Topic of the Week (7/19/24):
Taking inventory of industry news and catching up on a few things - it's the Captain's Log Edition!
The Maritime Professorᵀᴹ presents By Land and By Sea Podcast - 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 - Rulemaking Round-Up
2 - National Shipper Advisory Committee recording from May 20th is posted.
https://www.fmc.gov/about/national-shipper-advisory-committee-nsac/
3 - FMC issued a Request for Additional Information re: the Gemini Cooperation Agreement (A.P. Moller - Maersk and Hapag-Lloyd AG and Hapag-Lloyd USA, LLC) - open comment period until Aug 15.
FMC Announcement:
https://www.fmc.gov/articles/fmc-issues-request-for-additional-information-regarding-gemini-agreement/
Federal Register:
https://www.federalregister.gov/documents/2024/07/17/2024-15640/notice-of-request-for-additional-information
Hapag-Lloyd website:
https://www.hapag-lloyd.com/en/landingpage/gemini.html
4 - Shipping rates are rising - cause for concern? A discussion.
gCaptain (a repost of Bloomberg News):
https://gcaptain.com/global-shipping-strains-spark-fears-of-an-inflation-comeback/
gCaptain:
https://gcaptain.com/ships-fleeing-the-red-sea-now-face-perilous-african-weather/
5 - Offshore wind turbine breaks off into water at Vineyard Wind offshore wind farm
gCaptain:
https://gcaptain.com/u-s-coast-guard-issues-warning-after-wind-turbine-blade-breaks-off-at-vineyard-wind-farm/
-------------------------------
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#ByLandAndBySea
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:26):
no-transcript.
Yeah, I walk to the beat.
When you see me coming, makesome room.
Everywhere I go, I'm in thespotlight.
This is a good life I'm living.
Bold.
This is what it looks like Onthe 15th hour of the world.
(00:58):
We've been having some marathonby land and by sea episodes
recently, so today I thoughtlet's just keep it quick and
take inventory of some of themajor stories happening in the
week.
As always, I'll sprinkle in mytake, but let's hop into our
Captain's Log edition.
Hi, welcome to, by Land and bySea, an attorney breaking down
the week in supply chainpresented by the Maritime
Professor.
Me.
I'm Lauren Began, founder ofthe Maritime Professor and
(01:20):
Squall 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's no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
(01:41):
So usually we go through my topthree stories of the week, but
today every story is a top story, so let's get right into it.
All right, story number one.
First stop, let's check in onthe FMC's rulemakings.
We really haven't checked inmuch.
We've been talking a lot aboutthe D&D rule, but we haven't
checked in on kind of the wholeroundup.
So over the past year or two,right, the FMC has been working
(02:04):
through three rulemakings thatthey were directed to take
undertake by the Ocean ShippingReform Act of 2022, which was
given to them by Congress, aswe're kind of talking a lot more
after Chevron about things thatare doled out by Congress
directly, and we're alsowatching a request for
information that was part of theMaritime Transportation Data
Initiative undertaken byCommissioner Carl Bensel.
(02:26):
So where are we with all ofthese rulemakings, right?
So the billing practices ofdetention and demurrage as we
know, that went into effect May28th, but there's some notable
things that we should kind oftalk about.
So we've talked about thesebefore, but, as we're doing our
roundup, right, these are thingsthat we want to make sure that
we're mentioning and keepingaware of and just noticing.
(02:49):
So the commission issued acorrection to the final rule
preamble text.
So that's that discussion partat kind of the meat of that
final rule.
They clarified the rulesapplication to carrier-trucker
relationships, which seemed tome and this is what I mentioned
at the time was that it seemedto me that that was kind of a
nod toward the World ShippingCouncil petition, right, I mean,
(03:16):
how could it not be and I saythat kind of in jest, but it
seemed like it was aligningthere, almost to kind of have
the FMC say look, we fixed theproblem.
But I've said it before andit's certainly true now, just
because the FMC made thatcorrection does not mean that
the court's going to agree.
And in this post-Chevron worldthe petition is still very much
alive and on the table.
Prior to Chevron I thought thatthere might have been some
(03:37):
deferral to the FMC or to theagency With Chevron gone and I'm
not necessarily doom and gloom,and I mentioned this previously
in one of the previous episodesand I'm not necessarily doom
and gloom, and I mentioned thispreviously in one of the
previous episodes I'm notnecessarily doom and gloom about
Chevron being gone, but I dothink that it's interesting
because now it will create moreof a discernment from the court
(03:58):
itself, whereas previously itmay have been encouraged, slash
directed through the Chevroncase, to defer to the agency
where the statutory authority solike, where Congress made a
clear directive.
So all that to say, now thatthe agency, the Federal Maritime
(04:19):
Commission, might not get thatautomatic deferral or like
encouraged to defer to theagency, we're going to see the
court probably look at it alittle bit more thoroughly.
And all that to say.
I think that's why the petitionis potentially if it was never,
if it was, it may have beenpartially, I guess, on its face,
(04:42):
potentially partially resolved,or at least that would have
been the FMC's argument for it.
Now, post Chevron, I think thatthis is something that is fully
on the table.
I don't think that we're goingto see this go away.
I think that we're going to seethe FM excuse me that I think
we're going to see the courtultimately weigh in on it.
But we haven't seen a lot ofactual court discussion.
(05:03):
We've just seen some proceduralthings going back and forth in
this case.
So in previous episodes wetalked a little bit more about
the World Shipping Council'spetition against the D&D billing
requirements, final rule.
So go take a listen if you wantto hear more.
But to be clear, like I said, Ithink that the petition is
still very much on the table,even though it seemed like the
FMC kind of, in their pressrelease, nodded to the.
(05:26):
I mean alluded to the fact thatwe're all set here right now
that now that the FMC has madethat correction, potentially the
FMC was starting to kind ofbuild the argument of, like well
, we're good, we solved thatproblem.
The petition is in front of theUS Court of Appeals for the DC
Circuit.
Um, the petition is in front ofthe U?
S court of appeals for the DCcircuit, so it's out of the
(05:47):
FMC's hands, right, um, and notmuch has really happened there.
But, like I said, I'm I'm stillwatching.
There's.
I shouldn't say nothing muchhas happened.
There's been some proceduralback and forth and right now
they're kind of talking aboutwhether some of this email
discussion over the the thisrule and the um ambiguity, I
guess, of the final rule wherethey made that correction, if
(06:09):
some of that email discussionback and forth between the World
Shipping Council and theGeneral Counsel's Office of the
FMC and just the FMC generally,should be included in the record
.
So, like I said, it's getting alittle bit legal, procedural.
Once we start getting intocontent and some of the
decisions related to this finalrule, I'll come back and let you
know, but I'm still watching.
I think this is prettyinteresting from a procedural
(06:31):
standpoint.
But OK, so boil down.
What did the petition say?
Like I said, if you want adeeper dive, go check out one of
the episodes previously.
But what did the petition say?
Essentially, the petitionerschallenged the final rule on
grounds that it is contrary tostatute so that's what Congress
gave the authority that Congressgives the agency, including
that it exceeds the commission'sauthority under the Shipping
(06:52):
Act and Ocean Shipping ReformAct and that it is arbitrary,
capricious and an abuse ofdiscretion and otherwise
contrary to law.
Petitioner seeks an ordervacating and setting aside the
final rule.
So, like I said, we still don'thave a ton of information here
on kind of the meat of it, butit clearly is going back and
(07:13):
forth about the trucker and themotor carrier and the
relationship and that directcontractual relationship and the
motor carrier having a directcontractual relationship.
In some instances it goes backto the announcement that was on
the World Shipping Council'swebsite, I believe, because some
(07:34):
of the discussion back andforth about the email exchanges
that's in the procedural seemsto be centering around that.
So, like I said, once the courtcomes out with some more
information, I'll keep reportingback.
But this petition, like I saidafter I said this when we talked
about Chevron it just got a lotmore interesting, and it was
(07:54):
always pretty interesting, butit just got a lot more
interesting.
But so what does all of thismean?
Right as of right now, may 28thwas the rule's effective date.
There has been no wordotherwise.
The entire rule, this detentionto merge rule remember there
was a talk about maybe thecontents might not go into
effect because the Office ofManagement and Budget still
needed to approve.
Nope, all of that happened.
May 28th was the date.
(08:14):
That's when it all went intoeffect.
But what could happen with thispetition?
So the court could decide tosomehow modify this final rule
based on that petition has?
So the court could decide tosomehow modify this final rule
based on that petition.
Hasn't happened yet.
Nothing has changed yet, but itcould.
But there could be somethingthat could happen here.
There could be some change.
I think that as a generalstatement, I mean this is a
(08:37):
fairly big overhaul.
I mean arguably it's stillparameters or guardrails on the
industry, but it's a pretty bigadministrative overhaul, right,
but now we have these 20 invoicerequirements and direct
contractual rule and timingrequirements and how to do
disputes and all of the thingsthat are in this billing
requirements final rule.
I mean the court could vacate,they could turn it over, they
(09:01):
could say no, everybody, stopeverything.
I just don't think that they'relikely to do that because the
rule did go into effect.
What might happen?
They might start taking outpieces, right.
Maybe it's the 20 invoicerequirements that they're going
to keep, because for the mostpart they were kind of
expansions and clarifications ofthe 13 invoice requirements
that Congress created.
But on the other hand, theycould go after direct
(09:24):
contractual relationship, right,because that's kind of an issue
here with the motor carriersand that's what World Shipping
Council is kind of getting to.
That might be something.
That direct contractualrelationship might be something
that we're going to want towatch closely as a impact of
this petition.
We'll see.
Now I'm just kind ofspeculating, but nothing has
(09:45):
happened yet.
The D&D final rule is still ineffect.
It went into effect May 28th.
There's also another petitionthat I think we should watch and
I'm not going to talk about ittoo much here, but I think I
have mentioned it at leastpreviously a petition to delay
the effective date, which isobviously passed right.
We keep talking about that.
May 28th was when thiseffective date started, date
which is obviously passed, right, we keep talking about that.
(10:05):
May 28th was when thiseffective date started, but what
I see that petition because itwas only filed a few days before
the effective date or maybe theday of it was a really quick
turnaround.
So the effective date hasobviously passed.
But I think it's worth watchingbecause this could have impacted
some of those compliancecomplaints, particularly about
noncompliance from members ofthe industry or certain parties
(10:29):
in the industry, noncomplianceon that May 28th date.
Maybe not everybody as of May29th, may 30th, was complying
with it, and so those are someof those complaints that might
come in If the effective dategets bumped back.
