[Senate Hearing 117-437]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-437

                       OCEAN SHIPPING REFORM ACT

=======================================================================

                                HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION
                               __________

                             MARCH 3, 2022
                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                             


                Available online: http://www.govinfo.gov
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
55-151 PDF                WASHINGTON : 2024                   
                
                
                
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                   MARIA CANTWELL, Washington, Chair
AMY KLOBUCHAR, Minnesota             ROGER WICKER, Mississippi, Ranking
RICHARD BLUMENTHAL, Connecticut      JOHN THUNE, South Dakota
BRIAN SCHATZ, Hawaii                 ROY BLUNT, Missouri
EDWARD MARKEY, Massachusetts         TED CRUZ, Texas
GARY PETERS, Michigan                DEB FISCHER, Nebraska
TAMMY BALDWIN, Wisconsin             JERRY MORAN, Kansas
TAMMY DUCKWORTH, Illinois            DAN SULLIVAN, Alaska
JON TESTER, Montana                  MARSHA BLACKBURN, Tennessee
KYRSTEN SINEMA, Arizona              TODD YOUNG, Indiana
JACKY ROSEN, Nevada                  MIKE LEE, Utah
BEN RAY LUJAN, New Mexico            RON JOHNSON, Wisconsin
JOHN HICKENLOOPER, Colorado          SHELLEY MOORE CAPITO, West 
RAPHAEL WARNOCK, Georgia                 Virginia
                                     RICK SCOTT, Florida
                                     CYNTHIA LUMMIS, Wyoming
                       Lila Helms, Staff Director
                 Melissa Porter, Deputy Staff Director
       George Greenwell, Policy Coordinator and Security Manager
                 John Keast, Republican Staff Director
            Crystal Tully, Republican Deputy Staff Director
                      Steven Wall, General Counsel

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 3, 2022....................................     1
Statement of Senator Cantwell....................................     1
Statement of Senator Wicker......................................     3
Statement of Senator Thune.......................................     4
    Letter dated March 2, 2022 to Hon. Maria Cantwell and Hon. 
      Rgger Wicker from Bill Sullivan, Executive Vice President 
      for Advocacy, American Trucking Associations...............     5
    Letter dated March 2, 2022 to Chairwoman Maria Cantwell and 
      Ranking Member Roger Wicker from Ted McKinney, Chief 
      Executive Officer, National Association of State 
      Departments of Agriculture.................................     6
Statement of Senator Klobuchar...................................     7
    Letter dated February 25, 2022 to Hon. Amy Klobuchar and Hon. 
      John Thune from companies and trade associations 
      representing U.S. importers, exporters, transportation 
      providers and other supply chain stakeholders..............     8
    Letter dated March 2, 2022 to Senator Maria Cantwell and 
      Senator Roger Wicker from Brad Doyle, President, American 
      Soybean Association........................................    11
Statement of Senator Fischer.....................................    21
Statement of Senator Baldwin.....................................    23
Statement of Senator Tester......................................    25
Statement of Senator Lee.........................................    28
Statement of Senator Warnock.....................................    29
Statement of Senator Hickenlooper................................    33

                               Witnesses

Daniel B. Maffei, Chair, Federal Maritime Commission.............    12
    Prepared statement...........................................    14
Rebecca F. Dye, Commissioner, Federal Maritime Commission........    15
    Prepared statement...........................................    17

                                Appendix

Response to written questions submitted to Daniel B. Maffei by:
    Hon. Maria Cantwell..........................................    41
    Hon. Roger Wicker............................................    43
    Hon. Marsha Blackburn........................................    45
    Hon. Shelley Moore Capito....................................    46
Response to written questions submitted to Rebecca F. Dye by:
    Hon. Roger Wicker............................................    47
    Hon. Marsha Blackburn........................................    51
    Hon. Shelley Moore Capito....................................    53

 
                       OCEAN SHIPPING REFORM ACT

                              ----------                              


                        THURSDAY, MARCH 3, 2022

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:35 a.m., in 
room SR-253, Russell Senate Office Building, Hon. Maria 
Cantwell, Chair of the Committee, presiding.
    Present: Senators Cantwell [presiding], Klobuchar, Baldwin, 
Tester, Lujan, Hickenlooper, Warnock, Wicker, Thune, Fischer, 
Moran, Sullivan, and Lee.

           OPENING STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    The Chair. We will now go to the U.S. Senate Committee on 
Commerce, Science, and Transportation full committee hearing on 
the Ocean Shipping Reform Act, legislation co-sponsored by my 
colleagues, Senator Klobuchar and Senator Thune. I want to, at 
the start, welcome our two nominees. I am sorry, our two 
Commissioners. Thank God. Yes, thank you. Thank you. Yes, thank 
you. Our two Federal Maritime Commissioners who are here this 
morning to join us and testify, Mr. Maffei and Ms. Dye.
    We will evaluate the bipartisan Ocean Shipping Reform Act, 
which was introduced by my colleagues Senators Klobuchar and 
Thune, and co-sponsored by 24 bipartisan members. During the 
COVID-19 pandemic, consumers spent more on e-commerce goods 
that were shipped from overseas. And from 2019 to 2020, we saw 
nearly 32 percent increase in e-commerce spending, and from 
2020 to 2021, we saw another 14 percent increase. So the 
arrival of these imports has led to record volumes at U.S. 
ports.
    In 2021, the ports of Los Angeles and Long Beach moved 19 
million containers for the first--I am sorry, 10 million 
containers for the first time ever. In the state of Washington, 
the Northwest Seaport Alliance saw a 15.4 percent increase in 
container volume over the last year. This unprecedented volume 
continues to cause massive backups of ships offshore, and as of 
yesterday, 30 vessels are anchored or loitering waiting to 
access ports of Los Angeles and Long Beach. As the economy has 
roared back, ocean shipping and companies have struggled to 
keep up with the demand and freight costs have soared.
    The pandemic shipping rates for a 40-foot container was 
about $1,300. By 2021, the cost jumped to $11,000. That is a 
746 percent increase in freight costs. This increase means U.S. 
consumers are paying higher prices for goods every day. In 
November 2021, a United Nations report found that if container 
freight rates continue at this pace through 2023, the cost of 
importing goods could increase by 11 percent, which would raise 
consumer prices again.
    The Committee worked tirelessly with numerous provisions 
that were included in the bipartisan infrastructure law and 
made a historic $2.25 billion investment in port infrastructure 
and development. The total bill included $28 billion for 
freight infrastructure over the next 5 years, including $3 
billion for at grade crossings, which are known to be part of 
the supply chain bottleneck problem here.
    We also know that there was a robust Federal maritime--we 
also know we need a robust Federal Maritime Commission, and we 
passed out a nominee to join you, Max Vekich, who I think has 
been sworn in as a member. Today, we are taking another 
important step by holding this Ocean Shipping Reform Act 
hearing. This bill would significantly strengthen the 
Commission and provide tools to crack down on unfair practices.
    The bill would direct Commissioners to establish rulemaking 
to address unfair detention and demerged charges, these unfair 
fees being passed down to consumers. A 2021 report on the 20 
business ports found that detention and demurrage charges 
nearly doubled between 2020 and 2021. I will have specific 
questions to the FMC members today about that.
    As we have heard from our witnesses at a previous hearing 
that we had on unshared shipping practices chaired by our 
colleague from Michigan, we know that these costs are being 
passed on to the consumers. In addition, these unreasonable 
charges, we need to address the complaints that our 
constituents have that we have heard from many of our--many of 
the important industries across the State of Washington.
    According to the Agriculture Transportation Coalition, 
impacted farmers include hay and potato farmers from 
Washington, cotton growers from Mississippi, pork from South 
Dakota, soybeans from Minnesota, paper products from Tennessee, 
almonds from California and dairy from Wisconsin, poultry from 
Georgia and citrus from Florida.
    We are proud in what we make and grow in the United States 
of America, and we expect it to get to its destinations in a 
timely fashion. It is unfair that these consumers are being 
gouged with these high prices and our very important growers 
can't get their products to market in a timely fashion. So 
today we will hear from the Federal Maritime Commissioner, 
Chair Daniel Maffei and Republican Commissioner Rebecca Dye.
    We want to hear from you about what you think needs to be 
done to help address this issue? We want to know what tools in 
the Ocean Shipping Reform Act you can use immediately, if 
passed into law that would help you find real solutions for the 
market today? We need a Commission to offer real and immediate 
solutions to those farmers to get those products to these 
global markets.
    So with that, I will turn to my colleague, Senator Wicker, 
for his opening statement.

                STATEMENT OF HON. ROGER WICKER, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Wicker. Thank you so much, Madam Chair. Americans 
continue to feel the impacts of transportation supply chain 
disruptions. Unfortunately, these bottlenecks show no signs of 
letting up with freight congestion expected throughout the year 
2022. And let me just note, Madam Chair, there are only 100 
Senators.
    Members of this committee have had to scatter for any 
number of important meetings, but that does not take away from 
the fact that this is a vitally important subject today. We 
have seen the images of dozens of ships waiting to unload, but 
the lack of port terminal and warehouse space, limitations on 
intermodal equipment, and workforce disruptions are just as 
consequential but less visible.
    All of this makes it harder for truckers and railroads to 
move containers. On top of all this, vaccine mandates at our 
land borders are hindering the transportation of goods. It 
would be impossible to cover the supply chain challenges in one 
sitting, but I appreciate today's targeted hearing on Ocean 
Shipping Reform Act and other relevant measures. I hope this 
committee's next step is a markup on supply chain legislation. 
I, along with others, have bills that would help ease the 
movement of goods.
    I also want to reiterate my call for additional hearings 
with witnesses from the Administration and land side 
transportation operators. Unfortunately, the Administration's 
purported solutions have had little impact. Despite the 
Administration's announcement in October of around the clock 
staffing at the ports of Los Angeles and Long Beach, these 
ports are still not open 24/7. In fact, just one port of Los 
Angeles terminal has experimented with 24 hour operations.
    As of last week, there were 74 ships waiting to be 
offloaded at the ports of Los Angeles and Long Beach. During 
his State of the Union address, the President tried to 
distract, and shift blame by saying the ocean carriers are the 
reason for the supply chain crisis. And we will get into that 
today. Rather than trying to address the bottlenecks in a way 
that will help American agricultural shippers, retailers, and 
businesses, the President appears more interested in finding 
someone to blame rather than finding solutions.
    The Administration has also been pushing contradictory 
policy. On the one hand, the Administration wants to stop 
unreasonable detention and demurrage fees, which I agree with. 
On the other hand, the Administration touts its support for the 
high dwell fees that have been threatened by the ports of Los 
Angeles and Long Beach. These are just demurrage fees by 
another name. Further, I have been disappointed by the 
Administration's resistance to modernizing port and freight 
operations.
    Automated terminals and trucks would improve efficiency and 
transparency. I welcomed the President's signature of the 
bipartisan infrastructure bill, which includes much needed 
investments in traditional infrastructure, such as the Port 
Infrastructure Development Program. This program, which I 
authored in 2018, provides funding to improve the safety, 
efficiency, and reliability of goods movement in port and 
intermodal facilities.
    Last year, I introduced the Freight Act with Senators 
Capito, Moran, Young, Blackburn, Thune, and Sullivan. This 
legislation would streamline the licensing process for truck 
drivers, address unlawful shipping conduct, and provide 
oversight of transportation operations. Senator Blackburn has 
legislation to incentivize a private sector-led chassis pool in 
Memphis. As a major inland intermodal hub for marine 
containers, Memphis needs to operate more efficiency.
    I want to applaud Senators Klobuchar and Thune for 
introducing the Ocean Shipping Reform Act. American importers 
and exporters expect fair and transparent rules. This bill 
would take steps to eliminate harmful practices within the 
shipping industry. Many of the solutions to our supply chain 
crisis should come from the private sector, and Congress should 
avoid new Federal regulation or legislation which might 
undermine the fluidity of the freight system.
    I want to thank Chairman Daniel Maffei and Commissioner 
Rebecca Dye for being here today. I appreciate the chance to 
hear the Commissioners' views on the tools they have to improve 
the oversight of the shipping industry. My friend, Senator 
Thune, has worked diligently on Ocean Shipping Reform Act. 
Senator Thune, do you have an opening statement?
    Senator Thune. Yes, sir.
    Senator Wicker. Madam Chair, I request the indulgent--the 
indulgence of the Committee in allowing----
    The Chair. Well, I was going to let Senator Klobuchar----
    Senator Klobuchar. No, it is fine. Why don't you let 
Senator Thune, really?
    The Chair. OK. Senator Thune.

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Thank you, Madam Chair and Senator Wicker. 
And thanks to Chairman Maffei and Commissioner Dye for being 
here today. Supply chains continue to operate under 
unprecedented strain, with Americans encountering empty store 
shelves, long wait times, and rising costs for basic goods. 
Based on recent data, I have seen port congestion continue to 
worsen.
    I continue to hear from agricultural producers in South 
Dakota and across the country who are especially feeling the 
crunch, with capacity for their goods reduced by a combination 
of surging demand for containerized shipping, containerized 
iced-shipping, and a persistent backlog at our Nation's ports, 
particularly L.A., Long Beach.
    Despite record agricultural exports, this inefficiency has 
downstream effects on commodity prices, hurting farmers and 
ranchers across the country, including in South Dakota. That is 
why Senator Klobuchar, and I introduced the Ocean Shipping 
Reform Act of 2022 in late February.
    This bipartisan legislation, which is co-sponsored by 24 
Senators and supported by over 100 organizations, takes 
significant steps to clarify the Federal Maritime Commission's 
authority to curb unreasonable or anti-competitive behavior, 
while also providing the Commission with new tools to move--to 
quickly resolve disputes, particularly over detention and 
demurrage charges.
    And Madam Chair, I would ask unanimous consent that support 
letters to the American Trucking Associations and the National 
Association of State Departments of Agriculture be entered into 
the hearing record.
    The Chair. Without objection.
    [The information referred to follows:]

                             American Trucking Associations
                                       Arlington, VA, March 2, 2022

Hon. Maria Cantwell,
Chair,
Committee on Commerce, Science, and Transportation,
United States Senate
Washington, DC.

Hon. Roger Wicker,
Ranking Member,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.

Dear Chair Cantwell and Ranking Member Wicker,

    On behalf of the American Trucking Associations (ATA), I write to 
thank the Senate Committee on Commerce, Science, and Transportation for 
holding tomorrow's hearing on S. 3580, the Ocean Shipping Reform Act of 
2021. ATA supports this necessary supply chain solution and urges the 
Committee to expedite further consideration, final passage, and 
enactment of the Ocean Shipping Reform Act.
    ATA represents a diverse industry that moves nearly 12 billion tons 
of freight annually and employs more than 7.9 million people. ATA's 
membership encompasses over 34,000 motor carriers and suppliers who 
represent every sector of the industry. Within this federation, the 
Agriculture and Food Transporters Conference, whose members aid in the 
import and export movements of agriculture and food products, and the 
Intermodal Motor Carriers Conference, whose members move goods to and 
from maritime ports and rail ramps, have long advocated for updates to 
laws and regulations to ensure they receive fair treatment from 
foreign-owned ocean carriers and marine terminal operators.
    President Biden's call on Congress during the State of the Union to 
pass robust ocean shipping reform legislation is welcomed by the 
trucking industry. Modernization of the laws governing maritime 
commerce is urgently needed as noted by Executive Order 14017 and the 
Biden Administration's announcement of a cooperative effort by the 
Department of Justice and the Federal Maritime Commission (FMC) to 
promote competition in ocean freight transportation and increase 
oversight of global shipping companies. As the President's fact sheet 
notes, the share of global container ship capacity controlled by 
alliances of major ocean carriers has risen from 30 percent in 1996-
2011 to 80 percent of global container ship capacity, and 95 percent of 
the capacity in East-West trade lanes, today. The law must be updated 
to reflect the consolidation among ocean carriers to ensure fair play 
in their commercial relationships with domestic American trucking 
companies and shippers.
    The Ocean Shipping Reform Act as introduced by Senators Klobuchar, 
Thune, and other Senators, will give the FMC the authority to ensure 
fairness on long-standing contentious issues such as detention and 
demurrage penalty charges. These charges were originally intended to 
incentivize the efficient movement of cargo to and from ports, but have 
since devolved into revenue sources for foreign-owned ocean carriers 
and marine terminal operators. As evidenced by the ongoing struggle to 
clear cargo at our ports, detention and demurrage charges no longer 
serve their purpose and only serve to line the pockets of foreign-owned 
entities.
    ATA hailed introduction of S. 3580 in the Senate as a critical step 
forward in addressing our Nation's supply chain challenges. As the 
Committee considers this legislation, we urge negotiation with your 
counterparts in the House of Representatives, which passed companion 
legislation, H.R. 4996, in December, and also included the text of H.R. 
4996 in the House-passed version of the America COMPETES Act. As you 
work with your Committee members, Senate leadership, and members of the 
House to conference long-term economic competitiveness legislation, we 
encourage of the inclusion of the needed ocean shipping reforms in that 
final bill.
    ATA is grateful for the landmark investments in infrastructure made 
by Congress last year which were critical to ensuring America's 
economic competitiveness, and for the continued attention of leading 
members to the most pressing issues facing our supply chains. We 
support S. 3580 and are grateful to the Senate Commerce Committee for 
holding this hearing. We look forward to working with you to enact 
these important reforms.
            Respectfully,
                                             Bill Sullivan,
                             Executive Vice President for Advocacy,
                                        American Trucking Associations.
                                 ______
                                 
   National Association of State Departments of Agriculture
                                       Arlington, VA, March 2, 2022

Chairwoman Maria Cantwell,
United States Senate,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.

Ranking Member Roger Wicker,
United States Senate,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.

Dear Chair Cantwell and Ranking Member Wicker,

    The National Association of State Departments of Agriculture 
(NASDA) supports S. 3580, the Ocean Shipping Reform Act, a bipartisan 
bill that addresses unreasonable ocean carrier practices that are 
undermining U.S. export competitiveness. NASDA represents the 54 
secretaries, directors, and commissioners of agriculture, representing 
the 50 states and four of the territories. NASDA encourages the 
committee to quickly pass this bill out of committee because the 
reforms made in this bill will help address the longstanding issues of 
port congestion and supply chain interruptions that have been 
exacerbated by the COVID-19 pandemic.
    The transportation crisis for U.S. agriculture products has become 
increasingly dire. Many agriculture products produced in the U.S. 
experience significant competition from other countries. If we cannot 
deliver our products dependably, our foreign customers will find 
alternatives to our exports. U.S. farmers, ranchers, and producers need 
their products to get to foreign markets in a timely manner or the 
continual damage done will be determinantal the U.S. agricultural 
economy.
    We request that the committee advance this legislation to the 
Senate floor for a vote, so that following a conference with the House, 
a final bill can be sent to the President's desk as soon as possible. 
U.S. agriculture is depending upon it.
            Sincerely,
                                              Ted McKinney,
                                           Chief Executive Officer,
               National Association of Sate Departments of Agriculture.

