By Land and By Sea
By Land and By Sea
S4.E.14 - Captain's Log Edition (incl. what is the FMC's role in the Panama Canal discussion? an unfavorable conditions review...)
Topic of the Week (1/31/25):
There's a lot of maritime news hitting at the same time! Tune in to hear my take on it all.
⚓ 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
2 - Secretary Sean Duffy confirmed as Secretary of the U.S. Department of Transportation
https://www.linkedin.com/posts/laurenbeagen_graves-statement-on-confirmation-of-sean-activity-7290094297683542016-yuY1?utm_source=share&utm_medium=member_desktop
3 - Chairman Louis Sola named Federal Maritime Commission Chairman - let's get to know Lou...
https://www.linkedin.com/posts/laurenbeagen_president-trump-designates-chairmen-and-acting-activity-7287538740779003904-j80q?utm_source=share&utm_medium=member_desktop
4 - New administration, new maritime initiatives: Panama Canal (and the FMC's role) and the Gulf of America
United States Senate Committee on Commerce, Science, and Transportation Hearing:
https://www.youtube.com/watch?v=dM4oChRMqYk
-------------------------------
🔹The Maritime Professor® is dedicated to increasing collective knowledge of global ocean shipping through webinars and e-learning producing educational/e-learning content for maritime and supply chain professionals and businesses. This includes trainings and webinars for companies and their employees.
🔹Book a time to learn more: https://lnkd.in/gmyamTRh
🔹Sign up for our email list at https://lnkd.in/eqfZJShQ
🔹Look for our podcast episodes - NOW AVAILABLE:
https://lnkd.in/g4YUbxjs
❗As always the guidance here is general and for educational purposes only, it should not be construed to be legal advice and there is no attorney-client privilege created by this video or podcast. If you need an attorney, contact an attorney.❗
#ByLandAndBySea
I got soul coming through, flying free. Skies are blue, all the waves are mixing room. I got soul coming through, won't stop building a piece. And On top of the world, when you see me, come, oh, everywhere I go, I'm in the spotlight. This is a good night I'm living for. This is what it looks like On the tip of the world. Good night, oh, oh, oh, oh, oh oh. I'm living bold. This is what it looks like. I'm addicted to the world. Oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh.
Speaker 1:There's a lot going on, and all at the same time. So I thought this week let's do a Captain's Log, let's look at everything that's going on. I'll give you my take on it all. 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 as we walk through both ocean transport and surface transport topics in the wild world of supply chain. As always, the guidance 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. So usually we start with my top three stories of the week, but this week all stories are top stories, so let's get into it with the captain's log, story number one.
Speaker 1:We've been doing this for a few weeks now where we've been looking at different rulemakings and the petitions that are happening at the FMC. We don't have a lot to report, but last episode we did talk about a few updates that are happening on these petitions. So we have the detention demurrage billing requirements rule. There's a petition filed against it that started in April of 2024. So gosh, we're almost a year since that petition started and it came down to standing and lacking authority.
Speaker 1:The real issue, if we get into the subject matter, kind of hinges on this direct contractual relationship of the motor carriers and whether they should be or could be directly billed for detention. To merge, as of the rule, it has to be a direct contractual relationship. So it's either direct contractual relationship or consignee, not both and nobody else, which means that motor carriers and truckers have been kind of eliminated from that must pay or the bill gets sent to. They can pay, but they don't. They're not, they're not part of the who the bill gets sent to, and that's kind of at issue here. So one of the interesting things that happened in December was we had a whole bunch of trucking associations enter the chat and basically said, look, we, we kind of think that this is something that we don't hate the way that this has turned out. We talked about that in a previous episode, so go take a look at that. But you can also look at their joint amicus curiae brief, which is a friend of the court, where they basically say look, this is going to relate to us once you get through all the legal procedural stuff. We have something to say. Go take a look at that. That's pretty interesting.
