Bringing outdated shipping regulations in the US in line with the changes that have taken place in the container industry in the last decade is likely to prompt a post-Covid legislative reset, according to the newly appointed chairman of the Federal Maritime Commission, Daniel Maffei.
Promoted to chairman following the inauguration of US president Joe Biden in January commissioner Maffei was confirmed in his role at the end of March. The former two-term congressman heads up the FMC at a time when it needs to address a list of pressing issues that have shone a spotlight on some of the weaknesses of regulations passed more than 30 years ago.
In an exclusive interview with Container News chairman Maffei, said the Covid-19 crisis had highlighted how some regulations were currently not working to efficiently regulate the industry. In particular, who should be paying for delays in US ports and intermodal terminals.
Following complaints by third-party logistic operators who say they have paid hundreds of millions of dollars in unjust demurrage and detention charges, the FMC’s commissioner Rebecca Dye is undertaking an investigation into the issue after consulting widely on practices in US ports during the pandemic.
The issue revolves around how carriers are applying an interpretive ruling on D&D something that was first raised by several transport and freight forwarding associations, including the New York New Jersey Freight Forwarders and Customs Brokers, the National Customs Brokers and Freight Forwarders Association and the Agricultural Transportation Coalition at the end of last year.
“We need to at least look at the interpretive ruling. When it was drafted I said it would not be enough,” said Maffei. “Other things that we may need to look at are the contracts that are contradictory to the shipping act.”
Maffei said he was against the way shipping lines were sending these payment requests out by default and then removing them on request by disgruntled customers.
There was no guidance on when the result of commissioner Dye’s investigation would be presented to the industry beyond “in the coming months”.
The FMC is also looking at claims by agricultural exporters that they have been squeezed out of the supply chain due to overseas container lines preferring to reposition empty containers to Asia rather than ship low-paying export products from the US to China. Maffei urged carriers to behave like “good global citizens” to facilitate US exports or face the possibility of uniting politicians around further regulation. This issue, he argued, was a bipartisan matter that made the reform of the Shipping Act of 1984 more likely during the Biden administration.
“I definitely feel there’s a possibility,” he said “At the end of all of this we’re talking about exporters and making sure that FMC restrictions are clearer. Republicans feel the same as Democrats on this, so we have a bipartisan moment and therefore I think it’s possible. The one caution I have is that writing legislation just to address a crisis is not usually a good idea,” he said. “Am I advocating for a change in the law? I would fall short of that, but I am not opposed to it.”
When it comes to whether the new administration will act to relieve the pressure being heaped on US shippers, he suggested that close monitoring of runaway freight rates between the US and Asia had not pointed to any signs of collusion by carriers or manipulation of supply to push up rates seeming to suggest that there was little chance of any antitrust intervention from the new administration.
“At the US government we don’t have the capacity to set rates,” he said.
“That is not something that we do. We can monitor the alliances to be sure that there are no unreasonable increases in costs. We have increased the amount of information we get because of the crisis and we don’t have any substantial evidence. The issue seems to be that of supply and demand. We have been watching the carriers very closely to see if they have been manipulating supply and to the contrary, they have everything they can in operation and they are ordering new buildings,” he said.
All-in-all he said the administration and stakeholders in the supply chain had done their best to handle the soaring demand from workers in lockdown seeking to make home improvements in the world’s largest economy. The pressing demand for containerised goods, he said, had pushed the system to the “limits of physical capacity and we were not going to be able to change that. How we can increase productivity is in the flow of data and information technology making information available for shippers in a timely manner. Information systems that could help to know when a shipping container is coming and when it’s going to change delivery times for the container at the ports with potential for D&D implications,” he said.
One of his goals at the administration, he argued, would be to implement the lessons learned from the unprecedented surge in demand and the strain it has placed on US berths and inland infrastructure.
He said he would also be seeking to work more closely with his international counterparts.
“We are such an interconnected world, the FMC has a very interesting role. We regulate an industry that is vital for the entire economy. This is about global freight, and we will be working constantly with our colleagues in China and Europe as none of these issues are American issues alone,” he said.
One of the areas he said he wanted to increase collaboration was on the industry’s response to pledges by the Biden administration to cut carbon emissions in the USA by 50-52% by 2030. Suggestions to get to net zero carbon emissions in the shipping industry that come from within, he said, would be easier to implement. “The best legislation are ones that are proposed by the industry itself; they are far more lasting,” he says, underlining that the Biden administration would be keen to work with the World Shippers Council and the International Maritime Organization to push through required changes.
Rainbow Nelson
Americas Correspondent