May 23, 2025 • 35 mins
🚢 By Land and By Sea Podcast – an attorney breaking down the week in supply chain
🎙️ Captain’s Log – “Flags, Fees, and a Maritime Holiday”
🗓️ May 23, 2025
Ahoy! This week, we’re covering three stories every maritime professional should know:
⚓ Section 301 Tariffs — USTR shifts focus to port equipment with proposed tariffs up to 100% on Chinese-made ship-to-shore cranes, chassis, and cargo handling gear. This signals a strategic pivot in U.S. trade policy.
🛳️ FMC Flags of Convenience Investigation — What was once a possible remedy under the chokepoints investigation is now the FMC’s main focus, probing how foreign-flag registries might undermine fair competition and security in U.S. trade lanes.
🎉 National Maritime Day — May 22 honors the U.S. Merchant Marine and civilian mariners. This year, the President ordered U.S. government vessels to dress ship in commemoration—a proud salute to the maritime workforce.
Ready to break it down? Tune in now: https://podcasts.apple.com/us/podcast/by-land-and-by-sea/id1631684087
Explore corporate trainings and webinars to bring this insight to your team at www.themaritimeprofessor.com
⚠️ This content is for educational purposes only and should not be considered legal advice.
#maritime #shipping #FMC #supplychain #maritimepolicy #ByLandAndBySea #TheMaritimeProfessor
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:16):
I got soul coming through, flying free.
Skies are blue, all the wavesare mixing room.
I got On top.
When you see me, good night.
(00:45):
Whoa, I'm living bold.
This is what it looks like Onthe tip of the world.
Whoa, whoa.
This week, the maritime worldgave us a little bit of
everything, isn't that everyweek these days?
A hearing on proposed tariffsthat could reshape cargo
(01:07):
handling equipment, a newFederal Maritime Commission
investigation into internationalshipping flags, and a holiday
that celebrates one of thehardest working sectors of the
economy, the American maritimeworkforce.
Hi, welcome back to, by Landand by Sea, an attorney breaking
down the weakened supply chainpresented by me, the Maritime
Professor.
I'm Lauren Began, formerMaritime, former FMC
(01:28):
International Affairs Attorneyand founder of the Maritime
Professor and Squall Strategies,and I'm your go-to resource for
navigating the regulatory sideof global ocean shipping and I'm
your favorite maritime attorney.
Right, I'm here to walk youthrough both ocean transport and
surface transport topics in thewild world of supply chain.
As always, the guidance here isgeneral and for educational
(01:48):
purposes only.
It should not be construed tobe legal advice and there is no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
This is plain language maritimecreated so that anybody, not
just lawyers or industryinsiders, can understand what's
happening in the world ofshipping.
So let's dive into this week'sepisode because, as you know,
(02:09):
ocean shipping moves the world.
All right.
Story number one.
This is Section 301 Tariffs.
We've been talking about theSection 301 Tariffs.
Now there's a little bit of anew perspective.
I've been kind of mentioning itfor the past few episodes.
I want to bring it to yourattention again.
But let's start with a quickrefresher on where this is all,
(02:29):
where this all started from andwhere it's kind of going.
So back in April of 2024, sojust over a year ago, that's
when the United States TradeRepresentative that was under
the Biden administrationlaunched this Section 301
investigation into China's tradepractices in the maritime
sector.
Like I said, this started underthe Biden administration but
has now continued and evolvedunder the Trump administration.
(02:52):
So you may recall from aprevious episode that one of the
earlier proposals included inthe USTR proposal on this was a
million dollars per voyage feeand that was going to be
assessed on China-built vesselsor China vessels.
It wasn't quite clear if it wasgoing to be in the fleet or
just the ones that called the US.
(03:14):
It was a significant proposal.
The version caused quite a stir, as we know, right.
As we know, there wassignificant pushback.
There was a lot of messagingand media reports and industry
really saying, look, this is toomuch, this is going to be
significant.
So it got everybody all riledup, which I think is kind of
(03:35):
what it was used to do, and theyhad an in-person hearing.
Remember, there wasn't anyaudio, there wasn't any video.
Sal Mercogliano said he wasgoing to do a puppet show on the
transcript when it was released.
Well, I'm still waiting, Sal, Ihaven't seen that puppet show.
I'm still waiting.
But yeah, so it was revised,right, so it was revised and it
(03:56):
was a little bit more in linewith the industry proposals.
They kind of used thatin-person hearing it seemed like
as a brainstorming session.
And then that turned into thisnew narrower application where
the vessels had a cap on howmany times they could be charged
but still distinguished betweenChina vessels and heightened
(04:18):
fees associated with those andnon-China vessels and operators
and kind of reduced fees fornon-China related vessels and
operators.
So it was a clear attempt tokind of refocus the proposal to
better accommodate and really bein line with what the industry
requires, while also stilltrying to impact and influence
(04:38):
some of the behavior in theglobal ocean shipping world.
Right, it still put thatpressure on maritime, the
Chinese maritime dominance,which is what the whole
investigation is about, withoutover penalizing or trying
attempting to not over penalizeor penalize at all if they can
help it.
It looks like there's stillgoing to be some impact to the
supply chain, the US supplychain.
(04:59):
But that was the attempt right,it was that it was going to try
not to over penalize.
So that's the refresher.
Was the attempt right, it wasthat it was going to try not to
over penalize.
So that's the refresher.
Port fees, investment calls gota lot of attention.
There was also in the revised,amended proposal a section that
people aren't talking about asmuch and it's so important that
you pay attention to this.
(05:20):
It was a new proposal ontariffs on marine cargo handling
equipment.
So, according to the USTR'srevised proposal, it said in
accordance with the president'sdirection, ustr has considered
whether to propose additionalduties on certain ship-to-shore
cranes and other cargo handlingequipment.
The report highlightsvulnerabilities arising from
over-reliance on Chineseproduction, such as
(05:41):
over-reliance may createopportunities for China to
manipulate the supply ofcritical components or materials
, essentially US maritimeinfrastructure.
So here's what was proposedunder the support fees.
They came out with the revisedproposal.
In that revised proposal iswhere this new proposal came in
and they were asking forcomments.
(06:03):
The proposal is up to 100%tariffs on ship-to-shore cranes,
right, that are eithermanufactured, assembled or built
with Chinese origin parts orproduced anywhere by companies
owned or influenced by Chinesenationals.
So fine, right, 80 to 90% ofship-to-shore cranes are
produced in China.
100% of the fixed armship-to-shore cranes, all of
(06:27):
them, all of them are built inChina, unfortunately, right.
I mean, that's kind of what theintention of this whole
initiative is about is trying tofigure out ways of moving away
from the Chinese dominance, andone of those things is there
aren't other options for thefixed ship-to-shore cranes.
So most ship-to-shore cranescan lift up, but in certain
(06:48):
areas Port Everglades, bostonyou can't lift up because you're
right next to an airport.
Right, we have a maritime portright next to an airport and you
can't lift up because you'regoing to get in the flight path
and that's a big deal, right?
So the ship-to-shore cranesthat are fixed arms really is
kind of the precipice for whythis is so problematic.
The other thing is right, forthere's about 10 to 20 percent
(07:11):
of ship-to-shore cranes thataren't produced by China.
They're more expensive.
So that's part of this and Ithink that's one thing that will
be coming out from all of thisdiscussion when we have the
China tariffs from the firstTrump administration and they
had the whole list of thingsthat were I remember, list one,
list two, list three.
One of the lists hadship-to-shore cranes on it and
(07:35):
instead of actually getting anexception, it got taken off the
list entirely the ship-to-shorecranes, especially the fixed
ship-to-shore cranes.
So here's kind of that momentagain.