Speaker 1:But it's the World Shipping Council who filed this petition against the Federal Maritime Commission's final rule and it kind of comes down to and I'm going to this is oversimplifying it, but this is from their reply brief the most recent filing from the World Shipping Council. I think that this kind of one sentence or two sentence kind of summarizes their position where they say the fundamental mismatch between reasoning and result renders the commission's actions both outside of its statutory authority and arbitrary and capricious. So they're saying, look, not only was the statutory intent here not for them to do this rule in this way, but that, also the way that they did it, is a mismatch between reasoning and their result. Because the World Shipping Council, through kind of other means, has said that they believe that there is a direct contractual relationship with motor carriers sometimes, and yet the clarity on the rule was that motor carriers are removed from it. So the World Shipping Council saying, look, there's a mismatch here. And so therefore they're saying, look, this, this final rule, is a little incomplete. This, this isn't really getting to the heart of what they were supposed to do and they weren't really supposed to be in this area. So that oversimplification, right, we've been talking about this for so many weeks. So either listen to previous episodes or maybe we'll do a deeper dive once we have the next stage, which that's kind of. What I want to say here is that this petition has an oral argument that's been scheduled for March 13. So in a few weeks about six weeks we're going to be having a little bit more clarity on what some of the issues are from an oral argument perspective, because we've had the briefings filed. But now, every time you get an oral argument, it's kind of interesting because you'll get a little bit more of the life of the case, so we're not going to have a lot of updates until then, but stay tuned for this oral argument that's been scheduled for March 13.
Speaker 1:The other petition that's out there is the unreasonable refusal to deal and negotiate with respect to vessel space accommodation. So that was the other rule. I've talked about this so much. I really really really encourage any of my listeners to go take a look at this rule. Just take a look at it. Look at the text of this rule. This is a rule. This is a rule that came out from the FMC, a regulation that came out from the FMC. It came out in September, I think it was the 23rd, so it really kind of got snowed in by the port strike that was happening right around the same time. Right, that was only a week before the port strike. So I don't want this to drop off anybody's radar. I want you to pay attention to this because this is a really interesting rule, because anytime an agency is defining things and that's what the billing requirements for detention to merge is all about too it's about defining that. But this is defining unreasonable refusal to deal and negotiate with respect to best-of-space accommodations. So they're defining unreasonable and unreasonable refusal. Find out what that means to you and find out if it applies to you or not. This is one that you want to pay attention to.
Speaker 1:So I did mention in a previous episode that there is a per curiam order that the motion to be dismissed be addressed. There's a motion to dismiss. Both of these petitions are kind of getting into the weeds on legalese and legal procedure. But there's a motion to dismiss meaning basically like throw it out, we're done here, we're not even going to. This case should never have been brought. And so they're going to be having a briefing schedule on just that motion to dismiss. They want to.
Speaker 1:The court wants the parties to kind of dive in on whether or not so the FMC made a motion to dismiss, on whether or not the World Shipping Council even has standing to bring this petition against them, basically saying, should it have been the individual ocean carriers or can it be the World Shipping Council on behalf of kind of the industry of ocean carriers? So there's a briefing schedule. March 3rd is when the petitioner's brief deadline, march. April 2nd is the respondent's brief and a replied brief is April 23rd. Final briefs are due May 14th. So, similarly, it's going to be a while before we get a lot of movement and a lot of clarity here and again.
Speaker 1:This is just on the motion to dismiss, so that's kind of delaying the movement toward the actual like meat and potatoes of the case, right? So the motion to dismiss whether this case should have been brought at all is the only thing that they're going to be really talking about in this first stage. So we're not even to the unreasonable refusal to deal and negotiate definition, whether or not this was too far, whether this was just right, whether the FMC had the authority to do this or not. You know the congressional intent, the congressional language as part of Ocean Shipping Reform Act of 2022, directing the FMC to do this. All of that won't really be at issue yet. It's kind of captured as the whole petition. But what we're going to see in the next three months is just this motion to dismiss and a briefing schedule related to that. So we'll see.
Speaker 1:I also think there might be some interesting case law on who can bring these petitions, because to get some clarity over whether the World Shipping Council on behalf of the industry or if this really should have been individually by ocean carriers, that'll be an interesting. That will be an interesting little thing to watch here. But I'm ready for the main potatoes right, like I'm ready for, like, the beef of this, of this case to through. Because I've talked about this unreasonable free will to negotiate for a while, there's some things that feel like it might have been too far for the FMC to be diving into business practices of some of these private companies, and so I've often said I think the FMC does a pretty good job of staying kind of in that guardrails area of government oversight. You know, they kind of let the industry take the lead for the most part, but they want to make sure that it's not getting too far into monopolistic or anti-competitive or kind of distance I don't know how else to say that right, antiicompetitive or making it unfair for the industry, right, that's what the FMC is really trying to do. They kind of act as that competition authority in most regards where they're trying to make sure that it's for the benefit of the US importer, exporter and consumer. And so what does that mean? They're watching the market for imbalances that are not just commercial, regular, general, you know, commercial competition type things, but like monopolistic behavior.
