By Land and By Sea
By Land and By Sea
S4.E11 - Captain's Log Edition (Maritime Legislation Unveiled: SHIPS Act, FMC Rulemakings, and Strategic Alliances)
I got soul coming through Flying free. Skies are blue, all the waves it makes a room. I got soul coming through, won't stop till the fifth. And on top of the world, I got. It's the last episode in our Captain's Log holiday series before we break for the holidays, but, in typical maritime fashion, we have some major news to discuss today. A new bill was just dropped yesterday in Congress. It has the potential to significantly change the way the United States appreciates and funds its maritime sector. Stick around, I'll let you know what it proposes, what it may change and what are some unique things that I don't think are getting major attention that I'm really encouraged by in this bill.
Speaker 1:Hi, welcome to, by Land and by Sea, an attorney breaking down the weakened supply chain presented by the maritime professor me. I'm Lauren Began, founder of Maritime Professor and Squall Strategies. I'm your favorite maritime attorney. Join me every week as we walk through both ocean transport and surface transport topics in the wild world of supply chain. As always, the guidance here is general and for educational purposes only. It should not be construed to be legal advice and there's no attorney-client privilege created by this video or this podcast. If you need an attorney, contact an attorney.
Speaker 1:So usually we go through our top three stories of the week, but this week it's a continuation. It's the last week of our Captain's Log holiday series, so let's just jump right into it. All right, story number one we've been kind of covering the rulemakings. There's no new updates here. I'm going to be watching them as we continue on in the second week of January I believe it's January 10th, but as a reminder we saw the detention to merge billing practices rule and the unreasonable refusal to deal and negotiate with respect to vessel space accommodations, both finalized in the year 2024 out of the Federal Maritime Commission. If you're unfamiliar with either of those, you certainly probably are familiar with the D&D rule. Check out that unreasonable refusal to deal and negotiate rule. That's important.
Speaker 1:What we're looking forward to in 2025, a formalized process for charge complaints. It was brought up at one of the FMC hearings or meetings. A formalized charge complaints process will be making the rounds in 2025, just as Congress directed the FMC to do in the Oceanship Reform Act of 2022. They said charge complaints are a thing they created it. Fmc had to kind of quickly create their process for that. Now they're going through the more formal. So this is going to have notice and comment, meaning you're going to be able to submit some comments. They're going to put out what the process is that they've been going through and then, if you have thoughts on that, if you like it, if you don't like it, if you think that they aren't capturing some additional charges that you think should be included in charge complaints, put all that in there, get your thoughts ready. This is going to open up in 2025.
Speaker 1:Story number two the petitions. Again, we're watching two different petitions here. We have a petition on that first rule that we just talked about attention to verge billing practices and we have a petition on the unreasonable reason to deal and negotiate with respective asset-based accommodations. I'm going to continue to watch these in 2025. We should get some clarity on this in 2025, hopefully. I can't imagine that it would go too too long here, but we'll see. I mean litigation takes a while. So what we brought up last week, though, that's really interesting. Truckers have entered the chat right. The American Trucking Association, agtc, association of Bi-State Motor Carriers, california Trucking Association, harbor Trucking Association and New Jersey Motor Truck Association all filed a joint amicus curiae brief. So what does that mean? It's a friend of the court. They're offering additional information. Basically, since the issue at kind of hand at the D and D is hinging on motor carriers and their inability to be directly billed or their their direct contractual relationship, take motor carriers out of those who can be billed, it makes sense that they'd want to weigh in. So we'll we'll continue to watch that story.
Speaker 1:Number three the international longshoremen's and us maritime Alliance continuing discussion over the master contract. We've been talking we brought this up a few weeks ago maybe I think it was maybe last week already the ILA and President-elect Trump are still touting their close relationship. Right, they came out on X, they came out on Facebook. They were just showing off this relationship of the ILA being close to President-elect Trump and then, almost immediately, we saw in the industry saying, oh geez, well, this means we're definitely going toward a strike. I don't necessarily think that this automatically sends us into a strike, as many are suggesting. I think I'm not really sure where this will go and I'll admit that I was surprised by the close alliance that was publicized. But remember, don't take all messaging at face value.