CC: Members of the Se ate Committee on Commerce, Science, & 
Transportation

    Senator Thune. I believe these changes will provide the 
Commission with clear authority to investigate and intervene 
when unreasonable practices related to the movement of cargo 
are discovered. The changes to improve the efficiency and 
transparency of the complaint dispute resolution process will 
benefit shippers, especially small businesses, who currently 
find the process frustrating.
    This bill will not fix supply chain problems overnight, but 
it will result in long term positive changes to the maritime 
supply chain, which I hope will benefit exporters, importers, 
and consumers alike. Beyond reforms of the Commission, our 
Nation's ports are desperately in need of two things, 
modernization and transparency.
    A failure to invest in terminal automation and port 
efficiency initiatives such as data sharing compounds the 
problems we are facing today and puts the United States below 
the global average in vessel wait times. That is why I am also 
proud to be a co-sponsor of Ranking Member Wicker's Freight 
Act, which takes strong actions to improve the movement of 
freight across the supply chain.
    In light of this crisis, I appreciate the Commission's 
ongoing initiatives to alleviate supply chain problems and to 
address reports of anti-competitive behavior, including those 
raised in my February 2021 letter with Senator Klobuchar. Both 
Chairman Maffei and Commissioner Dye have spearheaded efforts 
to convene stakeholders, launch investigations such as Fact 
Finding Number 29, and even issue an Advanced Notice of 
Proposed Rulemaking on detention of demurrage billing 
practices.
    So, Madam Chair, I look forward to today's discussion on 
the Ocean Shipping Reform Act and the Commission's current 
actions to address the challenges at our Nation's ports. Thank 
you.
    The Chair. Thank you. Senator Klobuchar? Thank you for 
introducing this legislation and look forward to your comments.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Well, thank you very much, Chair 
Cantwell. And thank you to our two witnesses. I was amused as 
you came in and saw 25 Senators sitting here, you thought this 
was going to be a very different hearing. But there was a 
markup, and all is good. I want to also thank my colleague, 
Senator Thune.
    We worked well together on many, many issues across the 
border in Minnesota and South Dakota, and this is certainly a 
very important one. As has been pointed out now by my 
colleagues, the past 2 years have highlighted significant 
supply chain disruptions and vulnerabilities for U.S. 
exporters, including many in my home state.
    Whether it is a soybean farmer in Minnesota or, as pointed 
out by the Chairwoman, a citrus producer in Florida, whether it 
is a beef producer in South Dakota or a dairy farmer in 
Wisconsin, people have felt this in a big, big way. Now it just 
doesn't end there, right. It ends up in the grocery store when 
people are trying to buy milk and they see a price or when 
people are trying to buy eggs or beef. We have seen this across 
the board. So while we have seen consumers and the producers of 
the goods stocked by this, what do we see on the shipping side? 
It is estimated that the container shipping industry made a 
record $190 billion profit in 2021, a seven fold increase from 
the previous year.
    This isn't because of increased performance. We know that 
because we have heard all these complaints of our people's 
stuff not getting shipped. They are simply fleecing consumers 
and exporters because they know they can get away with it. The 
cost of shipping containers has quadrupled. U.S. exporters have 
also been slapped with unexpected and often illegitimate fees.
    This has hit small businesses and agriculture communities 
hard. Carriers demand that they pay these extraordinary fees 
with little explanation or opportunity for appeal. They carry 
out so--they carry so much market power, some fear retaliation 
for speaking out.
    In fact, one of the examples that I am going to use today 
was someone who didn't want to be identified, a company, 
because they were very afraid there would be retaliation. That 
is what happens when you have a concentrated market in this 
case, just a few major alliances of shippers, foreign based, 
leaving our people here at home often with little choice in 
terms of shipping their product and exorbitant ways to do it.
    We can't let ocean carriers slow down our supply chain 
while they are shaking down our exporters for their own profit. 
That is why Senator Thune, and I introduced our bipartisan 
solution, the Ocean Shipping Reform Act, which he has 
discussed. It clearly makes it better by protecting American 
farmers and manufacturers, making it easier for them to ship, 
limiting foreign ocean carriers ability to impose added fees.
    I was pleased that President Biden raised this issue in the 
State of the Union, and our bill aims to level the playing 
field for American exporters by updating Federal regulations 
for the global shipping industry. We are pleased to have the 
Federal Maritime Commission witnesses here who have the know-
how and the facts on the ground, and we have been pleased to 
work with them in the past and into the future.
    So what our bill does is it directs the FMC, Federal 
Maritime Commission for those not up on the latest acronym, to 
issue a rule prohibiting international ocean carriers from 
unreasonably declining shipping opportunities for U.S. exports, 
making it harder for them to unfairly leave our products behind 
in favor of importing products from, say, China. It also gives 
the FMC more authority to investigate bad practices by ocean 
carriers and directs the FMC to set new rules for what the 
international carrier companies can reasonably charge exporters 
and require ocean carriers to certify.
    Senator Thune and I worked on this, and our staffs did. I 
want to thank Baz from my staff, particularly over a period of 
months, because we wanted to make sure that nothing we put in 
the bill would have unforeseen consequences and that would 
provide some flexibility for the Commission. As he noted, we 
have a bipartisan group of 24 co-sponsors, including 9 other 
members of this committee. And in addition to the letters that 
Senator Thune put on the record, I would like to enter into the 
record two letters in support of our bill.
    The first is an endorsement letter by a coalition of 89 
trade associations that include the American Trucking 
Association, the Agricultural Transportation Coalition, the 
National Retail Federation, and the Consumer Technology 
Association. The second letter is from the American Soybean 
Association expressing support for our Senate bill. Our bill is 
also endorsed by the American Association of Port Authorities, 
along with over 100 other groups.
    [The information referred to follows:]

                                                  February 25, 2022

Hon. Amy Klobuchar,
United States Senate,
Washington, DC.

Hon. John Thune,
United States Senate,
Washington, DC.

Dear Senators Klobuchar and Thune,

    On behalf of the undersigned companies and trade associations 
representing U.S. importers, exporters, transportation providers and 
other supply chain stakeholders, we are writing to express our strong 
support for the Ocean Shipping Reform Act of 2022 (OSRA22) (S. 3580) 
which you have introduced. We believe the reforms included in OSRA22 
will help address longstanding, systemic supply chain and port 
disruption issues which have been further exacerbated by the COVID-19 
pandemic. The bill enjoys strong bipartisan support. We encourage the 
Senate to act quickly to pass the bill and reconcile the differences 
with the House version.
    Many experts agree that the supply chain disruptions that the 
Nation's exporters and importers have been facing will continue 
throughout 2022. This continues to have a significant effect on 
inflation and the ongoing economic recovery. While the supply chain has 
been stretched from end-to-end with disruptions at every stage, there 
are systemic issues that need to be addressed in the maritime cargo 
environment. OSRA22 as introduced will address several of these issues.
    One of the biggest issues facing cargo owners and other supply 
chain stakeholders has been the issue of detention and demurrage. The 
ongoing port congestion has led to a significant increase in these fees 
for cargo owners and truckers, many times due to issues beyond their 
control. We certainly welcomed the Interpretive Rule on Detention and 
Demurrage as published by the Federal Maritime Commission, but we need 
more than just ``guidance'' that is not being followed by ocean 
carriers or marine terminals. This has led to hundreds of millions of 
dollars in unfair penalties against U.S. shippers and their 
transportation partners throughout the pandemic. The legislation seeks 
to formalize this rule and truly define the parameters for these 
charges.
    The legislation also seeks to update key provisions of the Shipping 
Act, which hasn't been updated in over two decades. The maritime 
transportation system has changed significantly during those decades. 
While some changes have been a positive for the industry overall, we 
need to ensure the regulations remain applicable to today's market 
reality. With the creation of the carrier alliances, contraction of the 
number of carriers in the market, changes to chassis management and 
others, we believe the time is right for these important reforms. It is 
especially important for Congress to strengthen the role of the FMC to 
regulate perceived unfair business practices.
    We thank you for your strong leadership on this issue to ensure 
that the ongoing supply chain disruption and port congestion issues are 
addressed. We applaud the bipartisan support of the bill and encourage 
Senators to sign on as original co-sponsors and support the bill when 
it comes to the Senate floor. Passage of OSRA22 will help ensure U.S. 
competitiveness and continued economic recovery. We look forward to 
working with you to ensure passage of this important legislation.
            Sincerely

 1.  Accessories Council

 2.  Agricultural and Food Transporters Conference

 3.  Agricultural Retailers Association

 4.  Agriculture Transportation Coalition--AgTC

 5.  Air-Conditioning, Heating, and Refrigeration Institute

 6.  American Apparel & Footwear Association (AAFA)

 7.  Alliance for Automotive Innovation

 8.  American Association of Exporters and Importers

 9.  American Automotive Policy Council (AAPC)

10.  American Bakers Association

11.  American Bridal and Prom Industry Association (ABPIA)

12.  American Down and Feather Council

13.  American Forest & Paper Association

14.  American Home Furnishings Alliance

15.  American Lighting Association

16.  American Pyrotechnics Association

17.  American Seed Trade Association

18.  American Spice Trade Association

19.  American Trucking Associations

20.  Association of Bi-State Motor Carriers

21.  Association of Food Industries

22.  Association of Home Appliance Manufacturers (AHAM)

23.  Auto Care Association

24.  Autos Drive America

25.  Can Manufacturers Institute

26.  CAWA--Representing the Automotive Parts Industry

27.  Color Pigments Manufacturers Association

28.  Consumer Technology Association

29.  Council of Fashion Designers of America (CFDA)

30.  Distilled Spirits Council of the United States

31.  Experiential Designers and Producers Association (EDPA)

32.  Footwear Distributors & Retailers of America (FDRA)

33.  Foreign Trade Association

34.  Fragrance Creators Association

35.  Global Cold Chain Alliance

36.  Green Coffee Association

37.  Greeting Card Association

38.  Harbor Trucking Association

39.  Hardwood Federation

40.  Home Fashion Products Association

41.  Institute of Scrap Recycling Industries, Inc.

42.  Intermodal Motor Carriers Conference

43.  International Association of Movers (IAM)

44.  International Bottled Water Association

45.  International Casual Furnishings Association

46.  International Housewares Association

47.  International Warehouse Logistics Association

48.  ISSA--The Worldwide Cleaning Industry Association

49.  Juvenile Products Manufacturers Association  JPMA

50.  Leather and Hide Council of America

51.  Los Angeles Area Chamber of Commerce

52.  Meat Import Council of America

53.  Motor & Equipment Manufacturers Association (MEMA)

54.  Motorcycle Industry Council (MIC)

55.  National Association of Chemical Distributors (NACD)

56.  National Association of Home Builders

57.  National Association of Manufacturers

58.  National Association of Music Merchants

59.  National Fisheries Institute

60.  National Industrial Transportation League (NITLeague)

61.  National Marine Manufacturers Association

62.  National Milk Producers Federation

63.  National Pork Producers Council

64.  National Restaurant Association

65.  National Retail Federation

66.  National Ski & Snowboard Retailers Association (NSSRA)

67.  National Sporting Goods Association (NSGA)

68.  New Jersey Motor Truck Association

69.  North American Association of Food Equipment Manufacturers (NAFEM)

70.  North American Home Furnishings Association

71.  North American Meat Institute

72.  Outdoor Industry Association

73.  Pet Industry Joint Advisory Council

74.  Plumbing Manufacturers International

75.  Promotional Products Association International (PPAI)

76.  Recreational Off-Highway Vehicle Association (ROHVA)

77.  Retail Industry Leaders Association

78.  Snowsports Industries America

79.  Society of Chemical Manufacturers & Affiliates (SOCMA)

80.  Specialty Equipment Market Association

81.  Specialty Vehicle Institute of America (SVIA)

82.  Sports & Fitness Industry Association (SFIA)

83.  Tea Association of the U.S.A., Inc.

84.  The Airforwarders Association

85.  The Fashion, Jewelry and Accessories Trade Association (FJATA)

86.  Travel Goods Association (TGA)

87.  US-China Business Council

88.  U.S. Dairy Export Council

89.  Vinyl Institute

CC: Members of the Senate
                                 ______
                                 
                               American Soybean Association
                                       St. Louis, MO, March 2, 2022

Senator Maria Cantwell,
Chair,
Senate Commerce Committee,
Washington, DC.

Senator Roger Wicker,
Ranking Member,
Senate Commerce Committee,
Washington, DC.

Dear Chair Cantwell and Ranking Member Wicker:

    Thank you for your ongoing leadership as Congress continues to 
identify mechanisms to alleviate persisting supply chain challenges. As 
the Senate Commerce Committee begins to consider reforms to ocean 
shipping policy, the American Soybean Association is pleased to share 
its support for the bipartisan Ocean Shipping Reform Act (S. 3580) 
sponsored by Senator Amy Klobuchar (D-MN) and Senator John Thune (R-
SD). This legislation takes important steps to bring greater 
accountability and transparency to ocean carriers while improving 
efficiency throughout the system.
    The American Soybean Association (ASA) represents more than 500,000 
U.S. soybean farmers on domestic and international policy issues 
important to the soybean industry and has 26 affiliated state 
associations representing 30 primary soybean-producing states. Our 
soybean growers are meeting current market demand and harvesting an 
expected record crop of over 4.4 billion bushels this year--and the 
industry is preparing to meet even greater demand in the future. 
Soybeans and soy products are America's leading agricultural export, 
with more than 60 percent of our crop exported globally. Because of 
this, ensuring our crop can be transported to international markets in 
a timely manner and remain competitive remains a top priority for 
soybean farmers.
    While most American soybeans are exported using Panamax bulk 
carriers, nearly 10 percent of soybeans are exported via container. 
Shipping via container allows soybeans to be exported to emerging 
markets that may not have ports that can accommodate Panamax vessels 
and provides access to foreign markets for soy-based products. 
Furthermore, specialty-grown soybeans such as food grade soy and 
soybeans certified as non-GMO rely on containers for shipping due to 
the need for traceability in the soy supply chain. As delays and 
bottlenecks at our ports continue, ASA believes S. 3580 may help 
improve accountability among ocean carriers and streamline 
investigation and complaint processes at the Federal Maritime 
Commission (FMC).
    Importantly, S. 3580 will provide FMC with new authority to improve 
the negotiation of service contracts and to self-investigate common 
carriers as needed. The legislation also directs FMC to enter into 
rulemaking to determine what is considered ``unreasonable'' when common 
carriers decline U.S. exports. ASA recognizes that there is no silver 
bullet that will solve current shipping challenges but believes this 
legislation carefully identifies opportunities to improve regulation of 
the shipping industry without turning the entire industry on its head.
    As the Senate Commerce Committee explores multiple shipping 
challenges and deliberates the Ocean Shipping Reform Act, ASA lends its 
voice to the many agricultural organizations that support this 
legislation. ASA appreciates your continued focus on supply chain and 
shipping challenges impacting the agricultural sector. We look forward 
to continuing to work with the committee to address the transportation 
needs of soybean growers and the agricultural industry at large.
            Sincerely,
                                                Brad Doyle,
                                                         President.
Copy:

Senator Chuck Schumer, Majority Leader
Senator Mitch McConnell, Republican Leader
Senator Amy Klobuchar
Senator John Thune

    By the way, that was one of my first questions when we 
first started working on this, given that I have, you may not 
know this, Madam Chair, the Port of Duluth, the twin ports that 
the President just visited yesterday, very timely. And I wanted 
to make sure--and here is Senator Baldwin, who was also there 
on that visit, where it was rather freezing cold as we stood 
outside at the port.
    And the point of it is that it is really good that we also 
have the support of the port associations. So we are excited 
about this bill. Excited to hear from you today. Thank you, 
Madam Chair.
    The Chair. Thank you, Senator Klobuchar. And again, welcome 
to the Commissioners of the Federal Maritime Commission. We 
will start with you, Chairman Maffei. Welcome.

