By Land and By Sea
By Land and By Sea
S4.E18 - Navigating Global Maritime Choke Points: FMC's Investigation into Unfair Shipping Conditions
Topic of the Week (3/21/25):
Does the FMC really have the authority to review global maritime chokepoints? Yes! And even more significantly, they can turn away foreign vessels from U.S. ports or assess $1M per voyage penalties if they find unfavorable shipping conditions. Now that the FMC investigation has been released, let’s dive in!
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⚓ 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...
🔹 Top Three Stories of the Week:
1️⃣ Trump’s “Make Shipbuilding Great Again” Initiative
🚢 President Trump’s joint address to Congress highlighted the need to rebuild U.S. shipbuilding to counter China’s dominance.
📖 Read more from USNI News: www.usni.org
2️⃣ AAPA Legislative Summit – Ports & Policy at the Forefront
⚓ The largest-ever AAPA Legislative Summit brought together industry leaders, policymakers, and stakeholders in Washington, D.C. Topics included:
✔️ Kellyanne Conway’s keynote on ports & national security
✔️ Tariffs & infrastructure discussions on balancing trade policy with economic growth
✔️ The urgent need for modernizing port infrastructure
📖 Learn more at: www.aapa-ports.org
3️⃣ FMC Launches Fact-Finding Investigation into Global Maritime Chokepoints
🌍 The FMC is investigating whether transit constraints at key maritime chokepoints are creating unfair conditions for U.S. trade. If so, major penalties or port access restrictions could follow.
🔹 The Maritime Professor® provides training and education for global supply chain professionals. Learn more: www.TheMaritimeProfessor.com
🔹 Sign up for updates: www.TheMaritimeProfessor.com/
❗ This content is for educational purposes only and not legal advice. If you need an attorney, contact one.
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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 in the beat and on top of the world, can't walk to the beat when you see me coming, mix and boom. Everywhere I go, I'm in the spotlight. This is a good life. I'm living bold. This is what good life 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, oh, oh.
Speaker 1:The Federal Maritime Commission launched an investigation into global maritime choke points. Through this investigation, they're going to be looking at all of the different areas around the world that they've identified and whether there's any unfavorable conditions to shipping. If there are, the FMC has some pretty significant remedies available to them to correct the unfavorable shipping conditions. Stick around, we're going to talk about that today. To correct the unfavorable shipping conditions Stick around, we're going to talk about that today.
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 the 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 supply chain. As always, the guidance 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 this podcast. If you need an attorney, contact an attorney.
Speaker 1:So before we get into the discussion of the day, let's go through my top three stories of the week. Before we begin, one I just want to say did you like that little on site right in front of the Capitol video feed, trying or playing around a little bit with some video editing? But also before we begin, I wanted to say truly a heartfelt thank you to FMC Commissioner Rebecca Dye for joining our broadcast last week. If you missed that episode, be sure to go check it out. We talked about some really cool behind the scenes type stuff of the supply chain innovation teams, her fact findings, of fact finding 28 and 29,. The rationale for the incentive principle we really did. It was a. It was a wonderful casual conversation. We really did. It was a wonderful casual conversation and there was some really interesting information just behind the scenes.
Speaker 1:Right Like her TPM, I was busy out in Long Beach with with ocean shipping nerd camp guys. It is the most fantastic thing. Uh, I, I highly, highly, highly encourage everybody to go to TPM. If it's been on your maybe list, put it in your definitely going list, because it is fantastic. You can get years worth of networking done in three, four short days. It's worth it, but OK, so, oh, my goodness, shipbuilding and maritime made it into President Trump's joint address to Congress.
Speaker 1:Did you see that? I'm sure you did. I'm sure you did. Everybody's talked about it, but it happened just this month, just a few weeks ago. It feels like every week is another year in terms of time. Everything is happening so fast. But it happened right, I'm sure you saw it. But let's talk about it briefly.
