Captain's Log: Where geopolitics and global ocean shipping intersect...

Emergency fees. Geopolitical chokepoints. Antitrust guardrails. Funding gaps that quietly slow the Coast Guard. Maritime policy isn’t moving in one lane right now, and I wanted to connect the dots while the industry is trying to keep cargo moving.

I start with the Strait of Hormuz and the wave of emergency fuel surcharges tied to rising bunker costs and operational risk. Even when a crisis feels like pure force majeure territory, the Federal Maritime Commission is reminding carriers that U.S. Shipping Act compliance still applies. We walk through what the FMC is actually saying about tariff notice timing, special permission requests, and why the tariff in effect when cargo is received can become the rulebook in a dispute. I also tie it back to lessons from the Red Sea, where shippers pushed for more transparency and better justification instead of a blanket “it’s a crisis” explanation.

Next, I dig into an interesting FMC determination involving the World Shipping Council and the limits of filed agreements and limited antitrust protection under the statute. The Commission’s move to cancel certain categories and demand tighter justifications is one of the first guardrail signals on how “cooperative working arrangements” may be interpreted going forward, and it matters for how trade associations and carriers coordinate.

Then we zoom out to China’s increased inspections and detentions of Panama-flag vessels, the Panama Canal terminal backdrop, and the corrective tools the FMC could use if foreign practices start harming U.S. commerce. I wrap with what a DHS funding lapse means for the Coast Guard and mariner credential processing, plus a major PIDP port infrastructure funding opportunity and a bigger question: maritime dominance is not just defense sealift, so how do we build commercial fleet strength that can scale?

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Transcript

Opening Hook And Ground Rules

SPEAKER_00 0:12

Welcome to By Land and by Sea, powered by the Maritime Professor. All right. There has been a lot going on across maritime policy, regulations, funding, strategy. We got a lot to get into today. But before we get into it, I do want to start by saying, look, I am still very supportive of the movement and the direction we are going. Full stop. Full stop. We are in a once-in-a-lifetime moment for maritime. I truly mean that. But I have a little, I have a few frustrations that are starting to bubble up, and you might catch those a little bit as we get into it today. But I remain fully supportive of the movement and the direction that we are moving. I am so excited to see it. But look, today is a few good things, a few great things, and a few little frustrations. I'm going to leave it up to you to determine which ones are which. How's that for an opening hook? Let's get into it, everybody. Hi, welcome back to By Land and By Sea, an attorney breaking down the weekend supply chain, presented by the Maritime Professor. Me. I'm Lauren Beegan, founder of the Maritime Professor, former Federal Maritime Commission attorney in the Office of General International Affairs, in the Office of the General Counsel doing international affairs, and founder of school strategies. How many times have I done this opening? By land and by sea is your go-to resource for navigating the regulatory side of global ocean shipping. And me, I'm your favorite maritime attorney, aren't I? As always, this podcast is for educational purposes only and should not be considered legal advice. There is no attorney client privilege created by this video or this podcast. If you need an attorney, contact an attorney. All right, let's get into it because as you know, ocean shipping moves the world. All right, story number one. Let's just hit it. Let's go into the whore moves. Let's go into straight whore moves. Let's go into the risk. And the FMC has entered the chat, right? So let's start with these developments. It remains one of the strategically most important choke points in the world. Roughly a fifth of global oil flows through that corridor. I've I've mostly stayed away from it in our conversations because there's enough commentary on what's going on there. But now we're starting to talk about FMC type things here. So this is where, of course, this is where I enter the chat as well. If the FMC enters the chat, I won't be the next one behind them, but I will be here to break it down. And so what I want to talk about is that we have seen some ocean carriers start to introduce emergency fuel surcharges and related charges tied to rising bunker costs, operational risks. I mean, look, to be fair, this is about as force majeure and war clause as you get, right? All of the things that are happening in the Strait of Hormouths. This is squarely some of those things. However, surcharges have some procedural requirements, even if they are emergencies, even at the Federal Maritime Commission. And so I was waiting for it. Sure enough, the FMC issued a statement. And what they're saying in this statement is that they're reminding ocean carriers that even in a crisis, charges still have to comply with U.S. shipping law. Now we saw this with the Red Sea, and I'm going to talk about that in a minute, but we saw the FMC paying a little bit more attention to emergency surcharges when the Red Sea crisis was happening. But this is the straight of four moves, and this is what the FMC said. I'm going to be reading off the statement verbatim because I want you to hear their words. So it says under its statutory authority, the commission ensures that rates, charges, and rules that common carriers have implemented as a result of the threats to commercial shipping in the strait and neighboring waters do not violate the shipping act. They're saying the commission ensures that these rate charges and rules don't violate the shipping act. So the statement continues. Commission regulations at 46 CFR 520.8, subpart A1 and 2 require common carriers to provide at least 30 days between the publication and effective date of a change to a tariff. So 30 days between the publication