesday,perhaps, um, but yeah, all in
(10:59):
all, this year there were 160boats in this race and it's a
636 mile race from Newport,rhode Island, to Bermuda.
So really interesting and sothankful that all members of
both sailing teams were fullyaccounted for and everybody's
safe and survived.
And what a story.
All right, well, let's get intothe meat and potatoes of the day
(11:20):
.
Here we are doing a roundup ofall the things that I'm watching
from the FMC, or at leastcertainly some of the most
prominent things that I'mwatching.
They're not necessarily movingfast, but I do think that
they're still worth watching andmentioning every once in a
while.
So let's get into it.
So the first one is thepetition for the extension of
time for the detention anddemurrage billing requirements.
(11:43):
So this is the petition of theOcean Carrier Equipment
Management Association, osema,for an extension of the
effective date of the final ruleof demurrage and detention
billing requirements.
So this one we talked about, itwas filed close to the
effective date of the May 28thand it was asking for an
extension of time, sayingbasically, look, once they had,
(12:06):
once the FMC had clarified thefinal rule and made those
amendments, they said that theyonly had what?
19 days to review that andchange their systems.
So comments were requested inthis petition and so far the
comments I mean there weren't aton, they were maybe less than
10, maybe six, I believe.
They didn't show a lot of lovefor the extension of time and
(12:31):
I'm going to be bringing in afew of the quotes that were said
.
So Container Port Group said,and I quote extending the
compliance window at this pointwould just lead to massive
confusion and create an adminnightmare for all parties
involved.
Ok, and, like I said, these arejust some of the commenters.
(12:51):
Right, this isn't necessarilyeverybody out there and all that
, all that they feel, butcertainly these are the comments
that are filed and, as I alwayssay, if you don't file comments
, you can't have your voiceheard here.
So if you feel differently thanthe comments that I'm going to
be quoting here certainly getthose comments in.
It's important.
It's important to stay engagedin the process, especially when
(13:11):
comments are requested.
San Antonio Broker Services saysas an owner of a trucking
company that services the ports,I feel that any extension of
time to the Ocean CarrierEquipment Management Association
is unnecessary and uncalled for.
When we, as truckers, ask foran extension of time from when
they never gave us any, rather,they shut us out so that they
could hurt us financially aswell as put us in a position to
(13:34):
not only lose our customers butalso our business.
Enough is enough.
The date should stand.
That's San Antonio BrokerServices.
Mallory Alexander InternationalLogistics says that they
strongly oppose any extensionsand urges the FMC to allow the
final rule requirements toremain in place.
The alleged confusion over thefinal rule cited by Osema was
clarified by the FMC prior tothe rule taking effect.
(13:56):
The claim that ocean carriershave only had 19 days to review
and revise their billingpractices fails to recognize
their failure to takeresponsibility.
Despite several years ofongoing discussions surrounding
their unfair billing practices,despite pleas from motor
carriers documenting thosepractices and the clear
directive put forth in OSRA 22more than two years ago, they
have had more than enough timeto figure out how to bill fairly
(14:18):
and accurately.
That was a quote from MalloryAlexander International
Logistics.
I mean, these are kind ofscathing.
You can tell that there's someemotions involved here, right,
certainly unhappy with pastthings that have happened, but
ultimately they're saying, look,they oppose these extensions.
The last one that I'm going toread here is the Bi-State Motor
(14:38):
Carriers Association where itsays the Bi-State strongly
opposes any extension and urgesthe FMC to reject a seamless
petition allowing the final rulerequirements to remain in place
.
So I'll continue to watch thisright.
I said previously I'm notexactly sure, especially because
this final rule has alreadygone into effect.
It would be a big thing topause it.
(15:01):
But what Osema might be askingfor is if they're found to have
any noncompliance, perhaps theycould be justified in
noncompliance if the FMC, kindof post-hack, puts a extension
for that effective date.
So like, let's say, somethinghappened on May 30th where the
effective date was May 28th.
(15:22):
If the FMC were to say look, wethink that you well, not the
FMC really, but the Court ofAppeals here if the court were
to decide that Osema should havehad an extension of time,
that's where it couldpotentially play in is how I
maybe see it being effective.
