FMC Must Incentivize Carriers, MTOs to Reduce Port Congestion, Maffei Says

RANCHO MIRAGE, Calif. – The Federal Maritime Commission must eliminate the "perverse incentive" for ocean carriers and marine terminal operators to allow congestion as a way to make more money, FMC Chair Dan Maffei said, speaking Oct. 27 at the Pacific Coast Council's Western Cargo Conference, or Wesccon.

The FMC hopes to "create sufficient deterrence" so that carriers or operators don't feel that their competitors can get an advantage by creating congestion, Maffei said. He also said the FMC "hopes to restore credibility to our system" through "robust and equitable enforcement" of shipping laws.

This is part of the FMC's final rulemaking process on detention and demurrage that he said will "be before the commission this fall" (see 2309110033). Maffei also said the FMC is "making progress" on its rulemaking process on unreasonable carrier conduct (see 2308030052).

"Now, as a result, FMC now has the attention of even the largest carriers and hopefully even the small and medium-sized shippers," Maffei said. He also said the FMC is now a place where customs brokers and freight forwarders will be heard.

When asked about the potential for a federal government shutdown in November, Maffei said that while he is concerned, he feels the only way the FMC would run into a problem is if every agency budget has to be cut by a certain percentage. Cuts like that would mean the FMC wouldn't be able to fulfill its mandate under the Ocean Shipping Reform Act, he said.

“We're not asking for anything more than already authorized," Maffei said.

While Maffei is optimistic, he said, the dysfunction in Washington is real. “If the government shuts down in mid-November, and I think there's a fair bet that it will, it won't be because people couldn't come to an agreement, it is because a fair number of people simply did not even want an agreement,” Maffei said.

Maffei addressed partner government agency communications, saying that he doesn't know if there was a previous time when the FMC had “such good communications” with CBP as now. He also said that the commission has good communications with Stephen Lyons, the Biden administration's port and supply chain envoy, and the Surface Transportation Board.

Still, authorities and responsibilities are “somewhat siloed” at the federal level, and also split between different jurisdictions when dealing with ports, Maffei said. “Most countries, it's much easier to have a nationalized port strategy because the national government at least has some stake in the ports.” U.S. ports can be under state, city or multistate jurisdiction, which can make it more complicated, he said.

West Coast ports are suffering and, while East Coast ports are thriving, it's a mistake “if we don’t keep all of our ports strong,” Maffei said. Disruptions happen, and "we want to make sure that it doesn't interrupt the flow of cargo any more than necessary,” he said. “So it's very important that we have strong ports coast to coast.”

Maffei also said that while there may be some political instability in the government, the FMC should be fine as an agency. Noting he's a Democrat, he said FMC Commissioner Rebecca Dye is a Republican. “The president does pick the chair from among the five commissioners,” Maffei said. If a Republican president is elected in 2024, Maffei would probably not be chair anymore, but he said that is OK. “Everything we're doing, we're doing together, right,” he said. “Our little area” of trade and transportation likes to “keep party out of it.”

“I think that is to our advantage,” Maffei said.