Speaker 1:As we've seen throughout this negotiation, this has been happening in the public eye but through media statements. Right, they've been kind of negotiating and posturing through media. So it might be an over-exaggeration, I don't know. That's what we've been seeing. We've probably seen more media statements than what's even been happening in backroom closed-door negotiations, certainly informal, right. We haven't heard many formal negotiations. I think above all, we need to get back to a formal negotiation or some sort of if you can't do the formal, just find something to agree on. But the formal negotiation obviously is how you get there. But I still remain hopeful here. If nothing else, the fact that the incoming administration knows that this is a problem already and is addressing it way in advance. I reported previously that we saw reports suggesting that that feeling of perhaps the Biden administration being kind of delayed or late to the party in their reaction we saw a report saying that might have had some truth to it. So I just love that this is happening.
Speaker 1:It happened about five weeks in advance of the about a month in advance of the expiration of the interim contract, right. So we had, october 1st to October 3rd, a port strike. As we all know, the master contract expired September 30th. They have this interim agreement that agrees on wages a 66% wage increase. That agreement expires and basically this agreement is just a. We're going to hold this salary increase agreement so that we're not currently striking. So it got everybody back to work as of January 15th that expires. So I'm encouraged that we're having conversations happening here early in the process before, well before we get to that January 15th. I don't know, I just wouldn't it be great if we had a contract this week, next week, sometime over the holiday? I think as we get into January I'm going to get less and less hopeful. But there's just something about this that feels like we might be heading in a better direction than last time. But we'll see, we'll see. It's also very I mean, president-elect Trump took a strong stance by coming out fully in support of the ILA, basically hand in hand, arm in arm with Harold Daggett and his son. So we'll see, we'll see how this all plays out.
Speaker 1:Story number three FMC commissioner and chairman news. We have no new updates here. We still haven't had a chairman designated. Again, there's some movement toward Commissioner Dye becoming perhaps the chairman A letter written by a fellow commissioner, fmc Commissioner Lou Sola. But we haven't heard anything formal here. And there's been musings, I guess, on potential new commissioners coming in, because again we need one. We have a commissioner vacancy that will be filled by a Republican. There's been some names floating around. We'll see what comes of that. I only like to report the publicly available, the real story as we see it. So I haven't seen anything in the news yet on that, so I'll let you know when I do.
Speaker 1:All right, this is the big topic of the week. I wanted to make sure that we hit this and that this kind of stayed a quicker conversation. But shipbuilding and harbor infrastructure for prosperity and security for American Act of 2024 or the Ships for America Act of 2024. Look, mostly this has been called the Kelly-Waltz bill. If you've been kind of in the maritime world, the DC maritime world, you've been hearing about this Kelly-Waltz bill. I mean, for about a year, maybe even a little bit longer than a year. They've been working through with industry stakeholders making sure both Senator Kelly and Congressman Waltz have been working with industry stakeholders to make sure that this bill made sense for the maritime industry, made sense that it wasn't just congressman superimposing ideas, but that it was actually kind of an industry-led conversation Again. So this is Congressman Mike Waltz of Florida. He's actually been tapped to be the national security advisor to the president. So I think that's a good thing that this has support of now someone who will be rising to the national security advisor. But then also this had support when there was a kind of briefing or a smaller package released I think was last spring that included Congressman Marco Rubio as part of it. I think I got his title wrong. Marco Rubio has been nominated to be the US Secretary of State, is the part here. So it's important because he will also be elevating to a higher level or he's been nominated certainly to a US Secretary of State, so to high ranking potentially.