But I think it's so importantthat the industry explains these
things right, explains thenecessity of other options here,
(07:55):
because right now there are noother options for fixed-arm
ship-to-shore cranes and verylimited options for other types
of ship-to-shore cranes.
So just wanted to flag thatbecause that's important.
But also in this proposal is100% tariffs on certain cargo
handling equipment of Chineseorigin.
So this is chassis, chassisparts, cargo boxes, right.
(08:18):
The actual box itself.
Look, this is a big deal forport operations, right?
So China currently doesdominate the global production.
If you go back and look at theFederal Maritime Commission,
former FMC Commissioner CarlBensel actually did a report on
chassis and cargo boxes and theprevalence of, or the dominance,
(08:40):
I guess you could say of, chinain the production of those
goods.
So and actually that reportisn't being cross-referenced
here much, but it probablyshould be.
It was done 2020, right beforehis MTDI stuff.
A really good report.
It states some of the thingsthat we know, right, that China
is dominant, but it gives somenumbers associated with it.
(09:01):
It's a nice report that kind ofencapsulates what is happening
with the China dominance inchassis and containers, much
like this USTR investigation.
But the point is they're turningtheir focus away from the
vessel calls.
They're probably still going tobe refining some of the vessel
calls, right, because there'ssome terms that, as if you
(09:23):
follow Sal Mercogliano andwhat's going on with shipping he
talks about some of that nettonnage is a little bit
difficult to nail down the waythat they're using it.
I think there's probably goingto still be some discussion
around the port fees, but thisis the part that's not getting
as much attention theseship-to-shore cranes, these
chassis, these cargo boxes.
So this week, ustr and how do Iknow that?
(09:45):
This week, ustr held a hearingon the new proposal.
We had two days of hearingswith people just outraged.
The industry was so upset aboutthe fees that they all showed
up on that first one.
This hearing this past Mondayon the 19th, we didn't have that
(10:06):
same outreach.
We didn't have that sameeverybody in the industry
showing up for thisbrainstorming session.
And again, no audio feed, novideo feed.
Right, I said last time it feltlike USTR was creating an
environment, so perhaps theparticipants had a little bit of
cover to speak freely insteadof perhaps grandstanding if they
were being recorded and videofeed was streamed out.
(10:27):
And I think maybe that's whatthey were trying to do again
here.
100% tariffs on ship to shoreor chassis or containers is wild
, perhaps necessary to get apoint across, but I can't
imagine where we would keep 100%tariffs on these things because
(10:48):
they're so necessary to thesupply chain moving.
But look, same thing, right,this hearing on Monday no audio
feed, no video feed, just thetranscript, which has actually
already been released.
Um, but the transcripts are alittle bit clunky to read.
Look, it says they were trying.
They weren't trying to hide thehearing by any means, but it
says look, if you wanted to be apart of it, you had to be there
(11:12):
.
You had to be there so youcould be part of the
conversation, part of thebrainstorming session, if you
will.
Again, I kind of have twothoughts on this.
One, the 100% tariffs.
They have to come down right.
There's no way the industryrelies.
It's the crux of the wholeindustry.
Chassis, like boxes, can't movewithout the wheels.
And that's what the chassis are, right, those are the wheels
that move the boxes around.
(11:32):
And the industry wasrevolutionized by Malcolm McLean
when he created the box andmoved away from just piecemeal
shipping and actually createdthese boxes, these 20-foot
equivalent units or these40-foot equivalent units, but
the actual box itself.
So we need that.
And sure, yes, they're built inChina.
(11:53):
For the most part there are USmanufacturers of boxes and I
think that that might be an easyswitch.
But that's, I think, what USTRwanted to hear at this hearing.
They still need to hear from us, right?
They still need to hear fromthe industry.
So if you know of some of theavailability of cargo boxes
being manufactured in the US,get that information in.
(12:14):
If it's something that requiresa little bit of a runway, get
that information in.
It's so necessary to have thoseconversations and get that
information into the USTR so itcan inform their decision.
I will note, though, the USTR.
When they released theirrevised proposals, I think they
leaned heavily on their advisorycommittee.
(12:35):
So we've talked about thisbefore.
There's federal advisorycommittees.
These are advisory committees,for the most part non-political.
It's just industry leaders,stakeholders that come together,
that kind of chew on differenttopics that the agency has
questions on, sends it out tothe advisory committee.
They come up with, maybe,recommendations, general advice.
(12:56):
We talk about the NationalShipper Advisory Committee all
the time, but that happens atthe FMC.
We've talked about MITSNACbefore, the Maritime
Transportation System NationalAdvisory Committee that is
advising the Department ofTransportation through the
Maritime Administration.
That one's actually still onpause, so we're waiting to get
(13:17):
more information on what's goingon, because I think that
MITSNAC could be a fantasticresource, especially if USTR is
using their federal advisorycommittees to help inform this
decision or their guidance.
But again, it's important tohave this engagement.
I think the federal advisorycommittee will help to continue
to provide feedback and guidanceto USTR as they're going
(13:40):
through their next round ofrevised proposals.
Right, they have to come downoff of this 100% tariff, but we
need the industry to show up too.
Right, maybe you're not onthese advisory committees, and
if you're not, this is youropportunity and you don't want
to miss it.
My second thought on thisperhaps the containers maybe
can't be tariffed at all here.
(14:01):
It was one of the comments thatcame in and I thought that it
was a really interesting one,and probably one that might
sidetrack what they're trying todo, but also one that might
help inform a better way oftrying to impact and influence
this behavioral change of.
Let's get away from China beingthe dominant manufacturer of
(14:22):
containers and chassis and bringit back to the US.
But look, containers are not animport, right, they're part of
the transition of the goods.
They don't stay, if anybodylistening.
Still, if you have fresh milkdelivered in the glass bottles,
you know we're lucky to havethat as an option here where we
live.
But the glass milk bottlesactually on the side of it says
(14:43):
we, we came to visit, not tostay.
That's essentially the samething, right, they're the
reusable packaging material thatbrings the goods to you.
But the actual box Came tovisit, not to stay, right?
So it's not an import.
It comes in, it brings thegoods, it becomes an empty and
(15:04):
then hopefully gets filled withan export and then becomes an
export commodity that goes onits merry way into the supply
chain ecosystem.
So this was last Monday.
I think that there's like aseven-day finalized comment
period I can imagine.
Right, they're not going to besuper hard-lined on, we're going
to turn away comments thataren't submitted within these
(15:26):
periods, but to be guaranteedhaving your comments included
and considered.
Watch all of these deadlines.
I know we're drinking from firehoses here.
There's a lot going on.
Tariffs are changing quickly,but this is important to stay
engaged.
When the maritime industry isasking you for feedback, when
USTR, when the federalgovernment, is asking the
(15:47):
maritime industry for feedback,we have to continue to stay
engaged.
We have to continue to let ourvoices be known.
If 100% tariffs would impactyour bottom line, you got to let
them know.
You have to let them know thatthat's going to happen.
So, look, I think the otherthing is we're already probably
(16:07):
starting to see some industryrealignment based on the
revision of the fees proposal.
What I think that we're going tocontinue to see happening and I
think that there's probably anopportunity right now that I
think is being taken advantageof is China-built vessels are
being rotated out of the UStrade lanes.
Right, you have these globalocean shipping companies and
they have Korean built vesselsand other non-Chinese built
(16:29):
vessels, and then they certainlyhave Chinese built vessels.
I mean American companies do aswell.
There's waivers on the Americancompanies, right?
So if you have vessels even ifthey're Chinese builtbuilt
vessels in the rotation that'swhat the new proposal said is
that, well, if it's an Americancompany, there's a waiver
opportunity?
The globalization shippingcompanies that are non-Chinese
(16:51):
operators are trying to findways of limiting their exposure
to these fees, and I think oneof those ways is by moving the
China vessels out, movingnon-Chinese vessels into these
US trade lanes.
