Mutually enforceable contracts

are key to overcoming future

supply chain crunch – Fact
Finding 29

ByHariesh Manaadiar

June 1, 2022

27
– Drastic ocean freight rate increase due to market forces of supply
and demand
– A dozen recommendations made to alleviate US supply chains
disruptions
– Main US Trade Lanes are still highly contestable

These were the key findings by Commissioner Rebecca Dye as she

wrapped up Fact Finding 29 and submitted the final report..

Fact Finding 29 was an order set up by the Federal Maritime

Commission (FMC) to investigate challenges to the freight delivery
system in the USA and possible violations of the Shipping Act.

Commissioner Rebecca F. Dye was tasked by the FMC to carry out the
investigation with the full authority under 46 C.F.R. §§ 502.281 to
502.291, to perform such duties as may be necessary in accordance with
U.S. law and Commission regulations.

Fact Finding 29 was set up in response to many of the challenges faced

by customers and complaints raised by them with the FMC convening
teams of industry leaders to develop process innovations that would
enhance supply chain reliability and resilience and address these
industry concerns.

As part of Fact Finding 29, Commissioner Dye was directed to engage in

public or non-public discussions with the various stake holders in the
supply chain to identify solutions to unresolved supply chain issues
affecting smooth operations of the US international supply chain.
Commissioner Dye identified and created Supply Chain Innovation
Teams to address these issues and identified key measures to improve
efficient cargo movement in the US ports.

Based on discussions with various stakeholders, the Fact Finding 29

identified 3 major areas of concern being


o Increase in ocean freight rates during COVID-19
o Unreasonable demurrage and detention charges imposed by
ocean carriers and marine terminal
o Supply chain disruptions including the impact of blank
sailings
The final report of the Fact Finding 29 found that

1) On the issue of the ocean freight pricing and monitoring of the three
main ocean carrier alliances (2M, Ocean Alliance, and THE Alliance),


o the market for ocean freight services remains highly
contestable with the Trans-Pacific trade “not concentrated”
and the Trans-Atlantic trade “minimally concentrated”
meaning that it was open to more competition from lines
outside of the alliances..
othe ocean freight rates, especially the container spot freight
market were the result of market forces of supply and demand
driven mainly by the pandemic, and an unexpected and
unprecedented surge in consumer spending in the United
States leading to supply chain congestion..
2) On the issue of demurrage and detention, the Commissioner raised
concerns that some of the carriers were not in full compliance with the
incentive principle of the Commission’s Interpretive Rule on Demurrage
and Detention.

The interpretive rule was intended to reflect three general principles:

1.
o Importers, exporters, intermediaries, and truckers should not
be penalized by demurrage and detention practices when
circumstances are such that they cannot retrieve containers
from, or return containers to, marine terminals because under
those circumstances the charges cannot serve their incentive
function ;
o Importers should be notified when their cargo is actually
available for retrieval ;
 o Demurrage and detention policies should be accessible, clear,
and, to the extent possible, use consistent terminology
The Fact Finding Officer submitted a dozen Final Recommendations to
alleviate dislocations in the U.S. international ocean supply chain. These
are:

1.
1. A new Commission “International Ocean Shipping Supply
Chain Program” with dedicated personnel.
2. A rulemaking to provide coherence and clarity on empty
container return practices.
3. A rulemaking to provide coherence and clarity on earliest
return date practices.
4. Continued Commission support for the new FMC “Vessel-
Operating Common Carrier Audit Program” including
developing a new requirement for ocean carriers, seaports,
and marine terminals to employ an FMC Compliance Officer.
5. An FMC Outreach Initiative to provide more information to
the shipping public about FMC competition enforcement,
service contracts, shippers associations, and forecasting,
among other topics.
6. Enhanced cooperation with the federal agency most
experienced in agricultural export promotion, the Department
of Agriculture, concerning container availability and other
issues.
7. A Commission Investigation into practices relating to charges
assessed by ocean common carriers, seaports, and marine
terminals through tariffs.
8. A rulemaking to provide coherence and clarity on merchant
haulage and carrier haulage.
 9. A new “National Seaport, Marine Terminal, and Ocean
Carrier Advisory Committee” to work cooperatively with the
Commission’s National Shipper Advisory Committee.
10. A revival of the Rapid Response Team program as agreed to
by all ocean carrier alliance CEOs.
11. FMC International Ocean Supply Chain Innovation Teams
engagement to discuss blank sailing coordination and other
matters as needed to support recommendations.
12. A reinvigorated focus on the extreme problems at Memphis
rail heads and around the country.
In conclusion, the final report on the Fact Finding 29 is of the belief that
the implementation of its Interim and Final Recommendations will
alleviate the pressing problems experienced by the US customers..