Speaker 1:Officials in the US government were drafters and involved in this bill's creation, which to me says that even if this bill doesn't have legs right because just because the bill's proposed doesn't mean that it's going to go anywhere but even if this doesn't go anywhere and I do think that ultimately this will be adopted in some form, even if these are high level roles that these men will likely move into, and to me that says that these maritime issues are going to rise to the top instead of being an afterthought, as it kind of felt like maritime has been. And also look if these are maritime, if these are security roles, especially Congressman Waltz of Florida if he's moving into a security role. To me, that says maritime security will finally be appropriately attached to national security. You and I already know that right, maritime security is national security, but it's nice to see that at the highest levels of the US government. I'd also like to point out this is a bipartisan bill. So even though we have these two gentlemen from the Republican Party moving forward or moving either moving or being nominated to move this was also Democrat co-sponsored and authored. So Senator Kelly is a Democrat and Congressman Walz is a Republican.
Speaker 1:All right, so let's get into the actual bill. So that's all kind of the pre-information about this bill, but reasons why I think that it probably has some good, some ability to get passed. It's a big shift, it's a big change, it's a big bill. There's a lot in here, but I think that it's necessary for us to have a new I would almost say reinvigoration, but like new invigoration into the maritime industry. Okay, so Senator Kelly put an announcement on his website and this is I'm going to kind of rough phrase what the announcement said and interject as appropriate.
Speaker 1:So it says the bipartisan, bicameral bill will fuel US economy, strengthen national security by responding to China's threat over the oceans. It says currently the number of US flag vessels in international commerce is 80. China has 5,500. That's not an over-exaggeration, that's true. Us flag vessels in international commerce is probably less than 80, and China does have about 5,500. So this is something that I don't think was understood by many in society, but this is a major problem.
Speaker 1:So today, senator Mark Kelly, senator Todd Young, representative John Garamendi and Representative Trent Kelly, and I think that the introduction probably had to change because even though this was the Kelly Waltz bill with Waltz being tapped for national security advisor, that's probably perhaps why they had to change the those who introduced this. But it says introduce the shipbuilding and harbor infrastructure for up for prosperity and security ships for America Act and Harbor Infrastructure for Prosperity and Security Ships for America Act. It says comprehensive legislation to revitalize the US shipbuilding and commercial maritime industries After decades of neglect. The United States has a weakened shipbuilding capacity and declining commercial shipping fleet that is dwarfed by China and a diminished ability to supply the US military during wartime. I mean that kind of encapsulates it right? I mean it certainly is weakened ship building capacity, decline in commercial shipping fleet and diminished ability to supply the US military during wartime.
Speaker 1:It continues on the historic bipartisan proposal would restore American leadership across the oceans by establishing national oversight and consistent funding for US maritime policy. Incentivizing domestic shipbuilding, enabling US flag vessels to better compete in international commerce, rebuilding the US shipyard industrial base and expanding the mariner and shipyard workforce those are some of the most major topics in maritime that the US can undertake. Certainly, national oversight and consistent funding. I think what they're showing here is that no-transcript. That's what most people are going to be talking about that domestic shipbuilding and the US flagging, trying to get more presence in international commerce there. Rebuilding the US shipyard industrial base, shipbuilding and everything included in US flagging is going to be kind of the story here. But expanding the mariner and shipyard workforce the workforce is also important.
Speaker 1:Continuing on with this announcement we've always been a maritime nation, but the truth is we've lost ground to China, who now dominates international shipping and can build merchant and military ships much more quickly than we can, as a quote in this announcement said Senator Kelly, a US Navy veteran and the first US Merchant Marine Academy graduate to serve in Congress. It continues on his quote to say the Ships for America Act is the answer to this challenge by supporting shipbuilding, shipping and workforce development. It will strengthen supply chains, reduce our reliance on foreign vessels, put Americans to work in good-paying jobs, jobs and support the Navy and Coast Guard shipbuilding needs. I'm excited to introduce this comprehensive, fully paid for legislation today, alongside my Republican and Democrat colleagues and our partners representing all parts of the industry, and together we're going to work together to get this effort across the finish line. So that was all the finish quote there. This is important. I think that this is long overdue, but such a great inertia movement for the maritime industry and for it to be paid for, so I'm not going to go into all of that. But basically they've been as part of this proposal. Have tax incentives and ways of kind of moving things around. A trust fund for maritime in here, so maritime security trust fund, so it would reinvest. It says well, let me just get to the background.