and the effective date of a change to a tariff that results in an increased cost to shippers. FMC is saying that we know this. If you follow this show, you know this. 30 days. Tariff rate changes have to have 30 days for increases. The commission continues to say this reg 46 CFR 520.14 subpart C outlines a process through which a common carrier may submit a special permission request, showing good cause. They said showing good cause to reduce this 30-day waiting period. The commission reviews and votes on all SP requests, special permission. If a special permission is granted, the approval will show the effective date permitted for the charge. Per 46 CFR, so one of the regs, 520.7 subpart C, a tariff rate, charge, or rule must be in effect at the time the carrier or its agent receives cargo. So what the FMC is doing here is a few things, right? They're saying, look, we are, they're kind of signaling we are going to be looking for good cause. We are saying that special permission requests can be done, but they have to be granted. And tariff rate. Now, this is kind of a specific thing that I haven't really seen come out of the FMC in a while, or certainly not that I've been paying attention to, but they're saying a tariff rate, charge, or rule must be in effect at the time the carrier or its agent receives the cargo. So when the cargo is received, that tariff rate, charge, or rule must be in effect when you receive it. So basically, after you receive the cargo, you can't go changing things. It's kind of the antithesis to what the FMC is saying here. Again, not legal advice directly related to your matter. Just talking about what is happening here at the FMC in this comment. Now I'm going to summarize the next part, and basically the FMC continues on to say shippers should review their carrier tariffs and understand the terms of the service contract, right? That's how your cargo is moving. Carriers are responsible for properly filing service contracts and complying with the shipping act, including rules against discriminatory practices, unreasonable refusal to deal. If a service contract incorporates a carrier's tariff, the applicable rates and charges are determined based on the tariff in effect when the cargo is received. That's something that the FMC says. They also continue, and this is a summary, right? But importantly, under the shipping act, disputes over service contracts must generally be resolved in court unless the parties have agreed to another dispute resolution process. So they're saying just make sure that you know what your service contract says. Make sure that you are looking at the tariffs and that you understand them because that's going to be the rule book that is applied to your situation. Again, not legal advice directly to your matter. This is this is stuff that you should be paying attention to and what you should be looking into. All right. Now, this last part is what I'm actually going to read right off of the FMC's announcement. Again, it says alleging a breach of contract, in other words, a failure to comply with agreed upon terms, is different than alleging that a common carrier might have violated the shipping act's guidelines. Now, this is something that we have talked about certainly when we were talking about minimum quantity commitments, right? Breach of contract is not something that the FMC really has the authority for. And it's uh I I say that kind of cautiously. What I really want to say is the FMC has authority over shipping act violations. And that's where they squarely have authority. And so what they're trying to identify here is the shipping act guidelines and violations of the shipping act, is what the FMC is watching. Not necessarily a breach of contract. It's a fine nuance, one worth noting, but something that's important here. Now, the commission on this uh statement continues to say the commission may, on complaint or on its own motion, investigate potential shipping act violations. Shipping act violations, if found, may result in fines being assessed against the common carrier or damages awarded to a shipper. Now, what the commission is saying, they can look into this on their own. They don't necessarily need somebody to file a lawsuit with them. They can look into this on their own, on their own fruition. So shippers should file a complaint with the FMC or contact the Office of Consumer Affairs and dispute resolutions if they're concerned that a carrier is acting in a manner that does not comply. All right, so that's the statement. The key point here is that the commission is not saying carriers can't respond to changing conditions in the market, but it is reminding the industry that even emergency surcharges still have to follow regulatory framework established under the shipping act. Look, the larger picture here, like I started out with, this kind of harkens back to the Red Sea crisis, right? Special permission requests were granted pretty quickly then and without much justification. And I say that because that's what the shippers were saying. The FMC held a hearing on the Red Sea. They talked about what was happening in the Red Sea, and part of the discussion was about these special permission requests for changing the rates on less than on less than 30 days' notice. And I will say I do see you in the comments that the audio is off on my mic. I am so sorry. I tried looking up the microphone. I can't, I don't see any changes here. So I I hope that the recording is actually coming through okay. But I I do see you guys in the chat, don't worry. But what I'm what I want to get back to, so the Red Sea hearing that was happening in the at the FMC, they did a hearing on special permission requests. And what was saying is what they were saying is that the 30 days was trying to be reduced, and they didn't give a lot of justification, or that's what the shippers were saying. They wanted a little bit more of a specificity on how that drops down, right? They were saying the shippers were requesting more of an itemized explanation of Red Sea transit fees that were saved, versus the obvious fuel and operational costs that were increased undoubtedly by