Commissioner Dye Releases Final Report for Fact Finding No. 29

Commissioner Rebecca F. Dye today released her Final Report for Fact Finding 29, “The Effects of COVID-19 on the U.S. International Ocean Transportation Supply Chain,” a two-year investigation involving hundreds of Commission stakeholders participating through Team meetings, phone conversations, emails, and presentations to various groups. Commissioner Dye presented the Final Report with twelve Final Recommendations to her colleagues at the May 18, 2022, meeting of the Federal Maritime Commission.

During Fact Finding 29, importers and exporters highlighted two recurring pandemic-related concerns: the high cost of shipping cargo, and excessive demurrage and detention charges. Commissioner Dye stated, “The historically high freight rates experienced recently by U.S. exporters and importers have been devastating to many, but I want to emphasize that the Commission has done its job during the COVID-19 pandemic to enforce our competition authority. Our markets are competitive and the high ocean freight rates have been determined by unprecedented consumer demand, primarily in the United States, that overwhelmed the supply of vessel capacity. Congestion further constrained available capacity.

Commission Dye also stated “I am pleased that during the pandemic the Commission has moved forward on enforcement of the Interpretive Rule on Detention and Demurrage and ensuring compliance by carriers with the “incentive principle” embodied in the Rule. I look forward to implementation by the Commission of my Final Recommendations, which I believe will provide badly needed clarity and consistency in certain port and supply chain operations, especially involving “earliest return dates” and “empty container return.”

Fact Finding 29’s twelve new recommendations include:

• A new Commission “International Ocean Shipping Supply Chain Program”;
• A rulemaking to provide coherence and clarity on Empty Container Return practices;
• A rulemaking to provide coherence and clarity on Earliest Return Date practices;
• Continued Commission support for the new FMC “Ocean Carrier Compliance Program” including a new requirement for ocean common carriers, seaports, and marine terminals to employ an FMC Compliance Officer;
• An FMC Outreach Initiative to provide more information to the shipping public about FMC competition enforcement, service contracts, forecasting, and shippers associations, among other topics;
• Enhanced cooperation with the federal agency most experienced in agricultural export promotion, the Department of Agriculture, concerning container availability and other issues;
• A Commission Investigation into practices relating to the numerous charges assessed by ocean common carriers and seaports and marine terminals through tariffs;
• A rulemaking to provide coherence and clarity on merchant haulage and carrier haulage;
• A new “National Seaport, Marine Terminal, and Ocean Carrier Advisory Committee” to work cooperatively with the Commission’s National Shipper Advisory Committee;
• A revival of the Export Rapid Response Team program as agreed by all ocean carrier alliance CEOs;
• An FMC Supply Chain Innovation Teams engagement to discuss blank sailing coordination and information availability; and
• A reinvigorated focus on the extreme supply chain equipment dislocations in Memphis railheads, other rail facilities, and other facilities around the country.

This is the second set of recommendations arising out of Fact Finding 29. In July 2021, Commissioner Dye presented eight Interim Recommendations. The Commission has implemented all that did not require legislative action. Commissioner Dye believes that the industry would benefit from these twelve additional recommendations.

“Commissioner Dye’s work leading this Fact Finding investigation has been invaluable in determining ways the FMC can best assist importers and exporters to manage the supply chain challenges linked with the COVID-19 pandemic. I am eager to work with her and our colleagues to implement the Final Recommendations which will guide the FMC in keeping big players in the ocean shipping industry accountable,” said Chairman Daniel B. Maffei.

The full Final Report and Recommendation is available on the Commission’s website.