I don't think the entire ruleis going to be paused but there
(15:45):
potentially might be a look.
We're going to backdate theeffective date out to June 15th
or whatever, to kind of affordfor any inconsistencies in that
time.
We'll see, we'll see.
I mean we're still.
We are one month from theeffective date.
Today is June 28th.
We are one month from thateffective date of the detention
(16:05):
and demurrage rule.
I kept saying once we hit that30-day mark, once we hit that
one month mark, it's going to beinteresting.
I think that this is going tobe an interesting next few weeks
when we start to hear about howall of that 30 days, issuance
of invoice and dispute filingand website dispute information
(16:30):
and instructions this is wherewe're going to start to see the
rubber meet the road.
But we'll see.
We'll see this petition stayingon message right.
So this petition for theextension of time for ASEMA
we'll see.
The comments filed so far arecertainly not favorable to the
petition as I read them, butwe'll see where that goes.
(16:51):
The other petition that we'rewatching right is the petition
in the US Court of Appeals forthe DC Circuit.
This is the World ShippingCouncil's petition against the
FMC's rule?
There's not.
We brought this up quite a bit.
There's not much movement onthis, other than there was a
request to include an emailexchange between the FMC's
general counsel, chris Huey, andthe World Shipping Council CEO,
(17:12):
john Butler.
Sees General Counsel Chris Hueyand the World Shipping Council
CEO, john Butler.
It's a pretty interestingexchange but at this point we
haven't heard much from thecourt and that's really what I'm
waiting for.
The exchange is really kind oftalking about the ability to
issue invoices to motor carrierswhen they might be directly
contracted or part of theoverall.
(17:33):
The World Shipping Councilessentially said that there
wasn't jurisdiction here for theFMC and that basically a
petition against the whole finalrule, but also clarification
for that part of it on issuinginvoices to motor carriers and
how motor carriers are part ofthose direct contractual
(17:55):
relationships, or theexplanation in the preamble,
which is ultimately where theFMC made their rule correction
right.
So the FMC as we've talkedabout before and please go back
to some of the old episodes onthat but the FMC issued their
final rule correction, but theyonly issued that in the preamble
and the discussion.
(18:15):
So I'm really still waiting allthis to say.
I'm still waiting on the courtto say something.
There were some proceduraldeadlines around the May 20th
date.
We didn't hear much out of thecourt.
I was thinking maybe if we weregoing to hear something, that
would have happened then,meaning eight days before that
rule was supposed to go intoeffect.
It did go into effect.
(18:36):
We didn't hear anything fromthe court.
I'm still looking at the docket.
I don't see a lot happeningfrom the court perspective,
certainly filings back and forthand that sort of thing.
But I'm going to keep watchingthis.
I'm not exactly sure, similarto the other petition for the
extension of time, where thatmight have a little bit more
likelihood because it might notimpact the industry.
(18:58):
I don't think that this courtwould want to stop a rule that's
already gone into effect fullstop, right?
I mean, that's kind of what'sbeing asked here, especially
since it's such a significantupdate to how detention
demurrage invoices are issuedand the contents of those
invoices, right.
I mean, so this rule has reallybeen lauded as trying to
clarify what has happened or howdetention to merge is
(19:22):
approached from an invoicingperspective.
Right, the billing party, thebilled party.
I'm going to keep watching thispetition.
I think that it's interesting.
I think that this has somepotential for significant
impacts.
If the court were to decide tosomehow stop, delay, pause or
overturn this final rule ondetention and demurrage and I
(19:50):
say that because the FMCclarified what the World
Shipping Council was asking forclarification on that might have
made some significant changes.
We'll see.
We'll see, but, like I said,there was some discussion about
including an email exchangewhere they were talking about
(20:13):
the questions that the WorldShipping Council had on this
final rule with respect to themotor carriers.
Still watching this.
I'm going to keep watching this.
I periodically check into thedocket and I think that this is
an interesting one.
The other thing that we'rewatching is the chassis
investigation cases.
Right, so I'm still watching.
After the FMC announced thatthey would be investigating
(20:33):
possible failure to comply withchassis provisioning orders.