Speaker 1:I say all that because I don't know this rule. It just it's never totally sat well with me Unreasonable physical deal and negotiate. There's an export strategy document that has to be filed with the Federal Maritime Commission. I just want to know more about it. Right, I want to know more about what they're looking at. I was interested in this petition so that we could see a little bit more of the discussions, we could see a little bit more of the rationale, so we can see a little bit more of the justification and how that all hinges back to the FMC's authority. Because some of those things that are required in this regulation, this unreasonable refusal to deal and negotiate, is a little bit extra, it feels like, and so I want I just want to see the justification there. So we'll see. And again, just my opinion. I can be convinced. I just want to see some of that discussion. So take a look at this rule, this one I don't know this one just take a look at this unreasonable refusal to deal and negotiate. Everybody's obviously paying attention to. Attention to merge. Pay attention to the unreasonable refusal to deal and negotiate too. All right.
Speaker 1:Story number two Sean Duffy has been confirmed. He is now SECDA. He is the secretary of the Department of Transportation and you know what, the more that I sit on this, the more I think it really is a good thing, because one of the main tenants that he's discussed in his confirmation hearing was that he really wanted to focus on safety, and he said safety kind of as a blanket thing. There's a lot of discussion toward rail and aviation, and this was all actually pre the recent aviation disaster, which is so sad. But you know he was, he was initially focused on safety in his hearing. And look, while this podcast doesn't talk about all the modes of transportation right, we don't get too far into the rail or the aviation side of things. We do a little bit over the road, trucking as it relates to, and rail I guess, as they all kind of relate back to the global ocean, shipping through transport of goods, but we really focus a lot on maritime, and so I think a multimodal secretary announcing that safety is his top priority is in line with maritime, because most all ports probably all, but I would have to confirm that but at least most all ports around the country have safety as their top priority. If you were to take a look at all the priorities of all the ports, I can tell you, safety is usually number one, and so I think that it's appropriate that the Department of Transportation Secretary would also be aligned with safety as the top priority. Everything else kind of flows from that, whether it's consumer facing or not safety right. So I think that's a good thing, right? I mean, you can't not like that, I think.
Speaker 1:As a second priority, though, I think we're going to see, from the maritime side of things, this alignment with the return of the United States as a maritime power, and we've talked about that before on this podcast. I think that this is something that the SHIPS Act kind of brought up, but I think we're going to see this shipbuilding as a priority, and really we're already seeing that in the Coast Guard with their announcement this week to fleet up their icebreakers and they're ordering 40 what was called big icebreakers. We need icebreakers. We have two icebreakers in the Coast Guard large Arctic icebreakers and usually one is on dry dock and the other one is kind of getting fixed here and there we have a third that's just entered the fleet. But 40 big icebreakers it's a good start. It's what we need. We really need icebreakers. This is woefully. This should have happened a while ago. But look, here we are. The second best time for anything to happen is right now. And so, look, I mentioned the Coast Guard shipbuilding for the icebreakers.
Speaker 1:It's not Department of Transportation, right? Well, here's a little, a little factoid. They used to be Department of Transportation. Did you know that in 2003? Coast Guard actually was moved out of Department of Transportation into Department of Homeland Security? No-transcript. Looking at DOT, it kind of has this military service type element to it as well from the maritime side of things, because we have ready reserve fleet, we have the, we have a seal of command, we have a bunch of things that have military elements to them. Even our maritime academies right, those are. That's a service, those are service academies. So I think that that'll be an interesting and probably a good thing.
Speaker 1:Return to this maritime power, where we will actually be a good thing. Return to this maritime power where we will actually be supporting and giving attention to some of these things that have been not paid attention to in a long time. Right, it's no dig on recent administrations, it's just something that is. It's about time. So what does return to maritime power mean? Right, shipbuilding? Of course we have a, we have a very good shipbuilding base, but we just need to. We need to return, we need to get more shipbuilding going in the US. Right, we do have shipbuilding companies out there and so we can. We can build more ships, we can get them active again and then hopefully, that we can expand into more shipbuilding facilities and companies.