Speaker 1:The announcement has a bullet pointed section that kind of goes top level of what's happening here. So the Ships for America Act. I'm just going to call it the Ships Act. That's what I've been calling it. The Ships Act. Kelly Waltz Bill is what it used to be. Now it's going to be called the SHIPS Act so coordinate US maritime policy by establishing the position of maritime security advisor within the White House, who would lead an interagency maritime security board tasked with making whole of government strategic decisions for how to implement a national maritime strategy. That has been something that has been attempted multiple iterations and never quite gotten there A national maritime strategy, something that can direct and move forward so that we have a roadmap for where we want to go and be as a maritime nation. We've fallen away from that, and so having a maritime advisor, a maritime security advisor and a maritime security board at the White House that will help create and make a whole of government strategic decisions for national maritime strategy, it's a really important thing. The bill also establishes a maritime security trust fund that would reinvest duties and fees paid by the maritime industry into maritime security programs and infrastructure supporting maritime commerce.
Speaker 1:That's that first bullet in this overview. What this is also saying to me. Did you hear how many times security was, as I said, maritime security is national security, and so the importance and the need for this rises to the level of all other national security initiatives that we have. The second bullet here establish a national goal of expanding the US flag international fleet by 250 ships in 10 years. That is an aggressive number. 250 ships in 10 years means still 10 years, but 250 ships. To expand the US flag international fleet by creating the Strategic Commercial Fleet Program, which would facilitate the development of a fleet of commercially operated US flagged American crude and domestically built merchant vessels that can operate competitively in international commerce. Great More US flag vessels, which also means more jobs for US mariners. If we're going to up mariners, because we have a severe shortage in mariners, we need jobs for them and US flag vessels is a great way to do that.
Speaker 1:The next bullet enhance the competitiveness of US flag vessels in international commerce by establishing a rulemaking committee on commercial maritime regulations and standards to cut through the US Coast Guard's bureaucracy and red tape that limits the international competitiveness of US flag vessels. Requiring the government-funded cargo move aboard US flag vessels and requiring a portion of commercial goods imported from China to move aboard US flag vessels starting in 2029. A little jab to the Coast Guard there, but this is interesting, right? I think that this will. They're trying to create a longstanding relationship with the government and maritime but also that incentive, right. So government funding cargo moving aboard US flag vessels that's pretty common, or certainly that's a at least in part existing rule part existing rule, but this requiring a portion of commercial goods imported from China to move aboard US flag vessels. That's interesting. I think there's some tax breaks that are associated with that in the bill the bill just dropped yesterday, so I'm still kind of sorting through all of it. But they're trying to not just direct people to change things right, they don't want to just direct the market to move, but they're trying to find incentivization ways of doing that.
Speaker 1:All right, continuing on Expand the US shipyard industrial base for both military and commercial ocean-going vessels by establishing a 25% investment tax credit and here's where they start talking about some of these tax credits by establishing a 25% investment tax credit for shipyard investments. Transforming the Title XI Federal Ship Financing Program Title XI Ship Financing is kind of already there, but transforming it into a revolving fund, it says and establishing a shipbuilding financial incentives program to support innovative approaches to domestic ship building and ship repair. Continuing on with the bullets accelerate US leadership in next generation ship design manufacturing process and ship energy systems by establishing the US leadership in next generation ship design manufacturing process and ship energy systems, by establishing the US Center for Maritime Innovation, cool right R&D for maritime, which would create regional hubs across the country. So we're looking at a whole of the US movement toward let's regain our presence as a maritime nation and let's be good at it. Let's have cool tech or perhaps not cool tech, but cool designs next generation ship design, right, like let's be smart about how we do this and let's be cutting edge front instead of just old dusty, right. So that's my feeling here is that we're moving toward let's be good at this, we're going to do it, let's do it, but let's also be good at it.
