Topic of the Week (2/14/25):

Is the FMC the backup quarterback for the Panama Canal discussions? The answer isn’t no, and it might just be yes. Let’s talk about it.

The Maritime Professor® presents By Land and By Sea Podcast 🎙️ – an attorney breaking down the week in supply chain

with Lauren Beagen (Founder of The Maritime Professor® and Squall Strategies®)

Let’s dive in...

🔹 Top Three Stories of the Week:

1️⃣ GAO Report on MARAD Workforce Challenges

📉 MARAD faces staffing shortages with a 12.3% vacancy rate—GAO calls for a workforce strategy to close skill gaps.

🔗 GAO Report

2️⃣ FMC Enforcement Action Against Florida NVOCC

⚖️ Double Ace Cargo Inc. fined $50K for repeated violations—now required to self-finance compliance monitoring, a first for the FMC.

3️⃣ Premier Alliance Agreement Taking Effect

🚢 A new vessel-sharing alliance between HMM, ONE, and Yang Ming begins February 9, 2025, following FMC review.

Deep Dive: FMC’s Authority on Panama Canal Issues

Former President Trump referenced "powerful action" regarding Panama. While the Panama Neutrality Treaty is the obvious reference, the FMC has its own authority to act on unfair foreign shipping practices.

▶️ Foreign Shipping Practices Act of 1988 (FSPA):
🔴 Allows the FMC to investigate foreign policies that harm U.S. carriers
🔴 Authorizes port access limits, contract suspensions, and fines up to $1M per voyage

▶️ Section 19 of the Merchant Marine Act of 1920:
🔴 Gives the FMC power to correct unfair shipping conditions—no full investigation needed

The FMC’s role in global shipping is bigger than many realize. Could it play a key role in the Panama Canal discussions? Stay tuned!

🔹 The Maritime Professor® provides training and education for global supply chain professionals. Learn more: www.TheMaritimeProfessor.com

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Transcript

Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I got soul coming through, flying free.
Skies are blue, all the wavesit makes a room.

(00:22):
I got soul coming through,won't stop.
Feel the beat On top of theworld when you see me come.
Everywhere I go, I'm in thespotlight.
This is a good life.
I'm living for it.

(00:44):
This is what it looks like.
I'm addicted to the world.
Is the Federal MaritimeCommission the backup
quarterback for the Panama Canaldiscussions?
I mean, the answer isn't no, itmight just be yes.

(01:08):
Let's talk about it a littlebit more.
Hi, welcome to, by Land and bySea, an attorney breaking down
the weakened supply chainpresented by the maritime
professor me.
I'm Lauren Began, founder ofMaritime Professor and Squall
Strategies, and I'm yourfavorite maritime attorney.
Join me every week to walkthrough both ocean transport and
surface transport topics in thewild world of supply chain.

(01:29):
As always, the guidance here isgeneral and for educational
purposes only.
It should not be construed tobe legal advice and there's no
attorney client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
So before we get into thediscussion of the day, let's go
through my top three stories ofthe week.
All right?
Well, we don't have any newupdates on the rulemaking front

(01:49):
for the FMC.
As you know, we've beenwatching the petitions.
Nothing's really going tohappen on that until March-ish
timeframe.
So, in the interest ofrepeating myself every week,
I've taken it off of our list.
So we're going to start withour first story of the week.
I've taken it off of our list,so we're going to start with our
first story of the week, whichis the GAO just released a

(02:12):
report about the MaritimeAdministration saying actions
are needed to help addressworkforce challenges.
So I'm going to read a littlebit from the actual report.
They did an executive summaryand then I'm going to get my
take on it.
And I want to be careful herebecause I didn't actually work
at MARAD.
I worked over at the FederalMaritime Commission.
So obviously I know the FederalMaritime Commission and what
it's like to work there, but Ihave not worked inside MARAD

(02:34):
itself.
And I want to be fair because Ithink that there's a big
retraction of governmentworkforce these days.
So I want to be sensitivebecause these are kind of scary
times for government employees.
But all of that said, I do havesome thoughts on this report
and generally I want to kind ofreview MARAD staffing compared

(02:56):
to FMC staffing.
So, as of the like I said, I'mgoing to read this off of the
GAO report language.
So what did it say?
Why GAO did this study?
It said MERIT is tasked withfostering, promoting and
developing the US maritimeindustry to meet the nation's
economic and security needs.

