By Land and By Sea
By Land and By Sea
S4.E13 - What I'm watching in 2025...
Topic of the Week (1/17/25):
Let's talk about a few things I'm watching for 2025
⚓ The Maritime Professor® presents By Land and By Sea Podcast 🎙️ - an attorney breaking down the week in supply chain
with Lauren Beagen (Founder of The Maritime Professor® and Squall Strategies®)
Let's dive in...
1 - Federal Maritime Commission - Petition Updates (Motion to Dismiss to be addressed)
2 - United States Trade Representative releases Sec 301 report findings - "USTR Finds That China’s Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance Is Actionable Under Section 301"
https://ustr.gov/about-us/policy-offices/press-office/press-releases/2025/january/ustr-finds-chinas-targeting-maritime-logistics-and-shipbuilding-sectors-dominance-actionable-under
https://ustr.gov/sites/default/files/enforcement/301Investigations/USTRReportChinaTargetingMaritime.pdf
https://ustr.gov/sites/default/files/enforcement/301Investigations/FRNActionabilityChinaTargetingMaritime.pdf
3 - Sean Duffy's Confirmation Hearings this week - what we know about his credentials for Secretary of Transportation
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#ByLandAndBySea
no-transcript Catwalk to the beat when you see me coming Nixon Room. Everywhere I go, I'm in the spotlight. This is a good life I'm living. Bold. This is what it looks like On the tips of the world. The port strike is over, thank goodness, so now we can officially start 2025. Is that right? So today let's go through a few of the things that I'm watching in 2025.
Speaker 1:Hi, welcome, by land and by sea, an attorney breaking down the weekend supply chain presented by Maritime Professor Me. I'm Lauren Began, founder of Maritime Professor and Squall Strategies, and I'm your favorite maritime attorney. Join me every week to 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 considered legal advice and there is no attorney client privilege created by this video or this podcast. If you need an attorney, contact an attorney.
Speaker 1:So before we go into the discussion of the day, let's go through my top three stories of the week. All right, story number one there are no new updates to any of the rules that have come out of the FMC. We are watching to see what happens with the petition. We're going to talk about that in just a minute. But no new updates in the rulemaking area. No new updates. No new rules have been put forward. There are a few updates on the petitions, so let's kind of go over where we are, which two petitions that we're looking at Right. So we have the the FMC released their rule on billing practices of detention to merge, so that petition came out right about a month, a month and a half right before that rule became final at the end of May, about a month, a month and a half right before that rule became final at the end of May. So this started April 18th.
Speaker 1:There's been, as we've been talking about, a lot of kind of procedural things going back and forth. The real crux of what this ultimately will likely potentially go over is kind of that direct contractual relationship for motor carriers and the removal of them from the ability of the billing party, as it's indicated in the rule, to bill a motor carrier because they would not be a directly contractual, a direct contractual relationship, as the FMC has indicated. The argument from the World Shipping Council is that there is a direct contractual relationship, sometimes with motor carriers, with truckers, and in those instances the FMC is still saying that doesn't count under their direct contractual relationship rule, where they really are kind of moving more toward direct contractual relationship as it relates to either shippers or consignees and they say not both, either one or the other. So we've talked about the detention to merge rule quite a bit here. Go back and take a look at one of those past episodes. I think we actually did a few episodes breaking it down. But we had an interesting development in December where a few trucking associations got involved, wrote an amicus curia brief and basically said we have some thoughts on this as well, but we do have some updates.
Speaker 1:This week the World Shipping Council filed their reply brief, so a longer form argument came back from the World Shipping Council this week and I'm not going to go too far into detail here. I'm still kind of digesting the whole thing. It only came out a few days ago. But I just want to quote part of their opening which I think is kind of it's a well-written summary of their position and what they they are presenting as their argument in this petition. So again, the World Shipping Council brought this petition in the US Court of Appeals for the DC Circuit against the Federal Maritime Commission against this final rule, this detention to merge billing practices rule. They've been going back and forth but there's a motion to dismiss. Well, excuse me, I'm confusing it with the next one. There is a back and forth, procedural back and forth here where they're trying to decide if this is, if the if FMC has standing, if the World Shipping Council is standing. It kind of goes back to the legalese of it all. They haven't quite gotten into the crux of the matter, but I thought this was a well-written summary in the intro of the reply brief.