It might even not get bumpedback to current time, it might
even just get like bumped twoweeks or three weeks or a month
(10:51):
off of that initial May 28thdate.
But where I see the impactpotentially is if it does get
bumped back, any of thosecomplaints on noncompliance
during that time period.
Again, nothing has happenedhere yet, but just something I'm
kind of watching and some ofthe potential impacts, right, I
mean.
So it's almost like, okay, allthat happened in the past.
(11:12):
How is this going to impactanything it comes down to if
somebody is trying to bring acomplaint saying, look, they
didn't comply and this rule wentinto effect May 28th, that's
where I think that there mightbe potential for a shake up.
So that's the detention demergerule.
We still have two other rulesthat we're watching.
So we have the definingunreasonable refusal to
(11:33):
negotiate with respect to vesselspace accommodations provided
by an ocean common carrier.
Those comments closed up a yearago, july 2023.
It's been a year since we'vehad much activity here and I
should be fair, last fall therewas still some filings and still
some back and forths, and somefilings with federal agencies
(11:53):
and US Transcom TransportationCommand was still filing, I
believe in December, even of2023.
So there's been some activity.
But from the agency itself,that supplemental notice of
proposed rulemaking closed up ayear ago.
We keep hearing that potentially, this rule is on its way, will
come out anytime.
It always happens.
I feel like that.
I'll go live and then, withintwo or three hours after the
(12:15):
live, we get the final rule textand perhaps it'll pop up in my
emails while we're chatting here.
But as of right now, we do nothave the final rule for the
defining unfair, unreasonablerefusal to deal or negotiate
with respect to vessel spaceaccommodations provided by an
ocean common carrier.
Perhaps it's time to do arefresh episode on the status of
this rule and what was lastproposed, just so that we're all
(12:36):
kind of aware of what was lastdone here, because I do think
that we're probably close togetting a final rule on that.
Chairman Maffei has saidpreviously that it's more
important to get it right thanget it quick.
He said that this has been aparticularly nuanced rule and
that they didn't want to get itwrong.
Remember, this rulemaking wassomething that the FMC was
(12:59):
supposed to finish up in sixmonths.
So it certainly has not beensix months, it's been about two
years, just over two years.
But, like I said, he was sayingright off the bat, this one had
some pitfalls, that they didn'twant to step into landmines
that they didn't want to stepinto and they didn't want to
have accidental, accidental badeffects I guess is a poor way of
(13:22):
saying it through thisrulemaking process.
So they want to try to get itas right as they can.
I'm going to encourage everybodyto still go look up the last
text on this yourself, becausethere are some definitions here
right, obviously, definingunreasonable physical deal and
negotiate.
There's some definitions aroundreasonableness and, for me,
(13:43):
whenever you take big, broadstrokes at big terms like that,
like reasonableness, you'regoing to want to check it on
your own industry.
You're going to want to checkto see if this is something that
has an impact on you and if theway that that definition is
applied to you works with you ornot.
This is one to pay attention to.
I think the D&D rule got a lotmore attention.
This one, I think, is going tohave more of a commercial impact
(14:11):
.
Although the other one had theadministrative impact, I think
this one has some potential forthat commercial impact, but pay
attention to it.
The last rule that we werewatching is defining unfair or
unjustly discriminatory methods.
We're still waiting on anylanguage right to be released on
this, although, to be fair, theFMC said that they included
some of this in theirunreasonable refusal to deal and
negotiate language.
So we are still waiting on aindependent rulemaking on
(14:35):
defining unfair or unjustlydiscriminatory methods.
I think what's probablyhappening here is because they
included part of it in theunreasonable refusal to deal.
They didn't want to double upefforts or parallel efforts in
their own house, so they wantedto get the unreasonable result,
to deal and negotiate out, seewhat pieces remain in the final
version of the kind of edginginto defining unfair and just
(14:56):
the discriminatory methods andthen if there's anything left
over, they'll tackle that.
I'm sure that they're tacklingit in-house right now, but
that's probably part of it.
They don't want to beannouncing something over here
and then ultimately maybeforgetting something that didn't
get in the final rule of theunreasonable, frizzled deal.
That's probably what'shappening.
So I don't fault them for nothaving any text on that, because
(15:19):
it's not exactly accurate thatthey have no text, but they have
not released any standalonerulemaking process for the
defining unfair or unjustlydiscriminatory methods.
All right, the last one that wewere watching the Maritime
Transportation Data Initiative.
This was the RFI, the Requestfor Information number two.
It closed up about a month ago.
They received just over 22, 23comments, which is really,
(15:40):
really encouraging because itshows that the industry is still
engaged on the topic.
To have 22 comments in an FMCinitiative is a great thing,
like I said before I and like Isaid actually in the interview
with Commissioner Bensel a fewweeks back if you missed it, go
check it out I think that theMTDI's role in being a major
catalyst of starting theconversation and engaging the
(16:04):
industry, got people talkingabout data and data
dissemination and data standards.
Just that alone makes thiswhole project a success in my
eyes.
Prior to the initiative, itfelt like data conversations
were a little disjointed, butCommissioner Bensel has helped
organize that conversation, witha little more structure to the
discussion, and I think theindustry is stepping up with
(16:26):
some pretty smart solutions.
So I'm going to continue towatch what's happening with the
Maritime Transportation DataInitiative.
I'm going to continue to gothrough all of the comments
filed and certainly if there areadditionally comments filed on
this but go check that out aswell.
I think that this is somethingto stay engaged on, pay
attention to.
(16:46):
It's a really greatconversation and if you still
haven't seen the stakeholderinterviews that happened, from
the initial 18 interviews I meanit's an hour each.
So over 18 hours ofconversation with stakeholders
of the supply chain system allover the place talking about
data and data dissemination andwhat data is important to them
(17:08):
and what data they don't have.
It's really, really interesting.
And how often do you get that?
And you have access to it onthe FMC's YouTube page.
All right.
So story number two, what elseis happening with the FMC?
Well, there's plenty.
We're going to keep talkingabout a few more stories at the
FMC.
For those of you watching theNational Shipper Advisory
Committee, they finally postedthe recording of the last
(17:29):
meeting, so that last meetingwas May 20th.
I had mentioned that it wasgoing to happen and then they
didn't post the recording so Ididn't want to talk too much
about it, but it looks like itwas posted just about two weeks
ago, a week ago.
I expect a likely August orSeptember date for their next
meeting, just so you know.
(17:50):
They usually have about fourquarterly meetings, four
meetings in a year, quarterly.
I'm going to keep watching tolet you know, but if history
repeats itself, it looks likewe're looking at probably an
August, maybe September date fortheir next meeting.
And remember, they're closingin on their two-year time limits
and that's what they mentionedin this recording at the
beginning was that these charter, these nominations, are for two
years and so they're closing inon their two-year terms.
So they said that they would beclosing down in the fall slash,
(18:14):
winter for this.
We've talked about thiscommittee plenty of times before
, but I always like to make surethat we're all on the same page
From the Federal MaritimeCommission's announcement on the
meetings and just generallywhat's on their NSAC website and
that's kind of how you refer toit as NSAC.
The National Shipper AdvisoryCommittee is a federal advisory
committee.
This is from the FMC Operatesunder the provisions of the
(18:35):
Federal Advisory Committee Act,so that's why sometimes these
federal advisory committees arecalled FACAs.
It's the Federal AdvisoryCommittee Act and so that's what
the National Shipper AdvisoryCommittee and really all federal
advisory committees are calledFACAs.
It's the Federal AdvisoryCommittee Act and so that's what
the National Shipper AdvisoryCommittee and really all federal
advisory committees arebeholden to is this Federal
Advisory Committee Act.
The committee was establishedon January 1, 2021, when the
National Defense AuthorizationAct for fiscal year 21 became
(18:56):
law.
The committee providesinformation, insight and
expertise pertaining toconditions in the ocean freight
delivery system to thecommission.
Specifically, the committeeadvises the FMC on policies
relating to the competitiveness,reliability, integrity and
fairness of the internationalocean freight delivery system.
Yes, the committee will receivean update from each of its
(19:18):
subcommittees.
The committee may receiveproposals for recommendations to
the Federal Maritime Commissionand may vote on these
recommendations.
Any proposed recommendationswill be available to the Federal
Maritime Commission and mayvote on these recommendations.
Any proposed recommendationswill be available to the public
to view in advance of themeeting on the NSEC's website.
So this was their announcementfor this May 20th meeting, but
also that background is whatthey usually post when they're
talking about NSEC.
So, like I said, this is theFederal Advisory Committee to
(19:40):
the FMC, meaning it is theavenue for private industry to
engage with the FMC on a regularbasis and provide
recommendations and input on thefederal agency.
So this is how private industry, private stakeholders, can
(20:04):
engage with the FMC.
Outside of otherwise, noticeand comment periods would be
these requests for information,rfis from the MTDI or
potentially the rulemakingnotice and comment period where
they put out to the industry hey, we're looking for feedback and
so that's when you can submitcomments.
This is outside of that.
This is opening it up so thatthere is a regular relationship
with the private industrythrough these federal advisory
committees.
So a really important piece togeneral federal advisory or
(20:27):
federal engagement with theprivate industry.
I do think the federal advisorycommittees are so important and
the FMC, I think, does a goodjob of taking their
recommendations intoconsideration.
They respond to each one ofthose and house the
recommendations on their landingpage on the FMC's website.
So go take a look.
They have some prettyinteresting recommendations and
(20:48):
actually, if you track some ofthe recommendations and track
some of the movement over thelast two years in the ocean
global shipping world, you'llsee a lot of NSAC's work and
maybe recommendations findingits way into movement and
progress, which is great right.
I mean, if the private industryis coming together and telling
the FMC here's some things thatwe think need some work and then
(21:09):
that, either through the FMC orjust through speaking it out
into existence, is is affectingchange, that's a great thing.
Um, one more thing that I wantto mention um, that might be
worth watching generally.
So NSAC said that they hadpreviously made recommendations
on government holds for D&Dcharges, detention to merge
charges, and at the time the FMCwasn't able to fully respond to
(21:32):
it because they had somepending things and obviously the
D&D rule was going.
But what NSAC was saying at thebeginning of this May 20th
meeting recording is that theyare hoping to get more clarity
on this.
They're going to be revisitingsome of their previous
recommendations in theirsunsetting of their two-year
terms that, like I said, isclosing up at the end of 2024.