Speaker 1:The final bullet here make historic investments in maritime workforce by establishing a maritime and shipbuilding recruiting campaign, allowing mariners to retain their credentials through a newly established Merchant Marine Career Retention Program, investing in long overdue infrastructure needs for the US Merchant Marine Academy and supporting state maritime academies and centers for excellence for domestic maritime workforce training and education. The bill also makes long overdue changes to streamline and modernize the US Coast Guard merchant marine credentialing system. Look, there's a lot in here and everybody obviously is going to be talking about the push for increased shipbuilding and maritime security elements, but there's a few other things that I do want to point out. I think they're kind of captured but they certainly, like I said, the shipbuilding and maritime security elements. But there's a few other things that I do want to point out. I think they're kind of captured but they certainly, like I said, the shipbuilding and maritime security are going to be the top level conversations that people are going to have.
Speaker 1:But there's a workforce development sector section here and there's some great incentives in there for mariners. And actually I'd like to say that this parallels some of the Maritime Transportation System National Advisory Committee, so the MITSNAC, the Federal Advisory Committee, to Department of Transportation through MARAD. It's the Federal Advisory Committee, it's the equivalent, basically, of the National Shipper Advisory Committee that we often talk about at the FMC. This is over at DOT MARAD. Mitsnac has had some parallel recommendations here, and so I love to see some of these great ideas right, and they're happening kind of across different conversations and I love to see that some of them made their way in here. So, like I said, workforce development, there is a section that suggests that, look, public student loan forgiveness, if we're going to have the program then and it's pretty expansive it should have merchant mariners in it, right, I mean it goes there's Peace Corps. There's all different kind of qualifications of government service under this public student loan forgiveness or public service. The Merchant Mariners should certainly be part of that and so I'm happy to see that public student loan forgiveness is included in here. To say Merchant Mariners should be part of that.
Speaker 1:They also have a section in this bill on non-competitive eligibility for federal employment. It says this section allows individuals who one, have graduated from the US Merchant Maritime Academy and met all their cadet commitment agreement requirements and two, are credentialed US merchant mariners with an officer or rating endorsement who've served at least seven years at sea, to be eligible for non-competitive federal employment. So this is similar, it says, to hiring preference afforded to veterans or Peace Corps volunteers. So there's a veteran's preference for seeking federal employment. This is going to say look, if you were a merchant mariner, you're going to get a similar hiring preference if you kind of hit all these marks. But great, right. I mean it's a service and it should be treated as such. For those who are merchant mariners, who are in this service, they should have these preferences afforded to them.
Speaker 1:Military to mariner we've talked about this. So military to mariner helps use some of the qualifications and sea time that military members have to help translate that into a Mariner program, a Mariner credential. So this says Military Candidates to Mariner Careers Recruitment Exchange. This section requires the Department of Defense to encourage military recruiters to recommend careers in the maritime industry to recruits who don't necessarily qualify for US military service but who wish to serve at sea or work in a shipyard of the United States. It requires the DOD to establish a mechanism to introduce these recruits to the maritime administration. We're then required to provide these recruits with appropriate maritime industry career resources and handoffs. It's trying to find another way in for those who maybe have sea time or want to serve at sea to do it, and so and I love to see it right Having more encouragement into merchant mariners and merchant marines and maritime careers is great. It also has a 10-year campus modernization plan for Merchant Marine Academies and also they're saying in this proposal to elevate the US Merchant Marine Academy to be equally considered to the other four military service academies.
Speaker 1:Again, this is a service. This is a service to the country, so I'd love to see that that's included. Like I said, there's lots of tax credits here for maritime-related activities and expenditures. Love to see that that's included. Like I said, there's lots of tax credits here for maritime related activities and expenditures Great to see. There's also a section that pulls the conversation closer to the White House. I talked about this a little bit, but it creates that maritime security advisor and a maritime security board excuse me will coordinate national maritime affairs and policy, including maintaining and updating this national maritime strategy. Like I said, we've been trying to do this for years. Here it is. It's starting to move forward.