I also think that perhaps theremight be something to these
alliances and where there areChinese related companies as
(17:12):
part of the alliances, perhapsthere might be a strategy there
to have more of your goods go onthe company that isn't Chinese
connected.
I don't know.
We're going to see.
I'm going to continue to watchthis and see how perhaps some of
these trade lanes are movingwith some of the vessels that
(17:32):
they're putting in.
We might even see reflagging toUS-based entities, right, like
I said.
So Maersk has the US version ofthe company.
I guess subsidiary is MaerskLine Limited, so perhaps we're
going to be seeing an APLsimilarly right.
So I think we might be seeingsome of these vessels perhaps
reflagged into US flaggedentities under a US company to
(17:57):
try to find waiver opportunitiesfor some of these fees company
to try to find waiveropportunities for some of these
fees.
It takes a while to reflag right, that's not going to happen
right off the bat.
But since we have maybe somedowned imports right now a
slowdown that we keep hearingabout from port officials maybe
there's a silver lining to allof that.
Less cargo moving means thatperhaps the vessels can be
(18:18):
repositioned with lesser impacts.
So that's why I think right nowis maybe when that's happening
right.
I think they're probably beingstrategic with their fleet.
They're kind of moving thingsaround.
We'll see.
We'll see what shows up.
We'll see what vessels start tocome into the trade lanes as
the imports are starting to pickup is what I'm hearing a little
bit.
But look, if you work in supplychain right terminal operations
(18:41):
, infrastructure planning, portprocurement, marine handling
equipment and I mean reallysupply chain right this is
something that you got to payattention to.
We got to stay sharp on this.
So keep following the USTRstuff Just because the port call
and the port fees has startedto take better shape doesn't
mean that there aren't otherthings that are being looked at.
(19:01):
That would still impact yousignificantly.
And the thing is these costsprobably will get passed along.
The port fees it makes sensethat they would get passed along
, right, because they're notnecessarily the fault of the
carrier unless they're a Chinesecompany, right, but they're not
necessarily the fault of thecarrier.
They also have Chinese ships,just like American companies
(19:23):
have Chinese ships, right, sothat's part of it is that would
probably get passed on.
So they're trying to limittheir exposure, I think.
Right, I can imagine so thatway they don't have as many fees
to pass on, right, because it'snot a pleasant experience
having those fees passed on.
But also cargo handlingequipment, right, ship-to-shore
(19:44):
cranes if they cost more moneycoming in, that's more expensive
for the port itself and sothey're going to have to recoup
those costs some way.
Cargo boxes, right, or thechassis providers there's all of
these things if they cost moreto come in, are going to cost
more to the end consumer becausethose fees have to be passed
(20:04):
along.
It's going to be very difficultto just absorb them, especially
if it's 100 percent tariffright On multi-million, I mean
tens of millions of dollars fora ship to short grain.
So all right.
Story number two let's keepmoving on, but USTR, keep it in
mind.
Story number two the FederalMaritime Commission.
Again, they're so active.
Another investigation out ofthe Federal Maritime Commission,
(20:27):
this time on flags ofconvenience.
I can imagine they're stillgoing to be accepting late filed
comments.
They tend to.
They are late filed comments atthis point though, so if you
have comments in the matter, seewhat you can do.
Try to reach out.
(20:48):
Secretary at FMCgov is probablywhere I would send it.
That's kind of where theyreceive the Office of the
Secretary.
I don't know if the commentssubmission is still open on the
Maritime Chokepoints, but all ofthat to say OK, if you missed
out on the maritime choke points, you might still have an
(21:08):
opportunity.
But we're shifting gears nowhere to flags of convenience.
This was kind of part of themaritime choke points because it
was kind of part of theremedies that the FMC could
undertake right Turning awayflagged vessels of a certain
country, namely Panama, in thatsituation, or any country really
.
But it was most notable forPanama because if there's to be
found unfavorable shippingconditions by the country of
(21:31):
Panama, one of the remediesavailable to the FMC in that
situation is turning away fromvessels with Panamanian flag
vessels calling at any US ports.
Yes, yes, the FMC could do thatand they still can.
They could turn away, restrictport access to Panamanian flag
vessels if they find unfavorableshipping conditions have been
(21:55):
undertaken by the country ofPanama.
Not saying it's going to happen, but it could.
It is very much on the tableand that was the maritime choke
points.
Now they're looking at flags ofconvenience.
Generally.
They are looking at flags ofconvenience as a category that
needs to be reviewed forunfavorable shipping conditions
or really unfair shippingconditions.
So let's break this down alittle bit.
(22:16):
What is a flag of convenience?
Well, it's really kind of whena ship is registered in a
different country than one whereits true ownership is based.
So, and the name flagsconvenience, it kind of creates
a convenience for that not basedin that country ownership.
So usually what will happen iscarriers choose these registries
(22:36):
for cost savings, perhapslighter labor rules sometimes
significantly lighter laborrules, regulatory flexibility
and generally fewer complianceissues.
Some of the most popular flagstates Panama, liberia, marshall
Islands but there's a wholeslew of flags of convenience and
(22:57):
I'm not saying that these threethat I mentioned.
They just kind of happen to bethe biggest ones.
You're probably most familiarwith those, and we've talked
about the Panamanian flags ofconvenience, but they represent
18 to 20 percent of the world'sflag fleet, just Panamanian
flagged vessels alone.
But flags of convenience alsomight have a darker side, and
that's what this FMCinvestigation is kind of looking
(23:18):
at.
Is there something that's goingagainst overall favorable
shipping conditions?
Right, this unfavorableshipping conditions assessment?
So from a business perspective,flags of convenience can be a
savvy way to trim expenses, butfrom a regulatory or national
interest perspective, it canraise some serious questions,
(23:39):
and some of those questions thatthe FMC is kind of looking at
here is really who's in chargeif something goes wrong at sea?
What safety, labor orenvironmental standards are
actually being enforced?
And, especially in times ofgeopolitical tension, can the US
really rely on or holdaccountable a vessel that isn't
tied to any meaningful USoversight?
And again, right, the FMC isreviewing this flag neutral, but
(24:01):
from the perspective for thebenefit of the US importer,
exporter and consumer.
So, while the FMC generally isflag neutral, they are still
obviously a regulatory agency ofthe US with US interests in
mind, and so that's what the FMCreally wants to find out here.
Right, this new investigation isasking whether widespread use
of these flags in US trade lanesright for cargo that's touching
(24:23):
US trade lanes and being servedeither imports or exports, or
somehow just getting to theconsumers.
Is it creating unfaircompetition for perhaps US
flagged or other more regulatedvessels?
Is there unfavorable shippingconditions happening by flagged
to convenience?
Are there introductions ofincreased risks, either from a
(24:44):
security standpoint or supplychain reliability one, or from a
labor standards problematicstandpoint.
And also they're going to belooking at it from, obviously,
the perspective of is itundermining the goals of the
Shipping Act?
Right, Because the problematicstandpoint.
And also they're going to belooking at it from, obviously,
the perspective of is itundermining the goals of the
Shipping Act?
Right, because the Shipping Actis the marquee statutory
authority that the FMC enjoys,given to it by Congress.
(25:05):
But, as we've talked before,there's these two other
statutory authorities that theFMC has the Foreign Shipping
Practices Act and the Section 19Authority of the Merchant
Marine Act of 1920.
That's where the FMC gets theseauthorities to review
unfavorable or unfair shippingconditions.
(25:26):
So the choke pointsinvestigation highlighted how
foreign control ofinfrastructure can expose US
trade or perhaps if there'sunnecessary impediments in
certain choke points around theworld.
That's why there were sevendifferent areas looked at.