(03:19):
Now I want to kind of stop there.
You know that I really pointout the difference.
The compare and contrastbetween the Federal Maritime
Commission and MARAD reallycomes down to exactly this first
sentence here where it saysit's tasked with fostering,
promoting and developing the USmaritime industry.
The FMC is kind of thatcompetition authority, right?
They are interested in the fairand efficient movement of goods

(03:41):
for the benefit of the USimporter, exporter and consumer,
whereas MARAD is tasked withfostering, promoting and
developing efficient movement ofgoods for the benefit of the US
importer, exporter and consumer, whereas Merit is tasked with
fostering, promoting anddeveloping.
So you have this kind of like acourt system as the FMC where
they are regulating the industryand the global ocean freight
that comes to the US and thenMerit is tasked with the

(04:03):
fostering, promoting oceanfreight that comes to the US and
then MARAD is tasked with thefostering, promoting.
So they really are kind of thatpromotional piece versus that
regulatory piece.
So I'm just going to go into alittle bit more of the history
here.
1961, they split up.
It actually used to be the FMCand MARAD were together in the
Federal Maritime Board.
They split up because forobvious reasons right, you want
promotion and kind of moneygoing out through one side, but

(04:26):
you want that regulatorycompetition authority on the
other.
You don't necessarily want thesame agency sending money out to
one side and then callingwinners and losers on the other
side.
So that's the distillation.
Let's get back to the GAOreport.
So MERA is tasked withfostering, promoting and
developing the US maritimeindustry.
It also continues to say MERA'swide-ranging responsibilities

(04:49):
make workforce planningcritically important.
So when I first saw this reportjust the existence of this
report I thought, oh great, weare finally going to get some
sunshine in the fact that wedon't have enough mariners in
the workforce.
That's not what this is about.
This is about MARAD, specificemployees working at the
Maritime Administration, notabout maritime mariners, which I

(05:13):
will say this references thecritically low and high risk
list of employees working atMARAD.
Of employees working at MARAD,I'm going to expand that and say
we have a critically lowmariner shortage or mariner
levels across the US.

(05:33):
So I'm kind of switching thisand using this as an opportunity
to tell you, if you aren'taware, be aware, mariners in the
USS maritime trades is at, Ican only imagine historically
low levels.
It is critically low.
We need more mariners out there.
But that's not what this isabout, so I'm going to let me
move my soapbox over for aminute.

(05:54):
All right, so let's get back tothis report.
The report examines continuingon the GAO language here.
This report examines, one,current workforce challenges
MARAD faces.
Two, how MARAD is addressingits workforce challenges.
And three, the extent to whichMARAD has incorporated key
workforce planning principlesinto its strategic workforce
plan.
So this is kind of a deep diveon MARAD and the Maritime

(06:18):
Administration and how theiremployee staffing levels are.
It says GAO reviewed MARADpolicies, procedures and
documents related to theagency's strategic workforce
planning efforts.
Gao also interviewed MARAD andDepartment of Transportation
officials and analyzed MARADdata.
Again, marad, as you, I'm sure,likely know, marad, the
Maritime Administration, ishoused within the US Department

(06:40):
of Transportation.
We talked a few weeks ago abouthow Sean Duffy is now the new
Secretary of Department ofTransportation.
Marad, the MaritimeAdministration, sits within that
agency, that department, wedon't actually have a Maritime
Administrator currently.
We just had Admiral Phillips,ann Phillips as the outgoing
Maritime Administrator.
But under this newadministration we do not have a

(07:02):
new Maritime Administrator as ofyet.
It continues on to say so whatdid GAO recommend?
Gao is making fourrecommendations, including that
MARAT assess critical skills anddevelop a strategy to address
any future skill gaps identifiedin the forthcoming strategic
workforce plan.
The Department ofTransportation agreed with our
recommendations.
I'm a little bit.
I have a question there.

(07:24):
It says the Department ofTransportation agreed with our
recommendations.
This report obviously came outjust this week, february 2025.
My guess is that the Departmentof Transportation that agreed
with the recommendations herewere probably from the previous
administration.
So we'll see.
It's still an interestingreview, an interesting exercise

(07:45):
in a critical assessment, Iguess, of the Maritime
Administration and staffinglevels.
So it said, continuing on whatGAO found, renewed interest in
revitalizing America's maritimeindustrial base has driven
interest in the sufficiency ofthe workforce at the DOT's
Maritime Administration.
So it's saying yes, renewedinterest in revitalizing

(08:08):
America's maritime industrialbase.
I think that was true for theprevious administration.
I definitely I know that to betrue for the current
administration, this newadministration under this Trump
President, trump, term numbertwo.
I've been seeing maritimelanguage all over the place
which, as if you know me, Ialways say look, anytime
maritime is being talked about.