So, off of the announcementfrom the Federal Maritime
Commission, it said the FMCopened an investigation today to
determine if the Ocean CarrierEquipment Management Association
, or SEMA, and its members arecomplying with a decision issued
earlier this year establishingthe right of shippers and
truckers trucker choice inchassis provisioning for
merchant haulage in four key USmarkets.
(20:56):
As the FMC explains, thecommission initiated the
non-adjudicatory investigationin response to reports that
chassis providers in Los Angeles, long Beach, chicago, memphis
and Savannah are not complyingwith a cease and desist order
issued by the commission onFebruary 13th 2024.
In the case, case intermodalmotor carriers conference
(21:17):
American Trekking Associationversus OSEMA Ocean Carrier
Equipment Management Associationthat's docket number 20-14.
In case anybody wants to go intothe FMC's reading room, you can
actually look at the docket andsee what's been filed.
What's going on the decisionthat was determined at that
point or the partial decisionthat was determined filed.
What's going on?
The decision that wasdetermined at that point or the
partial decision that wasdetermined.
So the announcement continueson.
(21:38):
The investigation will beconducted by the Commission's
Bureau of Enforcement,investigations and Compliance
and will examine whether OSEMAand its members have altered
their policies and practices asrequired by the cease and desist
order.
Non-adjudicatory investigationsprovide BEIC that's that Bureau
of Enforcement, investigationsand Compliance with subpoena
powers as a discovery tool.
Evidence of wrongdoinguncovered by BEIC may be used by
(22:00):
the commission to seek aninjunction in federal district
court.
Beic can also use any evidenceof wrongdoing to initiate its
own enforcement action and seekcivil penalties for
non-compliance with thecommission order.
So this all comes from thisongoing case, this Intermodal
Motor Carrier Conference,american Trucking Association,
osema versus OSEMA.
One interesting update here onthat case that docket the DOJ,
(22:24):
the Department of Justice, fileda motion for leave to file a
brief amicus curiae.
So that's essentially a rightamicus curiae, a friend of the
court, offering additionalinformation or perspective on
this case, and so what the DOJsaid in their filing was that
they wanted to quote help toclarify two issues that have
risen in this matter One, thedivision's business review
procedure and two, what weight,if any, the commission should
(22:46):
give to a business review letterthat the division issued in
2014 to independent equipmentproviders, flexivan Leasing and
Direct Chassis Link.
I'm going to keep watching thisone.
There are a lot of issues goingon here, certainly one issue
being the jurisdictionalauthority of the FMC over
chassis and chassis pools.
Right, I mean, that's partlywhat some of the contention is
(23:06):
here.
There's a gray area on theFMC's jurisdictional authority.
Certainly, there's a movetoward and, depending on who you
ask, right saying that the FMChas jurisdictional authority
over through bills of lading andthrough bills of ocean
shipments, but is regulating thecompetition or perhaps the
anti-competitive actions inchassis part of that right?
(23:29):
That's where I say that this isgoing to be.
Hopefully the FMC will weigh inon that gray area jurisdiction
and I mean they've certainlysaid that in some of their
initial decisions or partialdecisions here.
But this is going to be aninteresting one.
Also, the chassis side ofthings, right, the chassis pools
and the anti-competitive impactthat the FMC has said that
(23:53):
those pools in merchant haulagehave.
We've gone into that case alittle bit more in previous
episodes.
I encourage you to go look atthose.
But as we learn more from this,it's getting legally
procedurally interesting,confusing, complicated.
So I'm going to keep watchingthis and ultimately, as you know
(24:14):
, I try to break things down, Itry to oversimplify them so we
can all understand what's goingon this one, I want to wait a
little bit more because I thinkthat there is so much contention
here that I want to make surethat I don't miscategorize or
misexplain what I'm seeing inthese chassis cases.
There's a legal procedurethat's happening, there's an
(24:37):
investigation on the cease anddesist order, there's attempts
at appeal and I say attempts atappeal because technically the
full docket isn't final butthere's this one decision that
is, and so I just want to makesure that we get a little bit
more of the full picture here.
As you know, I'd like to stayfair and just explain what's
(24:57):
happening from a neutral lens,and that's what I want to make
sure that I'm doing here.
So I've covered that before.