Speaker 1:So I'm actually going to be pulling from the US Naval Institute's coverage. It's written by Mallory Shelburne. I thought that she did a really good job of kind of highlighting what it is, explaining what he said, what his intentions are. So the article's titled Trump's Make Shipbuilding Great Again Order Calls for Wholesale Overhaul of US Maritime Industry. She does talk about an unpublished draft of the executive order. There's an executive order that's essentially Make shipbuilding great again. That kind of follows on to the announcement I am going to be reading from her encapsulation of that draft order. Admittedly, I also have a draft order. I've heard that it hasn't changed much, but I only pull from public information when I report out on by land and by sea. Changed much, but I only pull from public information when I report out on by land and by sea. So this is public information that I am pulling from from the US Naval Institute, so let's get into it.
Speaker 1:So what she says and I'm just going to read right off of her article here she says the Trump administration wants a sweeping government-wide overhaul of the US commercial and military maritime sectors in an effort to catch up to China's unrivaled shipbuilding capacity, according to draft documents obtained by USNI News. I'll stop there. That's true, right, unrivaled shipbuilding capacity. As it exists right now, the US has fallen far, far, far behind, and so he intends to overhaul the US commercial and military maritime sectors. We still build naval maritime, naval military vessels and support systems, but it's the commercial side that really is a big deal here. But all of it is right, all of it is right.
Speaker 1:So, continuing on with Mallory Shelburne's article, here again, I only pull from public information, and so this is my reading of her public news on the draft executive order. So it says the draft of an executive order dated February 27th calls on administration officials to create a maritime action plan over the next six months to revamp the American maritime industry. She now is quoting from the draft order. Again, this is not me quoting from it. This is her quoting from her draft, her copy of the draft order. So it says the United States has always been a maritime nation, but today China's shipbuilding sector has established a position of dominance in the global market through unfair, non-market practices, creating over 200 times the capacity of the US shipbuilding industry. Reads the draft White House fact sheet accompanying the draft order. Again, right, further emphasis on how much dominance China has in the shipbuilding sector.
Speaker 1:Continuing on with the article here says the order will create a new maritime industrial base office within the White House's National Security Council. To lead the effort. Trump announced the new office on Tuesday during the joint address to Congress. So that Tuesday was Tuesday, march 3rd, 4th earlier in the month. Continuing on, and she's now quoting the joint address where he made his announcement, he said to boost our defense industrial base, we are also going to resurrect the American shipbuilding industry, including commercial shipbuilding and military shipbuilding, and for that purpose I am announcing tonight that we will create a new office of shipbuilding in the White House and offer special tax incentives to bring this industry home to America where it belongs, trump said I can imagine I mean, if you listened out your window real close, you could probably hear every maritime person, whether they had anything to do with shipbuilding or not. Every maritime person across America go oh what? And kind of with resounding applause afterwards Right, we often joke, sal Mercogliano and I, that this is the most maritime that I think this industry has ever seen. We are so maritime focused right now and you know we thought it was a big deal when maritime generally found even a little smidge.
Speaker 1:The supply chain found a little smidge in the joint address to Congress, the State of the Nation, state of the Union address from former President Biden, where he talked about foreign ocean carriers and bopping them in the nose. Admittedly, it was not exactly accurate. It was more of a it felt like maybe a political statement than it did, rooted in for reasons we've talked about when he said that way back when, but at the same time it made it into the State of the Union at the time. Now, not only is it not necessarily inaccurate? This is exciting, right, this is exciting. This is shipbuilding in the White House and offering special tax incentives. I think how this happens is where the work begins now, right, the work, I'm sure, has already begun. Well, it's been years and years and years, but now we have the same goal and we're all, as an industry, excited and pushing forward toward it. So, I don't know, this was an exciting time.
Speaker 1:And then you know, here's what happened. This happened during TPM the very next day. Everybody walked into the conference and saying oh my gosh, oh my gosh, did you hear that? Did you hear we're going to have shipbuilding in the US again, or we do have shipbuilding? I want to be clear we do have shipbuilding, but he's saying to have a resurrection of the American shipbuilding industry. We are nowhere near where we used to be, and so that's what this is. It's a celebration of the resurrection of the shipbuilding industry, for both commercial shipbuilding and military shipbuilding. It's a commercial side. That's really exciting, complicated, but exciting, all right.
