FMC Investigating Wan Hai Lines and Ocean Network Express

On December 30, 2021, the Federal Maritime Commission instituted two Orders of Investigation and Hearing with respect to:

1. Ocean Network Express PTD. LTD. and Ocean Network Express (North America), Inc., and

2. Wan Hai Lines, Ltd. and/or Wan Hai Lines (U.S.A.) Ltd.

The FMC seeks to determine whether the companies violated section 41102(c) of the Shipping Act. Specifically, acting pursuant to 46 U.S.C. 41302(a) and 41304, and 46 CFR 502.63, that investigation is instituted to determine -- Whether Ocean Network Express PTD. LTD. and Ocean Network Express (North America), Inc. are violating or have violated section 41102(c) of the Shipping Act by failing to establish, observe, and enforce just and reasonable regulations and practices relating to its practice of demanding payment of charges from Greatway Logistics Group, LLC (Greatway) despite Greatway not being liable for such charges. With respect to Wan Hai, acting pursuant to Section 41102(c) of Title 46 of the United States Code, that investigation is instituted to determine -- Whether Wan Hai Lines, Ltd. and/ or Wan Hai Lines (USA) Ltd. are violating or have violated section 41102(c) of the Shipping Act by failing to establish, observe, and enforce just and reasonable regulations and practices relating to its assessment of charges on containers when return locations with corresponding appointments were unavailable.

Stakeholders Convene Maritime Information Transparency Meetings

FMC Press Release Posted December 8, 2021 -- Improved data transparency and increased information sharing can make an important difference in alleviating maritime supply chain congestion, but before that can happen, industry and the government must identify what terms and classifications people will agree to use in common when discussing the movement of an ocean container from origin to destination. These were two of the key messages conveyed by experts in policy, shipping, supply chain, and data speaking at the December 7, 2021 inaugural meeting of a data transparency initiative being led by Commissioner Carl W. Bentzel. The project is being undertaken at the direction of Chairman Daniel B. Maffei and will culminate next spring with a Data Summit. “One of the few ways we can truly increase the capacity of the supply chain in this country to handle more ocean cargo is through better information flow, enhanced data management, and increased transparency. Figuring out how to do this while maximizing benefits and minimizing costs is a rather Herculean task. That is why I am so grateful to my Commissioner Carl Bentzel, for volunteering to take on this project. We will be paying close attention to the meetings he will hold in the coming months and look forward to the findings he will share at the conclusion of his work,” said Chairman Maffei. Commissioner Bentzel said he will focus his work on three key objectives: cataloging the status quo in maritime data, storage, and access across the transportation chain; identifying key gaps in data definitions/classification; and developing recommendations for common data standards and access policies/protocols. “A container in motion creates information, but that information is either not being shared or it is not being shared effectively. Addressing and resolving the lack of consistent taxonomy and lexicon—classifications and terms—is key to creating an environment where everyone is using the same language and systems can ‘speak’ to each other. Getting to that point will take the cooperation and collaboration of many parties, but I am confident motivation exists to use data to make our maritime supply chain more efficient. Over the coming six months, the data initiative I am leading will identify best practices for naming, storing and transmitting data, and develop a set of best practices to improve transportation efficiency,” said Commissioner Bentzel. Presenting at the meeting were John Porcari, the Port Envoy for the Biden-Harris Administration; Lars Jensen, Chief Executive Officer of Vespucci Maritime; Brian Bumpass, Director of Logistics and Transportation for Brenntag North America, who also serves as the Chair of the FMC’s National Shipper Advisory Committee; and Dr. Kristen Monaco, Chief Economist, FMC. Chairman Maffei, Commissioner Rebecca F. Dye, Commissioner Michael A. Khouri, and Commissioner Louis E. Sola also participated in the event. In her presentation, Ms. Monaco underscored the benefits of creating a foundation of common lexicon and taxonomy throughout the trade community and noted these are largely missing in the maritime data environment. She pointed to inconsistencies in how common data elements such as ports, vessels, and even countries are reported from system to system. Uniform lexicon and taxonomy are necessary to ensure efficient and accurate transmission of information between data users and are needed to better automate data sharing.