I'll continue to watch it andcertainly cover it in more
detail as we get moreinformation on the chassis cases
.
We also have a string ofstore-to-door cases right.
These are the Samsung, flexportand Peloton.
Look, we've talked aboutPeloton versus Flexport.
(25:21):
We've talked about Samsungversus a few different carriers
that they filed against.
But this is basicallystore-door movements and the
argument hinging on theincentivization principle,
saying that the complainant sothe one filing the lawsuit
understood that they were undera store door arrangement and
that they had no control overthe movement of the goods, and
(25:42):
so what that means is that theythought that whoever they're
contracting with was going tomove it all the way from the
warehouse to their door, and soanything in the meantime really
was not under their.
Whoever contracted for themovement of the goods, it was
not under their control, and sowhy should they be?
This is their argument.
Why should they be responsiblefor detention and demurrage
(26:04):
charges when they had no reasonto be assessed?
Those because they had no, theyhad no um control over the
movement of the goods.
And and ultimately, if detentionand demurrage should be, as the
FMC has said a few times, basedon the incentivization of the
movement of the goods, right, Imean you could go with the
Evergreen case they're sayingwhere they said that weekends
(26:27):
and holidays, because you can'tactually move the goods during
that time period, that the FMChas said that dampens or that
what's the word I'm looking forhere that creates an
impossibility of movement, right, which goes against that
(26:48):
incentivization of the movementof the goods.
And so what they're saying islook, it was impossible for us
to do anything to move thosegoods and so there is no
incentivization for us to movethose goods because we weren't
supposed to be part of it.
Distillation of what Samsung issaying and what Peloton is
saying.
In these store door movementsthey're saying, look, they could
not control the incentivizationof the movement, they could not
(27:08):
control the movement of thestuff at all, so why should they
be responsible for thosecharges for things not moving?
Right, detention or demurrage,some of the Flexport complaints,
as we've talked about before,but Flexport said, or some of
the Peloton complaints thatPeloton said against Flexport,
saying Flexport assessed thedetention demerge charges
against Peloton and Pelotoncontainers and circumstances
(27:30):
where Peloton was not the partyresponsible to pick up, move or
return those containers.
And also they said Peloton saidFlexport assessed the D&D
charges against Peloton andPeloton containers and
circumstances where chargingPeloton detention to merge
charges did not incentivize thepickup of the cargo or primarily
function to promote cargofluidity.
So the ultimate question on thesecond part being if the BCO
(27:52):
ship are now under the detentionto merge rule, as the build
party is not responsible for themovement of the goods at that
stage and the assessment ofdetention to merge would not
have the effect of incentivizingthe movement of the goods
because the shipper couldn't orwasn't supposed to do anything
about it, then can the carrieror whoever was contracted the
NBOCC properly charge detentionto merge back to that customer,
(28:14):
back to that shipper?
We'll see, we'll see.
We'll see.
Based on what the FMC haspreviously said, especially
about that incentivization rule,it seems like the answer might
be no right, that this shouldn'thave been charged back to the
person who, under theircomplaint filing, had no control
over the movement of the goods.
(28:34):
But we'll see.
And I want to be careful herebecause, as I've said before and
as I'm going to say now, thisis just one side.
We have had motions to dismissfiled in almost all of these
cases.
There's been some interestingconversations in those motions
to dismiss.
But I'm going to.
I'm most interested here inwhat the FMC has to say about
these cases.
So I'm going to wait on theseas well.
(28:54):
Like I said, I want to bring upthings that I'm watching and
the reason for kind of notdiving into them more fully yet
as a discussion.
But at this point I'm mostinterested in what the FMC has
to say about these and we're notgoing to be there for a kind of
collective case law decision onhow things can be applied, how
(29:20):
this incentivization principlemoves in the D&D world and who
it moves on right, who thesecharges are for.
So we'll see.
Going to continue to watch, allright.
The other thing that I'mwatching minimum quantity
commitments and theenforceability of service
contract terms, right?
So remember, we talked aboutthis when we were contract
(29:41):
commitments to Bed Bath Beyondagainst the carriers that they
were filing against.