Speaker 1:And where the article continues on and she quotes President Trump again, she says we used to make so many ships. We don't make them anymore very much. Okay, sorry, this is President Trump saying we used to make so many ships, we don't make them anymore very much. Okay, sorry, this is President Trump saying we used to make so many ships, we don't make them anymore very much, but we're going to make them very fast, very soon. It will have a huge impact. A little complicated Ships take a long time to build and I completely appreciate President Trump saying that he wants to make them very fast. But the reality is right now, very fast is likely years and like at least five to 10, probably before we start seeing any real movement there or any kind of significant movement and build. And that's not even for the total goal being achieved right For us having a true presence and competitive presence in commercial shipbuilding and commercial shipping generally.
Speaker 1:But look, I don't want to focus on the negative here. I'm an optimist and I think look like let's get this done right, let's do this. So you know I've been kind of mulling this over between CPM and now the APA Legislative Summit, which we're going to talk about in a minute. What a fantastic conference to speak to. This month of March has just been. I mean ocean shipping nerds peak month, it feels like Also there's been I don't want to say it's all been positive, because there have been some very stressful moments. There have been some very complicated suggestions that require deep thought, really kind of problem solving attitudes. But, look, I can't say anytime maritime is being talked about, I'm so excited, this is so great, so all right. So, being that I'm a kind of get things done kind of person, I've been mulling this about, like, how do we get there, how do we get ships going, how do we focus on the shipbuilding? And I love that one.
Speaker 1:He sets the intention of focusing on shipbuilding, right, military and commercial, because that's going to be imperative, right? This is not a cheap industry. This is an expensive industry with a lot of uncertainty, especially right now, and we have to have commitments of cargo movement to make the commercial justification for the build of the vessel. And we've seen that actually in the offshore wind side of things, in commercial cable laying vessels and just different areas of support vessels that might have supported this offshore wind industry. So this is nothing new, right? This is nothing new that it requires a lot of money, and so the financial incentives is a good idea, and shipbuilding as an intention is a good idea too.
Speaker 1:But look, we got to get creative in the interim, because we are not going to have these ships at our ready right off the bat. So in the interim, let's get creative. Perhaps we're going to see an increase in waivers, maybe, right, there are vessels out there, there are foreign flagged vessels out there and maybe, until we can get the shipbuilding facilities fully stood up and I understand that this is kind of complicated and perhaps maybe even a little bit, I don't even know, like controversial to say this but look, we're not going to have new US commercial vessels in 2026. That's just the reality, unless something fantastic happens and we get a lot faster. But right now we're not going to have it in the next two to three years. So how do we kind of capture that section? Maybe we do more waivers, or waivers to make reflagging of vessels to the US companies, so while they might not be US built ships right now, they could potentially be US flags, right, and then that would step in the direction of achieving the ultimate goal of having a larger US flag fleet and therefore kind of having the baseline. So you get maybe a commitment of the cargo from a commercial viability standpoint, or at least you start building the momentum in the baseline there.
Speaker 1:And again, these are just ideas that have been ruminating in my head over the past month and so you know who knows where they might go. But I have a microphone, I have this podcast. I thought maybe I might share them, just because I've been exposed to all these different things and panels and you know public news reports and everything. It's just all is. Here's some random ideas that I have Also, I think, simultaneously. So perhaps maybe this waiver idea might start us out, maybe we start looking and again, potentially controversial, but let's just put all the ideas out there Potentially there might be an opportunity for an increased coastwide barge service.
Speaker 1:And look, we're pretty fast at building tugging barges in the United States and it's a much faster process than a full, full, full vessel and it's an area of the industry that could actually maybe absorb an increase in use. So, meaning, they have capacity for this if they were to do coastwide trade. Look, and I don't want to suggest that in any way we take away from our drayage providers, because they are a key piece. Right, this is a supply chain ecosystem and similarly for our rail operations, this has to be an and not an or. Right, this has to be an inclusion of additional ideas so that we can tackle the larger goal in kind of a thousand different little good ideas all coming together. I'm just thinking if we're going to increase our cargo movement and that seems to be in line with this goal and certainly in line with cargo projections generally I mean not taking into account some of the pessimistic cargo projections of slowed cargo movements and slower numbers for cargo trade and all of that that go along with the trade tariffs.