going around Africa. So perhaps not even the it was the maybe not even that level of certainty and specificity is what the shippers were asking for. But they wanted something more than it's a crisis, we need to change the 30 days. So that's the type of thing that was being discussed in that Red Sea hearing. And so when I started to see the Hormuz charges being brought about, it was also starting to be this idea of, I wonder if the shippers are going to be looking for specificity again. And I think that that's what's happening here with the FMC. I think that they just didn't forget the shippers asking for a little bit more specificity. And I think that what their FMC is really trying to say to the ocean carriers here is look, if you are going to be filing special permission requests, just make sure that you outline how this goes, what you are basing these higher costs on. Because it's not about whether or not there are higher costs, right? I started out by this is, I mean, force mechure, this is war time, this is all of those things that usually get captured in these contracts. But on the other hand, you gotta just justify it just a little bit more. And I think that's what we're seeing out of the FMC here. So look, what I think we're seeing when geopolitics and instability pushes shipping costs higher. I don't think anybody's questioning that. But how the justification is basically communicated is what the FMC is looking for here. All right, now let's go into another FMC. We have a few FMC issues here, like we always do, right? But this one I thought was interesting. I didn't see a lot of coverage on this one, but something that is very important to cover, and it has to do with the World Shipping Council. This is a case that's been kind of pending for a while, or I shouldn't even say a case, a determination, an investigation, I guess you would call it, but it has to do with the World Shipping Council and the agreement that was filed at the FMC and the type of agreement that they are being filed under. Now I want to be very specific here, so I will be reading mostly from what the FMC put out on this as well, because I want to make sure that I'm not mistranslating their words. So I'll I'll read it and then I'll kind of react to it as I'm reading it. So the World Shipping Council Trade Association, whose members operate about 90% of the world's liner vessel services, filed an agreement with the FMC in October 2020. So this is from the FMC final documentation that they they just released, I believe it was last week. Commission continues to say the agreement authorizes World Shipping Council's members who are parties to it to engage in seven categories of activities, which involve discussing and formulating common positions on a range of policy, legal, and other topics. The agreement becomes effective in November 2020 and has undergone a few amendments through the years, as many agreements often do. Agreements that are filed and effective have a limited antitrust exemption under 46 USC 40307. So what this means, right, this limited antitrust exemption, these members of the agreement can discuss things that otherwise might be a little monopolistic, but because the FMC is giving them authority through its authority in the shipping act on these specific topics or these specific categories, they're allowed to do it. And that's why these agreements are filed at the FMC. We see something similar with these vessel sharing agreements, these large ocean alliances, right? They're operational agreements kind of at their core. And so the FMC here, the whole gist of this is the FMC is questioning whether this World Shipping Council agreement is part of these covered operational agreements or otherwise identified agreements that are allowed under the shipping act. So that's what they're kind of trying to do here. They're saying, look, the agreements that are filed and effective have a limited trust anti-limited antitrust exemption, and they're allowed to do that because of the statutory authority under the code. So continuing on in the FMC's words, meaning that even though it might be otherwise considered monopolistic behavior, oh, this is me. Uh this is what I just said, that the the shipping act is allowing it. So continuing on with the FMC's words, in June 2025, the commission opened an investigation of World Shipping Council's agreement to determine whether the agreement by its terms is a violation of the shipping act. So the FMC allowed it when they filed it in 2020. And again, I'll say agreements that are filed at the FMC don't get approved. We've talked about this before, and I'm not going to go too far into this, but agreements filed at the FMC don't get approved. They just don't get stopped. Now that's what we see with the Ocean Alliances. If the FMC wants to stop it, they have to go file an injunction against it. They have to go file a case against it in court saying that these are the reasons why it should be stopped. Otherwise, it it just becomes effective. So in 2020, when this agreement was filed, that's what happened. It wasn't stopped. So in June 2025, the commission opened an investigation of World Shipping Council's agreement to determine whether the agreement, by its terms, is in violation of the shipping act. Now, again, this agreement started in 2020. Now, there was even some talk that, and I I think I remember hearing about this, that the World Shipping Council, I think they said it in their response that the FMC actually asked the World Shipping Council to file the agreement. Now that that I don't want to go too far into that. Let's get back to the actual comments here, but I'll continue on with what the FMC is saying. So the FMC indicated that although the agreement appeared to have been filed as a cooperative working agreement under 46 USC 40301A5, the agency had reason to believe that at least some of the seven categories of activities described in agreement article 5.1. Now that's the agreement, article 5.1 did not involve the working or operational activities of ocean carriers. And so to that extent, the agreement was not within the FMC's jurisdiction over such agreements. Commission