They were saying that thedetention of urnage assessed for
(30:06):
periods of time in which BedBath Beyond's ability to pick up
containers at the ports orreturn empty containers promptly
was constrained due tocircumstances outside the
control of Bed Bath Beyond, suchas congestion policies
implemented and that sort ofthing.
But then the third allegationthat Bed Bath Beyond at least
had in these cases wasintroducing Bed Bath Beyond to
enter into premium ratecontracts as a precondition to
(30:28):
carry out just a fraction of thequantity, scooting them to spot
market right.
That's what this kind of hingeson.
They were alleging that theyhad minimum quantity commitments
on an annual basis thataveraged out to per month.
And this is where I think thatI'm most interested to follow
these is the enforceability ofservice contracts, because when
(30:49):
you get into and I don't want togo into a full contract
discussion in the legal world,but when you get into service
contract commitments, you getsometimes a better rate based on
a commitment of a certainnumber of TEUs 20 equivalent
units.
So that's a container right.
Most containers that we seethese days are 40 equivalent
units of 40 feet long, butthey're still mostly measured in
(31:12):
kind of that TEU 20 equivalentunit, which is like a half size
of what we mostly see on vesselsand on the road and I say on
the road when a ocean carrierbox.
It's different than what's on atruck.
The ocean carrier box sits on achassis and gets pulled behind
a truck, but really they usuallydon't go too far, a hundred,
(31:35):
maybe 200 miles away from a port, but like, the trucks you see
in the middle of the country arenot the same boxes obviously
that you would see on a vessel.
Okay, so minimum quantitycommitments and service
contracts right.
So that saying they might have,in this case, right, it was
2100 FEUs annually.
So 2100 FEUs annually.
They said it worked out to bean average of 175 FEUs, but I
(31:58):
mean, really it's annually.
So what's the term, what's theperiod of time that those FEUs,
the 40-foot equivalent units,were supposed to be moving, and
how can you enforce that?
So you get to the end of theyear.
Are they supposed to move 2,100FEUs in December?
I mean no, right.
I mean that's probably notfeasible.
(32:20):
There was no like, if theydidn't move anything in April,
can you come after them for that?
Because they didn't necessarilysay that a certain number had
to be moved in the month ofApril or even on the day of
April 16th, right?
So if they had said you need tomove 50 boxes on April 16th,
that's something you can enforce, right, that has that
(32:41):
enforceability.
But if you say, during the year2020, you were supposed to move
2,100 FEUs, that's the questionhere.
That's something that I thinkthe potential of the string of
(33:05):
cases has the potential to serveand to provide clarity.
So we'll continue to watchthese Minimum quantity
commitments right in the servicecontract enforceability.
The last thing that we're goingto watch these Minimum quantity
commitments right and theservice contract enforceability.
The other, the last thing thatwe're going to be mentioning
here today, because we'vealready been talking for quite a
while, but the last thing thatI want to highlight is the MTDI.
Right so, the MTDI there werecomments required, or there were
(33:29):
comments due last week or twoweeks ago.
They're in, they're in andthose comments have been filed.
I'm still working my waythrough them, but I wanted to
let you know that there arecomments filed.
This was on the request forinformation.
Number two, and just as aoverall background of the MTDI,
because we just talked toCommissioner Bensel a few weeks
(33:49):
ago.
Commissioner Bensel, inDecember 2021, began holding
meetings with maritime andintermodal stakeholders.
These were one-hour meetingssometimes a little bit longer
that were held roughly everyweek and they ran from December
2021 to June 2022.
And they culminated with a datasummit.
These one-hour meetings thatran for I think it was 18
(34:10):
different sessions are on theYouTube page of the FMC.
Go check them out.
You don't have to look at allof them, but go check them out.
And they are broken intoindustry sectors and it's so
interesting to hear I mean, itwas, it was what four years ago
now, or three years ago, two tothree years ago so not that long
(34:31):
ago but they're still relevant.
These conversations are stillrelevant.
Some companies have have longsince gone away, but there are
still relevant.
Some companies have long sincegone away, but there are still
quite a few companies that arestill there and still building
that.