(21:53):
They're planning to revisitsome of those previous
recommendations and perhapsweigh in on some of those topics
again that might need an extralittle push.
So I think the I think NSAC hasreally done a great job on this
initial round of a federaladvisory committee to the FMC
right.
This is the importers andexporters national shipper
advisory committee.
There's been some call for anational ports and terminals
(22:16):
advisory committee and I think Ido think that it's a fair
critique to say that this is alittle imbalanced by having only
a shipper advisory committeeand not having that terminal or
carrier presence, because if youjust have one advising of a
regulated entity pool and notthe other, you're probably not
(22:36):
getting the full story either.
So there's been some push for amarine terminal operators and
ocean carriers advisorycommittee.
I really think that it's timeto get that scooting because
that would be a I think thatwould be an interesting group to
pull together for advising thecommission but for nothing else
(22:57):
to balance the conversation.
It's one thing to get theshippers pulling together and
making recommendations and Ithink that's great and, like I
said, engagement with agenciesis what it's all about, because
they're regulating the industrybut they need to know what's
happening in the industry andthis engagement is how they know
that.
But additionally, you need thefull story right, and so getting
the other side of the regulatedentity story is important.
(23:19):
All right, story number three.
So one last FMC story before wemove on to the other supply
chain areas.
The FMC issued a request foradditional information regarding
the Gemini cooperationagreement.
So the public comment period isopen and it's open until August
15, 2024.
They don't give a lot ofinformation about what they're
requesting additionalinformation on, but they are
(23:41):
opening it up.
But when they first received itthey opened it up for, I
believe, seven days and then nowthey're opening it back up for
open comments, general publiccomments, without knowing much
about what they've asked of thecooperation agreement here.
But from the announcement fromthe FMC last week, a global
operational alliance between thetwo of the world's largest
(24:01):
container shipping companieswill not go into effect next
week because more information isneeded by the Federal Maritime
Commission to determine thepotential competitive impacts of
the arrangement.
So Maersk and Hoppig-Lloyd filedthe Gemini cooperation
agreement.
It's agreement number 201429.
In case you want to go look itup, there's an agreements
library that you can go look upthese agreements and certainly
(24:23):
they'll reject any of thesensitive information.
But for the most part you canjust go look at these agreements
.
So, continuing on in theannouncement, it was filed at
the commission on May 30th 31st,excuse me filed at the
commission May 31st 2024.
The agreement would allow thesecompanies to share vessels in
the trades between the UnitedStates and Asia, the Middle East
and Europe.
Share vessels in the tradesbetween the United States and
(24:44):
Asia.
The Middle East and Europe.
Agreements become effective 45days after filing, unless the
commission issues a request foradditional information, as it's
doing here.
The commission uses the RFAIprocess to identify and achieve
clarity on matters that were notaddressed by the filing parties
or were insufficientinformation was provided in the
originally filed agreement.
The commission has determinedthat the Gemini cooperation
agreement has, as submitted,lacked sufficient detail to
(25:07):
allow for a complete analysis ofits potential competitive
impacts.
Information sought as part ofan RFAI is commercially
sensitive and is not publiclypublished, so that's why they're
not letting you know what thequestions are that they're
sending back to the parties tothis agreement.
Reconsideration of theagreement will not commence
until the commission hasreceived a fully compliant
(25:27):
response to its inquiry.
The commission has 45 days fromwhen it determines responses to
the RFAI are deemed complete toreview the agreement for
competitive and legal concernsbefore it becomes effective.
So after they get the responsesand the commission determines
that they have answered all thequestions, they have 45 days
(25:48):
from when they feel as thoughthat response is complete to
then review the new information.
So we went from the 45 initialdays of automatic implementation
unless there was a request foradditional information.
That came in right under thewire.
So now the commission, uponreceipt of all of the answered
questions, will get anadditional 45 days to review,
(26:13):
review the answers and completethe review for competitive and
legal concerns.
So a 15 day public commentperiod will open once public
notice of the RFAIA is publishedand so that we know happened.
So August 15th is when thepublic comment period will close
up.
Remember, this entirecooperative agreement,
(26:33):
cooperation agreement is set togo into effect February 2025.
So we do have some time hereand that's part of the reason
why you would want to submitthese agreements early is
because that's always apotential right that there might
be requests for additionalinformation.
So from the Hoppe-Gloyd website, they provide a bit of
information on the cooperation,the cooperation agreement.
So Hoppe-Gloyd and Maersk havesigned an agreement for a new
(26:55):
long-term operationalcollaboration called Gemini
Cooperation, which will startFebruary 2025.
The ambition is to deliver aflexible and interconnected
ocean network, withindustry-leading reliability
being its cornerstone.
Gemini Cooperation will coverseven trades and offer 26
mainline services.
The network will be centeredaround 12 key hub ports, 10
(27:16):
owned and or controlledterminals, as well as Singapore
and Cartagena.
We will, in addition and thisis from the Hoppe-Lloyd website
we will, in addition, run 32dedicated shuttles to and from
these key hubs to ensureseamless connections to many
major ports.
The fleet of our newpartnership will consist of some
290 modern and efficientvessels with a total standing
(27:38):
capacity of 3.4 million TEUs,many ready to adopt cleaner
fuels.
Now, like I said, you can goback and look at the agreement
specifically.
They talk a little bit moreabout how many vessels from
which company will be coming inand they start to kind of
dissect it with potential up tonumbers.
But if this, then that.
So you get to kind of peer intothe arrangement and it's a
(28:01):
publicly filed agreement.
Now there's been a littlesensationalism on this, so I
wanted to actually bring in thestatutory authority on this
45-day review and this requestfor additional information out
of the FMC because I wanted todispel some of the
sensationalism.
It's one thing to report.
I mean sure they're asking formore information right at the
(28:21):
end of the 45 days and now theyget an additional 45 days.
Oh man, and they get to decidewhen the answers are fully
answered and when they come in.
I mean maybe there's somesensationalism there, but look,
I'm here to tell you in generalit doesn't feel sensationalized
to me.
This feels pretty routine.
This feels pretty much like theFMC is kind of going through
(28:44):
the process and at leastrecently I've been seeing them
ask for more information whencomplicated global ocean
shipping vessel sharingagreements come in.
So the statutory authority todo this, this request for
additional information, is under46 USC, so the United States
code 40304, and it sayscommission action.
So it's notice of filing.
(29:04):
Not later than seven days afterthe date an agreement is filed,
the FMC shall transmit a noticein the Federal Register.
So they did that Requestinterested person to submit
relevant information documents.
They did that right.
So agreement comes in withinseven days.
It's got to be posted to theFederal Register and the Federal
Register is kind of like theclassified section of a federal
newspaper.
It's all online now and it doesget printed out into a book and
(29:28):
I don't I think it still does,but that's kind of how it's
presented, is it's essentiallythe classifieds of a newspaper.
Going on to subpart B,preliminary review and rejection
After preliminary review, thecommission shall reject an
agreement that it does not findmeets the requirements of the
filing requirements section andthe content requirements section
(29:49):
.
And I'll tell you, I lookedthose up.
They are very kind ofadministrative.
They're not because we don'tlike it, because we don't think
that it's good.
These are.
They can.
The commission can reject anagreement and I've said the
commission can't really denyagreements and certainly these
vessel sharing agreements.
They can reject them if they'renot filed correctly, like
(30:09):
administratively filed correctly, and that's an
oversimplification, but I wantto just kind of bring your
attention to that.
It continues on.
It said the commission shallnotify in writing the person
filing the agreement of thereason for that rejection.
Again, administrative, for themost part oversimplified Review.
An effective date, unlessrejected under subsection B,
which was that rejectionadministratively, an agreement
(30:31):
other than an assessmentagreement is effective on the
45th day after filing or on the30th day after notice of the
filing is published in thefederal register, whichever is
later.
So that's why we're looking atthat 45 days from the filing or
30 days right from when it waspublished, in case the federal
register is backed up and itdoesn't get into the federal
(30:51):
register for a while.
Usually there's a few day lag,so when it's submitted to the
federal register from the agencyit might be a few days later
that it actually gets publishedin these federal classifieds.
So that's what they're kind ofaccounting for there.
So if additional information ordocuments are requested on the
45th day after the commissionreceives all the additional
(31:12):
information, or if the requestis not fully complied with, on
the 45th day after thecommission receives the
information and documentssubmitted and a statement of the
reasons for noncompliance withthe request, so it said, unless
rejected, an agreement iseffective on the 45th day after
the commission receives all theadditional information.
So, like I said, in thatstatement the commission said
(31:33):
they need to determine when theyget all the additional
information.
But then it said if the requestis not fully complied with, on
the 45th day after thecommission receives the
information and documentssubmitted and a statement of the
reasons for non-compliance withthe request.
So if the parties to thiscooperation say we're going to
answer this, this and this,we're not going to answer this
last part on the 45th day afterthe commission receives the
(31:55):
information and that reason fornon-compliance, that becomes
effective.
This is where these agreementsare pretty interesting, because
there is a there's a nod towardtrying to get an agreement in
place and not letting the FMCget too in the way, and to me
this looks like it'spro-business right.
(32:16):
I mean, this feels a little bitmore like let the industry move
forward, let the industry havetheir agreements unless there's
problems.
And so if there's problems, ifthere's questions, they have
this request for additionalinformation, and so that's what
they're doing.
Not necessarily problems, justneed more information.
But you can also and we're notgoing to talk about this too
much here, but this is if theFMC does not like it and they
(32:38):
think that it's anti-competitiveand violates the Shipping Act,
they would need to file in courtof appeals.
They would need to file incourt of appeals.
They would need to file in acourt actually.
So that would be how they wouldneed to file to enjoin this
action.
That's not what's happeninghere.
That would be controversial.
This request for additionalinformation does not feel very
(33:00):
controversial to me, but I don'tknow what they're asking and
all I'm saying here is that look, they are allowed to request
additional information.
So request for additionalinformation before the
expiration of the periodspecified in subsection C1.
The commission may request fromthe person filing any
additional information anddocuments the commission
considers necessary to make thedeterminations.
(33:21):
Modification of a review period, shortening on request of the
party filing an agreement, thecommission may shorten a period
specified, but not to a datethat is less than 14 days.
So they can modify that 45 daywindow, but it also says it
can't be shorter than 14, butthen it also says it can't be
longer without the periodspecified may be extended only
(33:42):
by the US District Court for theDistrict of Columbia in a civil
action brought by thecommission.
So if the commission wants morethan 45 days, they're going to
have to go take that to court aswell.