Speaker 1:We're not talking about trade tariffs today. We're talking about let's just throw some ideas out there on how we can maybe reach this end goal of US being a competitive player in ocean shipping. I don't know, maybe right, maybe there is something here that you could do coastwide barge trade and if we, you know something to think about. And then if we increase our tug and barge world, there's kind of a knock on effect and a knock on benefit there. We could be increasing our available builds for mariners, for US mariners to sail on, which would then increase their opportunity for US-based jobs and potentially even increasing their experience and training opportunities, so that by the time we do get these big build commercial vessels out there and on the water, we're going to have a maritime workforce that's ready for it, that's been doing coast wide trade. Granted, it's barge and that's going to be different than large commercial vessels, but it's sea time right, it's being out there. It's seeing different conditions. It's seeing what it looks like when you pull up to the different ports different conditions. It's seeing what it looks like when you pull up to the different ports. There's some benefits there. All right, stay with me here. Right, these are all just hypotheticals. We're all just kind of throwing things out there, seeing just random ideas. But while we're doing this, right, so we have the barge. We have the increased availability for experience for the mariners. You know, we have the financial incentives that have already been suggested, potentially the waivers, right, I don't know.
Speaker 1:But look, one thing that was in the Ships for America Act. This is that Kelly Waltz bill. We covered it in a previous episode when it was first released. Go check that out, the old episode on that, if you want to learn more about the Ships for America Act. But another thing that was in that Ships for America Act was an intention to have increased research and development for tech onboard vessels and just kind of an increased R&D for tech generally for vessels so we can make the coolest ships. We're not just going to make ships. Maybe we could make the coolest ships and people're not just going to make ships. Maybe we could make the coolest ships and people want the ships because they're just super cool.
Speaker 1:And so when I start to think about that, I kind of think about okay, so perhaps maybe there's like like, if a commercial vessel is like an F-150, a Ford F-150, reliable, great design, always going to be a sought after 150, reliable, great design, always going to be a sought after kind of gets done, what you need to get done. But maybe there is an opportunity for like something kind of cool and fancy and fun. And then it gets me thinking right, elon's been in the news a lot. He makes ships, he makes spaceships. He makes ships, spaceships go up. Right, spacex makes spaceships that go up. What if that spaceship was laid on its side and it was floated and granted? Right, that's obviously not. You're not going to float a spaceship on its side and call it a commercial vessel, but maybe there's something there.
Speaker 1:Right, it's being said that these SpaceX ships can be generated, built, so much faster than kind of conventional thought that maybe we could have, and I don't know, right. I mean, maybe it's Elon, maybe it's a scientist, maybe it's just this intention of conventional thinking being thrown out and all of a sudden we might, as the United States, have a Cybertruck of ocean shipping Again. Right, kind of the parallel. The F-150 is the traditional model, it's the commercial vessel going ocean-borne transit. Maybe there's a Cybertruck that could look different, it could be.
Speaker 1:Remember when O&E came out with their pink ships. They literally, if you've never seen an actual ocean-going vessel from O&E, from one, they are bright pink ships. I mean, if you've never seen an actual ocean going vessel from ONE, they are bright pink ships. I mean, they are so cool and that's just a paint change. What if we actually were able to create just a really cool looking commercial ocean going vessel? I mean it would have to carry cargo or bulk or something, I don't know, but it's worth kind of ruminating on this idea. The other thing is it doesn't even have to be that cool, it doesn't even have to be like a flashy new look.
Speaker 1:Maybe we could even just get Wi-Fi on board, and I'm telling you I've mentioned this before that's a novelty in the industry. It really having Wi-Fi on board as a mariner really isn't an available option and so it disincentivized, or could be one of the disincentivizing things that mariners have for not wanting to go out to sea. They unfortunately lose a lot of that regular contact with their family at home, and so I think that's why we see a lot of kind of young families, mariners of young families not able to go back to sea or not wanting to go back to sea because they don't want to be missing out on that daily interaction with their kids. Maybe if we had Wi-Fi they could have a daily interaction. They could FaceTime I don't know, I write Starlink, maybe on there, maybe there's just a way of connecting those dots and that's just baseline tech and maybe even making it even cooler. Maybe we could have app-based temp logs or overall conditions, or if the vessel really got jostled in a storm and you needed to know that if there were chemicals being moved, maybe if we Wi-Fi enable these vessels through US-built ships, like really cool US-built ships that have this tech on it, that could probably be something that you know, I don't know, probably like an upcharge for the company who's sailing it, but it's available, and maybe it's like app based and it's direct, the same way that you might get the weather where you are. You get the weather on the vessel, I don't know. Right, these are just ways that vessels could be cool and maybe it's make shipbuilding great again, but maybe it's make vessels cool again or just cool for the first time. They are cool. Obviously I love them.