    STATEMENT OF DANIEL B. MAFFEI, CHAIR, FEDERAL MARITIME 
                           COMMISSION

    Mr. Maffei. Thank you very much, Madam Chair. I use to 
represent the Port of Oswego, New York. So if you want to talk 
about cold Great Lakes ports, I use to represent that. Thank 
you so much, Chair Cantwell, Ranking Member Wicker, members of 
the Committee. I am so honored to appear today, especially with 
my colleague, Rebecca Dye, to discuss the authorities of the 
FMC and legislative proposals to strengthen them.
    The dramatic surge in ocean cargo spurred by the COVID-19 
pandemic has led to reduced reliability, higher costs, and port 
congestion, not just in the United States, but around the 
world.
    Pictures of lines of hulking container ships, as the 
ranking member mentioned, and ports crowded with high stacks of 
containers draw media attention, but they can be somewhat 
misleading because what you see at America's ports is largely a 
manifestation of inland supply chain problems such as 
inadequate inland cargo facilities, shortages of equipment such 
as chassis and containers, and shortages of warehouse workers 
and truckers. In fact, America's ports have handled safely and 
efficiently millions more containers than ever before in U.S. 
history.
    The record numbers of throughput are a tribute to the port 
companies and workers who have never stopped even in the worst 
days of COVID. But even with increased productivity at our 
ports, the epical demand for ocean freight services has 
overwhelmed the capacity, and freight rates have gone up 
dramatically compared to pre-COVID levels.
    Unfortunately, the biggest increases are hitting smaller 
and medium sized shippers and farmers who do not have the 
shipping volumes that the Nation's biggest retailers have, and 
thus lack the bargaining power with the ocean carriers and 
terminals. And the situation does defy easy answers. The 
Federal Maritime Commission has responded to the supply chain 
challenges as aggressively, creatively, and comprehensively as 
we can.
    As some have mentioned already, we have intensified 
enforcement, paying particular attention to the ocean carriers. 
We have challenged the fees and surcharges that some carriers 
slapped on top of already high freight rates. We have increased 
the monitoring requirements on ocean carrier alliances, 
provided guidance to shippers on bringing complaints to the 
FMC, implemented a program to audit the nine largest carrier 
lines, and we continue to work to achieve compliance with our 
interpretive rule on detention demerge.
    Now, personally, my highest priority as chairman is for the 
FMC to promote access to export markets for U.S. producers, 
including farmers. The supply chain situation is especially 
difficult for agricultural exporters, who are put at the 
greatest disadvantage due to the scarcity of equipment in 
agricultural regions and the unpredictability of when ships 
will come into ports and be ready to take on export boxes.
    Now, as part of Fact Finding 29, Commissioner Dye has done 
tremendous work with stakeholders to find ways to make it 
easier for exporters to get their boxes on ships. Now I am 
going to leave it to her to discuss her recommendations but 
know that I fully support them. One recommendation we have 
implemented earlier was appointing a veteran of the ocean 
shipping industry as an in-house export advocate within the 
Consumer Affairs Bureau.
    Also, I am announcing that FMC's audit team will expand its 
scope to get information from carriers and their handling of 
exports and how to do better, and our Bureau of Enforcement is 
especially prioritizing any case involving exporters. Now, I 
sincerely believe that we are now pushing up to the limits of 
our authority under the shipping laws. Since the enactment of 
those laws, the Shipping Act of 1984 and the Ocean Shipping 
Reform Act of 1998, global containerized trade has grown 
exponentially.
    Over the years, consolidation of the ocean shipper carrier 
companies means that there are now less than half of the major 
competitors. And as some of you pointed out, not one of them, 
not one of the major ones, is based in the United States. In my 
view, the laws governing container shipping needed updates even 
before COVID triggered this demand surge. That is why I am so 
grateful to Senators Klobuchar and Thune and to Chair, Ranking, 
to Chair Cantwell and Ranking Member Wicker for holding this 
hearing.
    The bill that we are talking about includes new authorities 
that would provide the FMC with additional leverage over 
regulated entities and better protect shippers from unfair and 
deceptive practices.
    Now, while the FMC can do some needed rulemaking, and we 
have started some, even without enacting new legislation, 
updating our statute would remove any ambiguity about Congress' 
priorities on matters such as detention demurrage, export 
issues, and ocean shipping contract reform.
    To be clear, as Senator Klobuchar stated, any new law 
should minimize unintended consequences, such as disruption of 
trade, service reductions, or needless new compliance costs. It 
should be a balanced approach applicable both now and in the 
future, when we do eventually get past the supply chain 
disruptions that we face today, and freight rates do come down 
again. Thank you for your attention and I look forward to 
answering your questions.
    [The prepared statement of Mr. Maffei follows:]

           Prepared Statement of Daniel B. Maffei, Chairman, 
                      Federal Maritime Commission
    Good morning, Chair Cantwell, Ranking Member Wicker, and Members of 
the Committee.
    I am grateful for the opportunity to appear this morning with my 
colleague Rebecca Dye to discuss the authorities of the Federal 
Maritime Commission, and how current legislative proposals could 
strengthen to better address disruptions to container shipping and 
supply chains.
    The dramatic and historic surge in ocean cargo volumes that began 
in July 2020 has led to diminished service, reduced reliability, higher 
costs, and port congestion issues, not just in the United States but 
around the world.
    Pictures of lines of hulking containerships and ports crowded with 
high stacks of shipping containers draws the attention of the media, 
but this visual is misleading. A sink clogged with muddy water looks 
terrible and we often would say `our sink is broken' but the truth is, 
the sink itself is not broken--what is broken are the clogged pipes 
below it. Similarly, the problems that you see at America's ports is 
less an issue in the ports and more one of inland supply-chain 
problems. These include: the inadequacies of inland supply chain 
facilities, shortages of equipment such as chassis and containers, and 
shortages of workers such as truckers and warehouse personnel.
    In fact, it would be wrong not to acknowledge the fact that it has 
been truly remarkable how productive our ports have been. From Southern 
California to the New York/New Jersey port complex; from Seattle to 
Savannah, Gulfport to Norfolk, Oakland to Miami, and so many more, 
America's ports have handled safely and efficiently millions more 
containers of cargo than ever before in U.S. history. The record 
numbers of throughput are a tribute to the companies and workers that 
have never stopped and instead have intensified their efforts, even in 
the worst days of COVID.
    Less than 48 hours, ago I toured parts of the Port of L.A.--our 
Nation's largest single port--that port alone in 2021 smashed its 
record for most containers handled by 13 percent. That translates into 
1.5 million more containers than the biggest pre-COVID year and that 
does not include the neighboring port of Long Beach which has 
registered a similar increase in productivity. Even with increased 
productivity at our ports, these enormous volumes have overwhelmed the 
capacity and freight rates have gone up dramatically compared to pre-
COVID levels.
    Unfortunately, the biggest increases are hitting smaller businesses 
and freight forwarders who do not have the shipping volumes that the 
Nation's biggest retailers have. Some of them have business models that 
worked fine for twenty years or more, as ocean shipping rates were 
relatively cheap and stable--today, those business models are upside 
down.
    The situation defies easy answers. The usual answer to high 
shipping rates would be to incentivize the companies that own and 
operate the enormous container carrying ships to add more vessels to 
address demand. As the demand has been so high for so long, almost 
every ship that can carry containers is out on the water. Furthermore, 
the shipping lines are investing heavily in buying new ships. In 
addition, adding more capacity has not solved the problem any more than 
turning the faucet on high in a clogged sink would help unclog it. 
Instead, it just means longer lines of ships at our Nation's largest 
ports.
    The Commission has responded to supply chain challenges as 
aggressively, creatively, and comprehensively as we can within the 
bounds of our jurisdiction. I am proud of the non-partisan and reasoned 
manner with which we have identified initiatives and pursued actions 
which can be broadly summarized under three categories: Enforcement of 
the Law; Updating Policy; and Communication and Cooperation.
    We have increased investigative and enforcement activity, paying 
particular attention to ocean carriers. We have initiated a new focus 
on addressing fees and surcharges with the goal of bringing greater 
truth and transparency to rates. We increased the monitoring 
requirements of ocean carrier alliances and continue to assess if 
further changes are necessary. We have provided guidance to shippers on 
bringing complaints to the Federal Maritime Commission and we are 
seeing an increase in both formal and especially informal docketed 
proceedings being filed. We appointed an Export Expert in our Office of 
Consumer Affairs to specifically assist exporters in resolving 
disputes. We stood-up the National Shipper Advisory Committee, which 
provides an important channel between the Commission and one of our key 
constituencies. I asked Commissioner Bentzel to take on the Maritime 
Transportation Data Initiative to identify data constraints that impede 
the flow of ocean cargo and add to supply chain inefficiencies. Also at 
my direction, following conversations with Commissioner Dye, the FMC 
created the Vessel-Operating Common Carrier Audit Program. We continue 
to work to achieve compliance with our interpretive rule on demurrage 
and detention, which Commissioner Dye will address in her testimony.
    One of my highest priorities as Chairman is for the FMC to promote 
access to export markets for U.S. businesses, including farmers. The 
supply chain situation is especially difficult for agricultural 
exporters who are put at the greatest disadvantage due to the scarcity 
of equipment in agricultural regions and the unpredictability of when 
ships will come into ports. As part of Fact Finding 29, Commissioner 
Dye is doing excellent collaborative work with stakeholders to find 
ways to make it easier for exporters to get their boxes on ships. She 
will discuss her recommendations, which I fully support, particularly 
those aimed to promote exports. Also, I am announcing that the FMC's 
audit team will expand its scope to get information from carriers on 
their export strategies and discuss gaps between carrier strategies and 
measurable results. And our Bureau of Enforcement is prioritizing cases 
involving exports.
    Make no mistake, I do not think this is enough, but I sincerely 
believe we are already pushing into the limits on our authority under 
the current shipping laws. That's what brings us here today in response 
to the Committee's gracious invitation.
    Global containerized trade has grown exponentially since the 
passage of major shipping legislation in 1984 and then in 1998. The 
largest container ships were only a fraction of the size of 
contemporary line haul vessels. Consolidation of ocean shipping carrier 
companies means that there are less than half the major competitors in 
the market now than there were in the late nineties and--as many of you 
have aptly pointed out--not one major global container ship line is 
based in the United States. I have said frequently since first being 
confirmed to the FMC in 2016 that the law governing container shipping 
has been in need of updates, even before the current COVID-triggered 
demand surge.
    That is why I am so grateful to Senator Klobuchar and Senator 
Thune, the bill's co-sponsors, and especially to Chair Cantwell and 
Senator Wicker for holding this hearing. I will happily answer 
questions about the legislation's details. Let me just say that the 
proposal includes new authorities that would provide the Federal 
Maritime Commission with additional leverage over regulated entities 
and would help protect shippers from unfair and deceptive practices. 
While the Federal Maritime Commission can do additional rulemaking, 
legislation updating our statute would remove any ambiguity about 
policymakers' priorities on matters such as detention and demurrage, 
and ocean shipping contract reform. Similarly, providing the Commission 
with additional resources would allow us to be even more active than we 
already are in industry oversight, voluntary compliance, 
investigations, enforcement, consumer assistance, and outreach.
    Any bill that is ultimately passed into law must not have the 
unintended consequence of being too disruptive to trade. The cargo 
surge and associated congestion is primarily caused by conditions 
related to a global pandemic and record high demand for imported items. 
Indeed, none the ocean freight challenges are unique to America, 
although some challenges are more acute here. But I am ultimately 
optimistic. We will get past the worst of supply chain disruptions and 
return to a more established state of operations--perhaps as early as 
early next year. When that happens, we don't want to regret any 
kneejerk reaction to the current challenges that ends up creating worse 
problems in the long run.
    Thank you for your attention, your interest in these issues, and 
the privilege of testifying before you today. I look forward to 
answering your questions.

    The Chairman. Thank you, Chairman Maffei. Ms. Dye, welcome. 
Thank you for being here.

          STATEMENT OF REBECCA F. DYE, COMMISSIONER, 
                  FEDERAL MARITIME COMMISSION

    Ms. Dye. Thank you very much. Good morning. Thank you. Good 
morning, Chair Cantwell, Ranking Member Wicker----
    The Chairman. Could you pull the microphone, Ms.--
Commissioner Dye, a little closer? Thank you.
    Ms. Dye. Is that better?
    The Chairman. Yes.
    Ms. Dye. Chair Cantwell and, of course, Ranking Member 
Wicker, and members of the committee, thank you for the 
opportunity to appear here today with my colleague, Chairman 
Maffei. And I second his remarks. Also, thank you for your 
strong support for the legislation establishing the first 
Federal Maritime Commission Shipper Advisory Committee. They 
are hard at work. We had a great turnout for appointments. Fact 
Finding 29 is the fourth major investigation I have conducted 
for the Federal Maritime Commission.
    The following is a brief explanation of relevant issues and 
observations you may wish to consider. Demurrage and detention 
enforcement is on everyone's mind. The United States is the 
first Nation in the world to take steps to confine these 
charges to the purpose for which they are intended, to 
incentivize shippers to pick up cargo and return equipment 
during the allotted time periods.
    But in the interpretive rule, we shifted the risk for 
demurrage and detention where it belongs. For problems in the 
port, especially port congestion, ocean carriers, and marine 
terminals and ports should bear the risk of those charges. A 
major misunderstanding surrounds the nature of the demurrage 
and detention interpretative rule. The rule is not mere 
guidance. The rule provides that interpretation of demurrage 
and detention charges as potential, unreasonable practices 
under the section of the Shipping Act that requires carriers, 
ports and terminals, and intermediaries to have reasonable 
practices.
    Today, we are actively investigating potential violations 
and resolving filed complaints concerning demurrage and 
detention unreasonable practices. Of course, whether it is 
through filing a complaint or giving notice to the Commission's 
Bureau of Enforcement, we need facts from shippers to pursue 
demurrage and detention violations.
    And I can assure the Committee that if any of my colleagues 
heard even any indication of retaliation, we would act. And we 
appreciate your strengthening those retaliation provisions in 
legislation. The Commission recently moved forward on my last 
Fact Finding 29 recommendation by publishing an Advanced Notice 
of Proposed Rulemaking to respond to shipper concerns regarding 
the demurrage and detention billing problems.
    The Commission is also cooperating with the Port of Los 
Angeles in a 6-week experiment to determine the information 
contained in their port optimizer, whether or not it would be 
useful to our enforcement actions on demurrage and detention. 
The ultimate goal of these efforts, of course, are to require 
ocean carriers to change their billing systems and avoid 
billing shippers for unreasonable demurrage and detention 
charges in the first place.
    For some time, I have been concerned that many service 
contracts for carriage of cargo entered into between shippers 
and ocean carriers lack mutual commitment. This ambiguity about 
mutual enforceability and these so-called contracts may cause 
severe consequences for shippers, especially exporters during 
times of high demand for cargo space because they are not 
protected with binding contracts for the space they need.
    I do not recommend that the Commission regulate service 
contracts, but I do support the Commission's providing greater 
information to shippers on the value of mutual commitment and 
contracting, and also the availability of shippers associations 
to leverage volume for freight charges and service contracts.
    Shippers associations are useful in other areas of imports, 
and I believe they could be extremely useful, especially to our 
medium and our small exporters to band together to get good 
deals and commitment from ocean carriers. I will continue to 
work with our stakeholders and FMC supply chain innovations 
teams as we work now to bring Fact Finding 29 to a close.
    I promised my colleagues that I would continue this effort 
as long as the pandemic continues. And now we all hope and pray 
that we are moving out of this, and we are bringing this 
investigation to a close, moving on to a next phase. Of course, 
the Commission will continue to focus enforcement resources on 
unreasonable demurrage and detention. And we have several 
interim final recommendations that I included in my written 
statement.
    One of those is the beginning a new outreach program to 
provide guidance on maritime terminology. It is very important, 
about merchant haulage. What I do is target particular problems 
in the supply chain and work diligently to fix those. But one 
of my final recommendations that is extremely important to 
exporters is a program that I started years ago that they found 
was very responsive to their problems, it is called Rapid 
Response Program.
    All the CEOs of carriers USA promised and have promised me 
personally again to respond by picking up the phone if our head 
of consumer affairs calls and says, we have an emergency right 
now and you need to respond. And of course, you can imagine, if 
the CEO makes the call, the problem gets fixed.
    And we are starting that again. And like my colleague, we 
are doing this and other things, and we are pleased to hear 
from you today with other suggestions and continue to work with 
you to improve the shipping environment for our American 
exporters. I appreciate it, thank you.
    [The prepared statement of Ms. Dye follows:]

          Prepared Statement of Rebecca F. Dye, Commissioner, 
                      Federal Maritime Commission
    Good morning, Chair Cantwell, Ranking Member Wicker, and Members of 
the Committee. Thank you for the opportunity to appear with my 
colleague Chairman Maffei and discuss issues relevant to the Ocean 
Shipping Reform Act of 2022, and ongoing actions at the Commission to 
address supply chain issues.
    I also want to thank you for your strong support for the 
legislation establishing the Federal Maritime Commission's Shipper 
Advisory Committee. We have appointed a strong Advisory Committee of 
U.S. importers and exporters and they're hard at work.
    Fact Finding 29 is the fourth major investigation I have conducted 
for the Federal Maritime Commission. During these investigations, my 
overall focus has been on how to improve the performance of our 
international ocean supply chain.
    Following is a brief explanation of certain relevant issues and 
observations along these lines you may wish to consider in the context 
of S. 3580. Also, I will preview several of my final Fact Finding 29 
recommendations.
Demurrage and Detention Enforcement
    The Interpretative Rule issued by the Commission in May 2020, on 
Demurrage and Detention charges by ports, marine terminals, and ocean 
carriers is one of the biggest challenges the Commission has ever 
undertaken. Demurrage and Detention charges are internationally 
controversial. The United States is the first nation to take steps to 
confine the charges to the purpose for which they are intended: to 
incentivize shippers to pick up cargo and return equipment during 
allotted time periods.
    A major misunderstanding surrounds the nature of the Demurrage and 
Detention Interpretative Rule. The Interpretative Rule is not merely 
guidance. We have issued several ``guidance statements'' as part of 
Fact Finding 29, and they are useful regulatory tools. But the 
Interpretative Rule acts as the ``interpretation'' of demurrage and 
detention charges as potential ``unreasonable practices'' under section 
41102(c)of title 46, United States Code. Currently, the Commission is 
investigating potential violations of section 41102(c) against ocean 
carriers for unreasonable practices regarding demurrage and detention.
    Without the Interpretative Rule, it would take years of 
investigations and complaints for the Commission to develop a coherent 
approach to ``unreasonable'' demurrage and detention charges case-by-
case. Based on the Interpretive Rule, the Commission has completely 
reoriented our resources to focus on demurrage and detention, including 
beginning a new program to reach out to ocean carriers and ``audit'' 
their demurrage and detention compliance. We have also suggested 
regulatory and statutory changes to respond to shipper concerns 
regarding retaliation which I am pleased to see has been embodied in 
proposed legislation.
    One final point regarding a violation of any law or regulation: the 
Commission must be made aware of the facts surrounding a potential 
violation to pursue an investigation. Whether it is through a complaint 
or a notice to the Commission's Bureau of Enforcement, we need facts to 
pursue demurrage and detention violations. Stakeholders must be willing 
to come forward to assist the Commission in our enforcement efforts.
Demurrage and Detention Billing
    The Commission recently moved forward on my last Fact Finding 29 
Interim Recommendation by publishing an Advance Notice of Proposed 
Rulemaking (ANPRM) to respond to shipper concerns regarding demurrage 
and detention billing practices.
    The ANPRM requests comments on five areas related to demurrage and 
detention billing and whether they should be subject to future 
regulation. These include what data should be included on bills, 
reasonable timeframes for billing and response, and whether other 
charges should be included in billing regulation. Again, I am pleased 
this recommendation has been embodied in proposed legislation.
    The Commission is currently cooperating with the Port of Los 
Angeles in a 6-week experiment to determine if the information 
contained in the Port Optimizer would be useful to the Commission to 
enforce demurrage and detention. This project will also be important to 
develop the information important to demurrage and detention billing.
    The ultimate goal of this effort is to provide ocean carriers with 
the information they need to change their billing systems and avoid 
billing shippers for unreasonable demurrage and detention charges.
Lack of Understanding and Commitment in Service Contracting
    For some time, I have been concerned that many service contracts 
for carriage of cargo entered into between shippers and ocean carriers 
lack mutual commitment. This ambiguity about mutual enforceability in 
these so-called ``contracts'' may cause severe consequences to shippers 
during times of high demand for cargo space because they are not 
protected with binding contracts.
    I do not recommend that the Commission ``regulate'' service 
contracting as it did prior to the 1984 Shipping Act and the 1998 
amendments, because that would reduce the flexibility that contracting 
provides to shipper customers. Those deregulatory changes have 
benefitted ocean shipping tremendously for nearly 40 years. However, I 
do support the Commission's providing greater information to shippers 
on the value of mutuality of understanding and commitment in service 
contracting and the availability of shipper associations to leverage 
volume discounts for freight charges.
Fact Finding 29
    My authority for Fact Finding 29 is contained in two Commission 
Orders. Neither of these Orders contains a termination date, due to the 
uncertainties surrounding the COVID-19 pandemic. As we approach what we 
hope is the end of the pandemic, I am completing the last phase of Fact 
Finding 29.
    I will continue to work with our stakeholders in FMC Supply Chain 
Innovation Teams with in-person meetings in Washington, especially with 
the FMC Memphis Supply Chain Innovation Team. The Commission will 
continue to focus enforcement resources on potential unreasonable 
demurrage and detention violations of section 4102(c) of title 46, 
United States Code.
    My final Fact-Finding recommendations include:

        Reinvigorating a ``Rapid Response'' program for emergencies 
        facing agricultural exporters, in which all alliance Chief 
        Executive Officers (America) have agreed to personally 
        participate;

        Requiring ocean carriers to appoint FMC Compliance Officers who 
        report directly to their CEO America;

        Beginning a new Commission program to provide education on 
        maritime terminology, including prioritizing guidance to 
        importers and exporters on ``merchant haulage;''

        Issuing an Advance Notice of Proposed Rulemaking concerning 
        container return and earliest return date practice, based on 
        discussions we have conducted in FMC Innovation Teams;

        Beginning a full-time FMC International Ocean Supply Chain 
        program with dedicated staff; and

        Establishing an FMC Ports and Ocean Carrier Advisory Committee 
        to meet directly with our existing FMC Shipper Advisory 
        Committee.