More Meetings

Commissioner Bentzel also [held] a meeting on December 14, 2021, from 2:00-3:00 PM (Eastern Time) [and heard] from dray truckers operating at the ports of Los Angeles, Long Beach, New York, Charleston, Savannah, Miami, and Seattle. Executives from drayage trucking companies serving key container ports throughout the United States shared their insights on how improved data flow, transparency, and information sharing would benefit their segment of a container’s move from terminal to inland destination. The next meeting of the Maritime Transportation Data Initiative (MTDI) is scheduled to take place on January 11, 2022, and will focus on the data needs of the warehouse and distribution center sector. UTAH MEETINGS Back in November, Commissioner Bentzel travelled to Utah for meetings with shipping and supply chain executives to evaluate shipping technology and consider how to address supply chain challenges precipitated by the ongoing port congestion at U.S. ports. During the trip, Commissioner Bentzel met with executives from the Inland Port of Utah, the shipping company OOCL, and the Visible Ship Management Company. He also addressed a board meeting of the World Trade Center Utah (WTCU), which represents both large and small businesses and whose membership includes many importers and exporters. “Utah is a great example of an inland state that not only recognizes the importance of the maritime industry but is reliant on the maritime industry to keep their local economy strong,” said Commissioner Bentzel, “I am a big fan of inland ports, and their importance is growing within our supply chain. We cannot build enough space at our large coastal gateway ports, and I believe the wave of the future will be to directly expedite cargo through gateway ports to interior destinations like Salt Lake City.” Commissioner Bentzel was briefed by local industry leaders in conjunction with the WTCU on the impacts of ongoing supply chain disruptions. Home builders relayed the complexity of coordinating dozens of supply chain participants to build houses in a high growth locality that must address a housing shortage. “I was concerned that in a thriving housing market, that builders had to reduce potential construction by close to 1/3rd of what they could have built given shortages of different components used in construction.” While in Utah, Commissioner Bentzel also visited OOCL’s operational center and was briefed on how the carrier coordinates, plans, and executes shipments. “I continue to be very impressed by OOCL’s operations. They really emphasize communication and cargo visibility,” said Commissioner Bentzel. WASHINGTON MEETINGS Commissioners Bentzel and Louis E. Sola traveled to Washington state the week of November 15-19, 2021, for meetings with port, maritime, and the cruise industry stakeholders to discuss pandemic-related impacts to those sectors and the broader issues of port competitiveness. While in the Pacific Northwest, the Commissioners met with local Coast Guard leadership and toured the Puget Sound to assess the impact of containerships anchored there waiting for access to the ports. During a site visit to the Port of Tacoma, the Commissioners toured the port, met with Port Commissioners and Northwest Seaport Alliance (NWSA) Chief Executive Officer John Wolf to examine challenges of providing warehouse capacity near the Port of Tacoma. “I am concerned that the backlog of cargo in our harbors and the lack of transparency clogging our supply chain could be a contributing factor to rising inflation,” said Commissioner Bentzel. “It’s important that we address port congestion and increase container velocity, and the ports of Seattle and Tacoma are critical entry-points for our Nation’s commerce.” In Seattle, the Commissioners toured a cruise facility followed by a cruise roundtable hosted by the Port of Seattle and chaired by Commissioner Sola. The Pacific Northwest is the fourth largest cruise region in the country, servicing an average of 1.4 million passengers annually. At the roundtable, stakeholders discussed the steps taken, in coordination with the Centers for Disease Control, to bring the cruise industry back. Representatives from Congress, the Governor’s office, and the City of Seattle also weighed in on the challenges and opportunities of better coordination in working through the pandemic. “The success of the 2021 Alaska and Seattle cruise seasons is a testament to the hard work and cooperative efforts of many individuals in the public and private sectors who understood the need for ships to again sail. Cruising is an important part of the tourism sector for any port city, but for many communities in Alaska, it is their economic lifeline. I applaud all those who focused on finding solutions to get this industry operating again in the Pacific Northwest. I know there are countless small business owners and working families dependent on cruise-related income that share my appreciation for the public policy priority this issue became,” said Commissioner Sola. Finally, Commissioner Bentzel hosted a roundtable with the NWSA on examining regional port congestion issues. They were joined by Congresswoman Kim Schrier, who represents agricultural interests and manufacturers in her district. Stakeholders representing trucking, rail, pilots, and the terminals also participated and contributed to the conversation. The conversation focused on what needs to be done now to improve the velocity of freight through the port complexes. This centered on better coordination of information and efficient ways to share information as well as needed infrastructure investments. The NWSA and the Ports of Long Beach and Oakland released a report earlier this fall that studies the investment that the Canadian government has made into their maritime assets as compared to federal investments made to the West Coast ports. The Commissioners released a letter on November 12, 2021, raising concerns about maritime assets being sold to foreign entities, and the potential impact on the proposed sale of a U.S. rail line to a Canadian rail line, and concerns about the potential impact on U.S. and regional port competitiveness. “As a country, we need to fully appreciate our maritime assets. We saw during the pandemic that the industry continued to provide essential services, even as other industries and transportation sectors such as aviation had to shut down. Maritime was able to continue because it connects our economy with our communities. I think that the public would be stunned to find out how many vital U.S. industries are dependent on our overseas maritime trade. I hope that as Nation, that this is a wake-up call,” said Commissioner Bentzel.