So that's the statutoryauthority.
I mentioned this because, like Isaid, there has been some
sensationalism about thecommission tolling this 45-day
period, which basically meansstopping this 45-day period,
stopping the agreement fromgoing into effect right away.
(34:05):
I really think that it's moreadministrative and more routine.
I did receive a comment on mypost, so if you're not following
me on LinkedIn, I encourage youto do so, but I posted about
this and I mentioned thatsensationalism and the comment
said while this may happen morenow, it was rare previously.
This request for additionalinformation was rare until
recently and I agree with thatwith recently being probably the
(34:28):
last 10 to 15 years right, theadvent of the Global Ocean
Shipping or Global OceanAlliance and major vessel
sharing agreements.
But as a general statement,this really doesn't raise my
eyebrows too much as an agencytaking extra time to make sure
that they're doing their properand complete review.
Like I said, this is rooted instatutory authority.
The FMC is fully within theiror I shouldn't say fully,
(34:51):
because now Chevron,everything's up for debate,
right, but this seems to me thatit is rooted in statutory
authority and not necessarilyrooted in a regulation that the
agency had determined themselves.
So it gives it a little bitmore oomph.
I really don't think that thisis too sensationalized.
I've seen some headlines whereit's like ah, the FMC is
stopping all things, they'reasking for more information.
(35:14):
They've done this before.
All right.
Story number four what else ishappening?
What else is happening outthere?
Shipping rates are rising.
Have you heard, as reported inBloomberg and actually reposted
by GCaptain.
I want to read you aninteresting section of this
report where it talks about therising rates and I've been
hearing a lot about $9,000,$10,000 per TEU or for FEU
(35:38):
40-foot equivalent box.
You'll recall that in 2021,2020, kind of COVID congestion
years in 2021, 2020, kind ofCOVID congestion years rates
rose to above $20,000.
That's wild.
That was wild because normalrates prior to that were like
$1,200.
So you went from like $1,200,$1,500 to like $20,000.
So now there's a little bit ofa concern when the rates start
(36:03):
to rise.
And so, reading right off ofthis Bloomberg report that was,
like I said, reposted by GCaptain, greg Davidson,
co-founder and CEO of NewYork-based Miro, a baby products
company that ships a fewhundred containers annually from
Asia, says the highest he paidfor a 40-foot container box was
about $21,000 in 2022.
Now industry speculation isthat rates are headed back to
(36:24):
$20,000, he said that would be amajor markup from the 9,000 he
recently paid.
So he said recently he has hadto pay $9,000 for that same
40-foot equivalent box.
So, continuing on in the reportand this is a quote from
Davidson himself, if containerprices are rising to this level
(36:46):
again, that's going to drivesome amount of inflation and
obviously some amount of goods.
Davidson said hints of such andthis is a end quote, hints of
such pricing pressures havealready surfaced.
Us producers prices climbedslightly more than forecasted in
June.
The latest crunch comes just aswholesalers and retailers in the
US and Europe rushed to stockup inventory ahead of the back
to school and year-end holidayshopping seasons.
Adding to the impetus, thethreat of higher US tariffs on
(37:07):
Chinese imports.
A new quote.
The only bright side here is abetter understanding of the
problem that we continue to have.
End quote with disruption, saidStephen Lamar, president of the
American Apparel and FootwearAssociation, which represents
over a thousand leading brandnames.
Open quote.
That doesn't mean that problemis any easier to manage or deal
with.
End quote.
So I thought that that was apretty interesting section of
(37:29):
that reporting.
I've said this before rightShipping rates, as I've seen
them.
I mean they're prettyunpredictable, for sure, but I
also have seen them kind ofswing like a pendulum.
So right now it feels like it'sstarting to swing back up.
Are we headed back to $20,000rates?
I mean, who knows?
Right, first off, who knows?
But I'm not so sure and I justdon't think so.
(37:52):
The demand spike that we saw in2021, and certainly I'm not a
rates expert, but the demandspike that we saw in those 2021
COVID congestion years to mefelt like a true anomaly, right.
It was just such a funky timeand people were stuck at home
and so they were ordering stuff,and they were ordering big
stuff like furniture and houseprojects and all sorts of things
(38:15):
that take up a lot of space,and so that was taking up a lot
of room in these cargo boxes.
So, on top of the increasedordering, you also saw an
increase in size of thingscoming in.
But while I'm saying that, Ialso want to be a little bit
cautious, because we still havesome major things happening out
there.
We still have the Houthis andthe Red Sea, without much of a
(38:36):
resolution in sight.
There's been some activities,some sad activity, happening on
vessels in that area, but it'sstill happening and there isn't
really a lot of clarity on howit's going to be solved.
We're also hearing reports ofmajor storms disrupting vessel
traffic around the Horn ofAfrica.
So as they're diverting aroundthe Red Sea, they're going
(38:57):
around the Horn of Africa.
Now they're hitting really badweather.
I've also heard of Panama Canaldisruptions for East Coast ports
.
I previously was saying Ithought that the Panama Canal
was kind of on the up and up, itwas for the most part moving
forward and that it wasn't goingto be that impactful anymore
and who knows.
But I was seeing that theirdepth levels of the vessels able
(39:19):
to go through had returnedalmost to normal heights.
But apparently there's stillsome effects happening and
certainly they're impacting someof the East Coast ports.
So, and remember, it's anecosystem, so effects that are
happening in one place can haveknock-on effects elsewhere,
right?
So if a piece of the ecosystemgets gummed up, like the Panama
Canal or access to the EastCoast ports, that could have a
(39:44):
larger impact.
If, if the pieces are aregetting uh stuck, uh,
operational pieces, whatever itis, uh, we also have the threat
of the ila.
Right, like, looking forward,we have the threat of the ila,
us mx discussions um themaritime us maritime alliance
and the internationallongshoremen's association.
So they, it's the, it's theterminals and the labor I'm
(40:08):
certain that you've heard ofthis, but they might be moving
toward a strike, right, the ILAhas said look, we will not be
continuing to work.
We don't want to have to, butwe will be striking if we need
to.
That contract concludes thatmaster contract concludes
September 30th.
But just this week we had anannouncement from USMX, us
(40:28):
Maritime Alliance, that regionalconversations were still moving
forward and that they hope toreturn to the master contract
discussion soon.
But all of that said, right,there seems to be some certain
norm to the ocean shippingdisruptions and I think Stephen
Lamar of American Apparel andFootwear Association said it
well that there's a betterunderstanding of the problems.
Right, it doesn't make iteasier, but having to identify
(40:50):
it used to be part of theproblem, identifying what was
happening in the moment.
But now we've learned somethingand hopefully can better
mitigate some of thosepreviously identified problems.
I'm going to keep watching this,but my gut, my gut and do not
rely on this right, this is notlegal advice and certainly not
financial advice, but my gut isthat this is just part of the
pendulum swing.
For now, 20,000 rates to mefeels like it was a unique thing
(41:13):
for the time and I don't thinkthat our population and
associated like worldwidepopulation and associated demand
for goods has grown in thethree short years enough to
normalize that $20,000 rate highcycle as kind of a normal cycle
.
I don't know, I don't think so.
I'm certainly not an expert onrates, I'm just kind of
(41:34):
anecdotally watching.
But I think that it's somethingto pay attention to.
But I don't know, I don't seeit going back to $20,000 now,
perhaps in the future asinflation and all sorts of
things kind of modify thosenumbers.
So we're no longer lookingapples to apples, but $20,000
rates right now seem a littlebit outside of the realm of what
(41:57):
I would expect.
All right, story number five.
This last story and I promiseit's the last story has to do
with offshore wind.
The US Coast Guard is issuing awarning to mariners to exercise
extreme caution followingreports of a 300-foot-long piece
of debris in the water nearVineyard Wind offshore wind farm
off Nantucket.
G-captain was reporting on this, so here's a quote from
(42:20):
Vineyard Wind.
They said in a statement thismorning a significant part of
the remaining GE Vnova bladedetached from the turbine.
Maritime crews were on siteovernight preparing to respond
to this development, thoughcurrent weather conditions
create a difficult workingenvironment.
Despite these challengingweather conditions, a fleet of
vessels remains at sea managingthe situation and working to
remove bulk debris.
We have deployed additionalcrews to nantucket island in
(42:42):
anticipation that more debriscould wash ashore tonight and
tomorrow as we continue tomonitor additional coastal
communities.
That's what Vineyard Wind saidin a statement, continuing on in
that reporting the US Bureau ofSafety and Environmental
Enforcement so BSEE is how it'susually pronounced, b-s-e-e,
which is the sister agency toBOEM Bureau of Ocean Energy
(43:04):
Management.
So Bessie has issued asuspension order to Vineyard
Wind, halting all powerproduction and new construction
of wind turbines due to theblade failure.
Operations will remainsuspended until further notice.
Additionally, a preservationorder has been issued to protect
evidence related to theincident.
Again, this is continuing on inthat GCAPTAN article.
Bessie has been on site withVineyard Wind as investigations
(43:26):
are underway and will conduct anindependent assessment to
ensure the safety of futureoffshore renewable energy
operations.
The Vineyard Wind project,located 15 miles offshore of
Martha's Vineyard, connects tothe New England grid using
underground cables, subseacables to a substation on Cape
Cod.
The project delivered its firstpower to the grid in January
with one turbine generatingapproximately five megawatts of
(43:47):
power.
As of June, the project had 10turbines in operation.
So, being based up here inMassachusetts, that's where I'm
home, ported, you could saythat's where I live up here in
Massachusetts.
This has hit our local news andreports of debris washing up on
beaches was actually slowlybuilding over the past week it
was actually last Saturday, july13th, but the blade reportedly
(44:10):
broke.
So then, after it broke, it waskind of hanging there, and it
wasn't until yesterday when theturbine actually detached from
the pillar and fell into thewater.
I'm still not exactly clear onwhat happened, and perhaps it's
not exactly known what happened.
But I'm more curious to knowhow this is dealt with in
(44:30):
European wind farms.
Right, they've arguably beenthere for much longer.
Well, they certainly have beenthere for much longer than the
US wind farms.
But I'm also wondering to knowhas this happened before and
with what regularity?
If it does happen, you knowwhat usually happens, because
you're having a lot of pieces ofthis broken up wind turbine
scattered into the water andthey're, they're, they're coming
(44:53):
up on beaches, and I mean theseare some beaches that,
especially in the summertime,here, beach goers, right,
swimmers, and you could get hurt.
So, um, I'm going to keep aneye on this, but, uh, this is.