Speaker 1:Just some thoughts, right, just some thoughts from all the different things that have been happening and this new intention for shipbuilding. I mean, why not break the conventional mold of thinking? There's a lot of efficiencies that are kind of from the design, not changing much, right? If it's not broke, don't fix it. Or if it ain't broke, don't fix it. Maybe we should fix it even if it's not broke. Maybe we should just have another non-conventional thinking to create something just really cool. All right, off my soapbox, just some thoughts, like I said, just some thoughts that I want to throw out there in the world. All right. Story number two. The first story, story number two.
Speaker 1:This week the port world came together in Washington DC to participate in the American Association of Port Authorities Legislative Summit. This is the AAPA's Legislative Summit. This year's summit was just really cool. It was probably the largest to date. It brought together industry leaders, policymakers, stakeholders, the ports, obviously, to address really pressing issues in the port and maritime sectors.
Speaker 1:I can't say it enough, this month of March has been so interesting and so many things happening. We had kind of the news of new intentions at the beginning of the month. This summit felt like it was the second step. The first step was, okay, make the intention of the goal. The second step, it felt like, was this conference, right in the middle of it, having those let's roll up our sleeves moments of, well, how do we, how do we figure all this out? And it's ports, right, but it's still infrastructure in the maritime industry and that's also a key piece. So we have keynote address by Kellyanne Conway and that was one of the summit highlights. Was this keynote address by Kellyanne? As you probably know, she's a former counselor to President Donald Trump. She was his campaign manager for his first run. Trump won.
Speaker 1:She emphasized the critical role of ports in national economic security and it was important that she did that, because that's something that I've kind of been saying over and over again on here is that I'm seeing a theme of maritime security as national security. We saw that with Mike Waltz of the Kelly Waltz bill, former congressman being elevated to national security advisor under the Trump administration. That was one of the first appointments way back when. So, with his maritime mind as being part of that ships for America act, and then being elevated to the national security advisor, to me it signaled okay, maritime security is national security. And then that's what Kellyanne said here Ports play a critical role in national economic security.
Speaker 1:She yeah, she highlighted how port infrastructure underpins trade and commerce. She also discussed the importance of strategic communication between the government and private sectors to really bolster the maritime industry's resilience against global challenges. And, of course, you know the emphasis there is okay. So we want a collective voice, maritime industry's resilience against global challenges and all the different wild things that are happening out there. But I also took it as the importance of strategic communication between the government and private sector. This was important because it changed the tone.
Speaker 1:It felt like one of doom and gloom because of a lot of the kind of significant analysis sometimes pessimistic but significant analysis of the tariff discussion. It kind of shifted it to one of okay, look, the administration wants to hear from you and they want to hear from this industry. And she really emphasized the importance of not just bemoaning the ideas presented. So perhaps there's an idea that's just oh, that'll never work. She said rather, instead of just saying that'll never work, spin it and get your ideas together and submit concrete alternatives, say why it won't work and what you could do instead. Because she kind of made it clear that the administration has set the goals of where they need to go and they've outlined a runway of how to get there. If the runway isn't good, let them know. They want to know, they want to have that runway shifted and changed and maybe it should have a different astroturf and maybe it needs to have different lights. I mean on the analysis, on the metaphor here, but really what they're saying is look, they've set the goal, the goal will stay, but the runway can change, and they want that engagement from the industry and especially in maritime and shipbuilding and maritime infrastructure. It's a high enough issue that it made it into this joint address to Congress, which reinforces that this is a major issue for this administration, which is wild, which is awesome, but wild, look, it's important.