Speaker 1:So the World Shipping Council says the commission's responses fail to persuade and are revealing of one of the final rule's key flaws, pointing to the detention and demurrage final rule. They say the commission's stated purpose does not match the policy that the commission ultimately chose to adopt. The FMC repeatedly emphasizes that it intended to limit demurrage and detention invoices to only the parties that negotiated the relevant contracts. As these parties quote would likely have greater knowledge, quoting as the FMC on part of the justification, and then the World Shipping Council continues and would be better able to evaluate and dispute any charges. But the final rule prohibits billing motor carriers even when those motor carriers have contractual relationships with the Ocean Common Carrier and are thus the best position party to receive the invoice under the FMC's own reasoning. This fundamental mismatch between reasoning and result renders the commission's action both outside of its statutory authority and arbitrary and capricious. The final rule should be vacated. So that's, I mean, a pretty good summary.
Speaker 1:They certainly go into more depth and kind of more development of their arguments, but kind of a nice distillation in this intro of what the World Shipping Council is trying to prove here. They're trying to say look, the rule is a little bit inconsistent or mismatched to the application. And further they're saying that the FMC went too far and is reaching outside of its statutory authority and because of that this is like this is random, arbitrary and capricious. This is just random that the FMC is doing this in a way that isn't well supported by the Congress telling them to do it. That's kind of the distillation of the argument here in this intro. You know the stated purpose not matching the policy that the commission chose to adopt.
Speaker 1:I think that this argument, as the FMC, has stepped into the spotlight. I think this critique has risen. I've seen more and more people. I've seen a lot of people supporting the FMC and where it's going with its delivery or its enjoyment of its statutory authority. But it's clear to see that the FMC has gotten a lot more active in the past few years as well, right? So I think, as it's gained attention and as it's stepped into the spotlight that it found itself in after those 2021, 2022 congestion years, I think that we've also seen a critique of are they being too active In general? Right, an active commission will often find itself. The critique of are they being too active In general? Right, an active commission will often find itself.
Speaker 1:The critique of mission creep is usually what it is, mission creep being it's you're kind of creeping outside of the mission that you've been given. And, as we remember, right, congress gives these agencies their authority. The FMC has the authority through the Shipping Act and a few others, but the Shipping Act is kind of the main authority and main jurisdiction for the FMC to enjoy its regulatory authority here. And, you know, I think a responsible commission also does a little bit of checks and balances within itself against its statutory purposes and authorities, and I think that we might see that in the change of administration and a following change of chairmanship.
Speaker 1:I think that Chairman Dan Maffei did a fantastic job of really trying to provide available venue for a large portion of the shipping community and not just shippers, but a large portion of the shipping community that wasn't quite sure what to do when they all of a sudden had all of these giant charges. They weren't exactly sure what to do. And I think that the FMC stepped into that spotlight well, in that they provided a lot of opportunities for piecemeal and bite-sized opportunities for dispute resolution instead of just going to the big bang of a big lawsuit. So I think that that was great. But in that right it became a more active commission because there were more filings with the commission and therefore the commission had to make more decisions and kind of all of that snowballed together.
Speaker 1:And so now I think we're at this moment of the FMC is going to have to start looking okay, well, what are we getting right? What aren't we getting right? Are we staying within our mission? Are we not? And I think that this petition is going to force that conversation. And again, remember, this is a petition against the detention and demurrage billing practices, but it sounds like it's kind of being looped into a larger conversation of this active agency, statutory authority and, like I said, as we move into the next administration. We know from Trump administration one they prefer limited government. I've mentioned this a few times that for every one rule that was brought out of any agency to were required to be repealed. So, all that to say, I think we'll see that, if not more, with Trump administration number two, maybe pulling back or being a little bit more conservative in their interpretation, although you know the FMC, I feel like the FMC does a good job of staying within its jurisdiction, but there are some gray areas that just need to be determined and I don't think that they're only going to be determined by the FMC. I think this petition is going to be a good opportunity for that conversation of where those limits are. I think we're also going to see that conversation on, perhaps, chassis and intermodal rail and through bills of lading and all of those different areas of well, who's in charge of some of the rail storage, demurrage per diem, those types of things. I think that we're going to see that over the next few years and with a limited lens of a limited government. I think that's going to be an interesting conversation to have and probably an appropriate time to be having those conversations, and this happens all the time, right Every few years, every five to 10, this probably is just part of any agency's process, right, that they get challenged on their mission creep or they get challenged on where they're going and their interpretation of their statutory authority, which I think those are normal, healthy kind of housekeeping type things to do. So I'll keep watching it. I'll let you know what I see. But interesting, right?