This is an interesting thingtoo, all, but this is an
interesting thing too, all,right.
Well, that's it for today.
I'm so sorry, this was a littlebit longer than I expected, but,
as always, the guidance here isgeneral for educational
purposes.
(45:13):
It should not be construed tobe legal advice related to your
matter, directly related to yourmatter.
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 and
general industry information andinsights, come find me at the
Maritime Professor.
Again, this is not legal advicedirectly related to your matter
(45:33):
.
If you like these videos, letme know, 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 Landon
Bysse and if you prefer to seethe video they live my YouTube
page by land and by sea,presented by the maritime
professor.
While you're at it, check outour website, the maritime
professorcom.
So until next week.
This is Lauren Began, themaritime professor and you've
just listened to by land and bysea.
(45:54):
See you next time.
no-transcript.
Yeah, I walk to the beat.
When you see me coming, makesome room.
Everywhere I go, I'm in thespotlight.
This is a good life I'm living.
Bold.
This is what it looks like Onthe 15th hour of the world.
(00:58):
We've been having some marathonby land and by sea episodes
recently, so today I thoughtlet's just keep it quick and
take inventory of some of themajor stories happening in the
week.
As always, I'll sprinkle in mytake, but let's hop into our
Captain's Log edition.
Hi, welcome to, by Land and bySea, an attorney breaking down
the week in supply chainpresented by the Maritime
Professor.
Me.
I'm Lauren Began, founder ofthe Maritime Professor and
(01:20):
Squall 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's no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
(01:41):
So usually we go through my topthree stories of the week, but
today every story is a top story, so let's get right into it.
All right, story number one.
First stop, let's check in onthe FMC's rulemakings.
We really haven't checked inmuch.
We've been talking a lot aboutthe D&D rule, but we haven't
checked in on kind of the wholeroundup.
So over the past year or two,right, the FMC has been working
(02:04):
through three rulemakings thatthey were directed to take
undertake by the Ocean ShippingReform Act of 2022, which was
given to them by Congress, aswe're kind of talking a lot more
after Chevron about things thatare doled out by Congress
directly, and we're alsowatching a request for
information that was part of theMaritime Transportation Data
Initiative undertaken byCommissioner Carl Bensel.
(02:26):
So where are we with all ofthese rulemakings, right?
So the billing practices ofdetention and demurrage as we
know, that went into effect May28th, but there's some notable
things that we should kind oftalk about.
So we've talked about thesebefore, but, as we're doing our
roundup, right, these are thingsthat we want to make sure that
we're mentioning and keepingaware of and just noticing.
(02:49):
So the commission issued acorrection to the final rule
preamble text.
So that's that discussion partat kind of the meat of that
final rule.
They clarified the rulesapplication to carrier-trucker
relationships, which seemed tome and this is what I mentioned
at the time was that it seemedto me that that was kind of a
nod toward the World ShippingCouncil petition, right, I mean,
(03:16):
how could it not be and I saythat kind of in jest, but it
seemed like it was aligningthere, almost to kind of have
the FMC say look, we fixed theproblem.
But I've said it before andit's certainly true now, just
because the FMC made thatcorrection does not mean that
the court's going to agree.
And in this post-Chevron worldthe petition is still very much
alive and on the table.
Prior to Chevron I thought thatthere might have been some
(03:37):
deferral to the FMC or to theagency With Chevron gone and I'm
not necessarily doom and gloom,and I mentioned this previously
in one of the previous episodesand I'm not necessarily doom
and gloom, and I mentioned thispreviously in one of the
previous episodes I'm notnecessarily doom and gloom about
Chevron being gone, but I dothink that it's interesting
because now it will create moreof a discernment from the court
(03:58):
itself, whereas previously itmay have been encouraged, slash
directed through the Chevroncase, to defer to the agency
where the statutory authority solike, where Congress made a
clear directive.
So all that to say, now thatthe agency, the Federal Maritime
(04:19):
Commission, might not get thatautomatic deferral or like
encouraged to defer to theagency, we're going to see the
court probably look at it alittle bit more thoroughly.
And all that to say.
I think that's why the petitionis potentially if it was never,
if it was, it may have beenpartially, I guess, on its face,
(04:42):
potentially partially resolved,or at least that would have
been the FMC's argument for it.
Now, post Chevron, I think thatthis is something that is fully
on the table.
I don't think that we're goingto see this go away.
I think that we're going to seethe FM excuse me that I think
we're going to see the courtultimately weigh in on it.
But we haven't seen a lot ofactual court discussion.
(05:03):
We've just seen some proceduralthings going back and forth in
this case.
So in previous episodes wetalked a little bit more about
the World Shipping Council'spetition against the D&D billing
requirements, final rule.
So go take a listen if you wantto hear more.
But to be clear, like I said, Ithink that the petition is
still very much on the table,even though it seemed like the
FMC kind of, in their pressrelease, nodded to the.
(05:26):
I mean alluded to the fact thatwe're all set here right now
that now that the FMC has madethat correction, potentially the
FMC was starting to kind ofbuild the argument of, like well
, we're good, we solved thatproblem.
The petition is in front of theUS Court of Appeals for the DC
Circuit.
Um, the petition is in front ofthe U?
S court of appeals for the DCcircuit, so it's out of the
(05:47):
FMC's hands, right, um, and notmuch has really happened there.
But, like I said, I'm I'm stillwatching.
There's.
I shouldn't say nothing muchhas happened.
There's been some proceduralback and forth and right now
they're kind of talking aboutwhether some of this email
discussion over the the thisrule and the um ambiguity, I
guess, of the final rule wherethey made that correction, if
(06:09):
some of that email discussionback and forth between the World
Shipping Council and theGeneral Counsel's Office of the
FMC and just the FMC generally,should be included in the record
.
So, like I said, it's getting alittle bit legal, procedural.
Once we start getting intocontent and some of the
decisions related to this finalrule, I'll come back and let you
know, but I'm still watching.
I think this is prettyinteresting from a procedural
(06:31):
standpoint.
But OK, so boil down.
What did the petition say?
Like I said, if you want adeeper dive, go check out one of
the episodes previously.
But what did the petition say?
Essentially, the petitionerschallenged the final rule on
grounds that it is contrary tostatute so that's what Congress
gave the authority that Congressgives the agency, including
that it exceeds the commission'sauthority under the Shipping
(06:52):
Act and Ocean Shipping ReformAct and that it is arbitrary,
capricious and an abuse ofdiscretion and otherwise
contrary to law.
Petitioner seeks an ordervacating and setting aside the
final rule.
So, like I said, we still don'thave a ton of information here
on kind of the meat of it, butit clearly is going back and
(07:13):
forth about the trucker and themotor carrier and the
relationship and that directcontractual relationship and the
motor carrier having a directcontractual relationship.
In some instances it goes backto the announcement that was on
the World Shipping Council'swebsite, I believe, because some
(07:34):
of the discussion back andforth about the email exchanges
that's in the procedural seemsto be centering around that.
So, like I said, once the courtcomes out with some more
information, I'll keep reportingback.
But this petition, like I saidafter I said this when we talked
about Chevron it just got a lotmore interesting, and it was
(07:54):
always pretty interesting, butit just got a lot more
interesting.
But so what does all of thismean?
Right as of right now, may 28thwas the rule's effective date.
There has been no wordotherwise.
The entire rule, this detentionto merge rule remember there
was a talk about maybe thecontents might not go into
effect because the Office ofManagement and Budget still
needed to approve.
Nope, all of that happened.
May 28th was the date.
(08:14):
That's when it all went intoeffect.
But what could happen with thispetition?
So the court could decide tosomehow modify this final rule
based on that petition has?
So the court could decide tosomehow modify this final rule
based on that petition.
Hasn't happened yet.
Nothing has changed yet, but itcould.
But there could be somethingthat could happen here.
There could be some change.
I think that as a generalstatement, I mean this is a
(08:37):
fairly big overhaul.
I mean arguably it's stillparameters or guardrails on the
industry, but it's a pretty bigadministrative overhaul, right,
but now we have these 20 invoicerequirements and direct
contractual rule and timingrequirements and how to do
disputes and all of the thingsthat are in this billing
requirements final rule.
I mean the court could vacate,they could turn it over, they
(09:01):
could say no, everybody, stopeverything.
I just don't think that they'relikely to do that because the
rule did go into effect.
What might happen?
They might start taking outpieces, right.
Maybe it's the 20 invoicerequirements that they're going
to keep, because for the mostpart they were kind of
expansions and clarifications ofthe 13 invoice requirements
that Congress created.
But on the other hand, theycould go after direct
(09:24):
contractual relationship, right,because that's kind of an issue
here with the motor carriersand that's what World Shipping
Council is kind of getting to.
That might be something.
That direct contractualrelationship might be something
that we're going to want towatch closely as a impact of
this petition.
We'll see.
Now I'm just kind ofspeculating, but nothing has
(09:45):
happened yet.
The D&D final rule is still ineffect.
It went into effect May 28th.
There's also another petitionthat I think we should watch and
I'm not going to talk about ittoo much here, but I think I
have mentioned it at leastpreviously a petition to delay
the effective date, which isobviously passed right.
We keep talking about that.
May 28th was when thiseffective date started, date
which is obviously passed, right, we keep talking about that.
(10:05):
May 28th was when thiseffective date started, but what
I see that petition because itwas only filed a few days before
the effective date or maybe theday of it was a really quick
turnaround.
So the effective date hasobviously passed.
But I think it's worth watchingbecause this could have impacted
some of those compliancecomplaints, particularly about
noncompliance from members ofthe industry or certain parties
(10:29):
in the industry, noncomplianceon that May 28th date.
Maybe not everybody as of May29th, may 30th, was complying
with it, and so those are someof those complaints that might
come in If the effective dategets bumped back.
It might even not get bumpedback to current time, it might
even just get like bumped twoweeks or three weeks or a month
(10:51):
off of that initial May 28thdate.
But where I see the impactpotentially is if it does get
bumped back, any of thosecomplaints on noncompliance
during that time period.
Again, nothing has happenedhere yet, but just something I'm
kind of watching and some ofthe potential impacts, right, I
mean.
So it's almost like, okay, allthat happened in the past.
(11:12):
How is this going to impactanything it comes down to if
somebody is trying to bring acomplaint saying, look, they
didn't comply and this rule wentinto effect May 28th, that's
where I think that there mightbe potential for a shake up.
So that's the detention demergerule.
We still have two other rulesthat we're watching.