Speaker 1:I think I've said that quite often too. It's important to take a step back when some of these big ideas come out and not to be distracted by the chaos right. Find the opportunities within the chaos. Don't be too distracted by the doom. Find a way to make it not so doom-filled, if that makes sense. And that was kind of the it was a similar thing that I believe Kellyanne Conway was saying in her remarks because the doom is eliminated, because there's an opportunity for continued discussion, and that's great. Roll up your sleeves and get going. Maritime industry because they're saying there's a door. There's a door We'd like you to walk through. We'd like to have this conversation. Please come see us, but only walk through that door. If you're going to be concrete in your solutions and not necessarily just tell us what we're doing wrong, it's important to point out things that don't work, but come with the concrete solutions is what I took from that.
Speaker 1:So the rest of the summit was great. There were some really insightful panel discussions. There was a tariffs or taxes panel, which was right after Kelly and Conway's remarks. It was actually kind of well-timed because we went from Conway's tariffs Conway kind of branding the tariffs as the rebalancing of trade and potentially being used for leverage points, whereas the perhaps industry and shippers perspective of tariffs being potentially taxes and having a disruptive effect on trade flows and increased cost to consumers. So that was a nice balance of conversation. There's also a panel on infrastructure development. Discussion centered on the urgent need for modernizing port infrastructure to accommodate larger vessels and increasing cargo volumes, and the panel's really advocated for public-private partnerships as a means to fund and expedite these critical infrastructure projects. And again there were calls to find opportunities in the chaos and to find ways of helping to benefit the overall maritime industry. So the 2025 AAPA Legislative Summit underscored the pivotal role ports play in the global economy and the continuous efforts required to address challenges. Kerry Davis, the CEO of AAPA, and his team did a phenomenal job of providing engaging discussions that therefore created sidebar conversations that it felt like were concrete, essential building blocks and building discussions to shape the future of the maritime industry. I left so hopeful from this legislative summit that, like I said, I really felt like this was the 2.0 let's get to work of the month of March Story number three, and I apologize we are running so late on these stories, but we're going to keep it moving.
Speaker 1:We're going to go quick here. Story number three last week, the FMC launched a fact-finding investigation to examine whether transit constraints at some of the world's most critical shipping passages were creating unfair or unfavorable conditions for US trade. These constraints can arise from foreign government regulations, vessel operator practices or other external factors impacting global shipping efficiency. This investigation is undertaken by the FMC and by the authority granted to the FMC by Congress in the Foreign Shipping Practices Act and Section 19 of the Merchant Marine Act. They have some significant remedies available and so, with that, let's get right into it, let's get into the meat and potatoes of the day. We're going to be diving into this global maritime choke points investigation.
Speaker 1:We didn't talk about this specifically, but a few weeks ago I said that the FMC was the backup quarterback. I did a whole episode, a backup quarterback to the Panama Canal discussion, where we were talking about the neutrality agreement and I said everybody who listens talking about the neutrality agreement, and I said everybody who listens, there are these authorities that the FMC has. That makes them the backup quarterback and very important to this Panama Canal discussion. What I didn't see coming was all of the other choke points that got included and you know, at first I thought, okay, well, maybe this is still a Panama Canal discussion and these are just kind of additional areas, but really the focus remains on Panama. I'm telling you I don't. I don't think that's true, I think each one, the more that I've given dope, the more that I've dove into each one of these choke points and identified choke points, the more that I've seen that they stand alone on things that are worthy of an investigation. And I shouldn't say this is not a presumption of guilt, this is not a presumption of intention for unfavorable shipping conditions.
Speaker 1:Chairman Sola did a presentation or did a address to the AAPA Legislative Summit Right Again, perfectly timed this week he gave the presentation. Last week was the release of this investigation, and in that he talked about this being an investigation of areas of the world that probably just needed a good look. So, all right. The major development, what is it? The FMC investigation into transit constraints, a key international maritime choke point. The investigation is all about. It's essentially a fact-finding investigation to examine whether transit constraints at some of the world's most critical shipping passages are creating unfair or unfavorable conditions for US trade. These constraints can arise from, like we said earlier, a litany of different things, including foreign government regulations, vessel operator practices and really other external factors not listed Anything that might impact global shipping efficiency. And so the areas that are under review.