Speaker 1:I also think fleeting up the US flag vessels right is going to be part of this maritime power, at least more than the less than 100 vessels that we have now. Perhaps this also means being a competitor in the international global commercial liner shipping world right, all this global ocean shipping and we never talk about any US companies being a major player there. Maybe we will be right. Maybe that's part of the intention here is that we can get the US flag fleet to be a competitor on the international market of. We could potentially have some of these tens, fifteens thousand TEU vessels out there. So if we can beef up our shipbuilding, beef up our commercial presence for US flag and I think that also means infrastructure beef ups as well We've been talking about infrastructure across the country, but I think strategically increasing infrastructure in our ports if we're gonna become a maritime nation again, if we're really gonna commit to being a maritime power.
Speaker 1:Anything that comes in and out from a vessel is going to need a port, and the other thing that I think we might see here obviously right, obvious, I think the other thing we might see is an increase in strategic ports and increase in support for strategic ports. So these ports are kind of ready to flip from commercial to military or just simply support military operations if needed. It's kind of a different designation for ports. Did you know that they had this other, different designation? It does help to unlock some funding opportunities for infrastructure, but it also kind of has this intention of supporting military efforts if needed. Maybe we'll see more of that. Maybe strategic ports is something that we'll all be talking a lot more about in the coming months and years of this administration.
Speaker 1:But, like I said in the last episode, I can imagine that the Maritime Administration may find more of this military maritime security theme. I think the commercial will be important and I think ports are obviously going to be important. But I do think that we're going to see more of a kind of military or just maritime security in that shipbuilding is maritime security right, in that, having fleets and vessels and mariners. That is the one piece that I really haven't heard a lot of conversation about through all of this maritime prowess conversation and discussion is I do think that we need to really focus on the mariners, because we need the ships to have the mariners out there, but we need the mariners to be able to fill these ships right. So another vote for why maritime academies are so important. But I think that what we're going to see and I've said this for a few weeks now, or a few months almost, I think, at this point that maritime security will be linked to national security, and I'm excited about that because it's been a while since maritime has been part of the national conversation.
Speaker 1:Besides blips here and there and I don't mean to diminish COVID congestion as a blip, but it kind of was right. When was the last time you had talked about maritime before that and then after that, probably the port strike, right. Those were probably the two major things, and that was the past five years. The United States hasn't talked about maritime much beyond those major things happening over the past few years. Besides this and just besides all the listeners here, right, we love maritime. So yeah, I don't know. I think that the US has kind of been hobbling along trying to support its shipbuilding, its US flag fleet, and I'm loving the idea of more attention and more support sent this way for maritime, maritime security, maritime support, maritime infrastructure, everything that has to do with maritime, because way back when, if you ruled the oceans, you ruled the world Right, and it just feels like, while that may or may not still be true, it's not not true. That makes sense. I think maritime is national, maritime security is national security, and I'm encouraged to see what feels like a theme developing here of maritime security, national security, on the national conversation stage. So, all right.
Speaker 1:Story number three we have a new FMC chairman too. We have so many, so many new leadership positions. Right, it happens, every administration change, but here we go, or at least party changes. So let's get to know FMC commissioner excuse me FMC chairman Lou Sola. There's actually a few things that I didn't know about chairman Sola that were put out in his press release announced when his chairmanship designation was announced. So the FMC released their press release and they kind of did this overview of who Chairman Sola is and what his experience has been. I knew that he was from Florida. I knew that he was. I do know that he is very interested in kind of the cruise side of things during COVID congestion years. So he's been at the FMC since 2019.
Speaker 1:During the COVID congestion years he was the lead on the economic review study of cruise ships and what happened and their economic impact. And I think during the study it found that even up to 150 miles away there is economic impact from cruising Because, if you may or may not know, the FMC does have a little bit of a regulatory authority. It's a smaller authority but it's a regulatory authority over cruise ships and it has to do with kind of their bond and their financial requirements. So they obviously don't get into the operations of it all, but it's enough that the then commissioner, now Chairman Sola, thought that it was worthwhile and it was a really interesting study. So go take a look at that if you have anything to do with cruising. But the FMC did this economic impact study. I think it was for cruise ships, but so Chairman Sola, he's been there since 2019, like I said, I'm going to read part of the announcement that he released or the FMC released, so this is a quote from him. It said I am humbled by president Trump designated me chair, just designating me chairman and I am grateful for his confidence in my ability to lead the federal maritime commission.