(08:28):
It's a a good thing to havemaritime in the conversation
because it shines a light oncritical issues like

(08:48):
shipbuilding that we have to do,or just the US fleet or, like I
said, mariner shortage that wehave critical levels of and I
keep saying critical, but that'show important all of this is.
All right, so continuing on.
It said, the renewed interest inrevitalizing America's maritime
industrial base has driveninterest in the sufficiency of
the workforce, while MARAD'sbudget grew by approximately

(09:12):
314% from fiscal years 2015through 2024.
So a 10-year period the MARADbudget grew by 314%, 2015 to
2024.
And I'm stopping there, andthat's a big number anyways.
But look again, the sisteragency to this is the Federal

(09:35):
Maritime Commission.
They've stayed at about 30 to35, maybe million dollars as
their entire budget during thatsame time period.
I don't have the hard numberson that, but I do know that
their budget in 2017 was about$32, maybe $34 million and in

(09:57):
the most recent budget hearingsthat the FMC had, I mean we were
looking at maybe 40 million.
So we really were certainly notlooking at the FMC growing by
314%.
I'm just, I don't know.
That was a very shocking thingto me, that that's how much it
grew.
But GAO was right here.

(10:18):
There is a renewed interest inrevitalizing America's maritime
industrial base and, to be fair,that budget also included
infrastructure dollars and so orI'm assuming it did I wouldn't
assume that 314% would beentirely working.
Perhaps this is a little bit ofan unfair number, but the
budget grew by approximately314%.

(10:38):
They dole out grants, right,they issue grants, and so if
that 314% is also coming fromgrants, it's a little bit of a
misleading statement here,whereas the FMC does not give
out grant money.
All right.
So, continuing on, as ofSeptember 2024, marad has 12.3%
vacancy rate.

(10:58):
So they said 116 vacancies outof 941 authorized full-time
positions.
Those numbers are shocking, tooright, and not shocking in a
negative connotation and again,I want to be careful here but
not shocking in a negativeconnotation, but I just had no
idea.
941 authorized positions, andperhaps maybe that's the

(11:22):
baseline, and the real storyhere is that the FMC is woefully
understaffed.
But look, 116 vacancies.
I've said this so many times.
The FMC only has about 120 to130 people total throughout the
entire agency, so the entireagency of the FMC, is the number

(11:42):
of vacancies out of authorizedfull-time positions that MARAD
is down.
It just I mean, my only pointthat I'm making here is it just
doesn't match.
And perhaps they have.
They certainly serve differentroles, but I'm just, I'm just
the numbers right.
I'm just the numbers right.

(12:09):
The 941 authorized full-timepositions compared to FMC's 130
authorized full-time positions.
Maybe that means FMC needs aboost up.
Maybe according to the GAOreport, it says that actually
MARAD needs to fill those 116vacancies.
So maybe all of this is true,but I'm just the compare and
contrast is what I'm doing heretoday.
In addition, it continues tosay Merritt separated 235 more

(12:31):
employees than hired over thelast 10 years.
So they actually their theirnet right?
Was they separated 235 moreemployees than hired?
There's a lot of turnover.
According to merit officials,these vacancies have made it
increasingly difficult toaccomplish their mission.
Furthermore, the number ofretirement eligible staff is

(12:52):
projected to increase from 24%in 2024, so it was retirement
eligible staff to 43% bycalendar year 2029.
And I'm going to stop there,and this is why I think that
perhaps this information andthis data might be a little bit
outdated because, as we all know, right now the US federal

(13:13):
employee workforce is goingthrough a opportunity for a
buyout.
I guess is how I would phraseit.
If you're maybe interested inretirement or if you're
interested in perhaps leaving,there is a offer being made and
I believe that it's it's federalagency wide, I mean across all

(13:33):
federal employees that there areterms that you can leave and
get a little bit extra.
I think it's you continue yourpay through September.
I mean, look at the specificdetails on this.
But I say that because this istalking about retirement
eligible staff increasing from24% to 43%.
I think that maybe a good chunkof those may have or may be

(13:55):
looking at that buyout option.
So all of this data this 941authorized full-time positions
and this 116 vacancies I canimagine the vacancies number is
going to be increasing shouldthese buyouts be taken advantage
of.
But the compare and contrastright, I want to keep coming

(14:16):
back to that.
That is what has me reallyinterested in this report the
compare and contrast.
I knew that Marriott hadsignificantly more people.
I didn't know that they had 800more people.
I mean 941 authorized full-timepositions.
Fmc has, I think, 130.

(14:38):
Maybe we're getting up to 140authorized full-time positions.
That's a significant differenceand I don't want it's not a
value-based judgment.
I'm just putting it out there.
It says as of September 2024,like I said, marriott had a
12.3% vacancy rate, that's 116vacancies out of 941 authorized

(15:00):
positions.
So it actually has an image inthe GAO report that goes through
kind of the different areasthat they are understaffed.
So one of the major ones is theUS Merchant Marine Academy.
So remember, marad is not justthe desks that sit over in Navy
Yard in DC, but it is theoutside areas too.