    Thank you, and again, I appreciate the opportunity to be here 
today.

    The Chair. Thank you. Thank you, Commissioner Dye. I am 
going to start with Senator Klobuchar and then go to Senator 
Fischer.
    Senator Klobuchar. Well, thank you very much, Madam Chair, 
for allowing me to do that. I know, you know, a little bit 
about shipping being the Chair of this committee as well as 
from the great City of Seattle.
    So I will start with you, Chairman Maffei. We all have 
talked about how much more expensive it has gotten for 
consumers, as well as for manufacturers, and for those--our 
farmers and ranchers. And we also know that Ag exports have 
been sitting at ports while ocean carriers returning to Asia 
with empty containers.
    Mr. Maffei, in your testimony, you note that this 
legislation would help protect shippers from unfair and 
deceptive practices. Do you agree that we need to make it 
harder for foreign owned ocean carriers to unreasonably decline 
shipping opportunities?
    Mr. Maffei. I do. I do. I think one of the--we could not 
have been anticipated but there is not, even though it is in 
the purposes section of the Shipping Act, there are no 
authorities that really address whether or not ocean carriers 
take exports or not. There is a unreasonable refusal to deal, 
but in order to prove that we have to prove that a carrier is 
both refusing to deal with exporters and that refusal to deal 
is unreasonable.
    So I will give you one example, there are a lot of pop up 
carriers that are showing up. These aren't the biggest ones, 
but they are making a lot of money because there is such a 
demand. These carriers don't take any exports, they just drop 
it off.
    But I am not sure--an individual case is individual set of 
situations, but if they have no infrastructure at all to deal 
with exports, then they could make the argument that that is 
not unreasonable. So we need some sort of a specific export.
    Senator Klobuchar. Reason for the bill. Chair Maffei, then 
I will go to you, Ms. Dye. I heard from one trucking company 
that was billed $100,000 in late fees by an ocean carrier 
because it took months for them to make an appointment to 
return their empty container simply because of the overcapacity 
at the terminal. So it wasn't really their fault. Do you agree 
that we need stronger rules on what carriers can reasonably 
charge shippers?
    Mr. Maffei. I mean, what you are talking about there, these 
fees, and our rule--we need to make our rules even more clear. 
But Commissioner Dye is right, that is already illegal and that 
is already against our rules. I am frankly not even sure if 
that trucking company should have been billed at all. So it 
depends on the case.
    Senator Klobuchar. OK, Ms. Dye, would you answer that? But 
you highlight the work you have already begun. What challenges 
do you face when looking to update the current billing system?
    Ms. Dye. Well, I think that first of all, we have to agree 
on particular places in the supply chain that--where charges 
should be interrupted. For example, I am working with four 
exporters on a terrible problem with what they call earliest 
return date, when you engage with your exports to be loaded on 
a ship.
    And we are also going to start an advance notice on that 
particular service because it is out of hand. But there is a 
point at which many exporters were charged for storage, for 
sitting on dock, the ship hadn't even arrived. And so we have 
talked directly with the ocean carriers, and they said, oh, we 
never charged that. I said, well then don't send a bill.
    Senator Klobuchar. Yes, exactly. OK. I mean, I want to get 
to one other last thing in my remaining minute. We have a 
number of colleagues here. Do--I will ask you first, Chairman 
Maffei, do you agree that there should be stronger regulations 
that protect against retaliation from ocean carriers?
    Mr. Maffei. Yes. And I certainly support the provision in 
both your bill and Mr.--Senator Wicker's bill.
    Senator Klobuchar. OK, very good. Ms. Dye?
    Ms. Dye. Yes.
    Senator Klobuchar. Alright. Very good. I guess I have one 
more question here. Can you speak to the investments in our 
infrastructure, and this is the bipartisan infrastructure bill, 
a number of Senators--?
    Mr. Maffei. Yes----
    Senator Klobuchar.--supported this. How this could help at 
the ports.
    Mr. Maffei. It is like water on a dry desert. I can't--I 
just came from L.A. I was there less than 48 hours ago. The 
ports, they need more, you know, and they can quibble about the 
number and wish they had even more.
    But finally, they feel they have been recognized. Finally, 
they feel there is a line item specifically for them, and it 
will do tremendous good. Unfortunately, that is not overnight. 
Takes a while to build out these facilities, and particularly 
those, you know, rail and in yard, things that you really need.
    Senator Klobuchar. Very good. One thing I want to point out 
as Chair of the Antitrust Subcommittee, separate issue and I 
will have you just maybe, I will talk to you about this at the 
end when our colleagues are done.
    Mr. Maffei. We will stay as long as you want, Senator.
    Senator Klobuchar. Yes. The top three allowances control 80 
percent, as you know, of foreign shipping and the global 
container ship capacity, and 95 percent of Asia Pacific trade 
lines. So I think that is an important thing for us to 
consider. I have a separate bill on this on the antitrust side, 
but how would characterize the FMC's experience in challenging 
alliance agreements?
    Mr. Maffei. It has been--I mean, we have not even tried. 
And that goes for, you know, many, many, many years, different 
chairmen, different general counsels. I think it is--in 1986 it 
made sense. I wouldn't say I would have voted against it then. 
But now that we know how difficult it is.
    You see the burden of proof right now, if we challenge 
these alliances, is on the Commission, it is on the Government 
employee lawyers. For me, and you know, I think my colleague 
may have a different view, but I would put the burden of proof 
on these, as you say, foreign owned carriers and their very 
expensive law firms.
    Senator Klobuchar. OK, we will let you answer later, Ms. 
Dye. I want to get to my colleagues. Thank you.
    The Chair. Senator Fischer.

                STATEMENT OF HON. DEB FISCHER, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Fischer. Thank you, Madam Chairman. Thank you both 
for being here today. Chairman Maffei and Commissioner Dye, I 
have heard from a number of agricultural exporters that they 
fear when they file a complaint with the Commission, they would 
see retaliation. You gave a very short answer to Senator 
Klobuchar with regards to her bill. But what can the FMC do now 
to protect those shippers from retaliation when they do file 
complaints?
    Mr. Maffei. Mainly Commissioner Dye already spoke to it, 
which is absolutely anything on that immediately would rise to 
the top priority of anything we have investigated. Absolutely, 
it would be unforgivable.
    Senator Fischer. And so you would immediately begin an 
investigation?
    Mr. Maffei. Absolutely. And if the merits were there, we 
would immediately, as soon as we could, in the best case.
    Senator Fischer. And how many detention and demurrage 
complaints have been filed with the FMC against ocean carriers 
for any unfair practices since the start of the pandemic?
    Mr. Maffei. Well, one way I could answer that question is 
not enough because we have gotten, like you, you know, hundreds 
and hundreds of complaints where people don't want to put their 
names on it because they are concerned about one thing or 
another.
    In terms of the complaints that we have actually gotten 
where people are willing to file a formal complaint, it is, you 
know, in over 100 and we have invested--we are trying to 
investigate every single one of them. We have three cases 
already, specific cases, following orders of investigation, 
essentially indictments, but of three specific carrier lines 
and I expect more to come.
    But there are a number of them. Sometimes the facts don't 
allow it. Sometimes the carrier lines are following the letter 
of the rules, but not the spirit. But there are also legitimate 
cases, I believe.
    Senator Fischer. Do you think there that something can be 
changed with the filing process to improve it, so it is not 
such a long, arduous process?
    Mr. Maffei. I would love suggestions. I mean, you know, we 
have tried to--we have a Consumer Affairs Bureau. We have 
beefed up that. I put a specific--you know, export--
Commissioner Dye and I discussed long before that. You know, we 
are trying to figure out ways to help of them file it. I 
actually think that the kinds of coalitions that Rebecca Dye is 
talking about, they can help. I mean, we have been talking to 
them. But that doesn't mean I don't want to do more, but any 
ideas you or your staff or your constituents have, I would be 
very willing to listen to.
    Senator Fischer. Did you have anything to add on that 
Commissioner?
    Ms. Dye. Oh, yes, Senator. I agree with the Chairman. We 
have a complaint process that is sort of like a small claims 
court, and many of our shippers have had good results with 
that, and I would like to see that expanded and adapted in 
other ways. And as the Chairman says, what you hear will be 
valuable to us to know. I spend most of my time talking to 
shippers, but there is always more. And so we appreciate it, 
thank you,
    Senator Fischer. Commissioner, you have made a significant 
contribution to the Ocean Shipping Reform Act in 1988, and I 
think you offer a unique perspective. What other tools are at 
the FMC's disposal to prevent congestion when demurrage charges 
fail to influence the shippers to pick up that cargo?
    Ms. Dye. We have just about reached the limit on our 
ambitions for a small agency, but we have lots--I know that the 
Chairman and I have lots of additional thoughts and programs. I 
prefer outreach. I think that our ocean carriers will say, oh, 
our business is not that complicated. It is terribly complex. 
It is hard to understand. And I thought about a podcast, for 
example. A way for us to talk to our shipping public and help 
them through some of these complexities to their benefit.
    Senator Fischer. Can you explain how peel off works and 
what advantages are there to manage containers in this manner?
    Ms. Dye. Peel off is extremely useful, especially to some 
of the marine terminals in Long Beach and large shippers to 
simply consolidate cargo in one area, and they take it to a 
different location for the shipper to pick up, and it is 
effective. It doesn't work for all of them as a business model, 
but it is a good idea.
    Senator Fischer. In October 2021, the White House announced 
that the Port of Los Angeles would expand to a 24 hour 
operation which would be consistent with the Port of Long 
Beach. However, the local warehouses don't operate those same 
hours. Mr. Chairman, what benefit is there for the ports of 
Long Beach and for Los Angeles to have that 24/7 operation if 
the dock warehouses don't have the same hours?
    Mr. Maffei. Well, the answer is, of course, you need them 
both to. There is a chicken and egg problem here. Where do you 
start? You know, because the warehouse would say, well, why 
would we open 24 hours if the ports not open? That is why all 
the stakeholders have to work together.
    This problem is not going to be solved by the FMC or even 
by the U.S. Senate. It is going to be solved by the 
stakeholders. So that is why we focus so much, and particularly 
Commissioner Dye with her incredible connections, to try to 
convene and talk to them, and frankly, occasionally to call out 
when we don't think that the various parties are willing to 
even discuss stuff.
    I will say that 24/7 is a phrase--any kind of off peak 
ability, anything that gives truckers and shippers, and 
particularly Ag shippers flexibility doesn't have to be 24/7 
maybe, but, you know, late nights, Saturdays, Sundays, whatever 
works. It shouldn't be dictated beforehand. But we need 
everybody to sort of jump at once, so your point is well taken.
    Senator Fischer. Thank you both. Thank you, Madam Chair.
    The Chair. Senator Baldwin.

               STATEMENT OF HON. TAMMY BALDWIN, 
                  U.S. SENATOR FROM WISCONSIN

    Senator Baldwin. Thank you, Madam Chair. Chairman Maffei, 
good to see you again. I understand that you will be in 
Milwaukee tomorrow.
    Mr. Maffei. Good to see you again. I will be, yes.
    Senator Baldwin. And so I really wanted to just----
    Mr. Maffei. It is not cold enough here, ma'am.
    [Laughter.]
    Senator Baldwin. Well, it is warmer in--Milwaukee for 
Wisconsin is down South.
    Mr. Maffei. I know, I apologize, of course----
    Senator Baldwin. And we had a very chilly but warm 
experience in Northern Wisconsin.
    Mr. Maffei. I am going to be talking to the soy growers.
    Senator Baldwin. Yes. So I just wanted to express my 
appreciation for speaking directly with growers and 
agricultural shippers across the Midwest about the solutions to 
challenges in our global supply chain.
    The agriculture industry is really bearing the brunt of 
supply chain disruptions, and dairy farmers and other 
agriculture exporters in my state are looking for immediate and 
long-term solutions for these issues. So it is why I am a co-
sponsor of the Klobuchar, Thune legislation. But I just wanted 
to do appreciate your visit to Milwaukee, Wisconsin.
    Mr. Maffei. Thank you. And I will share that with the other 
Commissioners because all five--well, you know, Mr. Vekich is 
too new, so he hasn't done a lot of traveling, but the four of 
us, we have traveled a lot. COVID has made that difficult, so 
we had to travel virtually. But one of our key components is 
getting out.
    One of the things we appreciate is our independence in 
having five of us, frankly, is very, very helpful for doing 
that. So I appreciate it. And I know we served one term 
together when I was very, very junior and you were, of course, 
very senior. So you may not know, but my family's background is 
dairy. My grandmother grew up on a dairy in upstate New York. 
We don't do dairy anymore for the reasons that you might guess.
    Senator Baldwin. Well, thank you. Commissioner Dye, in 
testimony before the Marine subcommittee, a maritime 
subcommittee last summer, you noted that improving the 
availability of chassis would be critical as trade volumes 
recovered from the pandemic.
    Wisconsin is home to one of the largest domestic 
manufacturers of chassis, Stoughton Trailers, and just so 
happened that I visited that facility last week to discuss my 
Supply Chain Resiliency Act, which would provide companies like 
Stoughton Trailers Federal support to expand production and 
meet demand for critical supply chain products like chassis.
    I would like to have you talk about strengthening our 
industrial base for critical supply chain products like chassis 
and containers. And in your view, has that helped the U.S.--
would that help the U.S. supply chain better manage the COVID-
19 pandemic? What sort of threats do you see out there and 
opportunities?
    Ms. Dye. I understand Senator, and I agree about chassis 
supply in particular. Also, chassis provisioning is a problem, 
and it is a huge challenge for the country. I have worked 
particularly with an innovation team in Memphis, Tennessee, as 
Senator Wicker had mentioned. But I would be delighted to talk 
to your company. I would be very interested to see what they do 
and get their perspective. I would appreciate it.
    Senator Baldwin. Yes. And I know, just as an aside that, 
you know, there has been dumping of product.
    Ms. Dye. The Trade Commission----
    Senator Baldwin. Yes, indeed. And the Trade Commission has 
acknowledged that that is a problem and a challenge. But they 
are persevering, so. Chairman Maffei, we have heard stories 
time and time again about the empty containers departing our 
coast and leaving Made in America products behind.
    As much as 70 percent of outbound containers from major 
West Coast, U.S. ports are being shipped empty, and that 
deprives American agricultural exporters of this important 
means of transportation. So two part question.
    First, in the short term, what steps are being taken to 
address the empty containers issue? And second, does the FMC 
have the authority to regulate a reasonable availability of 
containers for exporters? And if not, should we address this in 
legislation?
    Mr. Maffei. Yes, so thank you for the question, Senator. It 
is a little bit more complicated in that it isn't exactly a 
shortage of containers, if you look at all the containers. We 
have too many containers in some places. What it is, though, is 
a shortage of containers and particularly a shortage of 
containers most used by agriculture and a shortage of the 
containers in those places. They are in the wrong place.
    You know, they are sitting at a port, or they are sitting 
in a city as opposed to getting out in the countryside. And a 
lot of the work, and you know, I will answer your second 
question completely, but the first answer, you know, I want 
would like Commissioner Dye to speak to it too, because part of 
what we are doing in what she is doing on the front lines and 
what I am doing to talk in Wisconsin is try to figure out 
exactly how those farmers get their containers now and how best 
we can help.
    In terms of, we have no specific authority on containers--
obviously equipment. You know, there are some provisions in the 
current shipping acts, if you know, equipment was lent out and 
that is where we get, you know, DND charges and other kinds of 
things. But in terms of directly, we don't--there is no 
provision that says that we can, you know, tell the carriers of 
the empties or any ones that they have to provide containers to 
a certain place. And I will be honest with you, people talk 
about prices and certainly export prices are a problem. But the 
price, those prices will come down again, and they may even go 
back to normal.
    The problem that will persist is these logistical 
challenges that our exporters face. How to get a container, how 
to get the right kind of container because exports tend to be 
heavier. It is not so much about the number of containers. It 
is about that quality, getting the right container, getting it 
in the right place, and getting it to the ship at the right 
time, when it can take it. If you get it there too early, your 
stuff will rot.
    If you get there too late, it is going to rot, and you are 
not even going to get on the ship. It is a big, big challenge, 
and it is those logistical challenges that we need to focus on.
    The Chair. Senator Tester.