Speaker 1:There are many ways the commission contributes to the competitiveness of American businesses access to foreign markets for us vessels and companies and economic growth for the nation. We will continue that important work while looking for more instances where applying the authorities of the commission helps US companies and consumers. So I kind of, the first time that I read this, I kind of read this as we're continuing the important work while looking for more instances where applying the authorities of the commission helps US companies and consumers Applying the authorities of the commission. So obviously right, the commission does have a strong competition authority. You know the anti-competitive, any monopolistic behavior. That's kind of the tenant of the Shipping Act. But we've talked about this a fair amount. When I was actually the international affairs attorney at the FMC this a fair amount. When I was actually the international affairs attorney at the FMC, this was part of what I was familiar with was the section 19 authority and foreign shipping practices act. So this is something that I kind of my my mind kind of went to when, when he said looking for more instances when we're applying the authority to the commission helps us companies and consumers. We'll talk. We'll talk. Talk about that a little bit in a minute here. But he wrote a press release responding to the investigation, the ongoing investigation into Spanish ports under this kind of discriminatory activity review. That's something that's part of the Section 19 authority of Merchant Marine Act of 1920 and the Foreign Shipping Practices Act. He weighed in on that. So I think that we might see a review of discriminatory activities of foreign countries be something that the FMC might start to look at more and again. We're going to talk about that again in a minute.
Speaker 1:Continuing on with the announcement, though, of Chairman Sola. The announcement said Chairman Sola had a distinguished. Continuing on with the announcement, though, of Chairman Sola. The announcement said Chairman Sola had a distinguished career as a soldier, entrepreneur and public servant. Before he joined the commission, he served in the US Army for 12 years specializing in counterintelligence. How did I know that? Following his military career, he worked in consulting before launching a company specializing in yacht and mega yacht sales. Prior to joining the FMC, chairman Solis served as commissioner of the Florida Board of Pilot Commissioners.
Speaker 1:I love this right, because this is a new perspective at the FMC Counterintelligence, I think is going to be a really interesting piece, especially if we see a Section 19 of foreign shipping practices emphasis or attention at the FMC. But I think that this is cool that he worked with board of pilot commissioners so he kind of understands some of the operations and some of the supporting roles that happen around a port, but then also specializing in yacht and mega yacht sales. I think that that's another very important area, not necessarily directly under the purview of the FMC, but I love a total maritime approach to maritime leaders in the industry, right. So I think that these are going to be. I just thought that that was interesting. But there's also something about Chairman Sola that I didn't know that I also found interesting from his larger, from his larger announcement his larger from his larger announcement where it talks about he has actually spent some time in Panama. So I'm going to read through some of his some of his bio from the chairman's bio on the FMC's website. So, like I said, he was sworn in January 2019. He was actually a candidate for Florida's 24th congressional district in his hometown of Miami Florida, so he's from Miami Florida.
Speaker 1:Chairman Sola was previously appointed by then Governor Rick Scott to serve as commissioner to the Florida Board of Pilot Commissioners in 2015. And as the commissioner of the Board of Pilots, chairman Sola was responsible for licensing and regulating Harbor pilots and served on the probable cause panel for marine accidents. Like I said, total understanding of the industry. I think that it's important that you get different aspects and different experiences within the maritime industry. Between 2005 and 2018, chairman Sola was a licensed ship and mega yacht broker who served as CEO of Evermarine and as an executive with prestigious yachting firms Northup and Johnson Yacht and Campers and Nicholson.
Speaker 1:Between 1998 and 2004, chairman Sola served as a consultant with Berkshire Capital and Arden and Price, while raising his family in the Panama Canal Zone. I did not know that. I didn't know that he raised his family, that he lived in the Panama Canal Zone, he says. During this time, he authored, among other things, studies for the Inter-American Development Bank regarding the creation of a Central American Index Fund through the region's equity markets. Chairman Sola also developed international finance strategies focusing on the maritime sector in Latin America, including ports, free trade zones and ship repairs, as well as management of greenfield projects. So this is interesting projects. So this is interesting right? He has some Panamanian and certainly some business understanding of the Panama Canal zone and of Latin America maritime sector. This is starting to kind of make some more sense. I don't know. I think that this is. We're going to talk about this a little bit more in a second. Let me continue on.