continues. And like I said, this is going to start to get a little. I just want to read what the commission is saying. As a first step, the commission ordered World Shipping Council to show cause as to why the agency should not cancel the agreement. World Shipping Council filed a detailed response in August 2025. The World Shipping Council response confirmed that World Shipping Council regards the agreement as a cooperative working agreement under section 40301A5. So there were kind of clear lines drawn between the FMC saying, I don't know if you are, and the World Shipping Council saying, Yeah, we think we are. We've been in existence for five years now, five years now as a cooperative working arrangement. Continuing on here, it says, after consideration of the World Shipping Council response and all relevant issues, the commission has determined that at least some current World Shipping Council agreement activities do not fall within the scope of a cooperative working arrangement under the code because they are not similar in type to those specifically enumerated in other parts. Now I pulled this section of the code 40301. So it's 46 USC, so US Code, 40301. You can actually look up Ocean Common Carrier Agreements and the types of agreements that are allowed under the Shipping Act, under the statutory authority given by Congress. So it said this part, these Ocean Common Carrier Agreements, this part applies to an agreement between or among Ocean Common Carriers to number one is discuss, fix or regulate transportation rates, including through rates, cargo space accommodations, or other conditions of service. Number two, pool or apportion traffic, revenues, earnings, or losses. Three, allot ports or regulate the number of character voyages between ports. Four, regulate the volume of character or of cargo or passengers. You know what? I'm reading from oh no, here we go. Number five. Here we go. Traffic to be carried. Number five, here it is. Engage in an exclusive preferential or cooperative working arrangement between themselves or with a marine terminal operator. This is what's at issue here, this cooperative working arrangement. And six is control, regulate, or prevent competition and international ocean transportation. And seven is discuss and agree on any matter related to a service contract. Now, those, that's what the FMC is referencing here, saying, look, the other ones feel more operational. And it's kind of what the FMC is saying. They're saying this cooperative working arrangement might have been too broadly interpreted when this agreement was filed. And so they're saying not the entire agreement necessarily, but some of the pieces that are captured in this agreement. Now, I think that we're not done here after this determination by the FMC, but I do think that this is something that we'll continue on. But let me continue on. This is important what the FMC came out and said, because this is one of the first times that we're seeing some guardrails put on what a cooperative working agreement may or may not look like. All right, so continuing on. Those other parts of section 40301A describe agreements about operational activities in plain terms, the nuts and bolts of getting paid to carry cargo or passengers on ships, as opposed to the trade associations, regulatory and policy matters that Article 5.1 of World Shipping Council's agreements generally envision. So they're kind of referencing, they're going back and forth between the statutory authority and actually Article 5.1 of the agreement itself filed by the World Shipping Council. So continuing on, it says indeed, Article 5.4 says agreement parties are not authorized to discuss vessel capacity or the terms and conditions of ocean transportation services. In other words, the kinds of activities listed in the rest of 40301A and any ambiguity about whether a World Shipping Council agreement activity falls within the scope of 40301A and the activities therefore subject to the antitrust exemption as section 40307 should be resolved narrowly. These are all the FMC's words. Continuing on, this is where they start to break it down. In evaluating the seven specific activities in the World Shipping Council's agreement of Article 5.1, the Commission has broken them into three categories. Now I might start to paraphrase this a little bit. So Article 51B is the first category: legal regulatory matters related to competition, 5.1C, International Agreements and Laws, and 5.1G, trade association activities. The FMC has clumped these together from, these articles are from the World Champion Council Agreement. And the FMC says here these three, 5.1B, 5.1C, and 5.1G, so legal regulatory matters, international agreements and laws, and trade association activities are not properly included in the agreement because they do not involve activities similar to the others listed in section 40301A. This agreement will be canceled as to these provisions. The FMC is canceling this agreement for those parts. All right, moving on to the second part. The FMC on their second category, right? That first category, legal regulatory, international agreements, trade association activities are saying doesn't count. Again, this is the FMC saying this. Not a value-based judgment, just this is the FMC saying this. Number two, Article 5.1D, requirements as to the infrastructure in similar matters, and 5.1F, requirements as to information, technology, customs, and similar matters. Describe activities that may fall within the proper bounds of a filed agreement, even though they seem to involve high-level best practice endeavors that are not similar to those at the rest of the section, the shipping act 40301. World Shipping Council may include versions of them in a proposed amended agreement, and the commission will consider any justifications it submits before canceling as to those provisions. So they're saying, look, IT, infrastructure, customs, those might all count, but they want a little bit more justification. So what we will be seeing is World Shipping Council, I mean, potentially likely appealing this whole thing, but potentially at at some point creating a better or a