So we have the definingunreasonable refusal to
(11:33):
negotiate with respect to vesselspace accommodations provided
by an ocean common carrier.
Those comments closed up a yearago, july 2023.
It's been a year since we'vehad much activity here and I
should be fair, last fall therewas still some filings and still
some back and forths, and somefilings with federal agencies
(11:53):
and US Transcom TransportationCommand was still filing, I
believe in December, even of2023.
So there's been some activity.
But from the agency itself,that supplemental notice of
proposed rulemaking closed up ayear ago.
We keep hearing that potentially, this rule is on its way, will
come out anytime.
It always happens.
I feel like that.
I'll go live and then, withintwo or three hours after the
(12:15):
live, we get the final rule textand perhaps it'll pop up in my
emails while we're chatting here.
But as of right now, we do nothave the final rule for the
defining unfair, unreasonablerefusal to deal or negotiate
with respect to vessel spaceaccommodations provided by an
ocean common carrier.
Perhaps it's time to do arefresh episode on the status of
this rule and what was lastproposed, just so that we're all
(12:36):
kind of aware of what was lastdone here, because I do think
that we're probably close togetting a final rule on that.
Chairman Maffei has saidpreviously that it's more
important to get it right thanget it quick.
He said that this has been aparticularly nuanced rule and
that they didn't want to get itwrong.
Remember, this rulemaking wassomething that the FMC was
(12:59):
supposed to finish up in sixmonths.
So it certainly has not beensix months, it's been about two
years, just over two years.
But, like I said, he was sayingright off the bat, this one had
some pitfalls, that they didn'twant to step into landmines
that they didn't want to stepinto and they didn't want to
have accidental, accidental badeffects I guess is a poor way of
(13:22):
saying it through thisrulemaking process.
So they want to try to get itas right as they can.
I'm going to encourage everybodyto still go look up the last
text on this yourself, becausethere are some definitions here
right, obviously, definingunreasonable physical deal and
negotiate.
There's some definitions aroundreasonableness and, for me,
(13:43):
whenever you take big, broadstrokes at big terms like that,
like reasonableness, you'regoing to want to check it on
your own industry.
You're going to want to checkto see if this is something that
has an impact on you and if theway that that definition is
applied to you works with you ornot.
This is one to pay attention to.
I think the D&D rule got a lotmore attention.
This one, I think, is going tohave more of a commercial impact
(14:11):
.
Although the other one had theadministrative impact, I think
this one has some potential forthat commercial impact, but pay
attention to it.
The last rule that we werewatching is defining unfair or
unjustly discriminatory methods.
We're still waiting on anylanguage right to be released on
this, although, to be fair, theFMC said that they included
some of this in theirunreasonable refusal to deal and
negotiate language.
So we are still waiting on aindependent rulemaking on
(14:35):
defining unfair or unjustlydiscriminatory methods.
I think what's probablyhappening here is because they
included part of it in theunreasonable refusal to deal.
They didn't want to double upefforts or parallel efforts in
their own house, so they wantedto get the unreasonable result,
to deal and negotiate out, seewhat pieces remain in the final
version of the kind of edginginto defining unfair and just
(14:56):
the discriminatory methods andthen if there's anything left
over, they'll tackle that.
I'm sure that they're tacklingit in-house right now, but
that's probably part of it.
They don't want to beannouncing something over here
and then ultimately maybeforgetting something that didn't
get in the final rule of theunreasonable, frizzled deal.
That's probably what'shappening.
So I don't fault them for nothaving any text on that, because
(15:19):
it's not exactly accurate thatthey have no text, but they have
not released any standalonerulemaking process for the
defining unfair or unjustlydiscriminatory methods.
All right, the last one that wewere watching the Maritime
Transportation Data Initiative.
This was the RFI, the Requestfor Information number two.
It closed up about a month ago.
They received just over 22, 23comments, which is really,
(15:40):
really encouraging because itshows that the industry is still
engaged on the topic.
To have 22 comments in an FMCinitiative is a great thing,
like I said before I and like Isaid actually in the interview
with Commissioner Bensel a fewweeks back if you missed it, go
check it out I think that theMTDI's role in being a major
catalyst of starting theconversation and engaging the
(16:04):
industry, got people talkingabout data and data
dissemination and data standards.
Just that alone makes thiswhole project a success in my
eyes.
Prior to the initiative, itfelt like data conversations
were a little disjointed, butCommissioner Bensel has helped
organize that conversation, witha little more structure to the
discussion, and I think theindustry is stepping up with
(16:26):
some pretty smart solutions.
So I'm going to continue towatch what's happening with the
Maritime Transportation DataInitiative.
I'm going to continue to gothrough all of the comments
filed and certainly if there areadditionally comments filed on
this but go check that out aswell.
I think that this is somethingto stay engaged on, pay
attention to.
(16:46):
It's a really greatconversation and if you still
haven't seen the stakeholderinterviews that happened, from
the initial 18 interviews I meanit's an hour each.
So over 18 hours ofconversation with stakeholders
of the supply chain system allover the place talking about
data and data dissemination andwhat data is important to them
(17:08):
and what data they don't have.
It's really, really interesting.
And how often do you get that?
And you have access to it onthe FMC's YouTube page.
All right.
So story number two, what elseis happening with the FMC?
Well, there's plenty.
We're going to keep talkingabout a few more stories at the
FMC.
For those of you watching theNational Shipper Advisory
Committee, they finally postedthe recording of the last
(17:29):
meeting, so that last meetingwas May 20th.
I had mentioned that it wasgoing to happen and then they
didn't post the recording so Ididn't want to talk too much
about it, but it looks like itwas posted just about two weeks
ago, a week ago.
I expect a likely August orSeptember date for their next
meeting, just so you know.
(17:50):
They usually have about fourquarterly meetings, four
meetings in a year, quarterly.
I'm going to keep watching tolet you know, but if history
repeats itself, it looks likewe're looking at probably an
August, maybe September date fortheir next meeting.
And remember, they're closingin on their two-year time limits
and that's what they mentionedin this recording at the
beginning was that these charter, these nominations, are for two
years and so they're closing inon their two-year terms.
So they said that they would beclosing down in the fall slash,
(18:14):
winter for this.
We've talked about thiscommittee plenty of times before
, but I always like to make surethat we're all on the same page
From the Federal MaritimeCommission's announcement on the
meetings and just generallywhat's on their NSAC website and
that's kind of how you refer toit as NSAC.
The National Shipper AdvisoryCommittee is a federal advisory
committee.
This is from the FMC Operatesunder the provisions of the
(18:35):
Federal Advisory Committee Act,so that's why sometimes these
federal advisory committees arecalled FACAs.
It's the Federal AdvisoryCommittee Act and so that's what
the National Shipper AdvisoryCommittee and really all federal
advisory committees are calledFACAs.
It's the Federal AdvisoryCommittee Act and so that's what
the National Shipper AdvisoryCommittee and really all federal
advisory committees arebeholden to is this Federal
Advisory Committee Act.
The committee was establishedon January 1, 2021, when the
National Defense AuthorizationAct for fiscal year 21 became
(18:56):
law.
The committee providesinformation, insight and
expertise pertaining toconditions in the ocean freight
delivery system to thecommission.
Specifically, the committeeadvises the FMC on policies
relating to the competitiveness,reliability, integrity and
fairness of the internationalocean freight delivery system.
Yes, the committee will receivean update from each of its
(19:18):
subcommittees.
The committee may receiveproposals for recommendations to
the Federal Maritime Commissionand may vote on these
recommendations.
Any proposed recommendationswill be available to the Federal
Maritime Commission and mayvote on these recommendations.
Any proposed recommendationswill be available to the public
to view in advance of themeeting on the NSEC's website.
So this was their announcementfor this May 20th meeting, but
also that background is whatthey usually post when they're
talking about NSEC.
So, like I said, this is theFederal Advisory Committee to
(19:40):
the FMC, meaning it is theavenue for private industry to
engage with the FMC on a regularbasis and provide
recommendations and input on thefederal agency.
So this is how private industry, private stakeholders, can
(20:04):
engage with the FMC.
Outside of otherwise, noticeand comment periods would be
these requests for information,rfis from the MTDI or
potentially the rulemakingnotice and comment period where
they put out to the industry hey, we're looking for feedback and
so that's when you can submitcomments.
This is outside of that.
This is opening it up so thatthere is a regular relationship
with the private industrythrough these federal advisory
committees.
So a really important piece togeneral federal advisory or
(20:27):
federal engagement with theprivate industry.
I do think the federal advisorycommittees are so important and
the FMC, I think, does a goodjob of taking their
recommendations intoconsideration.
They respond to each one ofthose and house the
recommendations on their landingpage on the FMC's website.
So go take a look.
They have some prettyinteresting recommendations and
(20:48):
actually, if you track some ofthe recommendations and track
some of the movement over thelast two years in the ocean
global shipping world, you'llsee a lot of NSAC's work and
maybe recommendations findingits way into movement and
progress, which is great right.
I mean, if the private industryis coming together and telling
the FMC here's some things thatwe think need some work and then
(21:09):
that, either through the FMC orjust through speaking it out
into existence, is is affectingchange, that's a great thing.
Um, one more thing that I wantto mention um, that might be
worth watching generally.
So NSAC said that they hadpreviously made recommendations
on government holds for D&Dcharges, detention to merge
charges, and at the time the FMCwasn't able to fully respond to
(21:32):
it because they had somepending things and obviously the
D&D rule was going.
But what NSAC was saying at thebeginning of this May 20th
meeting recording is that theyare hoping to get more clarity
on this.
They're going to be revisitingsome of their previous
recommendations in theirsunsetting of their two-year
terms that, like I said, isclosing up at the end of 2024.
(21:53):
They're planning to revisitsome of those previous
recommendations and perhapsweigh in on some of those topics
again that might need an extralittle push.
So I think the I think NSAC hasreally done a great job on this
initial round of a federaladvisory committee to the FMC
right.
This is the importers andexporters national shipper
advisory committee.
There's been some call for anational ports and terminals
(22:16):
advisory committee and I think Ido think that it's a fair
critique to say that this is alittle imbalanced by having only
a shipper advisory committeeand not having that terminal or
carrier presence, because if youjust have one advising of a
regulated entity pool and notthe other, you're probably not
(22:36):
getting the full story either.
So there's been some push for amarine terminal operators and
ocean carriers advisorycommittee.
I really think that it's timeto get that scooting because
that would be a I think thatwould be an interesting group to
pull together for advising thecommission but for nothing else
(22:57):
to balance the conversation.