Speaker 1:It says Chairman Sola served in the US Army between 1986 and 1997 as a strategic debriefer and as a counterintelligence agent. He served the US Army's intelligence and security command in Munich, germany, and after the fall of the Berlin Wall, by strategically debriefing refugees from Eastern Europe. Subsequently, chairman Sola served the US Army Southern Command as a Spanish linguist involved with counterintelligence activities in Panama during the war on drugs in the 1990s. So he was a Spanish linguist for the US Army Southern Command with counterintelligence activities in Panama. Here's another Panamanian connection here. He also earned the US Army's parachutist badge airborne and was awarded the Humanitarian Service Medal for his efforts during the Cuban refugee crisis. He's also received the National Defense Service Medal, the Joint Meritorious Unit Award, the Army Commendation Medal and has received the Army Achievement Award three times. He is a two-time graduate of the Defense Language Institute Foreign Language Center for Spanish and German.
Speaker 1:I mean I didn't know all this stuff. I mean I was always impressed by all commissioners, really, but this is impressive stuff. And do you see this theme of the Panama coming through a few different times? It sounds like he understands it on not just a kind of surface level, but he understands it on a deeper level and so it kind of makes sense. This is starting to align right. So Chairman Sola earned his associates in history from Parkland College, his bachelor's in management from Nova Southeastern University, a master's in international finance from the University of Illinois, and served as an adjunct professor at Florida State University between 1999 and 2001, where he taught classes in small business finance entrepreneurship. He says he's an avid fan of Miami Marlins baseball and has two children. So these are interesting things that I did not know Chairman Sola had under his belt.
Speaker 1:Now let's continue on, because we're going to talk a little bit more about Panama, but let's switch over. But congratulations to Chairman Sola. I think he's going to do a fantastic job. He's already been there since 2019. So he does have a good amount of kind of baseline understanding what the FMC is and what they can do. Obviously, the FMC, as we all know, is something that has, and so you can always be learning more and more and more about the FMC. So I'm excited to see where he takes the agency. I think he'll still be kind of stepping into his role as chairman for a little bit, but I'm encouraged. I think that he has a lot of impressive background history and a lot of really exciting experiences that. I'm interested to see how he uses those in his chairmanship.
Speaker 1:All right, story number four it's only been two weeks since President Trump's inauguration and we already have had some maritime issues arise, right. Obviously, we've been talking a lot about projections on how I think maritime issues will be part of the administration, but I think if you listen to this podcast, you already knew that maritime was on his mind, right. But I think we're going to see some interesting and US forward happening things. So newly confirmed Secretary of State Marco Rubio is on his way to the Panama Canal as his first overseas trip. I think he's going to get there tomorrow or he's traveling today. It's actually been kind of interesting to see mainstream media as part of this Panama trip, because I can't tell you how many times I just keep hearing this Panama Canal is really big. Well, yeah, yes, it is. So I like that. Anytime maritime hits national news is another opportunity for society to learn a little bit more about maritime, but I think this is interesting and, to be fully transparent, all of this attention on the Panama Canal. I'm still looking into the depths of the history here myself, right, I'm still looking into the depths of the history here myself, right, I obviously had some kind of baseline understanding of the Panama Canal and the agreements and how it was built and all of that. But I'd like to dive more into it and I've been challenging myself to do that.
Speaker 1:But there was a hearing this week in the Senate, so it was. The Senate Committee on Commerce, science and Transportation convened a full committee hearing titled Examining the Panama Canal and its Impact on US Trade and National Security. It was on Tuesday, january 28th. In case you want to go, look at the recording. They keep the recording up. I'll put a link to the recording, but it was in the morning. So it said this hearing examined the importance of the Panama Canal to the American economy and our national security, focusing on the canal's role in US trade, the challenges of capacity limitations and rising fees, and the potential dangers posed by the involvement of China and other foreign powers.
Speaker 1:They had four witnesses and two of them were FMC commissioners, or well, they had Chairman Sola, so designated as chairman Technically you can still call him commissioner, but he's the chairman of the commissioners, designated as chairman. Technically you can still call him commissioner, but he's the chairman of the commissioners. So Chairman Sola and then Commissioner Dan Maffei. So just recently chairman now has moved to commissioner. So you had Dan Maffei, lou Sola, and then you had the president and CEO of the World Shipping Council, joe Kramick, so he was kind of talking from the ocean carrier perspective. And then you had Eugene Kantorovich, so he's a professor with Scalia Law School, with George Mason University.