justification that the FMC is requesting here. The third category, Article 5.1A, environmental climate matters, and 5.1E, safety and security matters, the FMC says describes activities that are likely within the proper bounds for a filed agreement because they do relate directly to operational activities, like those in the rest of 40301A, and World Shipping Council may include versions of them in a proposed amended agreement along with justifications explaining why they meet the relevant standard for inclusion under section 40301A5. So those are the three categories that we have that the FMC has classified. The first one is out the second one needs justification. The third one they're saying likely within the bounds, we just need justification there too. So this the commission's saying accordingly the commission issues this order notifying World Shipping Council that the agreement will be canceled effective in 60 days as to the three listed categories of activities that are outside. So now they're couching them all together in paragraph one, right? The legal regulatory the agreement will be canceled as to the remaining four categories of activities in two and three so that's the IT and customs and that's the environment and security. They're saying two and three only if the commission subsequently determines that they are beyond the scope. So they're only going to be canceled if they determine if they're beyond following any considerations of a proposed amended agreement that needs to be submitted within that 60 day period. Continuing on it says the in the event that the commission determines that World Shipping Council has shown that at least one but not all of the activities in its new submission qualifies, the agency will give World Shipping Council additional period to submit a second proposed amended agreement that includes only the activities that fall within scope of the provision. So basically look the time the clock has started the FMC has told them where the parameters of what they think is appropriate filing fall. And here's where we are. So the commission what I see is starting to fine tune the broadness of a cooperative working arrangement. I wouldn't necessarily say that they are finding particularly narrowness in this reading but I do think that they are starting to guardrail it and we really haven't seen that before. And they seem to be guardrailing it around more operational functions that align with the statute things like rates, capacity service conditions, right? They even said IT customs, security, environment now, this cooperative working agreement was perhaps and perhaps kind of up until this point was seen as a catch-on the commission is now just kind of defining it right now I can't help but feel like this might also be part of a larger FMC pushback against the World Shipping Council or maybe when this investigation kind of started. I don't necessarily think that it's vindictive but for a little bit of context you might also remember that the World Shipping Council filed petitions against both the detention and demerge final rule that the FMC put out and the unreasonable refusal to deal and negotiate. Remember that was a documented export policy rule we talked about it quite a bit. Now here's what I want you to get from this this is not the FMC saying carriers could not coordinate all those ocean alliances all those vessel sharing agreements slot charters those types of things they're not necessarily falling into this what the FMC is saying is you only get the benefit of this framework, this limited antitrust kind of this limited antitrust piece protection if what you're doing fits into the statutory boundaries and here we just have the FMC starting to identify what those statutory boundaries are. But because it's statutory that's why I think we're not done here. I think that this is probably going to get appealed in some way and I think that we will see this conversation continue. But in the meantime really fascinating really fascinating I think that this is a really interesting and and legally fascinating piece to follow along with all right we're not done with the FMC FMC in China and Panama look the FMC is paying attention right now to something that involves China detaining Panama flagged vessels in its ports. Earlier this week FMC Chairman Lord Bella issued a statement noting that the commission is closely monitoring reports that China has significantly increased inspections and detentions of vessels flying the Panamanian flag. And the reason this matters is pretty straightforward here, right? Panama is the largest some lists say the second largest but for the all intents purposes this is one of the largest ship registries in the world we've talked about this before 18% of the world's flag fleet and many of the ships operating within its fleets of the major ocean carriers sail under the Panamanian flag. So when you start seeing a pattern where Panama flag ships are being detained it has potential to be a big deal and it kind of is a big deal right off the bat. And I want to read a lot of what Chairman de Bella put in her statement so bear with me and then I'll react to this. So in her statement Chairman Dabella said the Federal Maritime Commission is closely monitoring how recent developments surrounding the Panama Canal terminals and China's retaliatory actions against Panama are affecting global shipping conditions. So this goes back to BlackRock and CK Hutchinson and the Balboa and Cristobal terminals. And so we're going to get into that but I just want to give you kind of a frame of reference. This is where they're tying it back to so uh the chairman continues on Chairman Jabella continues on laws administered by the commission empower it to investigate whether regulations or practices of foreign governments result in conditions unfavorable shipping in the foreign trade of the United States. You know that if you follow the show Foreign Shipping Practices Act and Section 19 of the Merchant Marine Act of 1920 those are the two authorities that the FMC has for the foreign trade of the United States. On January 30th 2026 Panama Supreme Court invalidated I'm reading off