Remarks of Commissioner Rebecca Dye NCBFAA Government Affairs Conference

Thank you. It’s a pleasure to be here with you on Patriot Day. Also, in our thoughts today are our friends and colleagues in Texas and Florida dealing with the effects of Hurricanes Harvey and Irma.

As you know, since last year I have been focusing on a project I initiated on behalf of the Commission employing small innovation teams of industry leaders to improve supply chain performance generally, and to develop a seaport information portal for U.S. trades in particular.

Today, I’d like to highlight the importance of business process innovation in the liner shipping supply chain as a way to avoid operational disruptions. In this regard, I will discuss promoting supply chain reliability and resilience through visibility to all major supply chain actors of critical information concerning cargo delivery.

Briefly, I’ll discuss the long overdue reform of obsolete U.S. shipping regulations.

FMC Supply Chain Innovation Teams

The work of our FMC Supply Chain Innovation Teams – three import teams and three export teams—was everything we at the FMC had hoped it would be: Productive and enlightening. I believe that adoption of process innovations that apply information technological advances to the system of international supply chain networks is the route to transforming international freight delivery service.

To accomplish this, all supply chain actors—from ocean carriers to cargo owners—must change the way they think about our international shipping system. By the way, this includes government regulators, too.

Supply Chain System Complexity

The complexity of our system of international liner shipping and freight delivery is growing. As systemic complexity grows, the solutions to supply chain operational problems become less obvious. Almost everyone involved in international freight delivery in the U.S. is tired of roundtables and position papers discussing port congestion. They are anxious to act to confront the complexities in international transportation and increase the overall performance of the international supply chain.

The Federal Maritime Commission launched the FMC Supply Chain Innovation Teams project in May, 2016. Our Teams contain industry leaders from seaports, marine terminals, liner companies, cargo owners (importers and exporters), ocean transportation intermediaries, drayage trucking companies, warehouses, and longshore labor. They are an impressive group.

I have left copies of our team participants list for you, and you will see several NCBFAA company members on that list.

The approach of our initiative is based on two basic concepts: Process innovation and small team engagement.

• Process innovation: incremental improvement on past operational success; and
• Small team engagement: no more than 12 members to a team, direct engagement with a specific purpose.

The overall purpose of the project is to develop commercial solutions to supply chain challenges, not government regulatory requirements. I challenged our Teams to “step out of their enterprise silos” and choose one significant operational innovation that would improve supply chain reliability and resilience.

We asked them to keep in mind that the supply chain is a complex system that consists of interrelated components that continually affect one another.

With these things in mind, our Teams agreed that dramatically increasing supply chain visibility among major supply chain actors is the operational innovation that would make the greatest improvement in overall supply chain system reliability and resilience.

This project is different from other IT projects you’ve heard discussed, most of which focus on gaining efficiencies from digitizing certain individual business operations. The goal of our project is to use information technology to provide critical information visibility to major supply chain actors, allowing them to act in harmony, not at cross purposes, in the supply chain “ecosystem.”

To increase supply chain systemic visibility, we asked our teams to identify critical pieces of information that they need, and not large data bases used by liners or port terminals for their own business purposes. To support our teams’ discussions, I’ve talked to many consultants. It’s very “current” to discuss information sharing in our ports.

One consultant emphatically said to me, “They just need to learn to share information!”

I said, “What information?” and “For what reason?”

The IT systems that allow information sharing are expensive, and we must be careful to define the types of information (not data) we want to share and the reason we want to share it. Defining critical information is not as easy as it may sound. It required supply chain actors, especially cargo owners, to carefully identify what they need to know, when they need to know it, and why.

For U.S. importers a key question is: When can I pick up my container from the marine terminal? For exporters, the questions are: When and where can I get an export container, and when should I deliver the full container to the marine terminal? Those questions are not only difficult to develop, they are difficult to answer.

To tell a cargo owner when an import container is available for pick up, for example, a marine terminal must know about chassis availability, terminal yard operations and other port activities, among other things.

These underlying challenges have to be addressed before critical information can be made available. Our initiative has been well received by our stakeholders and by our Congressional Committees. We intend to publish the final report on the project this fall. We also hope to obtain authorization for a concept design for a national seaport information portal.

Regulatory Reform

When I joined the Federal Maritime Commission, after having handled the Ocean Shipping Reform Act, I expected that the Commission would continue incremental shipping deregulation. I was, unfortunately, too optimistic, but nonetheless, I have continued to advocate for reducing government compliance costs across the board.

In recent years, however, the Commission has begun reviewing existing regulations — the first fruit of which was our recent decision to relax requirements that tied service contracts to the filing of those contracts with the Commission. Then last March, following the Trump Administration’s executive orders on deregulation, the Commission established a Regulatory Reform Task Force to identify ineffective or unnecessarily burdensome regulations and make recommendations for their revision or elimination.

So far we’ve had roughly 40 responses to the Notice of Inquiry that we published at the end of May, offering suggested changes that our stakeholders would like to see. The Commission staff is currently reviewing them.

As things stand at the moment, I expect to see several central questions arise early in the reform.

First: Is the FMC’s tariff publication requirement – and its efforts to enforce those tariffs — a regulatory activity that has outlived its usefulness?

Second: Do benefits accrue from our unique legal requirement that service contracts, and similar instruments, continue to be filed with the Commission?

And also: (One of my favorites) Should the Commission publish competition and regulatory enforcement guidelines?

I encourage all of you whose organizations and businesses are affected by the Shipping Act and FMC regulations to pay attention to, and get involved in this new regulatory reform initiative. It’s long past time to reassess and, where warranted, repeal regulations to eliminate unnecessary costs from the international liner freight delivery system.

Removing obsolete regulatory requirements will allow the liner industry to develop commercial practices that meet the needs of their customers, not the government.

Why are we doing all this? Because I believe that repealing obsolete government regulations, and enhancing the performance our overall freight delivery system will provide a strong boost to American economic growth.

Thank you all for your attention. If we have time for questions, I’ll be happy to address them.