Speaker 1:The other petition that we're watching is the unreasonable refusal to negotiate with respect to health and face accommodations. This is where I got a little ahead of myself. There is a motion to dismiss on this one. So what we saw this week I think it was just yesterday or the day before from the court we saw a procurium order that the motion to dismiss should be addressed and not necessarily by incorporation by reference of the party saying look, we already talked about this, this is why it shouldn't be a motion, this is why it should be dismissed, or vice versa, this is why it shouldn't. The court's saying look, you need to address this directly with its own briefing schedule, meaning like their own arguments turned in. So what that means is that this argument made by the FMC the FMC is the one who presented this motion to dismiss of the World Shipping Council not having standing. The FMC's argument is basically like the carrier should have been bringing this collectively and not the World Shipping Council on behalf of the carriers Because, again, this is unreasonable refusal to deal or negotiate with respect to vessel space accommodations. This is defining unreasonable refusal to deal or negotiate. That's the question. Motion to dismiss Should it have been the World Shipping Council or should it have been some of these carriers individually?
Speaker 1:We're going to see that play out. I think this is going to be an interesting motion to dismiss to see because this argument is also being raised in the detention to merge petition. So I think this might have knock-on effects to other petitions that are out there and so we're going to see that play out in various arguments to see if this case gets thrown out before it even gets started and that's kind of what we're talking about here. A motion to dismiss means dismiss the whole thing or dismiss parts of it before you even get to really into like the meat of what's going on here. Hopefully, I mean on all of these, I hope that we get to the content, the subject matter of kind of the argument at issue and that's not to dismiss. A motion to dismiss saying shouldn't be properly heard. But I'm interested to see this one particularly unreasonable refusal to negotiate. I'm interested to have it challenged in thought because I'd like to just make sure there's a few parts that I have questions on that. I just want to make sure that they're on the right track. So I think that this will be a really interesting one to watch.
Speaker 1:Story number two we're moving right along. It's 13 minutes in and we're only in story number one. So story number two the USTR, the United States Trade Rep, released a post this week or just yesterday, actually about 24 hours ago, where they said press release saying USTR finds that China's targeting the maritime logistics and shipbuilding sectors for dominance is actionable under Section 301. So this is a petition brought by United Steel, paper, forestry, rubber Manufacturing, energy, allied Industrial and Service Workers, International Union, the International Association of Machinists and Aerospace Workers, international Brotherhood of Boilermakers, iron Shipbuilders, blacksmiths, foragers, helpers, the International Brotherhood of Boilermakers, iron Shipbuilders, blacksmiths, foragers, helpers, the International Brotherhood of Electrical Workers and the Maritime Trades Department of the AFL-CIO. So this one was interesting. We've talked about this before.
Speaker 1:There were two Section 301s that have kind of come into the spotlight. One was the China Trade Tariffs. That's not this. And then there was this one. This one was talking about the People's Republic of China targeting maritime logistics and shipbuilding sectors for dominance. Concluding that the PRC this is what the announcement said concluding that PRC China targeted dominance in these sectors is unreasonable and burdens or restricts US commerce and is therefore actionable under Section 301. I think you should go take a look at this. There is a very comprehensive report it's over 100 pages, it's almost 200 pages, I think where they talk about everything that they've looked at since this petition began in April, just April of this year. So this was all started under a Biden administration. But I mean, I can't imagine that this. It doesn't come out with the remedies, so I think that this just provides a study and a justification for, yes, we found that it was unfair. We found that China's tactics essentially China's tactics are unfair and burdensome and are violative, basically, of Section 301 of the Trade Act of 1974. So what this means is that we might see a Trump administration walk through this door, because what's happened is the door has been unlocked for a Section 301 with justification, saying that anything related to the maritime shipbuilding or any of the things that they list, yeah, china's in the wrong here. How can I say this Proceeding determination that needs to be taken to try to correct or negate or make even the playing field anything in this unreasonable or discriminatory or burdening or restricting of the US commerce, and that might be tariffs again. This might be another justification for tariffs. We'll see, we'll see. This one will be interesting. This just came out yesterday. I'm still sorting through the document but I think this one's going to be interesting to watch. All right.
Speaker 1:Story number three Sean Duffy. Have you heard of him? He has been nominated for the Department of Transportation Secretary of the Department of Transportation, secdot. He doesn't have a lot of transportation experience, but I did read somewhere and I haven't been able to confirm this but I did read somewhere that he does have his commercial driver's license, his CDL, so he must have some potential trucker experience because you don't just necessarily get a CDL for no reason. Look, he was on the Real World Boston and so he's gotten a little bit of feedback on that that he was a reality TV star of sorts. He was also a Wisconsin congressman and district attorney, but he's also recently, through these confirmation hearings, it's come out that he's supportive big section of the maritime industry that's very much watching to see what any DOT transportation secretary is looking at.