This wasn't just a Panamanianinvestigation, it was seven
different areas.
This flags of investigation,flags of convenience
(25:49):
investigation, is kind of doingthe same thing, but now more at
the vessel level, but also kindof an international, kind of a
country level, right, becauseit's flagged the convenience
from a certain country where theflag of convenience is coming
from.
So why does this matter?
It's not just a paperwork issue, right.
It's a power and policy issue.
If a ship is flagged in acountry that doesn't enforce
basic safety, labor orcompetition rules, I mean, can
(26:12):
it really be trusted to operatein our trade lanes?
And that's kind of what the FMCis looking at here Can it be
trusted?
Are there security implications?
Are there favorability toshipping conditions?
Is there a competition side ofit?
Really?
And it's probably less aboutthe safety and labor and more
about the competition rules,because right at the heart, the
(26:33):
FMC is a competition authorityand I think that's what they're
looking at.
Right, the FMC is putting thedebate squarely on the table is
because of those considerations.
Should a flag of convenience beallowed to operate in US trade
lanes, we could see a whole slewof things right.
As we've talked about before,foreign Shipping Practices Act
(26:54):
and Section 1930 has a catch-allwhere contracts or agreements
filed at the FMC right and thosestart to hit at alliances or
(27:17):
those start to hit at servicecontract generally.
But now this could be justsomething that the FMC could
take a lot larger of a broadstroke to.
So we'll see.
Look, the FMC has been lookingunder the hood or I suppose
(27:38):
they're down in the engine roomof global ocean shipping
recently and asking look, isthis still working for US
interests?
And I think that that'ssomething that's an important
question.
The FMC is situated withstatutory authority to ask those
questions.
They've historically taken alight approach to this, but now
they're doing it.
They're looking Is this stillworking for US interests or are
(28:00):
there unfavorable shippingconditions for the competition
of the global ocean shipping?
But as it relates to the US,I'll keep watching.
You got 90 days 90 days tosubmit comments on this one.
Don't let this one pass.
The maritime choke points didnot get as much attention as it
should have in terms of commentsbeing filed.
This one is a big deal.
(28:20):
I'm going to keep talking aboutthis one Flag convenience and
the FMC reviewing it.
All right.
Story number three so yesterday,thursday May 27th, was National
Maritime Day.
Happy National Maritime Dayeverybody.
If I'm a little hoarse or alittle tired today, I just flew
back this morning fromWashington DC.
I was down there.
(28:40):
What an exciting day.
A full lineup of NationalMaritime Day celebrations.
It's just a fantastic way tocelebrate this wonderful holiday
.
It was established by Congressin 1933 to honor the US Merchant
Marine and its vital role incommerce and national defense.
The date commemorates thehistoric 1819 voyage of the SS
(29:01):
Savannah, the first steamshipped across the Atlantic
Ocean.
And just yesterday, in a 2025presidential proclamation,
president Trump highlighted thecritical contributions of
merchant mariners.
The critical contributions ofmerchant mariners, stated in
that proclamation.
He said merchant mariners playa vital role in our national
defense, standing ready tosupport military operations
whenever they are needed.
(29:21):
He also emphasized their rolein supporting trade and
connecting American producers toglobal markets, saying in the
proclamation, they operate thevessels that transport goods,
energy and raw material to andfrom our shores, supporting
global trade and connectingUnited States producers with
international markets.
The proclamation also directedall vessels of the United States
(29:45):
government in appropriatewaters are authorized and
requested to dress ship incommemoration of National
Maritime Day, of NationalMaritime Day, so, in other words
, the US government vessels flewfull dress flags from stern to
stern, which is a proud vesselsalute to the maritime industry
and its workers.
Look, national Maritime Day ismore than a tradition.
It's a reminder that the USmaritime workforce and fleet are
(30:07):
critical to national security,economic strength and global
supply chain resilience.
And, honestly, for the firsttime since I've been in global
supply chain and maritime issuessince, oh my God, I'm going to
say 20 years now, which isn'tthat long, but how can that be?
I'm only 25.
No, that's not true, but I havebeen around for 20 years now in
(30:29):
the maritime industry.
I can say that saying workforceand fleet are critical to
national security, economicstrength and global supply chain
resilience is actuallyhappening and it feels like it's
getting that recognition as atop five issue for this
administration and all of thebuzz.
You know, yesterday we hadNational Maritime Day over at
(30:49):
Maritime Administration at theDepartment of Transportation
Wonderful celebration.
There was a roundtable that washappening right after the
ceremony Fantastic opportunityfor the industry to come
together to really think of newways, of how do we revitalize
this in real industry-specific,industry-led ways.
(31:11):
But I will say I'll take amoment.
These are conversations we'vebeen having for years.
Right, we've been havingconversations for years.
That was one of the takeawaysthat I heard from a few of the
participants was I'm happy we'rehaving these conversations, but
it was almost like this,haven't we said this before?
So if anybody's listening, fromanybody who is working on these
(31:36):
issues directly, take a look atsome of the messaging, the
reports, the Federal AdvisoryCommittee recommendations that
are out there, line with all ofthe things that have been
happening.
In fact, the last charteractually found quite a few of
(31:56):
the recommendations fromMidSnack specifically found
their way into, or at least thethemes of them found their way
into, the SHIPS Act and I don'tthink that's an accident, I
think that was just good ideas,or good ideas.
So there's a whole slew ofinformation out there, certainly
the stakeholders of theindustry, but it's actually
commemorated and written down incertain places, almost a book
of recommendations that areindustry vetted, that are
(32:19):
industry reviewed, that areprobably a great source.
So it was still such anexciting day yesterday.
That roundtable was fantastic.
There were some new ideas basedon some of the proposals and
movement that's already happenedin the past.
Gosh, only two months reallyThree months maybe, but only one
(32:40):
month since the April 9th, orjust over one and a half months
since the April 9th MaritimeProclamation Executive Order
came out.
So lots of great thingshappening in the US right now as
it relates to maritime,maritime workforce.
Again, it's a three-legged stool.
Here We've been focusing onshipbuilding.
That's fantastic.
We're starting, it seems like,especially with Maritime Day, to
(33:03):
focus a little bit on marinersand or refocus on mariners
retention attraction.
How do we make sure that wehave mariners to fill those
ships?
But the thing that we can'tforget is how do we make sure we
have cargo to fill those ships?
But the thing that we can'tforget is how do we make sure we
have cargo to fill those ships,because without cargo, that
stool falls over.
Every time it's a three-leggedstool.
It always has been, and that'skind of been the theme that
(33:24):
anybody who's been talking inthe maritime industry for the
past forever, but recent historyis talking about.
Right, you need the ships, youneed the mariners and you need
the cargo, and so let's go onthose themes.
Right, you need the ships, youneed the mariners and you need
the cargo, and so let's go onthose themes right.
Let's keep it going.
So, maritime Day happy MaritimeDay, everybody.
(33:47):
I hope that you were able tocelebrate.
I know the Propeller Clubacross the country has quite a
few activities.
If you're up in the Boston area, we still have a Maritime Day
celebration coming up next week.
I encourage you to participatein these events because they
really are a fantastic way tocelebrate the industry that
we're all in.
If you missed the observanceyesterday, make sure to take a
moment today to recognize themariners and ships that keep
this country and the worldmoving All right.
(34:07):
So this week we unpacked somebig moves shaping the maritime
landscape right.
We had the USTR, evolvingSection 301 tariffs, shifting
the focus from the vessel feesto the port equipment, the FMC's
focus, investigation into flagsof convenience, spotlighting
critical questions aboutaccountability, competition and
security in the trade lanes, andthe recent observation of
National Maritime Day.
If you liked this episode, besure to follow, subscribe and
(34:29):
leave a review.
Want to go deeper on thesetopics or bring this kind of
insight to your team?