It's one thing to get theshippers pulling together and
making recommendations and Ithink that's great and, like I
said, engagement with agenciesis what it's all about, because
they're regulating the industrybut they need to know what's
happening in the industry andthis engagement is how they know
that.
But additionally, you need thefull story right, and so getting
the other side of the regulatedentity story is important.
(23:19):
All right, story number three.
So one last FMC story before wemove on to the other supply
chain areas.
The FMC issued a request foradditional information regarding
the Gemini cooperationagreement.
So the public comment period isopen and it's open until August
15, 2024.
They don't give a lot ofinformation about what they're
requesting additionalinformation on, but they are
(23:41):
opening it up.
But when they first received itthey opened it up for, I
believe, seven days and then nowthey're opening it back up for
open comments, general publiccomments, without knowing much
about what they've asked of thecooperation agreement here.
But from the announcement fromthe FMC last week, a global
operational alliance between thetwo of the world's largest
(24:01):
container shipping companieswill not go into effect next
week because more information isneeded by the Federal Maritime
Commission to determine thepotential competitive impacts of
the arrangement.
So Maersk and Hoppig-Lloyd filedthe Gemini cooperation
agreement.
It's agreement number 201429.
In case you want to go look itup, there's an agreements
library that you can go look upthese agreements and certainly
(24:23):
they'll reject any of thesensitive information.
But for the most part you canjust go look at these agreements
.
So, continuing on in theannouncement, it was filed at
the commission on May 30th 31st,excuse me filed at the
commission May 31st 2024.
The agreement would allow thesecompanies to share vessels in
the trades between the UnitedStates and Asia, the Middle East
and Europe.
Share vessels in the tradesbetween the United States and
(24:44):
Asia.
The Middle East and Europe.
Agreements become effective 45days after filing, unless the
commission issues a request foradditional information, as it's
doing here.
The commission uses the RFAIprocess to identify and achieve
clarity on matters that were notaddressed by the filing parties
or were insufficientinformation was provided in the
originally filed agreement.
The commission has determinedthat the Gemini cooperation
agreement has, as submitted,lacked sufficient detail to
(25:07):
allow for a complete analysis ofits potential competitive
impacts.
Information sought as part ofan RFAI is commercially
sensitive and is not publiclypublished, so that's why they're
not letting you know what thequestions are that they're
sending back to the parties tothis agreement.
Reconsideration of theagreement will not commence
until the commission hasreceived a fully compliant
(25:27):
response to its inquiry.
The commission has 45 days fromwhen it determines responses to
the RFAI are deemed complete toreview the agreement for
competitive and legal concernsbefore it becomes effective.
So after they get the responsesand the commission determines
that they have answered all thequestions, they have 45 days
(25:48):
from when they feel as thoughthat response is complete to
then review the new information.
So we went from the 45 initialdays of automatic implementation
unless there was a request foradditional information.
That came in right under thewire.
So now the commission, uponreceipt of all of the answered
questions, will get anadditional 45 days to review,
(26:13):
review the answers and completethe review for competitive and
legal concerns.
So a 15 day public commentperiod will open once public
notice of the RFAIA is publishedand so that we know happened.
So August 15th is when thepublic comment period will close
up.
Remember, this entirecooperative agreement,
(26:33):
cooperation agreement is set togo into effect February 2025.
So we do have some time hereand that's part of the reason
why you would want to submitthese agreements early is
because that's always apotential right that there might
be requests for additionalinformation.
So from the Hoppe-Gloyd website, they provide a bit of
information on the cooperation,the cooperation agreement.
So Hoppe-Gloyd and Maersk havesigned an agreement for a new
(26:55):
long-term operationalcollaboration called Gemini
Cooperation, which will startFebruary 2025.
The ambition is to deliver aflexible and interconnected
ocean network, withindustry-leading reliability
being its cornerstone.
Gemini Cooperation will coverseven trades and offer 26
mainline services.
The network will be centeredaround 12 key hub ports, 10
(27:16):
owned and or controlledterminals, as well as Singapore
and Cartagena.
We will, in addition and thisis from the Hoppe-Lloyd website
we will, in addition, run 32dedicated shuttles to and from
these key hubs to ensureseamless connections to many
major ports.
The fleet of our newpartnership will consist of some
290 modern and efficientvessels with a total standing
(27:38):
capacity of 3.4 million TEUs,many ready to adopt cleaner
fuels.
Now, like I said, you can goback and look at the agreement
specifically.
They talk a little bit moreabout how many vessels from
which company will be coming inand they start to kind of
dissect it with potential up tonumbers.
But if this, then that.
So you get to kind of peer intothe arrangement and it's a
(28:01):
publicly filed agreement.
Now there's been a littlesensationalism on this, so I
wanted to actually bring in thestatutory authority on this
45-day review and this requestfor additional information out
of the FMC because I wanted todispel some of the
sensationalism.
It's one thing to report.
I mean sure they're asking formore information right at the
(28:21):
end of the 45 days and now theyget an additional 45 days.
Oh man, and they get to decidewhen the answers are fully
answered and when they come in.
I mean maybe there's somesensationalism there, but look,
I'm here to tell you in generalit doesn't feel sensationalized
to me.
This feels pretty routine.
This feels pretty much like theFMC is kind of going through
(28:44):
the process and at leastrecently I've been seeing them
ask for more information whencomplicated global ocean
shipping vessel sharingagreements come in.
So the statutory authority todo this, this request for
additional information, is under46 USC, so the United States
code 40304, and it sayscommission action.
So it's notice of filing.
(29:04):
Not later than seven days afterthe date an agreement is filed,
the FMC shall transmit a noticein the Federal Register.
So they did that Requestinterested person to submit
relevant information documents.
They did that right.
So agreement comes in withinseven days.
It's got to be posted to theFederal Register and the Federal
Register is kind of like theclassified section of a federal
newspaper.
It's all online now and it doesget printed out into a book and
(29:28):
I don't I think it still does,but that's kind of how it's
presented, is it's essentiallythe classifieds of a newspaper.
Going on to subpart B,preliminary review and rejection
After preliminary review, thecommission shall reject an
agreement that it does not findmeets the requirements of the
filing requirements section andthe content requirements section
(29:49):
.
And I'll tell you, I lookedthose up.
They are very kind ofadministrative.
They're not because we don'tlike it, because we don't think
that it's good.
These are.
They can.
The commission can reject anagreement and I've said the
commission can't really denyagreements and certainly these
vessel sharing agreements.
They can reject them if they'renot filed correctly, like
(30:09):
administratively filed correctly, and that's an
oversimplification, but I wantto just kind of bring your
attention to that.
It continues on.
It said the commission shallnotify in writing the person
filing the agreement of thereason for that rejection.
Again, administrative, for themost part oversimplified Review.
An effective date, unlessrejected under subsection B,
which was that rejectionadministratively, an agreement
(30:31):
other than an assessmentagreement is effective on the
45th day after filing or on the30th day after notice of the
filing is published in thefederal register, whichever is
later.
So that's why we're looking atthat 45 days from the filing or
30 days right from when it waspublished, in case the federal
register is backed up and itdoesn't get into the federal
(30:51):
register for a while.
Usually there's a few day lag,so when it's submitted to the
federal register from the agencyit might be a few days later
that it actually gets publishedin these federal classifieds.
So that's what they're kind ofaccounting for there.
So if additional information ordocuments are requested on the
45th day after the commissionreceives all the additional
(31:12):
information, or if the requestis not fully complied with, on
the 45th day after thecommission receives the
information and documentssubmitted and a statement of the
reasons for noncompliance withthe request, so it said, unless
rejected, an agreement iseffective on the 45th day after
the commission receives all theadditional information.
So, like I said, in thatstatement the commission said
(31:33):
they need to determine when theyget all the additional
information.
But then it said if the requestis not fully complied with, on
the 45th day after thecommission receives the
information and documentssubmitted and a statement of the
reasons for non-compliance withthe request.
So if the parties to thiscooperation say we're going to
answer this, this and this,we're not going to answer this
last part on the 45th day afterthe commission receives the
(31:55):
information and that reason fornon-compliance, that becomes
effective.
This is where these agreementsare pretty interesting, because
there is a there's a nod towardtrying to get an agreement in
place and not letting the FMCget too in the way, and to me
this looks like it'spro-business right.
(32:16):
I mean, this feels a little bitmore like let the industry move
forward, let the industry havetheir agreements unless there's
problems.
And so if there's problems, ifthere's questions, they have
this request for additionalinformation, and so that's what
they're doing.
Not necessarily problems, justneed more information.
But you can also and we're notgoing to talk about this too
much here, but this is if theFMC does not like it and they
(32:38):
think that it's anti-competitiveand violates the Shipping Act,
they would need to file in courtof appeals.
They would need to file incourt of appeals.
They would need to file in acourt actually.
So that would be how they wouldneed to file to enjoin this
action.
That's not what's happeninghere.
That would be controversial.
This request for additionalinformation does not feel very
(33:00):
controversial to me, but I don'tknow what they're asking and
all I'm saying here is that look, they are allowed to request
additional information.
So request for additionalinformation before the
expiration of the periodspecified in subsection C1.
The commission may request fromthe person filing any
additional information anddocuments the commission
considers necessary to make thedeterminations.
(33:21):
Modification of a review period, shortening on request of the
party filing an agreement, thecommission may shorten a period
specified, but not to a datethat is less than 14 days.
So they can modify that 45 daywindow, but it also says it
can't be shorter than 14, butthen it also says it can't be
longer without the periodspecified may be extended only
(33:42):
by the US District Court for theDistrict of Columbia in a civil
action brought by thecommission.
So if the commission wants morethan 45 days, they're going to
have to go take that to court aswell.
So that's the statutoryauthority.
I mentioned this because, like Isaid, there has been some
sensationalism about thecommission tolling this 45-day
period, which basically meansstopping this 45-day period,
stopping the agreement fromgoing into effect right away.
(34:05):
I really think that it's moreadministrative and more routine.
I did receive a comment on mypost, so if you're not following
me on LinkedIn, I encourage youto do so, but I posted about
this and I mentioned thatsensationalism and the comment
said while this may happen morenow, it was rare previously.
This request for additionalinformation was rare until
recently and I agree with thatwith recently being probably the
(34:28):
last 10 to 15 years right, theadvent of the Global Ocean
Shipping or Global OceanAlliance and major vessel
sharing agreements.
But as a general statement,this really doesn't raise my
eyebrows too much as an agencytaking extra time to make sure
that they're doing their properand complete review.
