FMC - Federal Maritime Commission

11/20/2020 | Press release | Distributed by Public on 11/20/2020 11:12

Statement by Commissioner Bentzel on the Supplemental Order to Fact Finding 29 (International Ocean Transportation Supply Chain Engagement)

Statement by Commissioner Bentzel on the Supplemental Order to Fact Finding 29 (International Ocean Transportation Supply Chain Engagement)

Posted November 20, 2020

I strongly support the issuance of the supplemental order to Fact Finding Investigation 29 (FF29) that builds on the important work my colleague Commissioner Rebecca Dye started over a year ago. Separately, I have been reviewing issues related to the on-going congestion at the ports of Los Angeles and Long Beach, and now we are hearing of similar issues in New York/New Jersey. I believe that we have deep-seated problems that could continue for the foreseeable future, and I strongly believe we must pay immediate attention to these issues. Utilizing an existing mechanism already underway in Fact Finding Investigation 29 to investigate conditions and make recommendations, is the proper way to move forward in a timely manner. I will fully support Commissioner Dye and do everything I can to ensure that the Commission devotes adequate resources to this investigation, given the gravity of the issues presented.

Going on nine months into a global pandemic, our maritime/intermodal supply chain has been a lifeline for our nation, communities, and families. The industry has continued to provide vital supplies of PPE, E-Commerce, and other resources necessary for our nation to transition in response to the challenges of COVID-19. We have gone from declines of over 20% of the total volumes of international container cargoes during spring and early summer to a situation more recently where ports like Los Angeles, Long Beach, and New York/New Jersey are creating daily, and monthly cargo volume records. The system has bent, but it has not yet snapped. However, the current volume surges and market irregularities are severely testing operational capabilities.

Clearly, the volume surges currently overtaking the ports of Los Angeles and Long Beach, and now New York/New Jersey shine a light on the operational vulnerabilities and reveal our supply chain weaknesses.

In no specific order, I believe we must address the following problems:

  • Availability of intermodal chassis at the ports of Los Angeles and Long Beach and the availability of containers. I would note with concern that most intermodal chassis and marine containers are manufactured in China. I find it hard to believe with the full restoration of Chinese manufacturing that has come roaring back, creating volume surges, that the marine equipment segment has lagged so far behind.
  • Application of the new FMC interpretative rule on detention and demurrage, policies on the return empty loads that restrict empty container delivery, and charge detention during this time. Of particular concern, is the allegation that truckers could be blacklisted for complaint.
  • Availability of skilled longshore labor to perform loading and unloading with larger than ever vessel sizes and vessel calls with all-time high cargo volume.
  • Information that beneficial cargo owners (BCO's) have restocked their warehouses and are failing to pick up cargo at marine terminals, or alternatively storing cargo at their facilities, and failing to unload containers and release chassis back into trade.

All these issues could be contributing to supply chain challenges we currently face. I am hopeful the targeted Fact Finding Investigation will shed light on the problems and generate discussion on how to address issues.

Separately, complicating the problems caused by volume surges of imports, on the heels of drastic cargo import reductions, are issues related to the availability of marine containers for use in the transport of U.S. exports. Reports indicate that Chinese container manufacturers have been slow to rebound in the manufacture of marine containers. Container ship capacity is projected to be close to maxed out for the next few months, as spot rates for import cargoes are at all-time high rates. This has contributed to the interest of shipping lines to reposition empty cargo containers back to Asia as rapidly as possible. It has been reported that they are unwilling to provide services to U.S. exporters for the export of American products.

We need more information on this practice and its impact on the balance of the supply chain. The Shipping Act of 1984 embodies the principle that carriers will provide a non-discriminatory system of common carriage. Carriers should not conduct themselves in a manner that would eliminate or diminish the abilities of shippers to compete in their respective markets by denying them access. Under the Act, carriers may not 'unreasonably refuse to deal or negotiate', or 'engage in conduct that unreasonably restricts the use of intermodal services'. While these may be further afield from the operational issues currently plaguing us, they, if accurate, are a symptom of the current problems, and maybe a question that the Commission may want to take a closer look at.

All this said, and I would be remiss if at the same time of acknowledging the challenges that we face, of not recognizing the supreme importance of the industries' efforts to keep us supplied during COVID-19. All the workers who report to work at shipping lines, railroads, trucking companies, the longshore laborers, and other maritime industry service providers are facing the daily challenges of COVID-19 while still getting the job done. They deserve our applause.

I look forward to working with my colleagues and industry stakeholders on these issues and using what we find from the supplemental order to FF29 to improve the operation structure and policies of our supply chain in the coming months.

Carl W. Bentzel is a Commissioner with the U.S. Federal Maritime Commission. The thoughts and comments expressed here are his own and do not necessarily represent the position of the Commission.

Tags: FF29