(15:20):
And so US Merchant MarineAcademy.
So one of the maritimeacademies, the Federal Maritime
Academy for merchant marinersthat are graduating out, these
cadets that are graduating out,they have 264 staff.
They are short 35 staff and twoSES.
So that's Senior ExecutiveService members.
So usually kind of the upperlevel management is SES.

(15:43):
So 264 staff, they're short to35 staff.
There's no comparison to the FMC, right?
They don't run an academy.
The Office of the MaritimeAdministrator five staff, two
short.
You know that's probably aboutright.
Office of the Chief Counsel 34staff with two staff short.

(16:03):
So the Office of the GeneralCounsel, which is equivalent to
the Office of Chief Counsel hereat the FMC is probably 10,
maybe 15 attorneys.
I mean maybe 34 attorneys or 34staff, I should say, in the
Office of Chief Counsel.
Not a value-based judgment.
Again, just a comparison 34attorneys in the chief counsel's

(16:26):
office with two shorts, andyou're looking at the FMC that
is regulating and part of all ofthese, this increased case law
that's coming up, but docketsgalore.
I mean you have theadministrative law judges that
start the process of the FMC,but it's 34 to 10, maybe 15.
Just again, not value-basedjudgment, just a comparative

(16:50):
contrast.
I'm not going to go through allof these different offices but
just so that you know.
I mean the comparison doesn'texactly match up.
For the rest of it, um one thatI actually think that we have
the associate administrator forstrategic C-LIFT, um, that's
something that has 306 staff.

(17:11):
They're short, 79 staff.
I think C-LIFT is a big dealand I think that this next
administration is going to seeC-LIFT as strategic C-LIFT as
something that's important, umand something that should be
appropriately staffed and and umpart of the, the kind of
strategy, right.
I've said this before, but itseems as though the theme that

(17:31):
we're running with here is thatmaritime security is national
security.
I think that we've seen thatthrough some of these strategic
appointments and some of theKelly Waltz bill, right, that's
what I'm thinking of.
It's Congressman Waltz fromFlorida became the national
security advisor to the WhiteHouse.
He introduced that bill.
That's now the Ships Act, right, which talks about shipbuilding

(17:52):
.
It talks about growing the USflag fleet.
It talks about marinerattraction and retention.
So all of those things I thinkare big theme issues that are
happening or will continue tohappen under this administration
.
I'm going to yeah, no.
I think that that kind of sumsit up right and my, like I said,
it's a compare and contrast.

(18:13):
It's just to show, probably Iguess my point is how small the
FMC is and how lean it has runfor at least the past 10, 15,
almost 20 years.
So something to keep in mind.
You know I often talk about allthe different things that the
FMC is doing.
They are running with a verylean staff.
They're probably half attorneys, half economists, or maybe I

(18:36):
should say they probably have asmany economists as they have
attorneys.
The attorneys aren't just inthe general counsel's office,
they are usually attorneys, area part of each commissioner's
office, and then they also haveattorneys in the Bureau of
Enforcement, investigations andCompliance, so there are quite a
few attorneys.
But Bureau of Trade andAnalysis right, those are
economists, so it's a reallyinteresting agency.

(18:57):
And compared to this largercabinet level agency or cabinet
level office within or agencywithin a cabinet level agency
right, department ofTransportation is a
cabinet-level agency and thenMARAD being within there Just
interesting to compare andcontrast.
All right, that was only storynumber one.
Story number two so the FMCreleased a press release this

(19:19):
week actually talking aboutNVOCC.
So Non-Vessel Operating CommonCarrier.
So it says Florida NVOCC agreesto pay civil penalties and
conduct ongoing self-financemonitoring.
So I want to bring this upbecause I wanted to kind of
highlight some of the thingsthat the Bureau of Enforcement,
investigations and Compliancedoes beyond just watching
surcharges and being part of thecharge complaint process and

(19:43):
all the things that we typicallytalk about process and all the
things that we typically talkabout.
So a Florida-based non-vesseloperating common carrier, nvocc,
has paid $165,000 in civilpenalties and agreed to accept a
self-financed, independentmonitoring of their business
practices as part of twoseparate compromise agreements
reached with the FMC over thepast 18 months.