Speaker 1:It was a really interesting panel and I would really encourage you to go take. It's a pretty long discussion but like, look at the recording, kind of jump around. The questions kind of moved all around from very informed questions. Obviously there were some that were like well, especially to the FMC commissioners, well, that's not exactly under our statutory authority. It's always kind of funny to whenever senators or congressmen are talking to commissioners. It's a little bit funny because sometimes there's a disconnect between, well, what is the FMC's authority zone and then what is MARAD's authority zone, and it's not always well understood. I'll just say but it was, it was.
Speaker 1:They did a pretty good job overall, but the conversation really jumped around from the history and the agreement of the exchange of the Panama Canal to questions about the drought. We've been talking about the drought and all the surcharges that were being reportedly paid to jump the line during that time. Do you remember we heard some giant numbers on? You know there was. You could get in the queue, the line, to get through the canal and then you could actually pay the authority extra to jump the line. Remember we heard at least one instance of that. They talked about that a little bit. They talked about the significance and the impact of the terminals or the ports at either end of the canal. This is part of that China discussion, that China conversation and the ability of kind of what that means. What do those canal terminals and ports mean for the actual canal itself? Are they associated with it? Are they not? I encourage you to go listen to this.
Speaker 1:It really was pretty interesting. It gave me some kind of jumping off points to do a little bit more research. As you know, I always love to see the direct language, so I'm going to be pulling up this agreement and this transfer of the Panama Canal language myself so I can kind of take a dive through it. Maybe I'll do a deeper dive on that. That'll be one of our episode subjects. But look, why the FMC? Right, why was the FMC on this and why two commissioners? Why did we have half of the panel as FMC reps here? Panama? They were there the fall I think it was August, september time, I believe and they were trying to learn more about the canal and the impacts of the drought and its role in global ocean shipping generally and really kind of the way that the canal being such a major throughway, it's, like I said, its role in global ocean shipping. Another piece to take away, though so obviously there's global ocean shipping. It might feel a little tangential there. But the other thing to take away on why the FMC may be partially interested and interesting to this new administration is because of the large hammer in their toolbox.
Speaker 1:I talked about this just the last little section the Foreign Shipping Practices Act and Section 19 of the Merchant Marine Act of 1920. These laws give the FMC the authority to kind of correct unfavorable conditions, and so the FMC has this anti-monopoly you know authority where they really are, this competition authority. But they also have this thing where and I'm going to read 46 USC. So from the US Code, section 42101, regulations of Commission. I'm going to read it and I'm going to break it down for you. But I'm going to read it. So it says A unfavorable conditions To further the objectives and policy set forth in Section 50101 of this title, the Federal Maritime Commission shall prescribe regulations affecting shipping in foreign trade, not in conflict with law, to adjust or meet general or special conditions unfavorable to shipping in foreign trade.
Speaker 1:So the FMC can make regulations affecting shipping in foreign trade to adjust or meet unfavorable conditions. So basically they can write their own regs if they think that there are unfavorable conditions out there to shipping in foreign trade. I mean, the connecting of the dots here is that if the Panama Canal is somehow creating conditions that are unfavorable to shipping in foreign trade, to correct that by trying to either put a fine on Panama or turn away any vessels that have a Panamanian flag. Those are some of those things that are allowed and delegated to the FMC under statutory authority through the Sporn Shipping Practices Act or Section 19 of the Merchant Marine Act. That's what this is saying. So continuing on, whether in a particular trade or in a particular route or in commerce generally. So trade lane, trade route or just general unfavorable conditions.
Speaker 1:So this is including intermodal movements. Intermodal, that's not necessarily only maritime movements, intermodal, that's not necessarily only maritime right Intermodal movements, terminal operations, cargo solicitation agency services, ocean transportation, intermediary services and operations, so OTIs, which is NVOC, season freight forwarding and other activities and services integral to transportation systems and which arise out of or result from laws or regulations of a foreign country or competitive methods, pricing practices or other practices employed by owners, operators, agents or masters of vessels of a foreign country. So the pricing practices piece is the piece that I'm going to kind of hone in on here. One thing that I've recently read is that those fees during the drought that you had to pay, or just fees generally to traverse the Panama Canal, it's being reported. And I only say it's being reported because I've never actually seen it happen. I don't have independent confirmation of this is how I'm framing this. Confirmation of this is how I'm framing this. It's being reported that the Chinese get that reimbursed for those fees where the US doesn't, and so that. And it's being reported. So that, I think, makes all of this make a little bit more sense to me, right?