of the statement again invalidated the legal framework supporting Hong Kong based CK Hutchinson's concession to operate the Balboa and Cristobal terminals on the Pacific and Atlantic sides of the Panama Canal. The decision followed an audit that uncovered alleged irregularities and raised questions about the concession's legal basis. Following the ruling the Panamanian government appointed U.S. subsidiaries Maersk APM Terminals and Mediterranean shipping companies MSC Terminal Investment Limited as interim operators under 18 month agreements again this is off the FMC Chairman de Bella's statement CK Hutchinson has rejected that ruling initiated legal proceedings against the Panamanian government and has steadily escalated its arbitration campaign including new actions filed as recently as March 24th which seek more than$2 billion in damages. Continuing on Chairman de Bella's statement here in a parallel response the Chinese Ministry of transport summoned Mariskin MSc to Beijing for high level discussions. Now I didn't see a lot of news on this I did see it but I didn't see a lot of coverage on it I mean there's a lot going on. So the Chinese Ministry of transport summoned Mariskin MSc well they requested to Beijing for high level discussions. So continuing on here with the statement Chinese government owned carrier Costco subsequently suspended its services at Balboa and rerouted operations. China now has imposed a surge in detention of Panama flag vessels in Chinese ports under the guise of port state control far exceeding historical norms these intensified inspections were carried out under informal directives and appear intended to punish Panama after the transfer of Hutchinson's port assets. Given that Panama flag ships carry a meaningful share of U.S. containerized trade these actions could result in significant commercial and strategic consequences to U.S. shipping I'm still reading off her statement. We're going to break this down I know I'm going kind of fast here. So the FMC is charged with ensuring an efficient competitive economical transportation system for the benefit of the United States actions by foreign governments that detain, delay or otherwise impede the movement of vessels documented under U.S. law or vessels of other nations engaged in commerce with the United States are inconsistent with the Commission's mandate to protect the reliability integrity of America's global supply chain. That's the statement really strong statement. Says this inspections so these inspections are reportedly being conducted under port state control authority. That's what they're saying which allows countries to inspect vessels for compliance with international safety and environmental standards, but it's being called into question, right? The number of detentions has reportedly sharply risen and the timing is notable because of the geopolitical tensions surrounding now Chairman de Bella emphasized that the FNC has authority under the Shipping Act to investigate foreign government practices that may disadvantage U.S. commerce or are unfair or unfairly assessed on the fair and efficient movement of goods. So at this state the Commission and well really just Chairman de Bella is saying that they're monitoring the situation. But the underlying point is important. When actions taken by a foreign government begin affecting vessels that are part of the global container liner system especially vessels moving U.S. cargo that quickly becomes more than just this local port inspection issue. So what are some of the available corrective actions this is where this gets really important. I don't want to freak anybody out here but one of the corrective actions that could happen here is turning away the FMC could issue a corrective action that turns away flag fleet of an unfair or unduly restrictive country which means the FMC should they decide to go this route has the authority to turn away all Chinese flag vessels from calling at U.S. ports will they do this? Look I don't know. I've mentioned this before when China said that they were going to join Russia on the Northern Sea route. One of the maritime choke points identified in the FMC's investigation on maritime choke points but when I mentioned it then it just felt like maybe a giant tool in the toolbox. Well now this is a very real possibility this is squarely China doing this. And I think some of the larger issues that are being determined right now are probably how much do we need Chinese flagged vessels calling the US what kind of hit would our economy potentially take can we still get in and out of the commodities that we need using maybe non-Panamanian or excuse me non-Chinese flagged vessels anybody but China right that's that's kind of what we might have here if we turn away Chinese flag vessels. Now stay with me here because this also kind of ties back to the USCR Section 301 port fees discussion. Remember that the$1 million per voyage that was then reduced to tonnage but only once on a trade lane touching the US and it was given six months to be implemented, right? These Section 301 China port fees at the time that six month time lag the ocean carriers repositioned their fleet and the only ones who couldn't were really the Chinese built or Chinese operated vessels so like Costco and the like what that also gave us though was a glimpse as to what percentage of our goods are arriving or departing on Chinese owned or operated and likely then the only Chinese flag vessels hitting our shores. Now I don't have that number but I'm hoping somebody at the FMC does. And I'm hoping that they're working cross-agency here to determine the larger national economic impact should they have to take corrective action of turning away Chinese flag vessels. But let me pull back on the doom and gloom here for a minute though because that's not the only corrective action. That's just the probably one of the most significant it's not the only corrective action. The FMC also has really any corrective action that could correct unfair practices but$1 million per voyage is something that the FMC has in their toolbox.