Visit themaritimeprofessorcomor explore corporate trainings,
tailored briefings and on-demandwebinars, all designed to make
complex maritime regulationspractical and easy to understand
.
If your organization needs helpnavigating this legal or
strategic side of ocean shippingregulations head over to Squall
Strategies.
(34:49):
That's where I provideconsulting services, regulatory
guidance and policy support forclients working directly with
the FMC and across the globalsupply chain.
As always, this podcast is foreducational purposes only and is
not legal advice.
If you need an attorney,contact an attorney.
So until next time, I'm LaurenBegan, the Maritime Professor,
and you've just listened to myLand Advice Seat.
(35:10):
See you next time.
I got soul coming through, flying free.
Skies are blue, all the wavesare mixing room.
I got On top.
When you see me, good night.
(00:45):
Whoa, I'm living bold.
This is what it looks like Onthe tip of the world.
Whoa, whoa.
This week, the maritime worldgave us a little bit of
everything, isn't that everyweek these days?
A hearing on proposed tariffsthat could reshape cargo
(01:07):
handling equipment, a newFederal Maritime Commission
investigation into internationalshipping flags, and a holiday
that celebrates one of thehardest working sectors of the
economy, the American maritimeworkforce.
Hi, welcome back to, by Landand by Sea, an attorney breaking
down the weakened supply chainpresented by me, the Maritime
Professor.
I'm Lauren Began, formerMaritime, former FMC
(01:28):
International Affairs Attorneyand founder of the Maritime
Professor and Squall Strategies,and I'm your go-to resource for
navigating the regulatory sideof global ocean shipping and I'm
your favorite maritime attorney.
Right, I'm here to walk youthrough both ocean transport and
surface transport topics in thewild world of supply chain.
As always, the guidance here isgeneral and for educational
(01:48):
purposes only.
It should not be construed tobe legal advice and there is no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
This is plain language maritimecreated so that anybody, not
just lawyers or industryinsiders, can understand what's
happening in the world ofshipping.
So let's dive into this week'sepisode because, as you know,
(02:09):
ocean shipping moves the world.
All right.
Story number one.
This is Section 301 Tariffs.
We've been talking about theSection 301 Tariffs.
Now there's a little bit of anew perspective.
I've been kind of mentioning itfor the past few episodes.
I want to bring it to yourattention again.
But let's start with a quickrefresher on where this is all,
(02:29):
where this all started from andwhere it's kind of going.
So back in April of 2024, sojust over a year ago, that's
when the United States TradeRepresentative that was under
the Biden administrationlaunched this Section 301
investigation into China's tradepractices in the maritime
sector.
Like I said, this started underthe Biden administration but
has now continued and evolvedunder the Trump administration.
(02:52):
So you may recall from aprevious episode that one of the
earlier proposals included inthe USTR proposal on this was a
million dollars per voyage feeand that was going to be
assessed on China-built vesselsor China vessels.
It wasn't quite clear if it wasgoing to be in the fleet or
just the ones that called the US.
(03:14):
It was a significant proposal.
The version caused quite a stir, as we know, right.
As we know, there wassignificant pushback.
There was a lot of messagingand media reports and industry
really saying, look, this is toomuch, this is going to be
significant.
So it got everybody all riledup, which I think is kind of
(03:35):
what it was used to do, and theyhad an in-person hearing.
Remember, there wasn't anyaudio, there wasn't any video.
Sal Mercogliano said he wasgoing to do a puppet show on the
transcript when it was released.
Well, I'm still waiting, Sal, Ihaven't seen that puppet show.
I'm still waiting.
But yeah, so it was revised,right, so it was revised and it
(03:56):
was a little bit more in linewith the industry proposals.
They kind of used thatin-person hearing it seemed like
as a brainstorming session.
And then that turned into thisnew narrower application where
the vessels had a cap on howmany times they could be charged
but still distinguished betweenChina vessels and heightened
(04:18):
fees associated with those andnon-China vessels and operators
and kind of reduced fees fornon-China related vessels and
operators.
So it was a clear attempt tokind of refocus the proposal to
better accommodate and really bein line with what the industry
requires, while also stilltrying to impact and influence
(04:38):
some of the behavior in theglobal ocean shipping world.
Right, it still put thatpressure on maritime, the
Chinese maritime dominance,which is what the whole
investigation is about, withoutover penalizing or trying
attempting to not over penalizeor penalize at all if they can
help it.
It looks like there's stillgoing to be some impact to the
supply chain, the US supplychain.
(04:59):
But that was the attempt right,it was that it was going to try
not to over penalize.
So that's the refresher.
Was the attempt right, it wasthat it was going to try not to
over penalize.
So that's the refresher.
Port fees, investment calls gota lot of attention.
There was also in the revised,amended proposal a section that
people aren't talking about asmuch and it's so important that
you pay attention to this.
(05:20):
It was a new proposal ontariffs on marine cargo handling
equipment.
So, according to the USTR'srevised proposal, it said in
accordance with the president'sdirection, ustr has considered
whether to propose additionalduties on certain ship-to-shore
cranes and other cargo handlingequipment.
The report highlightsvulnerabilities arising from
over-reliance on Chineseproduction, such as
(05:41):
over-reliance may createopportunities for China to
manipulate the supply ofcritical components or materials
, essentially US maritimeinfrastructure.
So here's what was proposedunder the support fees.
They came out with the revisedproposal.
In that revised proposal iswhere this new proposal came in
and they were asking forcomments.
(06:03):
The proposal is up to 100%tariffs on ship-to-shore cranes,
right, that are eithermanufactured, assembled or built
with Chinese origin parts orproduced anywhere by companies
owned or influenced by Chinesenationals.
So fine, right, 80 to 90% ofship-to-shore cranes are
produced in China.
100% of the fixed armship-to-shore cranes, all of
(06:27):
them, all of them are built inChina, unfortunately, right.
I mean, that's kind of what theintention of this whole
initiative is about is trying tofigure out ways of moving away
from the Chinese dominance, andone of those things is there
aren't other options for thefixed ship-to-shore cranes.
So most ship-to-shore cranescan lift up, but in certain
(06:48):
areas Port Everglades, bostonyou can't lift up because you're
right next to an airport.
Right, we have a maritime portright next to an airport and you
can't lift up because you'regoing to get in the flight path
and that's a big deal, right?
So the ship-to-shore cranesthat are fixed arms really is
kind of the precipice for whythis is so problematic.
The other thing is right, forthere's about 10 to 20 percent
(07:11):
of ship-to-shore cranes thataren't produced by China.
They're more expensive.
So that's part of this and Ithink that's one thing that will
be coming out from all of thisdiscussion when we have the
China tariffs from the firstTrump administration and they
had the whole list of thingsthat were I remember, list one,
list two, list three.
One of the lists hadship-to-shore cranes on it and
(07:35):
instead of actually getting anexception, it got taken off the
list entirely the ship-to-shorecranes, especially the fixed
ship-to-shore cranes.
So here's kind of that momentagain.
But I think it's so importantthat the industry explains these
things right, explains thenecessity of other options here,
(07:55):
because right now there are noother options for fixed-arm
ship-to-shore cranes and verylimited options for other types
of ship-to-shore cranes.
So just wanted to flag thatbecause that's important.
But also in this proposal is100% tariffs on certain cargo
handling equipment of Chineseorigin.
So this is chassis, chassisparts, cargo boxes, right.
(08:18):
The actual box itself.
Look, this is a big deal forport operations, right?
So China currently doesdominate the global production.
If you go back and look at theFederal Maritime Commission,
former FMC Commissioner CarlBensel actually did a report on
chassis and cargo boxes and theprevalence of, or the dominance,
(08:40):
I guess you could say of, chinain the production of those
goods.