I think that hearing from theperspective of the companies on
data exchange and maritime datainformation is still relevant
(34:53):
and that was kind of thefoundation, the building blocks
to this larger conversation thatwe're having as a supply chain
ecosystem and certainly as acountry, but as a supply chain
ecosystem internationally.
It could, at least in part, bebased on the conversation
started with these videorecordings.
So if you haven't yet, Istrongly urge you to go check
(35:16):
out these videos.
They're so interesting.
But yeah, so this effort wascalled the Maritime
Transportation Data Initiativeand Commissioner Bensel said
that he focused on threedifferent objectives with this
initiative.
So, and it continues on rightCataloging the status quo and
maritime data elements, metrics,transmissions and access,
identifying key gaps in datadefinitions and classifications.
And developing recommendationsfor common data standards and
(35:40):
access policies and protocols.
So go check out those videos.
They were OTIs freightforwarders, nvoccs, ocean
carriers, which includedHoppag-Lloyd, msc, one, costco,
zim, large aggregators, flexportand CH Robinson.
Maritime labor standards bodies, including DCSA and NIST.
Technology platform providers.
(36:00):
We had NYSEX, we had Cargologic, we had other US government
agencies, usdot, cbp Commerce,usda railroad stakeholders, mtos
.
I mean, you get the idea.
He covered a lot of ground withthis initiative, and so what
are we talking about now?
Of ground with this initiative?
And so what are we talkingabout now?
The RFI?
Number two the request forinformation.
(36:23):
Number two he was asking foradditional information from the
shipping public to expand theinformation gathered from the
MTDI sessions and addressadditional topics related to
data availability, accuracy andexchange.
This is just.
There's so much value.
There's so many gold nuggets inthis entire process.
So go, take a look, stayengaged.
Much value, there's so manygold nuggets in this entire
process.
So go, take a look, stayengaged, pay attention here.
(36:44):
This is all really interesting.
So those are the big thingsthat I've been watching.
So I'm going to continue towatch.
We'll do larger, deeper divesas the stories start to develop
and there's more of a completepicture.
But I did want to raise todayall of the things that I'm
watching and raise these back tothe top, because while the
detention to merge final rulecertainly is important, there's
a lot of things happening aroundit.
(37:05):
But then there's a lot ofthings happening that have the
potential to set precedentthrough the FMC cases.
I've said this before the FMCreally prefers, when they do
rules and regulations, to stayin the guardrails right.
They want to kind of providethe guardrails around the
industry and they want the caselaw to determine the specifics,
(37:26):
the details, that application,because then you get an actual
fact pattern and then you canapply the application right of
that rule or whatever it is tothose cases, to those fact
patterns, and that's what we'restarting to see here.
I also want to bring up we havethe unreasonable free-to-deal
and negotiate with respect tobustle space accommodations.
(37:47):
That rule is still ongoing.
That has the potential for somesignificant impact in the
industry.
Although it still is guardrails, there are some definitions in
that rule that I alwaysencourage you to take a look at.
Comments have closed on that.
We're expecting a final rule,probably a final rule on that in
the next few months, maybe nextfew weeks.
The FMC chairman, dan Ruffet,has mentioned a few times that
(38:11):
he expects that final rule to beout, so we're still waiting on
that.
That'll probably come out,hopefully sometime this summer.
That one has potential to bereally impactful for the
industry and he said that it's atricky rule that they need to
get right.
So I'm going to continuewatching that as well.
But, as always, the guidancehere is general and for
(38:31):
educational purposes.
It should not be construed tobe legal advice directly related
to your matter.
If you need an attorney,contact an attorney, but if you
have specific legal questions,feel free to reach out to me at
my legal company, squallStrategies.
Otherwise, for the non-legalquestions the e-learning, the
general industry information andinsights, the employee
trainings come find me at theMaritime Professor.
If you like these videos, letme know, comment, like and share
(38:52):
, and if you want to listen tothese episodes on demand or if
you missed any previous episodes.
Check out the podcast by Landonby Sea.
If you prefer to see the video,they live in my YouTube page by
Landon by Sea, presented by theMaritime Professor.
And while you're at it, checkout our website,
themaritimeprofessorcom.
Until next week.
This is Lauren Began, theMaritime Professor, and you've
just listened to by Landon bySea.
See you next time.
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