(20:03):
So Double Ace Cargo Incorporatedreached a compromise agreement
with the FMC in June 2023, whereit paid $115,000 in civil
penalties to resolve allegationsof violating the Shipping Act.
So it's 46 USC 41104A11.
The violation was of thestatute for transporting
shipments on behalf of entitiesthat were not licensed NVOCCs,

(20:26):
did not have bonds and did notpublish tariffs.
So take a look at that.
Obviously, nvoccs areresponsible for making sure
right that things are in order,and so part of that, the
violation here was violating thelaw by transporting shipments
on behalf of entities that werenot licensed NBOCCs, did not

(20:47):
have bonds and did not publishtariffs.
You can actually go check.
The FMC has a list of OTIs,ocean Transportation and
Meteorites.
So that's, freight forwardersor NBOCCs and those that are
licensed are listed there.
So in case you want to makesure that you're following up
and working with licensed NBOCCsor bonded companies, go check

(21:09):
the list at the FMC.
Continuing on in this pressrelease, it says in reviewing
and accepting the June 2023compromise, the commission
ordered its Bureau ofEnforcement Investigations and
Compliance to re-examine theconduct of AAIS after six months
to ensure it was complying withits relevant statutory and
regulatory obligations.
It says a second investigationwas completed in early 2024.

(21:30):
So that first one, it said, was2023.
Now we're looking at early 2024and a compromise agreement was
reached wherein double A's paid$50,000 in civil penalties to
resolve alleged violations ofanother shipping act violation
46 USC 411-04A11.
So actually the same statute.
It says by transportingshipments on behalf of entities

(21:53):
that were not licensed, nboccs,did not have bonds and did not
publish tariffs.
So this was $50,000 as part ofthe second compromise agreement
and in addition to the paymentof a financial penalty, aa's
agreed to accept and pay for anindependent monitor for a
12-month period ending May 2025.
So the independent monitor isproviding monthly reports about

(22:13):
AA's business practices andshipping agreements directly to
the FMC's BEIC director, that's,the Bureau of Enforcement,
investigations and Compliance.
So this is interesting.
They are having.
It was a self-monitoring andthen they moved over to an
independent monitor that's goingto be then providing monthly
reports back to the FMC.
Seems a little bit of likecreativity in monitoring because

(22:37):
, as I keep saying, the FMC thepositive way of saying it is a
very lean agency, but reallythey don't have a lot of people.
So, continuing on, in this pressrelease it says the choice of
the independent monitor wasreviewed and approved by BEIC.
Double Ace is bearing allfinancial costs for the
independent monitor, requiringthat a regulated entity accept
and pay for ongoing monitoringby an independent company.

(22:59):
Reporting directly to BEIC isnew to previous compromise
agreements.
Like I said, this is a creativesolution.
This arrangement allows BEIC tocontinue assessing the
compliance and integrity of acompany accused of wrongdoing,
while preserving the resourcesof the Bureau to conduct
investigations of othercompanies.
So exactly that.

(23:20):
That's how I see it too, thatthe Bureau the Bureau of
Investigation excuse me,enforcement, investigations and
Compliance got creative here,preserved the resources, the
manpower of the Bureau itself,but is still able to monitor
this company.
I mean, that's pretty smart, oran efficient use of resources

(23:42):
right, continuing on almostfinishing up here.
Resources right, continuing onalmost finishing up here.
Regulated entities are remindedthat self-reporting violations
is viewed favorably by thecommission and can help to
mitigate consequences ofnon-compliant activity.
Self-reporting violations isviewed favorably by the
commission.
All right.
Penalty payments are depositedinto the general fund of the

(24:03):
United States.
That's important, did you hearme?
Penalty payments are depositedinto the general fund of the
United States.
That's important, did you hearme?
Penalty payments are depositedinto the general funds of the
United States.
The Federal Maritime Commissionwill receive no portion of the
financial penalties collected.
That's true pretty much all thetime the FMC, when they assess
civil penalties, does notcollect that money.

(24:24):
So we've seen some significantcivil penalties assessed over
NVOCCs, voccs over the past fewyears and certainly since the
COVID congestion years.
That goes to the general fundthat does not get specifically
allocated to the FMC directly,so that $32 to $40 million

(24:46):
budget stays there.
So remember a few years ago wehad a couple million dollars
come through in some of thesecivil penalties.
The FMC didn't get a 5% raisebecause of that.
So if anything, it kind ofmakes the FMC even more
independent in its review,because the civil penalties
they're assessing are not tohelp fund the agency.

(25:08):
They really are to correct theviolations that are happening
under the Shipping Act.
So just an interesting pointthey always well mostly they
usually write that the penaltypayments are deposited into the
general fund.
That's important to notebecause it's saying we don't get
this money.
Maybe the FMC should, but theydon't.
They don't right now and so,short of a change with Congress,

(25:32):
the FMC doesn't collect thatmoney.
So story number two keep movingalong.
Story number three the PremierAlliance took effect.
So this was another pressrelease out of the FMC it was, I
believe, last week where itsaid the Premier Alliance
Agreement took effect February9th 2025.
So this Premier Alliance allowsHyundai Merchant Marine Ocean

(25:55):
Network Express Yang Ming JointService Agreement to share
vessels in the trades betweenthe US and Asia, middle East and
Europe.
The agreement was originallyfiled at the Commission October
28th 2024, and the Commissionissued a request for additional
information on November 5 tocollect the data necessary for
completing an economic analysisof the competitive effects of
the agreement.
The RFAI, which is the requestfor additional information