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. Thank you, Madam Chair. I really don't know 
where to start. All I know is, are the ship still lined up 
outside the harbors or are they pretty much empty out?
    Mr. Maffei. No, no there are still lines. I will say that 
for environmental reasons, those lines have moved further out 
to sea, but there are----
    Senator Tester. But they are still there.
    Mr. Maffei. Yes. And there are some smart people putting 
together things to sort of have them to slow steam. But there 
are--if they are not actual lines, they are virtual lines.
    Senator Tester. OK. And then we have got the fact as our 
good secretary or a good Senator from Wisconsin, as just 
pointed out, that we have got a lot of Ag products. I think 
milk has been hit exceptionally hard, that we can't get off our 
shores. So, and then, and just correct me if I am wrong on 
this. Pre-pandemic, a container, 40 foot container was about 
$1,300. Now it is $11,000.
    Mr. Maffei. It is so dependent. And unfortunately it is not 
a very transparent--if you have heard different statistics, it 
doesn't mean people are--it means they are looking at different 
things.
    Senator Tester. So why isn't it transparent?
    Mr. Maffei. One of the reasons is because of market power. 
Why isn't it transparent is because there isn't--we get a lot 
of stuff reported to us about contracts, but we are not allowed 
to share that with the public under the laws----
    Senator Tester. Why?
    Mr. Maffei. It is proprietary information, sir. So I----
    Senator Tester. So I know how much BNF charges me to ship 
grain to ports. I know how much the rails charge. What is the 
difference?
    Mr. Maffei. The difference is in the governing the 
governing laws, sir.
    Senator Tester. OK.
    Mr. Maffei. But----
    Senator Tester. I think my take is there is nothing wrong 
with transparency at any level of Government, including that 
one.
    Mr. Maffei. I think both my fellow Commissioner and I are 
huge advocates of transparency. I will say, though, to answer 
your question about the specific rates. They have gone up 
dramatically, but they have gone up much more for smaller 
shippers than they have for larger shippers because of the 
market power the larger shippers have.
    And because in a market where you have got this sort of 
scarcity, there is actually more capacity than before, but 
there is so much demand. The big shipping companies are worried 
about their biggest customer.
    Senator Tester. Yes. Gotcha. And so, as Senator Klobuchar 
said, there are three carriers that control 80 percent of the 
freight?
    Mr. Maffei. It is three alliances of carriers.
    Senator Tester. OK, is there a difference between what I 
just said and what the truth is other than alliances are 
several carriers----
    Mr. Maffei. There is the alliances, but the carriers that 
are part of an alliance are not allowed to discuss prices with 
each other. If they do, they are violating the United States 
antitrust laws. They have no immunity regarding discussing 
rates----
    Senator Tester. Who has oversight of--does the Department 
of Justice have oversight over that or who has oversight?
    Mr. Maffei. I think it is, I would say it is shared 
oversight, but it is certainly Department of Justice can look 
into it just as the FMC can.
    Senator Tester. So how do you guys get information from 
shippers? Do you have subpoena authority?
    Mr. Maffei. We do have subpoena authority. From shippers--I 
mean, do you mean from the big carriers, the ones that carry 
this stuff or you mean the actual ship?
    Senator Tester. I will tell you, if there is one thing that 
really boils me, it is the fact that you have got shippers that 
are screwing the little guy----
    Mr. Maffei. Right, right.
    Senator Tester. How do you get that information?
    Mr. Maffei. We do have very broad capacity to request 
information and they have to provide it. As we have already 
discussed, it is proprietary so that does create an issue with 
we, you know, we can't publicize it. But we do have it and we 
have asked for much, much more since this crisis has begun.
    Senator Tester. Yes, I look, I just think it is 
fundamentally wrong to beat up small business in this country 
because it is small businesses that are the smaller carrier or 
the smaller shippers. I think it is fundamentally wrong to beat 
up production agriculture. But that is just my opinion. So is 
there--so you have got ships that come into our ports that dump 
off a lot of goods because the trade difference is still big, 
and then they leave our ports and they don't take anything on 
it, on their ship going back. Obviously doing that because they 
can make more money.
    Mr. Maffei. Yes. They argue, because I share with you what 
you just said, and I do think it is fundamentally wrong. Even 
if it is not illegal, it is still fundamentally wrong to 
victimize small businesses and farmers. But they will make the 
argument or analysts will make the argument that there is--it 
costs so much, that the rate they make is so much more for an 
import in this time of demand----
    Senator Tester. Because we allow them to charge us more 
because we are the United States of America. This reminds me of 
prescription drugs. They allow us to charge us more and so they 
are going to screw us not taking our products out. And there is 
nobody watching the shop here?
    Mr. Maffei. We are watching.
    Senator Tester. I know, but you don't have to----
    Mr. Maffei. Let me clarify--I do want to clarify one thing, 
though, because you know, even you know, I apologize for this, 
but you know, somehow it was interpreted the other day as 
saying that the FMC has found no collusion. That is false. That 
is a false statement.
    And what I will say is we are looking at all of these 
reports and any sort of wrongdoing, anything against the 
shipping act that we find, we are ready to investigate, or we 
may already be investigating. I can't speak of particular 
cases. And that goes to the alliances and the individual 
carriers to the full extent of the law if the evidence is 
there.
    Senator Tester. My time is way, way over. I am going to 
tell you that it doesn't make any sense that we allow ships to 
leave our ports empty. I don't think there is anybody in this 
country who would say that if we have stuff that needs to be 
shipped out, we should allow ships to do that.
    Now, if the big guys are more powerful than the United 
States, then we have got to figure out something else, because 
it sounds like they do what they want, whenever they want, with 
little transparency, charge whatever they want, don't let that 
information get out to the general public so they know how bad 
they are getting taken to the cleaners, and we don't have the 
tools to deal with that. This is a hell of a problem. We have 
got, you know, the Senate doesn't fix much, but man, if we can 
fix this, this will be a giant step forward.
    Mr. Maffei. One of the things the legislation has is that 
we would have, we would collect and be able to report to the 
public aggregate numbers on exports. At least the public would 
know who the good guys are and who the bad guys are.
    Senator Tester. And I apologize, Madam Chair. But in the 
end, what we need to know is why can't we export our products 
when other countries, when China can import? Why can't we 
export? What is going on? And somebody needs to get out a big 
baseball bat and educate some folks.
    Mr. Maffei. We will be talking in the future, Senator.
    The Chair. Thank you, Senator. Senator Tester, I am going 
to follow up on your line of questioning because I 
wholeheartedly agree with you. And as somebody who spent time 
on a sleepy, another little agency called FERC at a time of 
another crisis, we need these agencies to be more robust. And 
if that means giving them more power than we should--we need to 
do that. I want to make sure, I saw Senator Young remotely. I 
don't know if he is available. If not, we will go to Senator 
Lee. Senator Lee.

                  STATEMENT OF HON. MIKE LEE, 
                     U.S. SENATOR FROM UTAH

    Senator Lee. Thank you, Madam Chair. Chairman Maffei, the 
soaring rates that we are experiencing with our, in this area, 
are they tied to supply and demand constraints? In other words, 
is there any evidence of this resulting from an artificial 
constraint of cargo supply?
    Mr. Maffei. There is. It is primarily due to the huge 
demand in the wake of COVID that has hit the country. We, of 
course, have examined and will continue to examine whether 
there is any artificial lowering of supply. So far, we have 
actually found a fair amount of increase of supply. Some of the 
carriers have ordered more ships. There have been--basically 
only more than 99 percent of what can go on the ocean is on the 
ocean, so yes.
    Senator Lee. Right. Right. So in other words, carriers have 
increased capacity. They have added capacity in response to 
increased demand since COVID, right?
    Mr. Maffei. Yes.
    Senator Lee. And if there are anti-competitive practices 
occurring, does the FMC have the authority under existing law 
to take legal action?
    Mr. Maffei. We do. I would say the burden, the legal 
burdens are rather high from--in a technical sense, but we 
certainly do have the authority and we will use it, whether or 
not you pass legislation, if we have, if the merits of the 
cases allow it.
    Senator Lee. Right, right. Because I mean, the reason I ask 
is because I hate to see these things happening. It is hard for 
all Americans to deal with the outgrowth of this. We have got 
some serious supply and demand challenges with our supply chain 
network.
    But I, and I hate seeing these rate and fee increases as a 
result of it. It is hurting everything. And I also want to make 
sure that we are throwing the right resources in the right way. 
And I appreciated the statement you made in a Bloomberg article 
from a couple of days ago, about 48 hours ago when you said, 
``the ocean carriers on the whole are in fact moving many more 
containers than pre-pandemic, and the ports are by and large 
doing their job.'' Now----
    Mr. Maffei. That is on the import side, but yes, that is 
absolutely right. They are moving more than they had before.
    Senator Lee. Now, so when COVID-19 began, we started seeing 
e-commerce sales hitting a pretty unprecedented rate. And that 
complicated, it frustrated or at least complicated the supply 
chain infrastructure and the work force. Some of these 
challenges spread to this were spread out over a pretty broad 
spectrum.
    But they included things like truck drivers shortages, 
outdated scheduling technology, port concentration, lack of 
storage for containers, port labor difficulties, and scarce 
equipment, including truck chassis.
    Now the Ocean Shipping Reform Act, or OSRA, which we are 
considering today, is something that is being presented as a 
way to address these issues. But can you help me understand how 
exactly would this bill address the supply chain challenges 
that I just mentioned? Does it address those? Does it address 
the lack of container storage, equipment storage, et cetera?
    Mr. Maffei. It certainly gives the Commission a lot more 
leverage in dealing with all of these issues, in convening 
groups, as has been pointed out. And actually, if you have 
time, I yield to Commissioner Dye on the specific equipment 
pieces, but the solution isn't going to come from the 
Government, but we can be a catalyst to working out solutions 
among the various stakeholders. And a lot of these issues--and 
you are quite right, Senator. They are complicated. You know, 
the overall may look simple, but they are complicated to solve 
them, will be done by that.
    Senator Lee. Right. And I am almost out of time. I 
appreciate you asking that, raising that issue because I want 
to make sure that we first do no harm. And because I don't see 
anything in this bill that addresses those issues, my instinct 
to first do no harm kicks in because I realize increased 
Government involvement can often make things more difficult. 
They can often slow things down.
    Now, Section 5 of OSRA prohibits a carrier from retaliating 
against a shipper by refusing or threatening to refuse cargo 
space accommodations when available for any reason. It seems 
that the goal of these changes is to respond to the controversy 
that carriers are taking empty containers and not our exports 
back to Asia to bring more imports back to the United States.
    Now, my understanding is that our supply chain crisis and 
some of the things that we have had significant problem with, 
even these empty containers, these are all creating a serious 
backlog. But if these provisions were passed, could they end up 
slowing down the ability to move empty containers out of the 
port and exacerbate our current backlogs? It is my assessment 
that they would have that effect. How am I wrong in thinking 
that?
    Mr. Maffei. Obviously there is--they would have to be 
administered, you know. I think if we took too heavy a hand in 
administering--let me say this, there are some who advocate of 
an export quota. This ship has to take this number of exports 
specifically. That may sound good to a lot of us, including 
myself on the surface, but that could lead to what you are 
worried about because the alliances would, if they feel that 
that is not in their own best business interest, they might 
avoid export ports altogether.
    They wouldn't stop in Oakland, they wouldn't stop in 
Houston. And if even if we try to close that loophole, then 
they may not service the United States as much, or maybe they 
would put more on the importer cost. So you are quite right to 
be worried about that. I personally feel the bill gives us the 
flexibility that we need without going too far. But that is my 
own personal opinion.
    Senator Lee. This is exactly my concern, and you have 
reiterated it perfectly. This is why I have introduced 
legislation called the Stop the Grinch Act and which I will be 
reintroducing shortly with some updates to it. That would 
address some of the real challenges that we are facing. This 
bill would not, and this bill threatens to make many of those 
problems worse. Thank you.
    The Chair. Senator Warnock.

              STATEMENT OF HON. RAPHAEL WARNOCK, 
                   U.S. SENATOR FROM GEORGIA

    Senator Warnock. Thank you so very much, Chair Cantwell. I 
hear from Georgians about the rising costs every day and its 
impact on their lives. Part of fighting against rising costs, 
it seems to me, is cracking down on large corporations and 
their wealthy executives taking advantage of market volatility, 
to pad their bottom line and enrich themselves, meanwhile, 
hardworking Americans are making difficult decisions with their 
pocketbooks. It is really hard to wrap your mind around how 
much money large ocean carriers are making, the shipping 
industry has made during this global crisis.
    The numbers speak for themselves. Industry wide quarterly 
profits increased nearly 2,000 percent since early in the 
pandemic. And one ocean carrier reported $17 billion in profits 
for a single quarter last year. So consumers are seeing record 
prices, corporate entities, in this case, large ocean carriers' 
record profits. And that is why I wrote a letter calling on the 
White House supply chain disruption task force to investigate 
what appears to be price gouging by some of these foreign based 
shipping companies raking in record profits.
    It is also why I am a proud co-sponsor of the bipartisan 
Ocean Shipping Reform Act to hold bad actors in the shipping 
industry accountable. I think the onus is on those who want to 
explain 2,000 percent increase in profit in the middle of a 
pandemic. Chair Maffei and Commissioner Dye, as you have 
observed these record profits over the last 2 years, have you 
seen improved shipping services to account for these kinds of 
profits or have ship or complaints increased?
    Ms. Dye. Well, Senator, of course, we don't regulate rates 
at the Federal Maritime Commission. But there is a difference 
between a contract rate and what we call a spot rate. And some 
of these extremes that we have seen have been when spot rates 
are literally bid up and all of us are horrified by that in 
particular.
    But one of the reasons that I emphasize that we need to put 
more work into letting our exporters understand that a contract 
for space as well as rate is so valuable to them because it 
protects them in the few times in which we find ourselves in 
this extreme demand. So, of course you are right. We have all 
read about those spikes and they are literally incredible and--
--
    Senator Warnock. But have we seen----
    Ms. Dye. I appreciate your comments.
    Senator Warnock.--yes. Have we seen improved shipping 
services that would account for this kind of increase in 
profits?
    Ms. Dye. We have not. What I do is not so much look at 
rates or other things that we literally cannot deal with right 
now. These problems are not new. And no one supply chain actor 
can fix them alone. And so what we do is get people together in 
a room and tell them that although you can't fix the warehouse, 
you can't fix every piece, that there are measures that we can 
do to move forward for exporters. And we are doing that. It is 
hard work for everybody, but it is immensely satisfying to help 
these people who were, to us they are not only colleagues, but 
their friends. So I appreciate your comments.
    Senator Warnock. Thank you so much. Chairman Maffei.
    Mr. Maffei. Well, I will say that, you know, as I said, the 
Commission stands ready to enforce the shipping act. We have 
been investigating many specific cases and we will continue to 
do so. Those enforcement actions could come at any time, and no 
one is off the hook. In terms of whether the service has gotten 
better, there is a lot more shipping. There is more shipping, 
more quantity than ever before.
    The quality has gone down a lot for a lot of shippers. I 
wish I had better metrics for you, but we certainly get a lot 
of reports that in terms of timely arrivals, in terms of 
predictability, in terms of basically any measure you could 
have, it has gotten much worse.
    To be fair, that is because the entire world has 
congestion. So it is not just--it can't be just laid on those 
executives. But certainly, I think, a large part----
    Senator Warnock. I don't think anybody is arguing that 
there is any single reason.
    Mr. Maffei. Yes.
    Senator Warnock. I mean, we are dealing with supply chain 
disruptions. The question is, to what degree are folks 
exploiting this larger situation? Let me ask something else. 
Does the Federal Maritime Commission currently have all the 
tools it needs from Congress to fulfill its mission and ensure 
a competitive and reliable international ocean transportation 
supply system?
    Mr. Maffei. Senator, I am extremely glad you asked that 
question. I do not feel we do. We will do--we are doing our 
very, very best with the resources given us. The Federal 
Maritime Commission is less than 120 employees. We do have 
authorization for more than that and we are hiring. But we are 
a very small agency, and we certainly could use more resources.
    The exact amount of resources depends on what you pass, you 
know, if you are giving us more authority or not, and exactly 
how quickly, you know, just how feasible it is to hire the 
people fast enough to ramp up on those sort of decisions. But 
there is no question that we need more resources. Many of the 
members of this committee, though, have already put a lot of 
work into doing that.
    So this is not a, you know, please, please, and nobody is 
paying attention. There are certainly a lot of good efforts to 
try to do that, but I really appreciate you asking me that, 
Senator.
    Senator Warnock. No, I appreciate your response.
    Mr. Maffei. Let me just say, there are cases that we could 
pursue more. We pursue the best ones we can. There are cases 
that we could pursue more, but we simply don't have enough----
    Senator Warnock. You don't have the tools. Which is why I 
support the bipartisan Ocean Shipping Reform Act in an effort 
to close these gaps and to protect the public from unfair and 
deceptive practices. Thank you so much.
    The Chairman. Thank you. Senator Thune.
    Senator Thune. Thank you, Madam Chair. Commissioner Dye, as 
you know, the bill I introduced with Senator Klobuchar codifies 
FMC's current actions to further define what constitutes 
unreasonable detention and demurrage practices, which while 
also establishing a separate streamlined complaint process to 
move, or I should say to more efficiently resolve disputes. Do 
you believe that further defining what constitutes an 
unreasonable detention or demurrage charge will help to 
alleviate some of the confusion surrounding the current 
process?
    Ms. Dye. Thank you, Senator Thune. Of course. And I will 
add, of course, the Commission would faithfully enforce any law 
as enacted. You know, we are interpreting the--we are enforcing 
the interpretive rule now, and so I wouldn't want anyone to 
think that they are--that we are waiting around for new 
authority. But we will continue to work with you on those 
issues. And of course, if there is a particularity that will 
help enforcement, of course we would favor it.
    Senator Thune. So let me just ask you a question, and you 
can both respond to this, too. But I want to correct the record 
on the intent of the Ocean Shipping Reform Act. I think I said 
this in my opening statement. Our bill is not intended to fix 
the supply chain crisis overnight. Instead, this bill makes 
improvements and clarifications to FMC's authority that allow 
it to more easily intervene when truly egregious and anti-
competitive behavior is discovered.
    And I realize fully that the supply chain crisis goes well 
beyond the ports, and this is, this bill is just one piece of 
the puzzle. But could I have you comment on just how clarifying 
the, or clarifications I should say the FMC's authority will 
improve the fluidity in ocean shipping? Either of you care to 
comment on that.
    Mr. Maffei. I think there are a lot of provisions in the 
bill that would help. Certainly provisions on making it clear 
where the Congress stands on detention and demurrage. I mean, 
let me make no mistake, the recommendation that came out of a 
previous fact finding that Commissioner Dye held, Fact Finding 
28, that set this rule, it is a very simple rule. If detention 
and demurrage fees help move cargo, they are OK. If they don't 
help move cargo, they are not. I would have thought that was 
enough. I was naive.
    So we are going to have to do more. Having Congress behind 
that is very, very important. It also gives us more leverage, I 
think, in many different ways in terms of the burden shifting 
in detention and demurrage.
    So no longer will a shipper or a small shipper or an 
agriculture shipper have to take pictures of every little thing 
that they, you know, here, I have got to take--and we have 
been--asking people, well, take a picture of that sign that 
says you can't get in the port. No, it would be the carrier 
that has to prove that it is legitimate. That is huge. That is 
just a couple of examples.
    Senator Thune. Commissioner Dye.
    Ms. Dye. I think that the issue that we talked earlier 
about for exporters and their problems with paying storage for 
the ship that hasn't even arrived, is a very clear example that 
they shouldn't have to pay. Shouldn't get a bill. There are a 
few others like that that are more obscure, but I agree with 
the Chairman.
    If they are helpful to us, then we will be delighted to 
have the authority. I honestly believe that our outreach with 
our ocean carriers to help them understand, first of all, that 
we are determined to enforce the rule. And second of all, to 
understand this incentive principle that we use is working.
    Senator Thune. Well, I appreciate your recent statement 
providing further guidance on options for shippers to file 
complaints. And I don't have a lot of time, but is there 
anything else you believe the Commission can do to improve the 
transparency and efficiency of the complaint process?
    Ms. Dye. I--we have literally revamped our enforcement 
approach for demurrage and detention. We have 35 cases, I 
think, outstanding for demurrage and detention that will 
proceed to final case law to provide precedence. This is not 
nearly so fast as any of us wanted, but you should be assured 
that we are doing everything we can. And I have had personal 
conversations with ocean carriers who I believe get it and are 
going to change. If they don't, the Federal Maritime Commission 
will be there.
    And we have revised a lot of our rules on ways that they 
can recover their payments, even if we charge fees for 
violations of the law, which is their--which is a unique 
approach to law enforcement. So we are pulling out all the 
stops on this because the world is watching us. I hear from 
Europeans, I hear from our friends in Australia who want to 
follow this approach. And that would be that would be great for 
the--globally.
    Senator Thune. Chairman Maffei, my understanding is the 
FMC's Maritime Transportation Data Initiative has been meeting 
regularly, most recently this week, to discuss current 
challenges with maritime data and to suggest improvements. 
Could you provide an update on that initiative and maybe some 
of the preliminary findings?
    Mr. Maffei. Yes, just quickly on your last question. We are 
working on a lot of different ideas. This won't surprise you, 
Senator, but the best ideas don't come from us, they come from 
the shippers themselves. And that is where we got the idea of 
having the export advocate in caters to help individuals 
navigate.
    In terms of look, we all know that data and is going to be 
a huge part of the future. One of the things we want to do is, 
you know, as I mentioned to Senator Tester, and he wasn't too 
happy about it, but the data--the stuff we get is proprietary, 
but that doesn't mean we can't do aggregate studies. It is just 
right now there is no standardization. It is a very complex 
issue, though. And so what I did is I asked one of my 
colleagues, a former Commerce Committee staff person, Carl 
Benzyl, to look into the issue.
    Some of you know, Commissioner Benzyl. He is a wonk. He 
gets into this stuff, and he is talking to everybody. And I am 
proud that he is having open meetings, and anyone can join into 
these meetings. It is a series of meetings. I can't tell you, 
right, you know any conclusion so far, but you know, we are 
looking into it, and we hope to be, you know, a bipartisan help 
to guide all of these data issues and because it is certainly a 
huge component.
    The Chair. Thank you. Senator Hickenlooper.