So and actually that reportisn't being cross-referenced
here much, but it probablyshould be.
It was done 2020, right beforehis MTDI stuff.
A really good report.
It states some of the thingsthat we know, right, that China
is dominant, but it gives somenumbers associated with it.
(09:01):
It's a nice report that kind ofencapsulates what is happening
with the China dominance inchassis and containers, much
like this USTR investigation.
But the point is they're turningtheir focus away from the
vessel calls.
They're probably still going tobe refining some of the vessel
calls, right, because there'ssome terms that, as if you
(09:23):
follow Sal Mercogliano andwhat's going on with shipping he
talks about some of that nettonnage is a little bit
difficult to nail down the waythat they're using it.
I think there's probably goingto still be some discussion
around the port fees, but thisis the part that's not getting
as much attention theseship-to-shore cranes, these
chassis, these cargo boxes.
So this week, ustr and how do Iknow that?
(09:45):
This week, ustr held a hearingon the new proposal.
We had two days of hearingswith people just outraged.
The industry was so upset aboutthe fees that they all showed
up on that first one.
This hearing this past Mondayon the 19th, we didn't have that
(10:06):
same outreach.
We didn't have that sameeverybody in the industry
showing up for thisbrainstorming session.
And again, no audio feed, novideo feed.
Right, I said last time it feltlike USTR was creating an
environment, so perhaps theparticipants had a little bit of
cover to speak freely insteadof perhaps grandstanding if they
were being recorded and videofeed was streamed out.
(10:27):
And I think maybe that's whatthey were trying to do again
here.
100% tariffs on ship to shoreor chassis or containers is wild
, perhaps necessary to get apoint across, but I can't
imagine where we would keep 100%tariffs on these things because
(10:48):
they're so necessary to thesupply chain moving.
But look, same thing, right,this hearing on Monday no audio
feed, no video feed, just thetranscript, which has actually
already been released.
Um, but the transcripts are alittle bit clunky to read.
Look, it says they were trying.
They weren't trying to hide thehearing by any means, but it
says look, if you wanted to be apart of it, you had to be there
(11:12):
.
You had to be there so youcould be part of the
conversation, part of thebrainstorming session, if you
will.
Again, I kind of have twothoughts on this.
One, the 100% tariffs.
They have to come down right.
There's no way the industryrelies.
It's the crux of the wholeindustry.
Chassis, like boxes, can't movewithout the wheels.
And that's what the chassis are, right, those are the wheels
that move the boxes around.
(11:32):
And the industry wasrevolutionized by Malcolm McLean
when he created the box andmoved away from just piecemeal
shipping and actually createdthese boxes, these 20-foot
equivalent units or these40-foot equivalent units, but
the actual box itself.
So we need that.
And sure, yes, they're built inChina.
(11:53):
For the most part there are USmanufacturers of boxes and I
think that that might be an easyswitch.
But that's, I think, what USTRwanted to hear at this hearing.
They still need to hear from us, right?
They still need to hear fromthe industry.
So if you know of some of theavailability of cargo boxes
being manufactured in the US,get that information in.
(12:14):
If it's something that requiresa little bit of a runway, get
that information in.
It's so necessary to have thoseconversations and get that
information into the USTR so itcan inform their decision.
I will note, though, the USTR.
When they released theirrevised proposals, I think they
leaned heavily on their advisorycommittee.
(12:35):
So we've talked about thisbefore.
There's federal advisorycommittees.
These are advisory committees,for the most part non-political.
It's just industry leaders,stakeholders that come together,
that kind of chew on differenttopics that the agency has
questions on, sends it out tothe advisory committee.
They come up with, maybe,recommendations, general advice.
(12:56):
We talk about the NationalShipper Advisory Committee all
the time, but that happens atthe FMC.
We've talked about MITSNACbefore, the Maritime
Transportation System NationalAdvisory Committee that is
advising the Department ofTransportation through the
Maritime Administration.
That one's actually still onpause, so we're waiting to get
(13:17):
more information on what's goingon, because I think that
MITSNAC could be a fantasticresource, especially if USTR is
using their federal advisorycommittees to help inform this
decision or their guidance.
But again, it's important tohave this engagement.
I think the federal advisorycommittee will help to continue
to provide feedback and guidanceto USTR as they're going
(13:40):
through their next round ofrevised proposals.
Right, they have to come downoff of this 100% tariff, but we
need the industry to show up too.
Right, maybe you're not onthese advisory committees, and
if you're not, this is youropportunity and you don't want
to miss it.
My second thought on thisperhaps the containers maybe
can't be tariffed at all here.
(14:01):
It was one of the comments thatcame in and I thought that it
was a really interesting one,and probably one that might
sidetrack what they're trying todo, but also one that might
help inform a better way oftrying to impact and influence
this behavioral change of.
Let's get away from China beingthe dominant manufacturer of
(14:22):
containers and chassis and bringit back to the US.
But look, containers are not animport, right, they're part of
the transition of the goods.
They don't stay, if anybodylistening.
Still, if you have fresh milkdelivered in the glass bottles,
you know we're lucky to havethat as an option here where we
live.
But the glass milk bottlesactually on the side of it says
(14:43):
we, we came to visit, not tostay.
That's essentially the samething, right, they're the
reusable packaging material thatbrings the goods to you.
But the actual box Came tovisit, not to stay, right?
So it's not an import.
It comes in, it brings thegoods, it becomes an empty and
(15:04):
then hopefully gets filled withan export and then becomes an
export commodity that goes onits merry way into the supply
chain ecosystem.
So this was last Monday.
I think that there's like aseven-day finalized comment
period I can imagine.
Right, they're not going to besuper hard-lined on, we're going
to turn away comments thataren't submitted within these
(15:26):
periods, but to be guaranteedhaving your comments included
and considered.
Watch all of these deadlines.
I know we're drinking from firehoses here.
There's a lot going on.
Tariffs are changing quickly,but this is important to stay
engaged.
When the maritime industry isasking you for feedback, when
USTR, when the federalgovernment, is asking the
(15:47):
maritime industry for feedback,we have to continue to stay
engaged.
We have to continue to let ourvoices be known.
If 100% tariffs would impactyour bottom line, you got to let
them know.
You have to let them know thatthat's going to happen.
So, look, I think the otherthing is we're already probably
(16:07):
starting to see some industryrealignment based on the
revision of the fees proposal.
What I think that we're going tocontinue to see happening and I
think that there's probably anopportunity right now that I
think is being taken advantageof is China-built vessels are
being rotated out of the UStrade lanes.
Right, you have these globalocean shipping companies and
they have Korean built vesselsand other non-Chinese built
(16:29):
vessels, and then they certainlyhave Chinese built vessels.
I mean American companies do aswell.
There's waivers on the Americancompanies, right?
So if you have vessels even ifthey're Chinese builtbuilt
vessels in the rotation that'swhat the new proposal said is
that, well, if it's an Americancompany, there's a waiver
opportunity?
The globalization shippingcompanies that are non-Chinese
(16:51):
operators are trying to findways of limiting their exposure
to these fees, and I think oneof those ways is by moving the
China vessels out, movingnon-Chinese vessels into these
US trade lanes.
I also think that perhaps theremight be something to these
alliances and where there areChinese related companies as
(17:12):
part of the alliances, perhapsthere might be a strategy there
to have more of your goods go onthe company that isn't Chinese
connected.
I don't know.
We're going to see.
I'm going to continue to watchthis and see how perhaps some of
these trade lanes are movingwith some of the vessels that
(17:32):
they're putting in.
We might even see reflagging toUS-based entities, right, like
I said.
So Maersk has the US version ofthe company.
I guess subsidiary is MaerskLine Limited, so perhaps we're
going to be seeing an APLsimilarly right.