Speaker 1:So if you have Panama, creating special conditions unfavorable to shipping and foreign trade, right through potentially kind of unfair pricing practices, which is another two words in here. The FMC can create, can prescribe regulations to correct that. So it says under B. So that was all A Under B. Initiation of regulation under B. So that was all A under B. Initiation of regulation A. Regulation under subsection A, which we just read, may be initiated by the commission on its own motion or on the petition of any person, including another component of the US government, so the FMC can just do their own investigation.
Speaker 1:So that's kind of I think what they were doing when they went down to Panama to go take a look at what's going down there the drought, everything kind of how it was all. Take a look at what's going down there the drought, everything kind of how it was all, how it all interplays with globalization, shipping. But then they were also looking at is this something that we need to be reviewing from a unfavorable conditions standpoint? Doesn't this all kind of make a little bit more sense now, like the pieces are coming together and I don't know right. I don't know where exactly this all goes and I don't know if that's what they were doing or if they were just, if it was just, you know, an honest let's just look, and I think that's where they are, let's just look. I think that the FMC for the most part stays very fair, for the most part, fair in how they review things. They want to get kind of the full picture, the total picture, and I've been saying for a while that, at least since the election, that I anticipated that the FMC, with this new administration, might be looking at this authority a little bit more and might be dusting this off a little bit. Right, because the Section 19 authority and the foreign shipping practices Authority really hasn't been used much. We saw it with Canada recently. We saw it with Spain. We talked about that on this podcast before that. We saw the FMC actually has an ongoing investigation into Spain on the denial of certain cargo vessels calling at the ports in Spain, but that's something that the FMC is looking at and so I don't know. I could see that as being an interesting authority that the administration wanted to learn more about.
Speaker 1:All right, the second major maritime related thing with this new administration is the official renaming of the Gulf of Mexico to the Gulf of America and honestly I mean, look, I'm already kind of smiling about it. I don't hate it, I mean sure. My legal mind immediately went to okay, well, what does that mean? For, like lease agreements, is a name switch going to mess anything up? Because I'm sure all like this is no way would anybody have ever guessed that this might've happened. And any of those contracts say, I'm sure they say Gulf of Mexico, they don't say Gulf of Mexico or whatever it might be named in the future. But look, my thought was, look, these multi-year leases for oil and gas. I don't think that's going to matter, right? I think that I think a shift in name is going to be more of kind of a I don't know, those contracts are probably based on latitude and longitude anyways, because they need to be more precise than just Gulf of Mexico. But as a general thing, a changing of the name of the Gulf of to the name Gulf of America, I'm kind of coming around to it. I don't know. What do you think?
Speaker 1:I came across a t-shirt the other day of like this Florida retiree. It looked like sitting on the beach in Florida with a big sign above saying welcome to the Gulf of America and there was just something about it, I don't know. It just made me smile, look, and I've read that we have the longest country coastline on this particular body of water. So I mean that makes sense. Right, that makes sense that perhaps it might be called the Gulf of America instead of the Gulf of Mexico. And it looks like US Coast Guard and NOAA National Oceanic and Atmospheric Administration they keep the nautical charts, they're already following suit and they're changing nautical charts and updating it. And the Coast Guard is updating their public messaging to identify the body of water as the Gulf of America. So I mean, that's it, folks, I think that's it. It's called the Gulf of America.
Speaker 1:And look, you can't tell me that the next time you're down on the Gulf you won't make some mention of the like. Here we are, this is the Gulf of America, and I challenge you, if you don't have like a little smile on your face about it, I don't know how this is all going to play out. Like I said, the legal mind in me is still a little bit apprehensive of the whole thing. I'm a little bit like okay, okay, but here we are, gulf of America. Most of the time I hear people call it the Gulf anyway. So I'm not exactly sure that, besides this little blip of interest, it's going to change much in the long term Other than, like I said, my legal brain of like these contracts. So I don't know it's, it is what it is. I don't hate it. I don't know it's a yeah, I don't know. Golf of America, we'll see, all right. Well, that's it for this week. Keep it here for all the updates on all the things that you need to know about global supply chain.
Speaker 1:As always, the guidance here is general and 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 me at 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. 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 by Sea If you prefer to see the video. That website this year. So stay tuned, it might look a little nicer. It's very bare bones. I'm so sorry about that, but 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 you.