Speaker 1:The bill establishes the office of the maritime security advisor in the executive office of the president. The maritime security advisor is authorized to appoint such officers and employees as the maritime security advisor may deem necessary. This section also establishes a Maritime Security Board which is based within the White House. So you have the advisor and then you also have this board, led by the Maritime Security Advisor and consists of representatives from all federal agencies with responsibilities for the maritime industry. So they're saying look, we want to pull in reps from all these federal agencies dealing with maritime. The board, which has voting and non-voting members, shall be responsible for the coordination of all efforts related to this national maritime strategy and generally marine transportation system of the United States, including establishing target numbers for the size of the maritime security fleets. Conducting independent oversight of cargo preference requirements. Coordinating national efforts to develop a robust maritime workforce Of course we have to do that, we have to develop a robust maritime workforce. Establishing national priorities for research and development of next-gen technologies in the shipping and maritime industries I think that's so cool, that's great. Coordinating interagency efforts to privilege US vessels operating in international commerce while maintaining US international obligations. So this is trying to figure out a way, well, to help boost up US vessels right operating in international commerce. Protecting vessels of the United States from physical or cyber threats so how do we make them more secure and conducting oversight of the Maritime Security Trust Fund. So all great things right. That's all the prerogatives, basically, of the Maritime Security Board led by that Maritime Security Advisor.
Speaker 1:I mentioned the Maritime Transportation System National Advisory Committee, the SMITSNAC. This is actually now shifting SMITSNAC a bit and this is interesting because now, like I said, it's an advisory board made up of industry experts. It currently reports to the Secretary of Transportation at the US Department of Transportation. This is moving it over to report to the Maritime Security Board. So this is private industry that makes up this federal advisory committee is now saying look, let's make that federal advisory committee advising the Maritime Security Board from kind of letting these federal employees or these federal members on this Maritime Security Board, let's let them know what's happening in the industry from a private, you know experts of the industry group. And they also say that this MITSNAC should then make technical updates to how members are appointed to serve on the committee. But, yeah, this is big news, moving the Midsnack over from DOT, if this gets adopted, to this Maritime Security Board that would be at the White House.
Speaker 1:I'd like to mention the FMC was not forgotten here. I always love to see it when the FMC is not forgotten on a national stage. On a national stage, they say in this proposal that the FMC should report on vessels of the United States, requiring the FMC to submit an annual report to the Maritime Security Board, this White House group and appropriate congressional committees, evaluating the competitiveness of US vessels in foreign commerce, which the board will then use to inform the National Maritime Strategy. So this is a lot of really good kind of, from all different angles, maritime movement, and I think that this is really comprehensive. I think that they hit some of the major topics that have been lagging and forgotten. It feels like and yes, like I said, this is certainly a shipbuilding bill, but it expands to focus on maritime for the United States as a whole and how we return to be a compelling and a important maritime nation. So that's it. Like I said, I wanted this to be fairly quick. I guess we're just under a half hour here. So that's it for this week.
Speaker 1:I'm going to continue to watch everything that's happening over the holiday season, but take some time for your family, take some time for the holidays. Happy holidays, merry Christmas, happy New Year to everybody. And we're going to be right back here the second week of January, five days before a potential port strike. We'll see if we have an agreement before that. But, as always, the Guidance Service General for Educational Purposes. It should not be considered 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 my legal company, squall Strategies. Otherwise, for the non-legal questions, the e-learning and general industry information and insights, come find me at the Maritime Professor.
Speaker 1:If you like these videos, let me know, comment, like and share. If you want to listen to these episodes on demand or if you missed any previous episodes. Check out the podcast by Landon by Sea. If you prefer to see the video, they live on my YouTube page by Landon by Sea, presented by the Maritime Professor. While you're at it, check out our website, maritimeprofessorcom. So until about January 10th I think it is yep, january 10th, friday. This is Lauren Began, the Maritime Professor, and you've just listened to by Land and by Sea. See you next time.