Like I said, this is rooted instatutory authority.
The FMC is fully within theiror I shouldn't say fully,
(34:51):
because now Chevron,everything's up for debate,
right, but this seems to me thatit is rooted in statutory
authority and not necessarilyrooted in a regulation that the
agency had determined themselves.
So it gives it a little bitmore oomph.
I really don't think that thisis too sensationalized.
I've seen some headlines whereit's like ah, the FMC is
stopping all things, they'reasking for more information.
(35:14):
They've done this before.
All right.
Story number four what else ishappening?
What else is happening outthere?
Shipping rates are rising.
Have you heard, as reported inBloomberg and actually reposted
by GCaptain.
I want to read you aninteresting section of this
report where it talks about therising rates and I've been
hearing a lot about $9,000,$10,000 per TEU or for FEU
(35:38):
40-foot equivalent box.
You'll recall that in 2021,2020, kind of COVID congestion
years in 2021, 2020, kind ofCOVID congestion years rates
rose to above $20,000.
That's wild.
That was wild because normalrates prior to that were like
$1,200.
So you went from like $1,200,$1,500 to like $20,000.
So now there's a little bit ofa concern when the rates start
(36:03):
to rise.
And so, reading right off ofthis Bloomberg report that was,
like I said, reposted by GCaptain, greg Davidson,
co-founder and CEO of NewYork-based Miro, a baby products
company that ships a fewhundred containers annually from
Asia, says the highest he paidfor a 40-foot container box was
about $21,000 in 2022.
Now industry speculation isthat rates are headed back to
(36:24):
$20,000, he said that would be amajor markup from the 9,000 he
recently paid.
So he said recently he has hadto pay $9,000 for that same
40-foot equivalent box.
So, continuing on in the reportand this is a quote from
Davidson himself, if containerprices are rising to this level
(36:46):
again, that's going to drivesome amount of inflation and
obviously some amount of goods.
Davidson said hints of such andthis is a end quote, hints of
such pricing pressures havealready surfaced.
Us producers prices climbedslightly more than forecasted in
June.
The latest crunch comes just aswholesalers and retailers in the
US and Europe rushed to stockup inventory ahead of the back
to school and year-end holidayshopping seasons.
Adding to the impetus, thethreat of higher US tariffs on
(37:07):
Chinese imports.
A new quote.
The only bright side here is abetter understanding of the
problem that we continue to have.
End quote with disruption, saidStephen Lamar, president of the
American Apparel and FootwearAssociation, which represents
over a thousand leading brandnames.
Open quote.
That doesn't mean that problemis any easier to manage or deal
with.
End quote.
So I thought that that was apretty interesting section of
(37:29):
that reporting.
I've said this before rightShipping rates, as I've seen
them.
I mean they're prettyunpredictable, for sure, but I
also have seen them kind ofswing like a pendulum.
So right now it feels like it'sstarting to swing back up.
Are we headed back to $20,000rates?
I mean, who knows?
Right, first off, who knows?
But I'm not so sure and I justdon't think so.
(37:52):
The demand spike that we saw in2021, and certainly I'm not a
rates expert, but the demandspike that we saw in those 2021
COVID congestion years to mefelt like a true anomaly, right.
It was just such a funky timeand people were stuck at home
and so they were ordering stuff,and they were ordering big
stuff like furniture and houseprojects and all sorts of things
(38:15):
that take up a lot of space,and so that was taking up a lot
of room in these cargo boxes.
So, on top of the increasedordering, you also saw an
increase in size of thingscoming in.
But while I'm saying that, Ialso want to be a little bit
cautious, because we still havesome major things happening out
there.
We still have the Houthis andthe Red Sea, without much of a
(38:36):
resolution in sight.
There's been some activities,some sad activity, happening on
vessels in that area, but it'sstill happening and there isn't
really a lot of clarity on howit's going to be solved.
We're also hearing reports ofmajor storms disrupting vessel
traffic around the Horn ofAfrica.
So as they're diverting aroundthe Red Sea, they're going
(38:57):
around the Horn of Africa.
Now they're hitting really badweather.
I've also heard of Panama Canaldisruptions for East Coast ports
.
I previously was saying Ithought that the Panama Canal
was kind of on the up and up, itwas for the most part moving
forward and that it wasn't goingto be that impactful anymore
and who knows.
But I was seeing that theirdepth levels of the vessels able
(39:19):
to go through had returnedalmost to normal heights.
But apparently there's stillsome effects happening and
certainly they're impacting someof the East Coast ports.
So, and remember, it's anecosystem, so effects that are
happening in one place can haveknock-on effects elsewhere,
right?
So if a piece of the ecosystemgets gummed up, like the Panama
Canal or access to the EastCoast ports, that could have a
(39:44):
larger impact.
If, if the pieces are aregetting uh stuck, uh,
operational pieces, whatever itis, uh, we also have the threat
of the ila.
Right, like, looking forward,we have the threat of the ila,
us mx discussions um themaritime us maritime alliance
and the internationallongshoremen's association.
So they, it's the, it's theterminals and the labor I'm
(40:08):
certain that you've heard ofthis, but they might be moving
toward a strike, right, the ILAhas said look, we will not be
continuing to work.
We don't want to have to, butwe will be striking if we need
to.
That contract concludes thatmaster contract concludes
September 30th.
But just this week we had anannouncement from USMX, us
(40:28):
Maritime Alliance, that regionalconversations were still moving
forward and that they hope toreturn to the master contract
discussion soon.
But all of that said, right,there seems to be some certain
norm to the ocean shippingdisruptions and I think Stephen
Lamar of American Apparel andFootwear Association said it
well that there's a betterunderstanding of the problems.
Right, it doesn't make iteasier, but having to identify
(40:50):
it used to be part of theproblem, identifying what was
happening in the moment.
But now we've learned somethingand hopefully can better
mitigate some of thosepreviously identified problems.
I'm going to keep watching this,but my gut, my gut and do not
rely on this right, this is notlegal advice and certainly not
financial advice, but my gut isthat this is just part of the
pendulum swing.
For now, 20,000 rates to mefeels like it was a unique thing
(41:13):
for the time and I don't thinkthat our population and
associated like worldwidepopulation and associated demand
for goods has grown in thethree short years enough to
normalize that $20,000 rate highcycle as kind of a normal cycle
.
I don't know, I don't think so.
I'm certainly not an expert onrates, I'm just kind of
(41:34):
anecdotally watching.
But I think that it's somethingto pay attention to.
But I don't know, I don't seeit going back to $20,000 now,
perhaps in the future asinflation and all sorts of
things kind of modify thosenumbers.
So we're no longer lookingapples to apples, but $20,000
rates right now seem a littlebit outside of the realm of what
(41:57):
I would expect.
All right, story number five.
This last story and I promiseit's the last story has to do
with offshore wind.
The US Coast Guard is issuing awarning to mariners to exercise
extreme caution followingreports of a 300-foot-long piece
of debris in the water nearVineyard Wind offshore wind farm
off Nantucket.
G-captain was reporting on this, so here's a quote from
(42:20):
Vineyard Wind.
They said in a statement thismorning a significant part of
the remaining GE Vnova bladedetached from the turbine.
Maritime crews were on siteovernight preparing to respond
to this development, thoughcurrent weather conditions
create a difficult workingenvironment.
Despite these challengingweather conditions, a fleet of
vessels remains at sea managingthe situation and working to
remove bulk debris.
We have deployed additionalcrews to nantucket island in
(42:42):
anticipation that more debriscould wash ashore tonight and
tomorrow as we continue tomonitor additional coastal
communities.
That's what Vineyard Wind saidin a statement, continuing on in
that reporting the US Bureau ofSafety and Environmental
Enforcement so BSEE is how it'susually pronounced, b-s-e-e,
which is the sister agency toBOEM Bureau of Ocean Energy
(43:04):
Management.
So Bessie has issued asuspension order to Vineyard
Wind, halting all powerproduction and new construction
of wind turbines due to theblade failure.
Operations will remainsuspended until further notice.
Additionally, a preservationorder has been issued to protect
evidence related to theincident.
Again, this is continuing on inthat GCAPTAN article.
Bessie has been on site withVineyard Wind as investigations
(43:26):
are underway and will conduct anindependent assessment to
ensure the safety of futureoffshore renewable energy
operations.
The Vineyard Wind project,located 15 miles offshore of
Martha's Vineyard, connects tothe New England grid using
underground cables, subseacables to a substation on Cape
Cod.
The project delivered its firstpower to the grid in January
with one turbine generatingapproximately five megawatts of
(43:47):
power.
As of June, the project had 10turbines in operation.
So, being based up here inMassachusetts, that's where I'm
home, ported, you could saythat's where I live up here in
Massachusetts.
This has hit our local news andreports of debris washing up on
beaches was actually slowlybuilding over the past week it
was actually last Saturday, july13th, but the blade reportedly
(44:10):
broke.
So then, after it broke, it waskind of hanging there, and it
wasn't until yesterday when theturbine actually detached from
the pillar and fell into thewater.
I'm still not exactly clear onwhat happened, and perhaps it's
not exactly known what happened.
But I'm more curious to knowhow this is dealt with in
(44:30):
European wind farms.
Right, they've arguably beenthere for much longer.
Well, they certainly have beenthere for much longer than the
US wind farms.
But I'm also wondering to knowhas this happened before and
with what regularity?
If it does happen, you knowwhat usually happens, because
you're having a lot of pieces ofthis broken up wind turbine
scattered into the water andthey're, they're, they're coming
(44:53):
up on beaches, and I mean theseare some beaches that,
especially in the summertime,here, beach goers, right,
swimmers, and you could get hurt.
So, um, I'm going to keep aneye on this, but, uh, this is.
This is an interesting thingtoo, all, but this is an
interesting thing too, all,right.
Well, that's it for today.
I'm so sorry, this was a littlebit longer than I expected, but,
as always, the guidance here isgeneral for educational
purposes.
(45:13):
It should not be construed tobe legal advice related to your
matter, directly related to yourmatter.
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 and
general industry information andinsights, come find me at the
Maritime Professor.
Again, this is not legal advicedirectly related to your matter
(45:33):
.
If you like these videos, letme know, 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 Landon
Bysse and if you prefer to seethe video they live my YouTube
page by land and by sea,presented by the maritime
professor.
While you're at it, check outour website, the maritime
professorcom.
So until next week.
This is Lauren Began, themaritime professor and you've
just listened to by land and bysea.
(45:54):
See you next time.
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