             STATEMENT OF HON. JOHN HICKENLOOPER, 
                   U.S. SENATOR FROM COLORADO

    Senator Hickenlooper. Thank you, Madam Chair. And thank 
both of you for your efforts on this. If you need more metrics, 
I am sure you have got lots of anecdotal, but Colorado is awash 
in anecdotal evidence. Kelty is one of our--it is a Boulder 
based outdoor recreation company, outdoor equipment company. 
They are shipping containers increased from $1,500 to $2,000 
pre-pandemic to $15,000 in 2021. Before Adventures is a small 
outdoor toy company. They could suffer $2 million in losses 
this year, which for them would be catastrophic.
    Typical shipping costs increased. What they could ship for 
$6,000 now suddenly is $30,000. Leprino Foods has had 99 
percent of their 2021 ocean shipments were delayed or rebooked 
for a different time. Over 100 bookings for shipping were 
rebooked 17 times, averaging in a 5-month delay.
    So Chairman Maffei, with these skyrocketing costs, how has 
the export expert position that the Office of Consumer Affairs 
helped small businesses register complaints, get that 
information to you, about unfair ocean carrier practices 
without obviously, without fear of retaliation?
    Mr. Maffei. Yes, I mean the fear of retaliation, we are 
doing everything about it and the additional help that the 
Committee would give would be good. I can say anecdotally that 
I know of some people who did file complaints. They just 
don't--those people just had the guts, had their names on them, 
settled those complaints, and actually believe it or not, their 
relationship with the carrier is better. I don't know if this, 
you know, that the carrier just sort of found religion or 
whatever it is, but it does happen.
    Each case is different. Each case is different. So in some 
cases, consumer affairs and dispute resolution can solve it. 
You know, I was a Member of Congress briefly. I know your 
Governor well. And you know, we used to get cases, you know 
what you do, maybe you might have staffers make a call. If you 
don't get the right answer, you pick up the phone, you call the 
executive. We do that. I do that. Commissioner Dye does it.
    Every Commissioner does that. And we are proud to. So that 
sometimes helps. But other times, you know, we think--you know, 
we advise them, do you want to file a complaint? You can file a 
formal complaint. Also, the law allows them to file their own 
case. And frankly, at the moment, filing their own case is 
better because then if they get the damages, they get to keep 
them. Your legislation, by the way, would allow us to file a 
case and then be able to reverse some of the damages to the 
aggrieved party.
    Current law does not allow that. But in any event though--
there is a lot of noise and that is why, you know, we do try to 
help each, and every case navigate. I will also be honest, you 
know, candid, a lot of folks have a lot of complaints, but at 
the end of the day, the thing that they thought the contract 
said doesn't say it and the contracts are too often written 
just to protect the carriers.
    And it is like when any of us, you know, sign those 
agreements online. I know every single member of this committee 
always reads every word of those agreements before clicking 
yes. But you know, some of it is just that sort of thing. And 
these small businesses who haven't had a look at these 
contracts for years because frankly, before the pandemic, there 
was plenty of space. The carriers were willing to sell all of 
it, you know, because they never ran out. Now that is 
different.
    Senator Hickenlooper. Right. And I, you know, just looking 
into the issue, there is not a lack of competition, really, 
there is just a lack of space right now. That backlog is 
getting processed.
    Mr. Maffei. I mean, one can make the argument that the 
consolidation of shipping lines through all these years is 
certainly--you know, the market power does exist. The primary 
driver, though, is this incredible demand. We would not have 
this crisis today if there weren't this incredible demand. 
Before this demand, there was actually oversupply.
    Senator Hickenlooper. Right. So which means we should be 
able to accommodate the bottleneck here pretty quickly. Ms. Dye 
as you are aware, the U.S. agricultural exports have really 
been hit hard by the disruptions and the delays in the supply 
chain. We have a company in Colorado, Leprino Foods, which is a 
multibillion dollar global dairy distributor based out of 
Denver, and they conveyed to us that the shipping cost for 
their products has increased 57 percent since the beginning of 
2021 and shows no sign of stopping. This proposed rulemaking, 
how is this going to--how well will this reduce the cost of the 
shipping of U.S. agriculture?
    Ms. Dye. Well, they--that rulemaking that I mentioned was 
only one of my recommendations. But I can assure you, we have 
kept on top of the additional order book from the ocean 
carriers. For example, how--if there is an overwhelming demand 
now of supply, what are we doing for the United States to 
correct that in the future?
    We don't--none of us know exactly how long this is going to 
last or whether or not the demand will continue, but we 
understand this was--information was provided to me that 705 
new ships are on order and a lot of that capacity will be 
available to the United States.
    Senator Hickenlooper. And how many ships were 
decommissioned in the last 18 months? Because that is--my 
understanding is they haven't decommissioned suddenly massive 
numbers of ships, so it is great they have got new ships on 
order, but it seems really to be a backlog, a bottleneck that 
is a result of backlog. I mean, that is what we should be 
addressing, and I think that is what you are addressing.
    Ms. Dye. Yes, absolutely.
    Mr. Maffei. Senator, one of the issues of, it would seem 
simple just add more ships, but that is one of the reasons why 
we have the lines. They just end up having, you know, waiting 
in the line. So you are quite right, it is not as simple as 
increasing that capacity. And it is also the overall supply 
chain capacity. And as you know, both of us have discussed and 
the Chair and the Ranking Member both mentioned, there are a 
lot of these issues inland, and that is really where the 
capacity strain is.
    Senator Hickenlooper. Right. And that is why we did the 
bipartisan infrastructure bill will address some of those. 
Madam Chair, I yield back to you.
    The Chair. Thank you very much. I don't know, Senator 
Klobuchar, if you have more questions. I am going to ask my 
round of questions now. I don't know if we have any of our 
other colleagues joining us online, but if not, then that will 
probably wrap this up for this hearing. So that is kind of a 
last call announcement to anybody who might be out there 
joining us. I wanted to go back.
    Listen, for me in the Northwest, this is about agricultural 
product that needs to get to international markets, and it 
needs to get so in a timely fashion. There are some of these 
products that are highly perishable and so timing matters. So 
the way I see this, the reason why you even exist is because 
the United States of America set some terms for people to come 
to our ports and deliver product. Is that not right? That is 
the history of us and our----
    Mr. Maffei. Yes. I mean, I think we have gotten away from 
that, certainly part of the purposes section. But you know, 
yes----
    The Chair. Part of what Senator Tester was saying is we are 
letting everybody come here and make bank, make big bank, huge 
increases. Our longshoremen actually have increased their 
productivity. Some died even doing it.
    And yet this issue is they are making bank and then they 
are leaving our products on the dock. That is exactly what is 
happening. And you don't seem to have the authority, which I am 
going to try to get at here is why you don't have the authority 
and what we need to do to change it because we are going to 
pass some legislation here. We are going to fight for these 
shippers who need to get their product to international 
markets. And as a very trade dependent state, I will make this 
the biggest priority of this committee if it is what it takes.
    So first and foremost, under Section 41104 of Common 
Carriers, it says that any person directly or indirectly may 
not give any undue or unreasonable preferences or advantage or 
improperly undue unreasonable prejudice or disadvantages. And 
then that is in section--that Section sub 8 and then sub 9 is 
or give any undue preferences or advantage to impose undue, 
unreasonable prejudice or disadvantage with respect to any 
port. So why doesn't that give you enough authority today?
    What is it about that language that doesn't allow you to 
say to these major shipping companies who have now basically 
been even more consolidated, so it is not like there is 
somebody who says, I will deal with the small shippers, I will 
take their product and get them to Asia? That is not happening. 
These guys are just hurrying back, getting more cargo, and 
jamming them through our ports and leaving our shippers and our 
products there on the docks to rot.
    Mr. Maffei. Well, Senator, Madam Chair, some of it has 
evolved over years. It has to do with the trade deficits. The 
carriers make their money on what is called the front haul, 
coming to the United States.
    The Chair. OK, I don't need it explained. I know how they 
are making money. It is in the paper. It is in the Wall Street 
Journal. They are making a lot of money. It is record profits. 
What I am trying to get at is what in the existing authority 
right there does not allow you to do something about these 
unreasonable rates. What is it?
    Mr. Maffei. The carriers could defend themselves by saying 
we are offering space, if they want to pay as much as the 
importer, we will give them space, and therefore we are not 
discriminating.
    The Chair. How is their--what is the rate increase? Is it 
over 100 percent increase?
    Mr. Maffei. Oh, it is well more than that. I was thinking 
about Mr. Hickenlooper's people got a great deal.
    The Chair. How is that reasonable? How do you determine 
that is reasonable?
    Mr. Maffei. I don't believe it is, ma'am.
    The Chair. OK, so as Section 6(g) of the Shipping Act 
allows--empowers the FMC to go to Federal court to seek an 
injunction if it determines that any agreement or agreements 
between carriers or others are likely to produce an 
unreasonable increase in transportation costs. Do you agree 
that that dramatic increase during the pandemic is an 
unreasonable increase in transportation costs?
    Mr. Maffei. I certainly agree that it is a colossal 
increase. Whether it would be unreasonable under the law is a 
more complicated question. I will say, though, that I am not 
sure that--we don't have evidence--well, we are looking into 
whether we can connect these costs to the alliances or to the 
individual carriers. Either way, it is a huge problem for----
    The Chair. They are unreasonable cost. Trust me, they are 
unreasonable cost, and they aren't even able to pay it. So we 
are giving access to our ports, and we basically believe in 
trade. I have come from one of the most trade dependent states 
in the Nation. Believe me, I believe in trade probably more 
than 98 percent of the people in the U.S. Senate, maybe Patty 
Murray and I are like the top two.
    We believe in it. OK. So we want to have this shipping 
industry work and work effectively, but it can't be a one way 
street. And so we can't have our products left on the docks. So 
we want to have--if you don't feel that you can go to court 
right now on unreasonable rates or you don't feel like the 
definition is strong enough.
    Listen, I have I have authored three statutes related to 
unfair and deceptive practices and manipulation. And believe it 
or not, there is a lot of case law already in these areas. And 
so I do think--so I really want to nail down here, what is it 
that you----
    Mr. Maffei. Under current law, a rate, no matter how high, 
in itself is not unreasonable. It would be how that rate of was 
arrived at. If it is an alliance. How they got to that rate. 
There is----
    The Chair. It is not about an alliance. It is that we found 
in so many aspects of manipulation of oil and natural gas and 
when we set new laws because it wasn't about collusion, it 
wasn't about somebody coming together and setting a price. It 
is about whether you have a market condition that basically 
serves the customer, and you have small customers here for not 
getting served is the issue.
    And so--and they can't get their products out of our ports. 
Importers can't get their products out because they can make 
more money being exporters to the United States than bringing 
our product back to Asia.
    Mr. Maffei. There is no doubt that your observations are 
well-taken and your points are right. This bill was--the last 
bill was written 1986, 36 years ago. We didn't have mobile 
phones. I mean, the industry has changed so much. That is why 
it is so important that we update it. Now, we don't have the 
authority to regulate rates.
    We don't have the authority to say that rate is too high. 
We don't have the authority to say you have to pay some 
attention to small businesses, you can't just pay attention to 
the big box stores. We don't have that authority. I wish--you 
know, sometimes I wish we did. And if you give it to me, I will 
use whatever authorities that the Congress sees fit to give us.
    The Chair. Well, we are definitely going to give you new 
authority. The question is whether we get it absolutely right. 
Because we can't afford not to get this right. We can't afford 
this to continue this way. So I will take, for the record, 
something more defining of on the unreasonable rate. Maybe you 
can go back to more----
    Mr. Maffei. I would be very glad to give you something.
    The Chair. Counsel at the Federal Maritime Commission--I am 
all for a Federal Maritime Commission and a strong one. That is 
why we also sent a new nominee to you and hopefully that will 
be some more expertise, at least from the real life experience.
    Mr. Maffei. We do have somebody who worked on the docks 
himself.
    The Chair. Yes, and I think that is--I think that is very 
good experience. But I think that we have to crystallize here 
what exactly are we talking about. To me, when I read this 
authority, it seems to me you should be able to go to court 
right now on unreasonable increases in transportation costs. It 
seems to me that you should be able to do that. But let's--we 
will write one for the record that gets you the counsel and get 
you the right question. Senator Klobuchar.
    Senator Klobuchar. Thank you. Yes, I just had one 
additional question. I appreciated Senator Cantwell's line of 
questioning and that Senator Thune, who cares a lot about this 
as well, now returned. One of the things I just want to make 
very clear simply is that these price increases the consumers 
have experienced are, in fact, related to these supply chain 
problems when it comes to shipping. And do you believe they 
are, Mr. Maffei, not the only reason, but a reason?
    Mr. Maffei. With that qualification, yes, of course they 
are a reason.
    Senator Klobuchar. OK, thank you. So I look forward to 
moving our bipartisan legislation swiftly. I will note there is 
another bill that there has been some mention of by me and a 
few others tangentially about the antitrust piece of this and 
that, in fact, there is immunity right now. Correct, Mr. 
Maffei?
    Mr. Maffei. There is--yes, there is a limited immunity. And 
as I say that immunity can be gained just by filing with us and 
letting 45 days pass. And we have the burden of proving the 
court that that wouldn't be right within 45 days. I personally 
feel that is almost impossible--an impossible standard, so. And 
by the way, those immunity never expires, which is something 
else that I would like to talk to you about, Senator.
    Senator Klobuchar. OK, well, that would be very helpful 
because we, of course, have a bill to get rid of the antitrust 
immunity, and with members of the Judiciary Committee for this 
industry because I just see no reason when you have this near 
monopoly situation when it comes to the alliances, that this 
would remain.
    Mr. Maffei. Yes, and yet there are reasons why you might 
not agree that there ever should be an antitrust immunity. I 
will say, though, that it depends on the circumstances. If 
prices day as high as they are now, one could do that.
    There is certainly a credible scenario that if prices go 
back down, getting rid of the alliances, which again, these 
carriers are already it is illegal for them to do prices--to 
collude on prices. If you get rid of those, it could actually 
have the opposite effect. It could create more consolidation, 
bankruptcy, such as the Hanjin bankruptcy.
    We never thought that would happen. So there could be 
unintended consequences to completely eliminating it.
    Senator Klobuchar. So what you are saying, in addition to 
getting rid of the immunity, you could also do something to 
limit some of the times and----
    Mr. Maffei. Exactly. The context----
    Senator Klobuchar [continuing]. Be more defined in terms of 
how you handle the antitrust----
    Mr. Maffei. Precisely. I am just talking about getting rid 
of the immunity alone in a vacuum and hoping that it will solve 
things. No, it would be more complex than that. But you are 
quite right, Senator, there are ways to do it.
    Ms. Dye. I mean, Senator, we would like to talk to you more 
and to your staff about how we handle our competition laws 
because we, our 6(g) is modeled against the Clayton Act Section 
7. And so first of all, that we have to show a reduction in 
competition.
    Senator Klobuchar. Understand. Well, that is why we are----
    Ms. Dye. So we would like to talk to you. Nobody is immune 
from competition laws.
    Senator Klobuchar. Well, given these prices, you know, 
given seven fold increase in profits, something is going wrong 
here. And that is why Senator Thune and I have this bill to 
take one approach similar to the House bill. But as you know, 
the House bill also includes the antitrust. We have broken it 
up here. And that is why we are going to get something done 
here. And hopefully we will never see anything like this again. 
But I do want to thank both of you for your hard work and 
your--the work you have done here. It has opened up I think a 
lot of avenues for us here to pursue, and I believe that the 
Maritime Commission needs additional tools to do your work in a 
way that is good for consumers and producers, so.
    Mr. Maffei. You will get no argument from me, Chair.
    The Chair. OK, thank you.
    Senator Klobuchar. Thank you very much.
    The Chair. And just to clarify, you guys actually reduced 
fees--fines over the last several years, is that correct? Like, 
we used to have a heavier stick----
    Mr. Maffei. Yes, in fact, fines have gone down. We have--
there are some chronic issues with enforcement, in my view, 
that I am attempting to solve. It is been my top priority is to 
get enforcement back on track. And I am proud that we have 
three cases. You may say, wow, three cases. That is not that 
much. That is three more than we have had in the last decade 
against ocean carriers.
    So there are some legacy issues here that we are dealing 
with together in a bipartisan way, but we are dealing with. Can 
I just say one quick thing? You know, I did--I served in the 
House. I actually have the largest apple producing--when I was 
there at the largest apple producing county outside of 
Washington State, Senator Cantwell, you have five or six that 
beat Wayne County, New York.
    There are not a whole lot of opportunities these days to do 
something bipartisan that is going to help people in farmland 
and in inner cities, and this is one of them. So I just----
    The Chair. It is why you are here.
    Mr. Maffei. Yes. Well and I just--it is a thank you because 
I really appreciate it. And I just, if I can encourage, you 
know, no bill is perfect, but this will sure help.
    The Chair. Well, no, no, no, we are going to get something 
that works. And so it is too important to the growers. And 
trust me, not a fan of the Trump tariffs, not a fan of the 
trade wars that got created. These people have taken it on the 
chin. And so we are not going to create more havoc, we are 
going to help them, and we are going to get legislation that 
does so. With that, unless any of my other colleagues, the 
record will stay open--thank you so much.
    I want to thank Senator Klobuchar and Thune for producing 
this legislation. I do think it is a very important piece of 
legislation. Very important, healthy start would--as Senator 
Klobuchar reminded me, this also is in the House version of 
USICA, which is the bill that we are now trying to work and 
negotiate out. So, but I personally would like it if the Senate 
would show some initiative and action on this legislation to 
clarify where we are in addition to the House.
    I think that would be helpful. So the hearing record will 
remain open for two weeks until March 17, 2022. Any Senators 
who would like to submit questions for the record should do so 
by March 17, 2022. We ask that your responses be returned to 
the Committee as quickly as possible and in no case later than 
two weeks after the receipt. And that concludes today's 
hearing. Again, thank you to the Commission.
    [Whereupon, at 12:16 p.m., the hearing was adjourned.]