(26:18):
process, included a 15-daypublic comment period, which
generated filings by twoindustry trade associations.
The information provided by thePremier Alliance agreement was
deemed by the commission asresponsive on December 26th.
The law provides the commissiona maximum of 45 days to review
a newly filed agreement or theresponses to an RFAI before the

(26:40):
agreement automatically goesinto effect.
One thing that I want to pointout here.
We talk about it every time wetalk about agreements the FMC
does not approve agreementssubmitted to them.
They don't approve them.
They just either can stop themor it automatically goes into
effect.
And when I say stop them, theycan't just tell the filer of the

(27:02):
agreement denied.
They can't deny them in-house.
The only way they can stop themis filing an injunction in
federal court on this.
So they would have to file alawsuit against the agreement
and go prove their case which,as we know, is manpower right,
that's resources.
So they have to be pretty dangsure that they have it right if

(27:25):
they're going to go and say wethink that this is
anti-competitive, we think thatthis is a violation of the
Shipping Act, we think that thisis perhaps monopolistic, and
here's why.
So really, if an agreement getsfiled at the FMC, it's likely to
be automatically in effectafter the initial 45-day period
and then they can have a requestfor information and additional

(27:47):
information.
And that's where you get thatadditional 45 days.
So really like 90 ish, ahundred days, cause they say
they they need, they need todetermine that the responses
were responsive to the requestfor additional information.
So there's, there's a littlewiggle room on.
It's not exactly 90 days, but Imean that's not a lot of time.
So the FMC, as soon as anagreement is filed, especially

(28:09):
on some of these big ones, islike all hands on deck.
Let's review this.
So, just in case you didn'tknow, they're not automatically
rubber stamped, they are notautomatically approved and they
can't even be denied in-housein-house.
The benefit of all of this,though, means that the law

(28:30):
itself is more favorable toprivate business doing
innovative private businessthings.
If it's something that is anagreement that can be filed to
enjoy limited antitrust immunityunder the Shipping Act, then
kind of the default it feels isthat go ahead, try it.
If it's anti-competitive, theFMC will attempt to stop it.
But they can attempt to stop itat any point, whether it's when

(28:53):
it gets filed or when it's ineffect.
Once it automatically goes intoeffect, it doesn't mean that
that ability of the FMC to filean injunction against it is
changed in any way way.
Basically, what happens iswhenever it's anti-competitive
and the fmc reviews anddetermines that they can go
after it.
So initially, once it's alreadyin place, they continue to

(29:14):
monitor and that's the essenceof the fmc's job.
Right, they are the competitionauthority for global ocean
shipping.
That relates back to the us uhports and us commerce, so
they're going to keep watchingit.
So I mean, if anything, itfurther solidifies the FMC's
very important role in the fairand efficient movement of goods

(29:35):
across global ocean shipping.
Just as a little refresh, so thealliance reshuffle.
We saw some shuffling happeningin 2025.
So 2M alliance has now kind ofbroken off.
Msc has gone off, maersk hasnow joined with Hoppag-Lloyd
under the Gemini cooperation.
That was already approved.
That was already.
The agreement has gone intoeffect.

(29:56):
I should say the alliance, orTHE, the High Efficiency
Alliance, which was Hoppag-Lloyd, o&e, yang Ming and Hyundai
Merchant Marine, has now becomethis that we're talking about,
the Premier Alliance, which isO&E, yang Ming and Hyundai
Merchant Marine, and then theOcean Alliance remains, right
CMA, cgm, costco, ocl andEvergreen.
So we are a little bit shiftedaround.

(30:18):
I think the Gemini cooperationwill be one to watch in 2025 to
see how that hub and spoke modelworks and the increased
reliability that they arepromoting for there.
But I think this is going to bea really interesting one to
watch.
So everything is in place,everything has become effective
of the reshuffle here and we'llsee how it all plays out.

(30:39):
All right, so let's get into themeat and potatoes of the day.
Those were a lot of storiesthat we went through, but let's
switch over and let's talk aboutPanama Canal.
So the Federal MaritimeCommission might just hold the
authority that powerful actionPresident Trump is referring to
with respect to Panama.
So what is that powerful actionTrump is referring to?

(31:01):
Well, obviously right, he'stalking about that treaty
concerning the permanentneutrality and operation of the
Panama Canal.
That's often discussed in themainstream media.
But one thing that I reallyhaven't seen hit the mainstream
media is anything about theFederal Maritime Commission and
their authorities.
So they actually have theauthority to issue corrective
action on unfavorable conditionsto shipping and foreign trade.