Speaker 1:These are high traffic maritime choke points and they each present unique challenges. So I'm going to go through each one of them with kind of a little briefer, I guess, a little sentence on what each one of them, a little overview. So the English Channel was included, and at first I was like the English Channel. So it's a narrow, congested passage with heavy traffic. Chairman Sola, during his remarks at the AAPA, said that there are some fairly strict environmental regulations and that perhaps it's worth looking at, and so that, again, this is a heavy traffic congested passage. There are strict environmental regulations and some geopolitical tensions between UK and France Um, certainly not as as large as some of the other areas that we're going to talk about, but, um, so worthy of a look. And that's what I want you to kind of approach all of these areas, these passages and straights with. Worthy of a look. Is there an opportunity to take advantage of any of these situations't over, pollute or disrupt the environmental areas, while also allowing for the commercial heavy traffic that needs to come through here? So I'm going to continue on the Malacca Strait. This is one of the busiest straits in the world.
Speaker 1:This has some piracy risks and congestion, limited infrastructure around the area, the Northern Sea passage. It's an emerging trade route impacted by geopolitical competition, ice coverage and military activity from Russia and China. Also, there's been I've I've heard, I've read that there's some talk of requirements of icebreakers through the area, which, on its face, fine Right Icebreakers if it's ice laden, of course you might require icebreakers. The simple investigation might be is there an overly restrictive application or requirement of those icebreakers? Is it just a sure you can have an icebreaker? We require them, make sure you go get one. Or is it you need to have a $10,000 icebreaker come with you? And I don't even know if that's too much. Right, I don't know the scope of how much money it might be, but is there an opportunity for taking advantage of the situation? That's where it might just be worthy of an investigation. The Singapore Strait's also on there, a high traffic area with navigational challenges. Piracy concerns strict regulatory oversight.
Speaker 1:The Panama Canal as, as we know, crucial trade gateway experiencing congestion over the past few years, mostly due to water level issues and vessel capacity limitations. But also there's been discussion of surcharges and and rebates, and and again worthy of an investigation to see if there are unfavorable shipping conditions in any of these choke points, but straight passages, canals. It's also including the Strait of Gibraltar, a narrow passage with security concerns, heavy maritime traffic and complex geopolitical considerations. And the last one was the Suez Canal, a critical route handling 10 to 12% of global trade, prone to disruptions like the ever given. And I guess, like I say, it's not necessarily prone to disruptions like the ever given. And I guess, like I say, it's not necessarily prone to disruptions, but when there is a disruption, it can be major, like the ever given.
Speaker 1:Incident Also has geopolitical tensions and environmental challenges. So, like I said, chairman Sola spoke at the APA Legislative Summit briefly about the impetus for the investigation and highlighted that these surcharges and environmental regulations simply needed to be reviewed to see if they rose to the level of unfavorable shipping conditions. And that's exactly what this is. Is it worthy of an investigation? Is it something that we should look into? Many of these choke points have nuances to them that require special circumstances Perhaps an icebreaker, like I mentioned, in the Northern Sea Passage, or a pilot in the Suez, or surcharges that offset geopolitical or environmental drought conditions. Right On its face, this investigation is not inherently accusatory.
Speaker 1:Just the opposite, actually, I kind of look at this as quite benign. Sure, it's obvious to make the geopolitical connection here, but I look at it as being quite benign. It's simply looking at these identified areas to see if the nuances that require special circumstances are being taken advantage of and if so, this is where it can be significant. So just investigating doesn't necessarily mean that they are compelled. They don't have to automatically do anything, they being the FMC. But if they do find unreasonable or unfair or shipping conditions that are not favoring fair and efficient movement of goods, the FMC is empowered, through their statutory authority, to take corrective actions.
Speaker 1:The FMC is empowered, through their statutory authority, to take corrective actions, to take corrective actions to do something to correct the unfair, unfavorable shipping conditions, and that could include a million dollars per voyage, which I'm going to stop right there. I mentioned this a couple of weeks ago. Doesn't that sound familiar? The section the three, the USTR, section 301, all penalties also have a million dollars per voyage. Chairman Sola said that's not a coincidence. Ok, but this is a one million dollar per voyage. In his public remarks he said that.