                            A P P E N D I X

   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                            Daniel B. Maffei
    Question 1. Does FMC have the authority to act against rate 
increases?
    Answer. Since the enactment of the Shipping Act of 1984, the FMC 
has had no authority to approve or disapprove of rates per se.
    In the evolution of shipping regulation from 1916 to 1984, there 
was a tightening of regulatory control over ocean carriers to prevent 
discrimination in rates and ensure that carriers strictly adhered to 
their filed tariff rates. Following the creation of the Federal 
Maritime Commission in 1961, Congress amended the 1916 Act to address 
certain concerns about anticompetitive conduct by ocean carrier 
conferences. Specifically, the 1961 amendments mandated tariff filing 
and authorized the Commission to disapprove rates that were determined 
to be detrimental to the commerce of the United States.
    The 1984 Act radically departed from the previous regime by 
allowing individually negotiated service contracts as an alternative to 
tariff rates. With the disappearance of the conference system (whose 
sole purpose was to collectively set rates of the conference members) 
and the shift of most cargo now moving under service contracts, 
Congress did not continue to allow the FMC authority over rates. The 
Ocean Shipping Reform Act of 1998 provided shippers and carriers with 
more flexibility to negotiate rates, decreased reliance on carrier 
tariffs, and relaxed shipping regulation by allowing most service 
contract terms to remain confidential.
    The Commission does have the authority to address rate 
discrepancies in certain situations where similarly situated shippers 
are being offered a different tariff rate. However, this authority is 
only to ensure that there is no discrimination among shippers due to an 
``undue'' or ``unreasonable'' prejudice. (See answer to question 2).
    The Commission also has authority to take action if rates were 
arrived at in a manner contrary to the Shipping Act. For example, if 
evidence was uncovered, either through the Commission's comprehensive 
monitoring program or otherwise, to indicate that carriers were 
discussing and setting rates outside the authority of their FMC 
agreement, then that activity could be the subject of the prohibition 
in 46 U.S.C. Sec. 41102(b), as well as violation of other antitrust 
statutes administered by the Department of Justice.
    However, I reiterate that I know of no authority for the FMC to 
object to a rate per se. Even the prohibition against ``unreasonable'' 
acts does not include rate setting. Therefore, as I indicated to Chair 
Cantwell at the hearing, I (and my fellow Commissioners) indeed may 
agree with her that the current rates set by carriers are 
``unreasonable'' or, for that matter, that the rate of rate inflation 
is ``unreasonable'', but the Shipping laws do not allow the FMC to take 
action on those items whether or not they are deemed unreasonable.

    Question 2. Does 46 U.S.C. Sec. 41104(a) (8) or (9) give the 
Commission authority to take action against carriers to regulate rates 
or terms of service for export cargo or to require carriers to offer 
transportation service under conditions defined by the Commission?
    Answer. Since 1984, the law does not give the FMC authority to 
regulate rates and extremely limited authority to regulate terms of 
service, even with regard to exports. I would note here that while the 
``purposes'' section under 46 U.S.C. Sec. 40101 states a purpose of the 
act is to ``promote the growth and development of United States exports 
through competitive and efficient ocean transportation and by placing a 
greater reliance on the marketplace.''
    I will point out that it is quite plausible that ``reliance on the 
marketplace'' prescribed by this section may not provide satisfactory 
solutions in many current cases involving U.S. exports. Regarding the 
specific question about Sections 41104(a)(8) and (9), these sections 
focus entirely on ensuring that common carriers do not give preference 
to certain shippers. They only apply to services provided under a 
tariff or service contract. The FMC cannot affect a rate that is seen 
as ``too high'' or ``unreasonable'' under this authority if it is being 
offered to all shippers without undue or unreasonable prejudice or 
disadvantage.
    With respect to service provided under a tariff, it is important to 
define what authority the Commission does and does not have regarding 
tariffs. While carriers are required to publish tariffs with the 
Commission which show ``all its rates, charges, classifications, rules, 
and practices between all points or ports on its own route,'' the 
Commission does not have authority to review or dictate those rates or 
service terms. 46 U.S.C. Sec. 40501(a)(1); see also. 46 U.S.C. 
Sec. 41104(a)(2).
    With respect to service contracts, Sec. 41104(a)(9) provides that a 
common carrier providing service under a service contract may not give 
any undue or unreasonable preference or advantage or impose any undue 
or unreasonable prejudice or disadvantage with respect to any port. The 
Commission's authority over service contracts is similarly limited to 
ensuring, under Sec. 40502(c), that the service contract contains 
certain essential terms and makes certain required disclosures. But the 
Commission has no oversight of rates or of business decisions involving 
the movement of cargo. The rates are set by the market, and many market 
forces can determine rates including cargo location and type (such as 
perishable goods vs. electronic equipment), fuel costs, demand, and 
distance, for example. These factors inform the negotiations between 
sophisticated parties that undergird service contracts in the first 
instance. A service contract entered into by the parties and filed with 
the Commission does not permit Commission intervention on the terms 
under that contract.
    Unlike the Commission's authority over agreements between or among 
common carriers and other regulated entities, which the Commission has 
authority to review before they become effective, the Commission's 
authority over service contracts and tariffs is quite different and 
even more limited. Carriers file tariffs with the Commission, but the 
Commission has no authority to examine the rates/service terms and 
inquire as to their reasonableness or market impact or to require 
carriers to justify or revise their rates/terms of service as a 
condition of allowing them to operate under those terms. In other 
words, as long as the common carrier is providing service in accordance 
with its tariff or a service contract, the Commission would not be able 
to establish the elements of a Sec. Sec. 41104(a)(8) or (9) claim based 
on, for example, a carrier imposing higher rates.
    In sum, Sec. Sec. 41104(a)(8) or (9) would apply to the current 
state of shipping rates only if FMC could show evidence that carriers 
are acting in derogation of their applicable tariffs or service 
contracts. Sections 41104(a)(8) and (9) address, respectively, services 
provided under tariffs and service contracts. These sections prohibit 
common carriers from giving any undue or unreasonable advantage to, or 
imposing any undue or unreasonable prejudice or disadvantage on, a 
shipper pursuant to a service under a tariff (Sec. 41104(a)(8)) or with 
respect to any port under a service contract (Sec. 41104(a)(9)). These 
sections do not apply to current conduct by carriers vis a vis rate 
increases because there is no evidence that carriers are acting in 
derogation of their applicable tariffs or service contracts. The 
Federal Maritime Commission cannot step in under these provisions 
unless there is an allegation that a carrier is acting in contravention 
of its applicable tariff or service contract, and rates being high 
alone does not equate to per se undue or unreasonable prejudice or 
disadvantage.

    Question 3. Does 46 USC 41307(b) (aka 6g) provide such authority?
    Answer. No. This authority defines the competition standard against 
which the Commission evaluates agreements among regulated entities, 
including ocean carriers and marine terminal operators. Most agreements 
among ocean carriers do not include rate authority; they include the 
authority to share capacity and, in the case of the global alliances, 
to coordinate capacity. Most rates are either negotiated independently 
via confidential service contracts with individual shippers or through 
tariff rates also published independently by each carrier. There are 
currently only 9 agreements on file with the FMC that contain rate 
discussion authority. Many of these are in relatively small trades 
(Bermuda, the Caribbean, Central and South America) and none of these 
involve the global carrier alliances.
    As noted in the answer to Question 1, if evidence was uncovered to 
indicate that carriers were discussing and setting rates outside the 
authority of their FMC agreement, the FMC and/or the Department of 
Justice would have authority to take action under current law but only 
due to the manner in which the rates were set, not due to the amount of 
the rate or any measure of the inflation of the rate compared to past 
rates.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Roger Wicker to 
                            Daniel B. Maffei
    Question 1. Should the provisions of the Senate Ocean Shipping 
Reform Act and/or the FREIGHT Act be enacted, what resources would the 
Federal Maritime Commission need, in terms of staff and financial 
resources, to carry out the additional rulemakings and enforcement 
requirements in the bills?
    Answer. I support the requirement in the bill to hire no less than 
seven people in key bureaus and offices to enhance the Commission's 
investigatory capabilities. This directive reflects two of my key 
priorities as Chairman--to establish more rigorous and effective 
enforcement and to enhance public assistance functions at the Federal 
Maritime Commission.
    The Ocean Shipping Reform Act of 2022 has several rulemaking 
requirements of a significant nature with fairly immediate deadlines 
for implementation. The Commission will need to hire additional staff 
with specialized expertise to meet these legislative mandates. We 
anticipate needing as many as 17 new employees to include subject 
matter experts, attorneys, and technical writers. We envision hiring a 
mix of full-time and contractor personnel to meet our requirements for 
meeting rulemaking requirements enacted into law. As rulemakings 
conclude, individuals with skills that can be repurposed to support 
other functions within the Commission would be reassigned to 
appropriate policy and program offices.
    The Commission expects an increase of complaints necessitating 
review. Additionally, I expect more shippers to seek relief through 
filing a complaint that must be heard by our Small Claims Officer or 
our Administrative Law Judge. We are already working to address needs 
we have within the Office of the Administrative Law Judges to be able 
to more promptly hear and adjudicate cases. Accordingly, we expect the 
need to hire additional attorneys, investigators, judges, and small 
claims officers.
    The provision establishing a Shipping Exchange Registry will create 
new requirements for the Bureau of Certification and Licensing. We will 
need to hire a program director to establish and manage this program as 
well as transportation analysts and related support staff.
    The legislation has several requirements that will necessitate the 
Commission bolstering its information technology workforce and 
infrastructure. The requirement to establish a web-based gateway for 
the public to file complaints and comments will involve expanding our 
web management team. Similarly, the requirements for data collection, 
public reporting, and changes to service contracts necessitates experts 
who know how to manage projects and build databases to collect, store, 
and share information.

    Question 2. In your testimony, you said, ``Any bill that is 
ultimately passed into law must not have the unintended consequence of 
being too disruptive to trade.'' What did you mean by unintended 
consequences?
    Answer. I support this legislation and would inform Congress if I 
identified any provisions likely to cause unintended consequences. What 
would be worrisome are directives to take more radical action, while it 
could have a laudable goal, that would have unintended negative 
impacts. For instance, a directive that forced carriers to load a 
certain quota of exports when they visit U.S. ports seems to further a 
goal I agree with. However, the impact would likely be the opposite of 
the desired outcome. If forced to accept any exports ready to ship, 
carriers could start skipping ports with ready exports and sailing only 
to ports that traditionally have few exports. Even were this loophole 
closed, carriers could simply skip U.S. ports all together and call at 
Canadian and Mexican ports. This would devastate U.S. ports. Further, 
as fewer carriers called at U.S. ports, this directive would actually 
increase the cost of exports and there would be fewer options for 
exporters.
    Another example would be if the Commission got the directive to 
outlaw all detention and demurrage charges during a crisis such as that 
involving COVID. These charges have been problematic for many parts of 
the supply chain ecosystem, due to information asymmetries, uneven 
enforcement, or other issues. However, these charges do often serve a 
valid purpose. They create an incentive to move containers quickly in 
and out of ports. If the Commission prohibited all of these charges in 
certain circumstances, it could unwind the incentive to move cargo 
rapidly. This could lead to shippers or carriers using ports as 
warehouses for full or empty containers. Ordering the Commission to 
issue a simple rule prohibiting detention and demurrage charges could 
have the unintended effect of paralyzing ports.
    These are the type of unintended consequences that could disrupt 
trade that we must avoid. I look forward to working with Congress to 
highlight any of these potential pitfalls.

    Question 3. What work has the FMC done since the start of the 
COVID-19 pandemic, and the subsequent freight congestion challenges, to 
more closely examine for any unreasonable behavior by ocean carriers, 
particularly as it relates to the dramatic increase in freight 
transportation prices? What has the FMC learned from this work?
    Answer. The Federal Maritime Commission, through its Bureau of 
Trade Analysis (BTA), engages in continuous monitoring and analysis of 
the marketplace for any signs of anticompetitive or collusive behavior. 
The three ocean carrier alliances (2M, OCEAN, and THE) are already 
subject to demanding reporting requirements and close scrutiny because 
of the potential to manipulate the market. While high rates certainly 
draw the scrutiny of BTA, they are not in themselves evidence of 
improper behavior. Our economists and industry analysts examine 
conditions in the marketplace, as well as carrier behavior to determine 
if high rates are the result of supply and demand pressures or the 
product of an artificial reduction in supply of cargo space or some 
other action in violation of the shipping laws. We would be happy to 
provide a briefing on the BTA monitoring process.
    The Commission has responded to supply chain challenges as 
aggressively, creatively, and comprehensively as possible within the 
bounds of its jurisdiction. With respect to the high rates and 
associated complaints:

   We have increased investigative and enforcement activity, 
        paying particular attention to ocean carriers.

   We have initiated a new focus on addressing fees and 
        surcharges with the goal of bringing greater transparency to 
        rates.

   We have increased the monitoring requirements of ocean 
        carrier alliances and continue to assess if further changes are 
        necessary.

   We have provided guidance to shippers on bringing complaints 
        at the Federal Maritime Commission and we are seeing an 
        increase in both formal and especially informal docketed 
        proceedings being filed.

   We have reviewed hundreds of pieces of correspondence sent 
        to the Commission for actionable enforcement actions.

   The Bureau of Enforcement has continued to investigate for 
        any illegal conduct in the marketplace and stands ready to 
        prosecute potential violations by any entity under our 
        jurisdiction.

   We have consulted with counterpart competition authorities, 
        the European Union and the People's Republic of China, 
        regarding our respective efforts to ensure a competitive 
        marketplace for ocean transportation services, as well as 
        observations and conclusions from each regime's monitoring 
        work.

   I directed, following conversations with Commissioner Dye, 
        that the FMC created the Vessel-Operating Common Carrier Audit 
        Program to help ensure with compliance on the Commission's 
        interpretive rule on detention and demurrage and other 
        important regulation.

    To date, the Commission has not identified any credible cases of 
ocean carriers colluding to restrict space and, in that way, keep rates 
artificially high. We know that the world's container ship fleet is 
essentially fully deployed, and we know that the ocean carriers are 
aggressively ordering new vessels. Overall demand for container 
shipping services eclipses the capacity of container slots carriers can 
provide. We remain vigilant to look for any sign of collusive behavior 
or any other behavior that violates our statutes.
    With respect to the shipping rates, since the enactment of the 
Shipping Act of 1984, the FMC has had no authority to approve or 
disapprove of rates per se. Even the prohibition against 
``unreasonable'' acts does not include rates. Therefore, as I indicated 
to Chair Cantwell at the hearing, I (and my fellow Commissioners) 
indeed may agree with her that the current rates set by carriers are 
``unreasonable'' or, for that matter, that the rate of rate inflation 
is ``unreasonable,'' but the Shipping laws do not allow the FMC to take 
action on those items whether or not they are deemed unreasonable.
    I would add that the Commission has brought forward three formal 
enforcement cases against major carrier lines and there may well be 
additional ones to follow. We are seeing an increase in filed cases--
lawsuits essentially--at the Commission and we examine those for any 
potential enforcement actions we can bring. We will not hesitate to act 
aggressively against any party we believe has violated the law.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Marsha Blackburn to 
                            Daniel B. Maffei
    Question 1. As you may know, Senator Wicker and I introduced the 
Improving Memphis' Supply Chain Act that would require DOT, in 
consultation with the FMC, to issue a request for proposals to develop 
an operating model for an interoperable gray chassis pool at the rail 
ramps around Memphis, Tennessee. Do you support this legislation?
    Answer. Yes. Improving chassis availability across the Nation is a 
needed and important step toward improving the reliability and 
efficiency of the ocean-linked intermodal supply chain. I know that the 
Memphis Supply Chain Innovation Team has worked hard on this very issue 
and that they believe the answer to improving container velocity in the 
Mid-South region is establishing a single gray chassis pool in Memphis. 
The Innovation Team provided a very thorough briefing on their 
priorities to Chairman Martin Oberman of the Surface Transportation 
Board and me last August. This legislation appears consistent with the 
Memphis Team's goals.

    Question 2. The way ocean common carriers have been treating U.S. 
exporters raises serious concerns. There have been countless reports of 
foreign-owned ocean common carriers that have neglected American 
products at our ports. According to a California Globe report, ``China 
pays shipping carriers so much money to export Chinese-made goods. They 
are then paid a premium to carry the empty containers from America back 
to China.'' As a result, hundreds of thousands of containers with 
American products sit idle at our ports while foreign customers wait. 
Could you please explain why ocean common carriers continue to revoke 
the cargo space of American exporters?