Temporary Revision to PierPass Takes Effect

FMC Press Release Posted November 29, 2021 -- The Federal Maritime Commission is permitting a temporary revision to the PierPass program to go into effect, allowing “off-peak” users of marine terminal gates at the Ports of Los Angeles and Long Beach to be exempted from paying the Traffic Mitigation Fee. The exemption lasts from December 1, 2021, through January 31, 2022. The Commission granted a request for expedited review of this amendment to the West Coast MTO Agreement, under which authority the PierPass program was established.

Statement by Commissioner Bentzel on the WCMTOA Amendment

"Today (November 30, 2021), I voted not to challenge an amendment to the West Coast MTO Agreement that will allow PierPass to only charge its Traffic Mitigation Fee during peak hours between 7:00 AM and 5:59 PM at the Ports of Los Angeles and Long Beach (LA/LB). This amendment properly shifts the Traffic Mitigation Fee to incent the movement of cargo to off peak night hours when general traffic congestion eases. The duration of the amendment is only a temporary period of two months, which I can support since it will allow time for an assessment of how effective the measure has been in driving terminal operations to a 24 hour/7 day a week basis (24/7). The actual success of this amendment to the agreement will depend on whether and how quickly other members of the supply chain can shift their operations to off-peak gates. "While I support this temporary measure, I believe that more aggressive action will be needed in the future. I question whether the amendment will go far enough to truly maximize the potential usage of terminal operations on a 24/7 basis. The Biden Administration sent a clear message by proposing 24/7 gate operations, but for a 24/7 or off-peak gate hours program to be successful, it means that all supply chain partners need to be rowing in the same direction. "I also question whether an opportunity to amend the appointment system was lost. The current appointment system has not been successful in ensuring that appointments will be kept. Each terminal operates its own system, and this balkanization impacts the effectiveness of the appointment process. The industry should explore how to strengthen this program. "There are many challenges to be faced when considering current operational issues at the LA/LB ports complex, but it is clear to all that this entry point is a vital artery in our Nation’s economic engine. LA/LB recently announced a super demurrage fee to incent cargo owners to pick up cargo that had excessively been kept at marine terminals, and while the Federal Maritime Commission staff has been in dialogue on specifics of application of the fee, there is evidence that the proposal itself has caused cargo to be picked up. Additional actions are being planned to address a growing build-up of empty containers and identifying temporary off-site storage options to allow the shipping complex to handle the backlog of over 90 ships waiting for berth space. "The Ports of Los Angeles and Long Beach have reported increases of 26.5% and 21%, respectively, over 2020 containerized shipping volumes. Shipping experts widely agree that as a result of congestion, we have lost potentially upwards of 15% of total containerized shipping capacity. These twin factors are driving continued delays and are contributing to national economic consequences. It is an incredibly difficult challenge to overcome these factors in an infrastructure confined area, which is why we need this LA/LB port complex to work with maximum efficiency. While I commend the marine terminals for taking the first step to truly incent nighttime moves at LA/LB, more can and should be done."