So I think we might be seeingsome of these vessels perhaps
reflagged into US flaggedentities under a US company to
(17:57):
try to find waiver opportunitiesfor some of these fees company
to try to find waiveropportunities for some of these
fees.
It takes a while to reflag right, that's not going to happen
right off the bat.
But since we have maybe somedowned imports right now a
slowdown that we keep hearingabout from port officials maybe
there's a silver lining to allof that.
Less cargo moving means thatperhaps the vessels can be
(18:18):
repositioned with lesser impacts.
So that's why I think right nowis maybe when that's happening
right.
I think they're probably beingstrategic with their fleet.
They're kind of moving thingsaround.
We'll see.
We'll see what shows up.
We'll see what vessels start tocome into the trade lanes as
the imports are starting to pickup is what I'm hearing a little
bit.
But look, if you work in supplychain right terminal operations
(18:41):
, infrastructure planning, portprocurement, marine handling
equipment and I mean reallysupply chain right this is
something that you got to payattention to.
We got to stay sharp on this.
So keep following the USTRstuff Just because the port call
and the port fees has startedto take better shape doesn't
mean that there aren't otherthings that are being looked at.
(19:01):
That would still impact yousignificantly.
And the thing is these costsprobably will get passed along.
The port fees it makes sensethat they would get passed along
, right, because they're notnecessarily the fault of the
carrier unless they're a Chinesecompany, right, but they're not
necessarily the fault of thecarrier.
They also have Chinese ships,just like American companies
(19:23):
have Chinese ships, right, sothat's part of it is that would
probably get passed on.
So they're trying to limittheir exposure, I think.
Right, I can imagine so thatway they don't have as many fees
to pass on, right, because it'snot a pleasant experience
having those fees passed on.
But also cargo handlingequipment, right, ship-to-shore
(19:44):
cranes if they cost more moneycoming in, that's more expensive
for the port itself and sothey're going to have to recoup
those costs some way.
Cargo boxes, right, or thechassis providers there's all of
these things if they cost moreto come in, are going to cost
more to the end consumer becausethose fees have to be passed
(20:04):
along.
It's going to be very difficultto just absorb them, especially
if it's 100 percent tariffright On multi-million, I mean
tens of millions of dollars fora ship to short grain.
So all right.
Story number two let's keepmoving on, but USTR, keep it in
mind.
Story number two the FederalMaritime Commission.
Again, they're so active.
Another investigation out ofthe Federal Maritime Commission,
(20:27):
this time on flags ofconvenience.
I can imagine they're stillgoing to be accepting late filed
comments.
They tend to.
They are late filed comments atthis point though, so if you
have comments in the matter, seewhat you can do.
Try to reach out.
(20:48):
Secretary at FMCgov is probablywhere I would send it.
That's kind of where theyreceive the Office of the
Secretary.
I don't know if the commentssubmission is still open on the
Maritime Chokepoints, but all ofthat to say OK, if you missed
out on the maritime choke points, you might still have an
(21:08):
opportunity.
But we're shifting gears nowhere to flags of convenience.
This was kind of part of themaritime choke points because it
was kind of part of theremedies that the FMC could
undertake right Turning awayflagged vessels of a certain
country, namely Panama, in thatsituation, or any country really
.
But it was most notable forPanama because if there's to be
found unfavorable shippingconditions by the country of
(21:31):
Panama, one of the remediesavailable to the FMC in that
situation is turning away fromvessels with Panamanian flag
vessels calling at any US ports.
Yes, yes, the FMC could do thatand they still can.
They could turn away, restrictport access to Panamanian flag
vessels if they find unfavorableshipping conditions have been
(21:55):
undertaken by the country ofPanama.
Not saying it's going to happen, but it could.
It is very much on the tableand that was the maritime choke
points.
Now they're looking at flags ofconvenience.
Generally.
They are looking at flags ofconvenience as a category that
needs to be reviewed forunfavorable shipping conditions
or really unfair shippingconditions.
So let's break this down alittle bit.
(22:16):
What is a flag of convenience?
Well, it's really kind of whena ship is registered in a
different country than one whereits true ownership is based.
So, and the name flagsconvenience, it kind of creates
a convenience for that not basedin that country ownership.
So usually what will happen iscarriers choose these registries
(22:36):
for cost savings, perhapslighter labor rules sometimes
significantly lighter laborrules, regulatory flexibility
and generally fewer complianceissues.
Some of the most popular flagstates Panama, liberia, marshall
Islands but there's a wholeslew of flags of convenience and
(22:57):
I'm not saying that these threethat I mentioned.
They just kind of happen to bethe biggest ones.
You're probably most familiarwith those, and we've talked
about the Panamanian flags ofconvenience, but they represent
18 to 20 percent of the world'sflag fleet, just Panamanian
flagged vessels alone.
But flags of convenience alsomight have a darker side, and
that's what this FMCinvestigation is kind of looking
(23:18):
at.
Is there something that's goingagainst overall favorable
shipping conditions?
Right, this unfavorableshipping conditions assessment?
So from a business perspective,flags of convenience can be a
savvy way to trim expenses, butfrom a regulatory or national
interest perspective, it canraise some serious questions,
(23:39):
and some of those questions thatthe FMC is kind of looking at
here is really who's in chargeif something goes wrong at sea?
What safety, labor orenvironmental standards are
actually being enforced?
And, especially in times ofgeopolitical tension, can the US
really rely on or holdaccountable a vessel that isn't
tied to any meaningful USoversight?
And again, right, the FMC isreviewing this flag neutral, but
(24:01):
from the perspective for thebenefit of the US importer,
exporter and consumer.
So, while the FMC generally isflag neutral, they are still
obviously a regulatory agency ofthe US with US interests in
mind, and so that's what the FMCreally wants to find out here.
Right, this new investigation isasking whether widespread use
of these flags in US trade lanesright for cargo that's touching
(24:23):
US trade lanes and being servedeither imports or exports, or
somehow just getting to theconsumers.
Is it creating unfaircompetition for perhaps US
flagged or other more regulatedvessels?
Is there unfavorable shippingconditions happening by flagged
to convenience?
Are there introductions ofincreased risks, either from a
(24:44):
security standpoint or supplychain reliability one, or from a
labor standards problematicstandpoint.
And also they're going to belooking at it from, obviously,
the perspective of is itundermining the goals of the
Shipping Act?
Right, Because the problematicstandpoint.
And also they're going to belooking at it from, obviously,
the perspective of is itundermining the goals of the
Shipping Act?
Right, because the Shipping Actis the marquee statutory
authority that the FMC enjoys,given to it by Congress.
(25:05):
But, as we've talked before,there's these two other
statutory authorities that theFMC has the Foreign Shipping
Practices Act and the Section 19Authority of the Merchant
Marine Act of 1920.
That's where the FMC gets theseauthorities to review
unfavorable or unfair shippingconditions.
(25:26):
So the choke pointsinvestigation highlighted how
foreign control ofinfrastructure can expose US
trade or perhaps if there'sunnecessary impediments in
certain choke points around theworld.
That's why there were sevendifferent areas looked at.
This wasn't just a Panamanianinvestigation, it was seven
different areas.
This flags of investigation,flags of convenience
(25:49):
investigation, is kind of doingthe same thing, but now more at
the vessel level, but also kindof an international, kind of a
country level, right, becauseit's flagged the convenience
from a certain country where theflag of convenience is coming
from.
So why does this matter?
It's not just a paperwork issue, right.
It's a power and policy issue.
If a ship is flagged in acountry that doesn't enforce
basic safety, labor orcompetition rules, I mean, can
(26:12):
it really be trusted to operatein our trade lanes?
And that's kind of what the FMCis looking at here Can it be
trusted?
Are there security implications?
Are there favorability toshipping conditions?
Is there a competition side ofit?