$1 million per voyage for Chinese flagged vessels that call it the U.S. Should they find China to be unfairly discriminatory here. Yes the same language the same$1 million per voyage that we heard out of the USTR port fees it was basically a copy and paste. So we might see that and it might end up being a strictly cash grab for the US of Chinese flag vessels. Now look if I recall this$1 million per voyage might not just be containerized cargo. It might actually be all vessels. I think that's how it reads look then we'd be talking bulk and we have to be careful here because bulk we might accidentally hit our ag world because a lot of those vessels are Chinese vessels that are even moving of some of our own ag products so we need to be considered and we need to be considerate of the bulk commodities especially as corrective fines are considered. So even though this hall may not completely have hit your radar this week the implications of the FMC watching China detaining Panamanian flag vessels is something that if you are in the supply chain, if you have anything to do with ocean shipping you got to be paying attention to you know I will just keep it here. But no action yet out of the FMC but they are monitoring and those are some of the things that they might have in their toolbox. All right I just want to quickly head over to Capitol Hill. You know I don't like to get too far into the politics of it all but there's a funding issue moving through Congress that has direct implications for the maritime system and I just want to bring this to the attention because this is important. The House is currently working through the Senate version of a funding bill aimed at restoring funding for the Department of Homeland Security. Now look feel how you will about ICE but the thing about Department of Homeland Security DHS not having funding that's hitting our U.S. Coast Guard look the U.S. Coast Guard didn't always sit in the Department of Homeland Security for many beers it was part of the DOT after September 11th Congress created DHS and Coast Guard got moved into it but here's the thing when we talk about Coast Guard when we talk about DHS we're talking about IC we're talking about customs we're talking about FEMA we're talking about all these things but we are also talking about the Coast Guard and the Coast Guard has not gotten paid throughout this whole thing and they continue their critical missions even during a shutdown but they do so with reduced support with reduced manning this is a giant thing. We have to get funding going for everybody but for the Coast Guard they are not they're they're they're side they're a side conversation to the larger conversation here. Look and also the Coast Guard's National Maritime Center handles licensing for U.S. Mariners I mean this is new captains renewals upgrades merchant mariner credential processing now slowed down or stopped through all of this they've been releasing some some announcements saying how this funding lapse is is affecting that it's limited but look limited slowed down it just means that it's going to get slower on the other side and if national maritime security is national security then we have to act like it is we have to make sure that our National Maritime Center and that our Coast Guard are getting funded. They are getting caught in this shutdown they're standing watched they're still doing the work and they're doing it without pay and look we got to get this going we have to get this going and I just want to bring that to your attention because you may or may not have known that all of this DHS discussion TSA all of that it also is impacting the Coast Guard. All right next story port infrastructure development PIDP DOT announced a new round of funding this week for PIDP actually just yesterday they announced it in FY2026 a notice of funding opportunity there is$488.6 million dollars available for port infrastructure projects across the United States that's awesome that's giant now these grants improve port capacity efficiency reliability they are birth improvements terminal modernization cargo handling equipment I just want to bring this to your radar you probably already have it on your radar but June 26 2026 is when those applications are due this is important. This is part of how we get there they are putting this in a maritime dominance category I'm hoping we see more funding come through but a half a billion dollars that's pretty good I like to see it at 488 million right so almost a half a billion dollars that's great let's keep it going another thing that I saw this week that didn't get a lot of play I mean there's a lot happening right but that's why I want to highlight I don't make the news I just react to the news and I bring some of the news to your attention there was a study that was conducted by the Center for Naval Analysis. It was commissioned by Congress to provide analysis and recommendations on how the United States should think about rebuilding and strengthening the maritime sector this report looks at everything from shipbuilding capacity to the size of the U.S. flag fleet maritime workforce issues and the broader industrial base that supports maritime's transportation system. Not surprisingly a lot of this analysis came with a national security perspective which is great and it makes sense given the audience and policy environment and because this agency Center for Naval Analysis conducted the report. Now the report talks extensively about the importance of sea lift cap capability the need for a stronger shipbuilding base and the role commercial shipbuilding plays in supporting defense logistics during a conflict or national emergency. All of that is important that conversation absolutely needs to happen but one of the things I'm always looking for in these discussions because we're talking about national maritime strategy or maritime strategy in the larger sense and this was a DOT Mayrad type thing I want to see commercial conversations. It doesn't get nearly enough attention. While the Department of Defense Department of War has an obvious interest in SEALs and shipbuilding capacity the maritime administration sits inside the Department of Transportation not DOD. Mayrad