Speaker 1:As it relates to the Jones Act, which kind of has a protectionistic or a I don't want to say protectionist necessarily, but it provides an opportunity for US flag and US mariners to have a fighting shot. Basically, we'll go into the Jones Act another time. There are two sides to it, obviously, and it can become. It's not necessarily even something that falls on political lines, but it does have kind of two different sides to it. So notable that he's come out saying that he's supportive of the Jones Act. So, like I said, he was a congressman for Wisconsin. He was a member of the House Financial Services Committee during his tenure Not that that has anything to do with transportation, but you know, that's that's good that he's. He was with the numbers committees, financial services that's good that he was with the numbers committees, financial services. He was a contributor on Fox News since 2020. He was on Fox Business. So I mean, I think that this kind of circling around, he's a numbers guy who does business things, so perhaps there's something there.
Speaker 1:He has received some industry support from OIDA, the Owner Operator Independent Drivers Association, saying that he understands small business truckers. He's also endorsed by the Governor's Highway Safety Association, allegedly saying that they're emphasizing the need for strong leadership in transportation safety. So we'll see where this goes. The nominations and the confirmations are kind of still ongoing. We'll see. Right, certainly, having transportation experience is not a job requirement. Even Secretary Pete Buttigieg, the outgoing Transportation Secretary, didn't have more than really just light rail and a light bus experience from his time as mayor in South Bend. Elaine Chao, the secretary before that, had a lot of transportation experience, right, specifically maritime, obviously. I love to see that, but we'll see where this goes. If Secretary Duffy if confirmed where he would go with this term and what his priorities are. I think that it's sometimes a good thing to bring fresh eyes to transportation sector, but then also it's a very, as we all know, right, there's a lot of different modes within and it can be drinking from a fire hose for a long time just to get up to speed. So let's see where he goes with this.
Speaker 1:But let's get into the main stages of the day. I just kind of want to quickly run through some of the 2025 things that I'm looking at. We've seen the ILA, we've seen that there was a deal struck, and all I really have to say here is that it looks like mid-February is when we're going to see this deal finalized. I've been hearing about a potential meeting happening in mid-Febru. Out was actually when the ILA leadership went to Mar-a-Lago to meet with Trump mid-December, december 15th. He actually called US Maritime Alliance at that time, and so there might have been like a little mini negotiation discussion at that time, which we didn't know. We just knew that the ILA had met with President Trump. So that's interesting what we know about the agreement. It's still under wraps, but we've been hearing a few here and there. Six-year contract, it looks like. So 2030,. Meet you back here, we'll talk about it. A potential 62% wage increase, it looks like, is where we came out. The ILA has been saying that it's stronger healthcare and retirement package. Job preservation and expansion is a key tenant and a tech advancement is allowed if new jobs are also created. So I think that's going to be good for just making sure that our ports and our services are able to advance with tech advances.
Speaker 1:Fmc things that I'm watching in 2025, as we know, commissioner Carl Bensel departed FMC in mid-December. He went over to work for the National Association of Waterfront Employers, nowi, which leaves an open commissioner spot. We've been hearing a few names floating about. I still don't want to say the main name that I keep hearing because it hasn't been put out there publicly but I'm starting to hear a little bit more about one person in particular that is being eyed, but until they're fully and officially nominated, it's just a rumor, so we'll see where that goes. And then also we've talked about this Chairman Maffei moves to a commissioner role. A new chairman of the FMC has not been appointed or named, so we'll keep watching that In 2025, I anticipate that we're going to see charge complaints move into a formal rulemaking process Again.
Speaker 1:Remember the charge complaints were created by Congress in their OSHA Superinform Act of 2022, but it was always an interim process. So we will see a full formal rulemaking happen in 2025. We're also going to be watching for alliance reshuffling. We'll dive into this in a little bit more depth in a future episode. But we have 2M has disbanded and moved around. We have the alliance will be now moving over to the premier alliance. We have Ocean Alliance. That is mostly staying the same. So the Gemini cooperation is essentially the new 2M, if you will. It's Maersk and Hapag-Lloyd. The premier alliance loses Hapag-Lloyd. As we know, it went over to Gemini, so it'll be O-N-E, yang Ming and Hyundai Merchant Marine and then Ocean Alliance, like I said, stays the same, so I'm going to be watching all of that.
Speaker 1:As always, the guidance here is general and for educational purposes. It should not be considered to be legal advice directly related to your matter. If you need an attorney, contact an attorney, but if you have specific legal questions, feel free to reach out to me at my legal company, small Strategies. Otherwise, for the non-legal questions, the e-learning and general industry information and insights, come find me at the Maritime Professor. 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 Bicey and if you prefer to see the video, they live on my YouTube page by Landon by Sea. While you're at it, check out the website, the maritimeprofessorcom. Until next week. This is Lauren Began, the Maritime Professor, and you've just listened to by Land and by Sea. See you next time.