(31:25):
Do you know that it's actuallytwo major authorities that you
probably didn't even know werethere?
So unless you listen to thispodcast, then you definitely
know.
So we have the Foreign ShippingPractices Act of 1988 and
Section 19 of the MerchantMarine Act of 1920.
So under the Foreign ShippingPractices Act, it grants the FMC
authority to investigate laws,rules, regs, policies or

(31:46):
practices of a foreigngovernment that adversely affect
the operations of US carriersand does not exist for foreign
carriers of that country.
So kind of an imbalance, anunfair imbalance, I guess I
would say.
It also allows the FMC to takeactions to offset the adverse
conditions.
They can do that by limitingaccess to and from US ports,

(32:07):
suspending foreign carriertariffs and service contracts,
suspending rights to operateunder agreements filed with the
FMC, and or the FMC could assessa fee of up to a million
dollars per voyage.
So they can do this to respondto foreign government policies
or shipping practices thatcreate unfavorable conditions
for US carriers, exporters andimporters.

(32:30):
So I'm going to go through kindof the actual language of what
the Foreign Shipping PracticesAct says here, just as we always
do, because I like to kind ofhelp illuminate so that you can
walk through yourself, because Ireally encourage you to look up
these statutes and see ForeignShipping Practices Act in
Section 19 of 1920.
So it says the FMC shallinvestigate whether any laws,

(32:51):
rules, regs, policy or practicesof a foreign government or
practices of a foreign carrieror other person providing
maritime or maritime-relatedservices in a foreign country.
It's kind of all-encompassing.
So the foreign government, aforeign carrier or persons
providing maritime ormaritime-related services in a

(33:12):
foreign country, and it saysresult in the existence of
conditions that adversely affectthe operations of US carriers
in US ocean-borne trade and donot exist for foreign carriers
of that country in the US underthe laws of the US or as a
result of the United Statescarriers or other persons
providing maritime ormaritime-related services.
So an investigation what theycan do is they initiate an

(33:36):
investigation.
It may be initiated by thecommission on its own motion or
a petition can be filed of anyperson, including another
component of the US government.
So somebody from the USgovernment or some private
entity or the commission itselfcan initiate this investigation
Under this law.
It says the commission shallcomplete an investigation under

(33:56):
the section and render adecision within 120 days after
it's initiated.
However, the commission mayextend its 120 day period for an
additional 90 days.
So it does have kind of a timecomponent to it 120 with an
additional 90 with sufficientjustification.
They can also request additionalinformation To further the

(34:17):
purpose of this title.
The Federal Maritime Commissionmay order any person, including
common carrier, shipper,shippers, association, ocean
transportation, eitherintermediary or maritime
terminal operator, or an officer, receiver, trustee all these
people to file with thecommission any periodic or
special report, answers toquestions, documentary materials
or other information thecommission considers necessary

(34:39):
or appropriate.
The commission may require theresponse to any such order to be
made under oath and theresponse shall be provided in
the form and within the timespecified by the commission.
So it's kind of furtheroutlining how the commission can
ask for information under theirinvestigation.
And then here's where we getinto action against foreign
carriers, whenever the FMC afternotice and opportunity for
comment or hearing determinesthat the condition specified of

(35:02):
this title exists, thecommission shall take action to
offset those conditions itconsiders necessary and
appropriate against any foreigncarrier that is a contributing
cause, foreign carrier that is acontributing cause or whose
government is a contributingcause.
So you can go after the oceancarrier or foreign carrier I
should say that is acontributing cause or whose
government is a contributingcause, and the actions may

(35:23):
include limitations on voyagesto and from US ports or the
amount or type of cargo carried,a suspension of any or all
tariffs and service contracts.
Again, remember, servicecontracts and agreements are all
part of this limited antitrustimmunity that otherwise would be
monopolistic, but because it'sunder the Shipping Act, the FMC

(35:45):
is monitoring it.
They're going to allow at leasta little bit of an ability to
file those Number threesuspension or right to operate
under any agreement.
So again, remember theseagreements.
I mean, these are the oceancarrier agreements, they're
cooperative working agreements.
There's a million differentkinds of slot charter agreements

(36:06):
.
There's lots of agreements, butthis could suspend them and
then the last one that theycould use is a fee not to exceed
a million dollars per voyage.
Now this law has been in effectsince 1988.
In 1988, a million dollars pervoyage was wild.
It still is wild, a milliondollars per voyage.
So it's a pretty big deal.