Really?
And it's probably less aboutthe safety and labor and more
about the competition rules,because right at the heart, the
(26:33):
FMC is a competition authorityand I think that's what they're
looking at.
Right, the FMC is putting thedebate squarely on the table is
because of those considerations.
Should a flag of convenience beallowed to operate in US trade
lanes, we could see a whole slewof things right.
As we've talked about before,foreign Shipping Practices Act
(26:54):
and Section 1930 has a catch-allwhere contracts or agreements
filed at the FMC right and thosestart to hit at alliances or
(27:17):
those start to hit at servicecontract generally.
But now this could be justsomething that the FMC could
take a lot larger of a broadstroke to.
So we'll see.
Look, the FMC has been lookingunder the hood or I suppose
(27:38):
they're down in the engine roomof global ocean shipping
recently and asking look, isthis still working for US
interests?
And I think that that'ssomething that's an important
question.
The FMC is situated withstatutory authority to ask those
questions.
They've historically taken alight approach to this, but now
they're doing it.
They're looking Is this stillworking for US interests or are
(28:00):
there unfavorable shippingconditions for the competition
of the global ocean shipping?
But as it relates to the US,I'll keep watching.
You got 90 days 90 days tosubmit comments on this one.
Don't let this one pass.
The maritime choke points didnot get as much attention as it
should have in terms of commentsbeing filed.
This one is a big deal.
(28:20):
I'm going to keep talking aboutthis one Flag convenience and
the FMC reviewing it.
All right.
Story number three so yesterday,thursday May 27th, was National
Maritime Day.
Happy National Maritime Dayeverybody.
If I'm a little hoarse or alittle tired today, I just flew
back this morning fromWashington DC.
I was down there.
(28:40):
What an exciting day.
A full lineup of NationalMaritime Day celebrations.
It's just a fantastic way tocelebrate this wonderful holiday
.
It was established by Congressin 1933 to honor the US Merchant
Marine and its vital role incommerce and national defense.
The date commemorates thehistoric 1819 voyage of the SS
(29:01):
Savannah, the first steamshipped across the Atlantic
Ocean.
And just yesterday, in a 2025presidential proclamation,
president Trump highlighted thecritical contributions of
merchant mariners.
The critical contributions ofmerchant mariners, stated in
that proclamation.
He said merchant mariners playa vital role in our national
defense, standing ready tosupport military operations
whenever they are needed.
(29:21):
He also emphasized their rolein supporting trade and
connecting American producers toglobal markets, saying in the
proclamation, they operate thevessels that transport goods,
energy and raw material to andfrom our shores, supporting
global trade and connectingUnited States producers with
international markets.
The proclamation also directedall vessels of the United States
(29:45):
government in appropriatewaters are authorized and
requested to dress ship incommemoration of National
Maritime Day, of NationalMaritime Day, so, in other words
, the US government vessels flewfull dress flags from stern to
stern, which is a proud vesselsalute to the maritime industry
and its workers.
Look, national Maritime Day ismore than a tradition.
It's a reminder that the USmaritime workforce and fleet are
(30:07):
critical to national security,economic strength and global
supply chain resilience.
And, honestly, for the firsttime since I've been in global
supply chain and maritime issuessince, oh my God, I'm going to
say 20 years now, which isn'tthat long, but how can that be?
I'm only 25.
No, that's not true, but I havebeen around for 20 years now in
(30:29):
the maritime industry.
I can say that saying workforceand fleet are critical to
national security, economicstrength and global supply chain
resilience is actuallyhappening and it feels like it's
getting that recognition as atop five issue for this
administration and all of thebuzz.
You know, yesterday we hadNational Maritime Day over at
(30:49):
Maritime Administration at theDepartment of Transportation
Wonderful celebration.
There was a roundtable that washappening right after the
ceremony Fantastic opportunityfor the industry to come
together to really think of newways, of how do we revitalize
this in real industry-specific,industry-led ways.
(31:11):
But I will say I'll take amoment.
These are conversations we'vebeen having for years.
Right, we've been havingconversations for years.
That was one of the takeawaysthat I heard from a few of the
participants was I'm happy we'rehaving these conversations, but
it was almost like this,haven't we said this before?
So if anybody's listening, fromanybody who is working on these
(31:36):
issues directly, take a look atsome of the messaging, the
reports, the Federal AdvisoryCommittee recommendations that
are out there, line with all ofthe things that have been
happening.
In fact, the last charteractually found quite a few of
(31:56):
the recommendations fromMidSnack specifically found
their way into, or at least thethemes of them found their way
into, the SHIPS Act and I don'tthink that's an accident, I
think that was just good ideas,or good ideas.
So there's a whole slew ofinformation out there, certainly
the stakeholders of theindustry, but it's actually
commemorated and written down incertain places, almost a book
of recommendations that areindustry vetted, that are
(32:19):
industry reviewed, that areprobably a great source.
So it was still such anexciting day yesterday.
That roundtable was fantastic.
There were some new ideas basedon some of the proposals and
movement that's already happenedin the past.
Gosh, only two months reallyThree months maybe, but only one
(32:40):
month since the April 9th, orjust over one and a half months
since the April 9th MaritimeProclamation Executive Order
came out.
So lots of great thingshappening in the US right now as
it relates to maritime,maritime workforce.
Again, it's a three-legged stool.
Here We've been focusing onshipbuilding.
That's fantastic.
We're starting, it seems like,especially with Maritime Day, to
(33:03):
focus a little bit on marinersand or refocus on mariners
retention attraction.
How do we make sure that wehave mariners to fill those
ships?
But the thing that we can'tforget is how do we make sure we
have cargo to fill those ships?
But the thing that we can'tforget is how do we make sure we
have cargo to fill those ships,because without cargo, that
stool falls over.
Every time it's a three-leggedstool.
It always has been, and that'skind of been the theme that
(33:24):
anybody who's been talking inthe maritime industry for the
past forever, but recent historyis talking about.
Right, you need the ships, youneed the mariners and you need
the cargo, and so let's go onthose themes.
Right, you need the ships, youneed the mariners and you need
the cargo, and so let's go onthose themes right.
Let's keep it going.
So, maritime Day happy MaritimeDay, everybody.
(33:47):
I hope that you were able tocelebrate.
I know the Propeller Clubacross the country has quite a
few activities.
If you're up in the Boston area, we still have a Maritime Day
celebration coming up next week.
I encourage you to participatein these events because they
really are a fantastic way tocelebrate the industry that
we're all in.
If you missed the observanceyesterday, make sure to take a
moment today to recognize themariners and ships that keep
this country and the worldmoving All right.
(34:07):
So this week we unpacked somebig moves shaping the maritime
landscape right.
We had the USTR, evolvingSection 301 tariffs, shifting
the focus from the vessel feesto the port equipment, the FMC's
focus, investigation into flagsof convenience, spotlighting
critical questions aboutaccountability, competition and
security in the trade lanes, andthe recent observation of
National Maritime Day.
If you liked this episode, besure to follow, subscribe and
(34:29):
leave a review.
Want to go deeper on thesetopics or bring this kind of
insight to your team?
Visit themaritimeprofessorcomor explore corporate trainings,
tailored briefings and on-demandwebinars, all designed to make
complex maritime regulationspractical and easy to understand
.
If your organization needs helpnavigating this legal or
strategic side of ocean shippingregulations head over to Squall
Strategies.
(34:49):
That's where I provideconsulting services, regulatory
guidance and policy support forclients working directly with
the FMC and across the globalsupply chain.
As always, this podcast is foreducational purposes only and is
not legal advice.
If you need an attorney,contact an attorney.
So until next time, I'm LaurenBegan, the Maritime Professor,
and you've just listened to myLand Advice Seat.
(35:10):
See you next time.
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