Speaker 1:But they could also take action to block access to US ports by certain flag vessels, and I talked about this the other day when the other episode. We were talking about the Panama Canal and FMC being the backup quarterback. Roughly 18 to 20% of the world's flagged fleet is Panamanian flagged. So if there is unfavorable shipping conditions found in the Panama area that perhaps link it back to Panama itself, the FMC, as a corrective action, could block access to all Panamanian flagged vessels. That's a big deal. That's a big deal. Perhaps they could reflag, but I'm pretty certain Panama wouldn't want 20% of the world's fleet to be reflagged under other flags of convenience. They make money on the canal, for sure, but they also make money on these flags of convenience. So these are just possible remedies that the FMC could take. These aren't guaranteed actions that the FMC would take, but they're available.
Speaker 1:There's also a piece that we talked about a few weeks ago, or any other action the FMC deems necessary to correct the unfair or unfavorable shipping conditions. I mean right, that's or anything else they might want to do. Why does this matter? Why should you pay attention? This could directly impact global trade. This could lead to potentially well, or even if there are unfavorable shipping conditions. The unfavorable shipping conditions could lead to higher shipping costs, or they might be leading to currently higher shipping costs. They might be increasing transit times if they're found to be unfavorable shipping conditions, that basically somebody taking advantage of the situation of a nuance of the area, they could be leading to supply chain bottlenecks unnecessarily. Should the unfavorable shipping condition change, maybe those bottlenecks wouldn't be there and it could potentially lead to these regulatory actions, these different things that the FMC could do to correct the action.
Speaker 1:The FMC is looking for public input here. This is going to be open until May 14th. It's open for 60 days, and so here's my call to action to you. I do this every time the FMC opens for comments. This is your opportunity to have a conversation with the FMC. Put your thoughts together, put it into some comments, maybe start working with a global ocean shipping expert or an attorney or somebody in the industry to make sure that your comments make sense and they kind of they go along with what you're trying to do here. You know, seek legal advice on this, because this is going to be important to be part of this conversation.
Speaker 1:This is the opportunity to be part of this conversation they're requesting from industry professionals, shipping companies, trade organizations and really any stakeholder in the supply chain. They want to hear from you. They have six outlined questions that they would like addressed. But you don't have to stop there. If you have something really pertinent to this conversation, it's going to be important to get your thoughts into a comment, submit it to the FMC, make it part of the docket here. This is, I can only imagine, likely to have maybe an in-person hearing as well, but this is the time. This is huge, even if you don't hear it talked about a lot yet. This is huge. You need to pay attention to this. You need to know what's going on here, because this will become a larger issue issue. Even if they don't find full unfavorable shipping conditions, there's at least a few questionable areas that there will likely be something that happens here. So potential for major implications is high here. Pay attention. If you're in the industry, this is your chance to have a voice and look if you want to learn more about this.
Speaker 1:Like I said, I've been working on new live webinars. We're going to be having a live webinar. The Maritime Professor is hosting a live webinar on this, with a live Q&A non-legal advice, but a live Q&A on March 27th at 1 pm, us Eastern Time. If you're interested in learning more about the investigation, we're going to deep, dive it a little bit more so that you can really understand. And if you have questions about the investigation again, non-legal of course register, join us. We'd love to have you there. We're really going to. If you've been meaning to take some time to look into this, let me do the work for you. Come join our live webinar. So that's it again. That's it again for this week.
Speaker 1:Keep here for all the updates on what you need to know about the global supply chain. And, as always, the guidance here is general, for educational purposes only. It should not be construed 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, skoll Strategies. Otherwise, for the non-legal questions, the e-learning and general industry information and insights, the corporate trainings 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, like the Commissioner Dye conversation, check out the podcast by Land and by Sea and if you prefer to see the video, they live on my YouTube page by Land and by Sea presented by the Maritime Professor. While you're at it, check out the website MaritimeProfessorcom. Got a couple live webinars happening soon. Join us for the Global Maritime Choke Points webinar. So 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.