certainly supports national defense requirements and I'm not trying to minimize this side of it. But Marad has responsibility to promote and support the U.S. flag commercial fleet and the economic health of the maritime transportation system. And over time that commercial conversation has gotten a little quieter in Washington, which is why some people in the industry are actually encouraged now because even though this CNA report and I think that it does a good job of identifying things on a military national strategy side it was called for prior to this current administration. So I do want to say I think that this current administration I think that Steve Carmel, I think that Sang Yi are doing fantastic jobs of keeping the commercial elements in in mind as they're talking about all of this. But look this report calling for a national maritime strategy is not a new thing. This is something that has been called for at least 10 years, 15 years I mean this is something that even going back to former Maritime Administrator Chip Janikin around the 2015 2016 timeframe he was working on a national maritime strategy. This is something that we've been talking about for a long time and so the frustration that I opened with and the opening hook is that it's time to move this away from reports and into action right we have about a year ago April 9th the executive order on restoring American maritime dominance we have the maritime action plan that was just released and starting to put some of those directives into action but we also need to have and should have probably been having a continued discussion on national maritime strategy alongside all of this look talking to Matt Leach, the EO and president of Ports America in my last episode really kind of jostled something in my mind. The United States through Sealand was the dominant ocean carrier in the 1990s up until it was sold in the early 2000s. That wasn't that long ago I mean we're talking 30 years or less why weren't we talking more about the United States andor one of the U.S. flag companies acquiring Zim when it was available we would have had an automatic jump in our vessel numbers and actual international fleet capability of moving more cargo worldwide. Now look maybe some people were discussing it and maybe I just wasn't privy to those conversations but if it were anywhere near a good idea or a possibility it feels like a public discussion might have been beneficial there. Look I'm going to continue to watch this and that's just one little piece, right? I just feel like how do we how do we accentuate this? How do we accelerate this? How do we get there? I'm going to keep watching this I think we're going to continue to have conversations on this I'm I'm sure but we can't keep having the same discussions we've always had we can't only be focused on supporting military maritime operations. And I don't want to take away from that we just also have to be focusing on the commercial operations side. We have to have that standing on its own two feet. We don't get there by purely subsidizing the industry. Yes we need cash injections but we also need market drivers and a business model to scale it. As we get closer to National Maritime Day in May I know I have expectations on where I hope we'll be on hopefully some announcements that'll be coming out over the next two months. I don't know what they'll be but I do hope that we have a little bit more momentum here. We are one year post the executive order on maritime dominance like I said April 9th was when that came out we got to get there right maybe that even means Mayored and Coast Guard going over into an entirely new department of maritime right that would stand alongside that would be a giant federal agency lift but maybe it's necessary to have that dedicated maritime secretary at a cabinet level right maybe even akin to Secretary of war, defense, you know maybe there's something there but if we're going to make maritime a priority we have to continue to make maritime a priority and we got to keep the momentum going. So I love what I'm seeing. I love the intention I just I'm a little bit frustrated because we have to keep the commercial side and this report although it was started way before it it I I'm going to keep reading it. I want to see more commercial side of part of the conversation. So look this week we saw developments across almost every level of the maritime policy landscape. When you look across these stories you're really seeing two timelines at once right we see the short-term operational issues surcharges inspections regulatory oversight but we're seeing these longer term policy conversations about ports fleet capacity in the future of U.S. maritime strategy and they're unfolding at the same time which is good and all these pieces fit together in the same conversation but how the United States maintains a resilient and competitive maritime system is now, right? Because at the end of the day ocean shipping doesn't just move cargo it moves the global economy and they say economy here because while military is of the utmost importance so is the commercial side. We can't forget that. Look if you like this episode be sure to follow subscribe and leave a review want to go deeper on these topics or bring this kind of insight to your team visit the maritimeprofessor.com to explore corporate trainings, tailor briefings and on demand webinars all designed to make complex maritime regulations practical and easy to understand. And if your organization needs help nav getting the legal or strategic side of ocean shipping head over to School Strategies. That's where I provide consulting service As regulatory guidance and policy support for clients working directly with the FMC and across the global supply chain. As always, this podcast for educational purposes only and not legal advice. If you need an attorney, contact an attorney. So until next time, I'm Lauren Beegan, the Maritime Professor. I'm so excited with where we were going here. I continue to support the movement. I hope we continue to keep pressing forward on the maritime side. You've just listened to By Land and By C. See you next time.