(36:26):
Then if they do refuseclearance, the FMC can then go
ask the Secretary of HomelandSecurity to tell the Coast Guard
to deny entry for purposes ofoceanborne trade of a vessel of
a foreign carrier.
So this is a pretty significantauthority that the FMC has

(36:50):
under this title becomeseffective, or a request to the
Department of Homeland Securityfor that refusal of entry is
made.
This determination shall besubmitted to the president
immediately to the president.
The president, within 10 daysafter receiving it, may
disapprove it in writing settingforth the reasons for the
disapproval.
If the president finds thatdisapproval is required for
reasons of national defense orforeign policy, which kind of
has this connotation of itautomatically is approved unless

(37:12):
the president within 10 dayssaid no, no, you can't go that
way.
So that's the foreign shippingpractices act.
Section 19 is a little bit morestreamlined.
We often see the FMC kind ofreferring to section 19
authority more than the foreignshipping practices of the two,
but they kind of are around thesame theme right.
It authorizes the FMC toprescribe regulations to correct
unfavorable conditions toshipping in foreign trade.

(37:34):
I'm going to go directly intothe law, the actual text of the
law here, because it saysunfavorable conditions.
To further the objectives andpolicies, federal Maritime
Commission shall prescriberegulations affecting shipping
in foreign trade to adjust ormeet general or specific
conditions unfavorable toshipping in a foreign trade.
To adjust or meet general orspecific conditions unfavorable
to shipping in a foreign trade.
So they can create regulationsto adjust if they find

(37:58):
unfavorable shipping conditions.
They can rebalance itessentially.
So they can do that if theyfind these unfavorable
conditions in a particular tradeon a particular route or in
commerce generally.
Right, so that they list outhere, but including intermodal
movements, terminal operations,cargo solicitation, agency
services, oti services andoperations and other activities

(38:21):
and services integral totransportation systems.
And they could say that thiscan arise out of results from
laws or regulations of a foreigncountry or competitive methods,
pricing practices or otherpractices employed by owners,
operators, agents or masters ofa vessel of a foreign country.
Initiation of a regulation orregulation may be initiated by
the commission on its own motionor on the petition of any

(38:43):
person, including the USgovernment.
So that's it.
This second one doesn't need afull investigation and can be
undertaken to correctunfavorable conditions.
I mean connecting this to thePanama Canal, depending on what
they ultimately find as part oftheir initial conversations with
Panama.
20% of the world's fleet isflagged under Panamanian flag.

(39:07):
So if, under the ForeignShipping Practices Act, flagged
under Panamanian flag, so ifunder the Foreign Shipping
Practices Act, they determinethat they should do something to
the Panamanian flagged vessels,20% of the world's fleet,
almost 20%, I think it's 18% ofthe world's fleet is Panamanian
flagged.
That's significant.
The US could, I mean, threatenor suggest that 20% of the

(39:30):
world's fleet can no longer comeinto the US?
And that's why I say this is amaybe right, because this is a
giant authority that the FMC has.
I don't know if it's going tobe used and I don't know if
anybody really knows about it,right?
Maybe they do, and I'm surethat the FMC commissioners and
certainly the new chairman,chairman Sola, know about it,

(39:52):
because he and former chairmanDan Maffei just were down in
Panama over the fall to do alittle bit of an investigation
on the drought and the PanamaCanal, generally unrelated to
all the current conversation,but I just wanted to bring this
up because I wanted to make youaware of it, should the
conversation continue past theneutrality agreement of Panama,

(40:13):
don't be surprised if you seethe FMC coming back into the
forefront.
Certainly, the FMC found itselfin the spotlight during COVID
congestion years.
Fmc might find itself in thespotlight again in 2025 with
respect to this Panama Canaldiscussion.
All right, so that's it for thisweek.
Keep it here for all theupdates on what you need to know

(40:35):
in the global supply chain.
As always, the guidance here isgeneral for educational
purposes.
It should not be construed tobe legal advice directly related
to your matter.
If you need an attorney,contact an attorney, but if you
have specific legal questions,feel free to reach out to me at
my legal company, skollStrategies.
Otherwise, for the non-legalquestions, e-learning and

(40:55):
general industry information andinsights, come find me at the
Maritime Professor.
If you like these videos, let meknow, comment, like and share.
If you want to listen to theseepisodes on demand, or if you
missed any previous episodes,check out the podcast by Landed
by Sea.
If you prefer to see the video,they live on my YouTube page by
Land and by Sea, presented bythe Maritime Professor.
And while you're at it, checkout the MaritimeProfessorcom.
We have been releasing webinar,live webinar sessions.

(41:16):
We refresh the website.
Coming soon, we're going tohave e-courses that you can
actually purchase and take atyour own leisure, so keep an eye
on the Maritime Professor.
Go sign up for our newsletter.
We'll be dropping a lot ofinformation on all the different
happenings with the MaritimeProfessor and the e-learning and
educational resources foreverybody.
So until next week.
This is Lauren Beacon, theMaritime Professor, and you've

(41:37):
just listened to by Land and bySea.
See you next time.

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