    Follow-up. Could you also tell me if ocean common carriers allocate 
their space by commodity? If so, why?
    Answer. I share your goal that American exporters should be able to 
access overseas markets. Policymakers are right to ask what can be done 
to assist U.S. producers and manufacturers in procuring ocean 
transportation services.
    Though the Federal Maritime Commission is not a trade promotion 
agency, we are using the authorities and relationships we do possess to 
assist exporters. I have directed our Vessel-Operating Common Carrier 
Audit Team to expand its scope and evaluate how shipping lines are 
serving U.S. export shippers. Responses will provide better insight 
into not only market trends and performance, but where opportunities 
exist for individual lines to improve or increase access to service 
offerings. Additionally, I have assigned an advocate to the Office of 
Consumer Affairs and Dispute Resolution Services (CADRS) to assist 
export shippers. Finally, I directed the Bureau of Enforcement and 
CADRS to prioritize any cases involving exporters.
    Noting that each ocean carrier has a different business strategy 
for how it serves the U.S. export market, and some lines are doing a 
better job than others in the service they provide, it is reasonable to 
say all could do more especially on two issues. Exporters are 
particularly frustrated by Earliest Return Dates, providing shippers 
with more notice of this deadline would be beneficial. Similarly, the 
empty container return process is ripe for improvement. Commissioner 
Rebecca Dye has been working with marine terminal operators and ocean 
carriers to identify industry-led solutions to these issues. Improved 
information sharing and transparency would also address the above two 
issues and would benefit exporters generally and that is why I asked 
Commissioner Carl Bentzel to take-on the Maritime Transportation Data 
Initiative.
    A fundamental challenge to making progress in increasing service 
options for exporters is the Nation's overarching trade imbalance. 
Trade flows on Asia-to-U.S. routes are much higher than in the U.S.-to-
Asia direction. Ocean carriers establish services designed to meet 
customer demand, which for the U.S. market is serving American 
manufacturers and consumers importing cargo. This is the ``headhaul'' 
portion of the roundtrip a vessel makes. The ``backhaul'' is a 
repositioning move, putting assets back into position to serve the 
headhaul. American export shipments ride the backhaul. For decades, 
this has been advantageous to both shippers and carriers. For shippers, 
there was ample space to get aboard a vessel, they did not have to pay 
the much more expensive ``headhaul'' rate, and ocean carriers were able 
to generate revenue to defray some of the costs associated with getting 
vessels and containers back to where abundant cargo volumes exist.
    As a result of this system, carrier companies make most of their 
money on the ``headhaul'' cargo (i.e., imports) and comparatively 
little on the ``backhaul.'' When COVID-related effects increased rates, 
they increased even more dramatically for imports than exports and that 
growing discrepancy convinced some container lines to further 
prioritize getting equipment and ships back to Asia over taking more 
U.S. exports. I suspect that the article referenced this effect. It may 
be a deplorable situation in many ways, but there may be legitimate 
market-based reasons why it occurs.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Shelley Moore Capito to 

                            Daniel B, Maffei
    Question 1. The ongoing supply chain crisis continues to impact a 
whole host of industries across the Nation. The congestion of freight 
movement has affected specifically West Virginia, among other states. 
Additionally, the railcar shortages have resulted in shipment 
cancelations or delays. While railcar congestion and cancellation 
issues traditionally fall under the jurisdiction of the Surface 
Transportation Board (STB), can you speak to the impact on freight 
movement more broadly, and the impact on available railcars? 
Specifically, has the congestion at various inland terminals also 
impacted the availability of railcars?

    Follow-up. Has the Federal Maritime Commission (FMC) coordinated 
with other Federal agencies, like the Surface Transportation Board 
(STB), to address this issue?
    Answer. Ocean cargo relies on a multimodal system to get from 
origin to destination. Rail service is an indispensable link for trade 
that must get from a coastal gateway to a distribution or logistics 
facility in the interior of the United States. Similarly, many American 
export shippers rely on rail to connect their products to ocean going 
vessels. These networks are deeply interconnected, operational issues 
in one mode will have a consequential effect in another. Unless quickly 
resolved, problems will feed off one another, spreading in scope and 
magnitude. We have seen this happen over the course of the cargo surge 
that began in July 2020.
    Rail service that serves the ocean container market has been just 
as overwhelmed by the surge as any other segment of the broader ocean-
linked supply chain. Equipment shortages, personnel issues, and sheer 
volumes all contributed to decreased efficiency and reliability of 
intermodal rail service. Just as marine terminals at seaports have been 
overwhelmed with cargo, inland rail facilities have as well. There have 
been instances of suspended intermodal rail services from ports and 
inland rail facilities having to stop accepting cargo. These 
interruptions have the effect of degrading service and adding to 
congestion upstream and downstream from rail links whether at seaports 
or inland railheads. The consequences are cyclical and compounding.
    It is not just sheer volume that can interrupt rail service. 
Extreme weather and catastrophic events can shut down a rail line for 
an extended period. The winter storm that hit Texas in 2021 caused 
significant disruptions to freight rail operations in Texas and it was 
weeks before the system fully recovered. In that intervening time, 
shippers who needed to access yards in Texas, or cargo volumes that 
would normally flow through the state, could not move. Any interruption 
for any cause creates operational issues that take time to remedy and 
remediate.
    We are fortunate to have a good partner in the U.S. Surface 
Transportation Board. There is open channel of communication between 
FMC Commissioners and STB Board Members, as well as between our 
respective staffs.

    Question 2. Congress was able to pass a historic, bipartisan 
legislation that reflected our commitment to nation's infrastructure 
and just this last month was signed into law. The Infrastructure 
Investment and Jobs Act (IIJA) made significant investments across our 
Nation's transportation system and of that, $16.6 billion will be 
invested in port and waterway infrastructure. These investments once 
they come to fruition and will likely help the flow of goods for 
Americans. How will the multimodal and port infrastructure investments 
made in the IIJA help address the disruptions to container shipping and 
our Nation's supply chains?
    Answer. The cargo surge related congestion that began in Summer 
2021 has brought to the broader public's attention something that 
people in the freight industry have known for many years, there is 
simply not a lot of excess capacity or capability in the Nation's 
domestic transportation networks. We must think in terms of both 
physical infrastructure and systems infrastructure. In some places, 
capital projects are not realistic options for adding capacity to 
facilities or networks but improving processes might have a similar 
benefit to building out a terminal or railhead. A step toward improved 
information sharing between all the parties that handle an ocean 
container would very likely help realize more capacity out of ports 
that cannot grow much beyond their current footprints. The Commission 
is doing work on this very topic and our agreement authority would be 
beneficial to parties who wish to work cooperatively and 
collaboratively to create platforms that would achieve efficiencies in 
moving cargo. Investing in our domestic freight transportation networks 
is needed and will be beneficial to maintaining infrastructure needed 
to keep our economy strong and competitive.

    Question 3. On November 23, Ranking Member Wicker and I in 
introduced the Facilitating Relief for Efficient Intermodal Gateways to 
Handle Transportation (FREIGHT) Act. This legislation will build on the 
work of the IIJA by minimizing barriers and harmonizing port operations 
in order to alleviate the current shipping crisis. In your opinion, 
would the provisions of the FREIGHT Act help alleviate the logistical 
challenges we are currently experiencing?
    Answer. There are no immediate solutions to the multitude of 
underlying and interconnected causes for the congestion impacting the 
freight networks of the United States. The benefits of any legislation 
will take time to be realized. That noted, this is not the first time 
the ocean-linked supply chain has been disrupted and presumably it will 
not be the last time either. Legislation being considered by Congress 
will certainly be beneficial in addressing and mitigating any potential 
future disruptions.
    I am supportive of the Federal Maritime Commission provisions 
contained in the Facilitating Relief for Efficient Intermodal Gateways 
to Handle Transportation Act (FREIGHT Act). Increasing our 
investigatory and public assistance capabilities, providing more 
incentives for parties to bring cases at the Commission are all 
consistent with my priorities as Chairman to increase the enforcement 
and outreach work of the Commission. The Ocean Shipping Reform Act of 
2022 is an even stronger bill with the inclusion of FMC related FREIGHT 
Act provisions. For the record, I am sharing my views only on the 
Federal Maritime Commission section of the legislation.

    Follow-up. What are some of the provisions that would have a 
significant impact on improving operational and logistical challenges?
    Answer. I have limited my responses to the Federal Maritime 
Commission section of the FREIGHT Act. As I note above, the provisions 
in this section will benefit the Commission in providing better 
services to the public, increase our investigatory capabilities, and 
encourage more parties to seek relief through the formal complaint 
processes. Being more effective across all these endeavors will 
contribute to improving the freight delivery system and the interaction 
between carriers and shippers. I cannot speak with authority as to how 
other provisions of the bill might improve operational and logistical 
challenges more broadly.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Roger Wicker to 
                             Rebecca F. Dye
    Question 1. I appreciate your leadership of the FMC's Fact Finding 
29. The interim recommendations included three changes to statute 
related to strengthening anti-retaliation provisions, allowing for 
double reparations for violations of detention and demurrage 
regulations, and authorizing the FMC to order refund relief in addition 
to civil penalties. I was glad to include those recommendations in my 
FREIGHT Act. Can you elaborate on how those provisions would support 
shippers seeking redress for violations of the Shipping Act?
    Answer. I am gratified that these recommendations from Fact Finding 
29 were included in the FREIGHT Act. Shipper and trucker concerns about 
retaliation, litigation costs (both in time and money), and attorney 
fee liability are important disincentives to private party enforcement. 
Implementation of these recommendations will minimize barriers to, or 
incentivize, private party efforts to deter unlawful conduct.
    Broadening the antiretaliation provisions of the Shipping Act to 
include other regulated entities will protect those who complain to the 
Commission about potentially unlawful conduct. There is reason to 
believe that shippers, their agents, and their contractors are 
disinclined to file private party complaints or provide information to 
Commission investigators due to fears of retaliation. Although 46 
U.S.C. Sec. 41104(a)(3) prohibits retaliation, it only applies to 
retaliation by carriers against ``shippers.'' It does not apply to 
retaliation by other regulated entities, and it does not apply to 
retaliation against non-shippers, such as truckers or others working on 
behalf of shippers. Additionally, the current anti-retaliation 
provision appears to have been interpreted narrowly to focus on 
preventing carrier conferences from stifling competition from 
independent carriers. Amending the statute protects the different types 
of entities in the supply chain who could be subject to retaliation for 
complaining to the Commission about unlawful practices.
    By amending 46 U.S.C. Sec. 41305(c) to add 46 U.S.C. Sec. 41102(c) 
to the list of prohibitions for which double reparations are available, 
Congress has addressed the potential disincentive to private party 
complaints of the cost of litigating against carriers or marine 
terminal operators, especially as compared to the amount of ``actual 
injury'' at issue. In the past, it might not have made sense for a 
shipper to file a private party complaint to recover hundreds or 
thousands of dollars of unlawful demurrage or detention if it would 
cost significantly more to obtain a reparations award. By changing 
these incentives, Congress has taken an important step to deter 
unlawful demurrage and detention practices.
    By granting the Commission the discretionary authority to order 
refunds in enforcement proceedings in addition to civil penalties, or 
in lieu of civil penalties, Congress would incentivize parties to 
cooperate with the Commission in enforcing violations of the Shipping 
Act.

    Question 2. The ports of Los Angeles and Long Beach, with support 
from the Administration, have threatened extremely high fees for 
containers left on dock beyond nine days. The Administration has called 
these ``dwell'' fees, but these are actually demurrage fees. Has the 
FMC reviewed whether these fees, if implemented, would be subject to 
the Commission's interpretive rule on detention and demurrage?
    Answer. The Commission has not yet addressed whether these proposed 
dwell fees are demurrage. However, if these proposed fees are intended 
to incentivize the free flow of containers across the pier, then they 
function for all intents and purposes as demurrage and if so, in my 
view, would be subject to the enforceable standards outlined in the 
Interpretive Rule.

    Question 3. What have you learned about ocean carriers' compliance 
with FMC's detention and demurrage interpretive rule as part of the 
Commission's Vessel-Operating Common Carrier Audit Program?
    Answer. The VOCC audit program began by assessing the carriers' 
current policies and practices involving detention and demurrage and 
found that many of these did not properly align with the principles 
outlined in the interpretive rule. We created a best practices document 
and provided this to the carriers, which resulted in nearly all 
carriers altering their internal and external documentation on policies 
and practices to better align with the rule. We next provided briefings 
to each of the carriers on the rule which addressed gaps in carriers' 
understanding of the rule and ensured that we had common understanding. 
As a result, we have found that many carriers have further changed 
their internal and external policies and practices to ensure they 
better align with the interpretive rule, including changing their 
billing systems.
    While we believe this effort has created consistent understanding 
of the interpretive rule by carrier leadership among the audit members, 
this does not mean that there are no issues with detention and 
demurrage in practice. The FMC has issued an ANPRM on detention and 
demurrage and has encouraged individual shippers with complaints to 
contact the FMC.
    This is an extremely complex undertaking by the FMC, but the 
Commission felt a responsibility to intervene directly in the market to 
address the excesses in detention and demurrage practices.
FMC Carrier Compliance Program
    Question 4. How could FMC leverage existing statutory authority, 
through rulemakings, adjudications, or other actions, to address the 
issues we are seeing with detention and demurrage to ensure fees 
function as an incentive for freight movement?
    Answer. The Interpretive Rule is based on the incentive principle--
that detention and demurrage fees must facilitate freight fluidity by 
acting as an incentive to shippers to pick up cargo and return 
equipment. In effect, this principle allocates the risk of congestion 
to those in the best position to address the issue--the ocean carriers 
and the ports and marine terminal operators and in some cases the 
shippers, especially when they have opted for merchant haulage. This 
interpretive rule provides enforceable rules concerning the 
reasonableness of demurrage and detention practices and regulations 
under the Shipping Act. The interpretive rule describes a non-exclusive 
list of factors the Commission may consider in evaluating claims and 
complaints that come before the agency under 46 U.S.C. Sec. 41102(c) 
and 46 C.F.R. 545.4(d). The complexity and variables presented by the 
U.S. international ocean supply chain are too complex to capture in a 
Legislative Rule. The Interpretive Rule, however, which was developed 
pursuant to notice and comment, and is enforced through the 
Commission's considerations of cases and enforcement actions. Although 
the Commission is allocating additional resources to industry-wide 
compliance with the Interpretive Rule, we continue to enforce 
violations of 46 U.S.C. 41102(c) based on sufficient facts to support a 
demurrage and detention investigation.

    Question 5. In the Fact Finding 28 final report, you noted that 
clarifying definitions of cargo availability and providing consistent 
notice to shippers when they can retrieve their containers would 
benefit the ocean freight system. When considering the ongoing freight 
crisis, can you talk about how standardizing terms like 
``availability'' and improving communication with shippers about 
freight availability could make ports more efficient?
    Answer. As I concluded in Fact Finding 28 (and through my work with 
the Supply Chain Innovation Teams) it is evident that some of the 
demurrage problems experienced by American shippers would benefit from 
a focus on container availability. Presently, although demurrage and 
detention practices differ among ports and even among terminals at the 
same port, in general it appears that the start of allotted free time 
typically begins either when cargo is off-loaded from a vessel or when 
the container is moved to the terminal yard. In some cases, free time 
reportedly begins with vessel arrival. This lack of a commonly 
understood and shared understanding of ``availability'' creates 
problems in the supply chain--from the inability of shippers to know 
when to pick up containers to misunderstandings about when and how 
detention and demurrage charges can reasonably be assessed under any 
circumstances.
    An industry-wide implementation of a ``notice of availability'' 
based on when a container could actually be picked up or returned would 
harmonize supply chain fluidity and address traffic bottlenecks at our 
ports and terminals. Supply chain ``information'' is only valuable to 
harmonize supply chain activity if it informs supply chain actors of 
exactly what they need to know and when they need to know it. A clear, 
timely, dependable notice to shippers from marine terminals of actual 
cargo availability would be a major step forward to removing 
bottlenecks in the U.S. international ocean freight delivery system.
    Commission competition responsibilities inform our efforts in 
standardizing and clarifying existing maritime terminology. I support 
strategic supply chain standardization that would improve supply chain 
performance while encouraging innovation and competition in freight 
delivery practices. In that regard, I plan to recommend to the 
Commission under my Fact Finding 29 authority that we standardize the 
``practice'' of marine terminals in two areas: ``empty container 
return'' and ``earliest return date.'' We held many FMC Innovation Team 
virtual meetings on these topics and are ready to move forward to 
standardize these marine terminal practices under the ``reasonable 
practice'' authority of 46 U.S.C. 41102(c). Container return 
clarification will address problems with appointment availability and 
chassis availability. Current earliest return date processes create 
constant problems for our agricultural exporters and greater 
dependability in this area will promote a more efficient export supply 
chain.

    Question 6. In your testimony, you said, ``I do not recommend that 
the Commission `regulate' service contracting as it did prior to the 
1984 Shipping Act and the 1998 amendments, because that would reduce 
the flexibility that contracting provides to shipper customers.'' What 
would be effect of the FMC regulating service contracting as it did 
prior to the 1984 and 1998 legislation, and what impact would that have 
on shippers?
    Answer. As part of the move to deregulate all transportation modes 
in the 1980s, Congress addressed the costs and inefficiencies of the 
tariff-based system of common carriage in international ocean shipping 
in the Shipping Act of 1984 and moved the industry towards a market-
driven system based on the freedom to contract. Supported by both ocean 
carriers and shippers, this deregulatory effort culminated in the Ocean 
Shipping Reform Act of 1998 with a full recognition of individual, 
confidential service contracting. For more than thirty years, this 
approach for ocean shipping has resulted in greater efficiencies, 
vigorous competition, and reduced costs that have benefited American 
shippers.
    The recent rise in shipping rates and equipment issues is the 
result of a hopefully unique convergence of circumstances--a supply 
chain that is already strained at peak demand periods, overlayed with 
the challenges of a global pandemic, an international workforce that is 
disrupted by illness and an unprecedented demand in consumer spending 
and import orders in the United States. While there are problems that 
need to be addressed, such as detention and demurrage charges, I am 
concerned that a return to a heavily regulated approach would 
ultimately lead to reduced market competition with fewer transportation 
options for shipper customers and higher costs for everyone at every 
point in the supply chain. At best, the consequences are unknown.

    Question 7. What would be the impact on the movement of goods of 
removing the exemption from antitrust laws in 46 U.S.C. 40307 as they 
are applied to agreements? What would be the impact on the Federal 
Maritime Commission's oversight if the Department of Justice were 
authorized to seek injunctive relief under 46 U.S.C. 41307?
    Answer. What is characterized as an ``exemption'' or ``immunity'' 
from the antitrust laws in the Shipping Act is actually a statutory 
division of competition authority between the Commission and the 
Department of Justice. Today, the Commission is responsible for 
enforcing section (6)g of the Shipping Act regarding joint ventures or 
other ``collaborations among competitors.'' The Commission does not 
exercise competition authority over mergers. This division of 
responsibility is clear and avoids confusion and controversy between 
competition officials.
    Congress has recognized that, properly managed, joint ventures and 
other collaborations among competitors, such as vessel sharing 
agreements can achieve efficiencies and cost savings that benefit 
shippers and ultimately the U.S. consumer. The FMC shares this view, as 
does the Department of Justice and the Federal Trade Commission. The 
competition standard in the Shipping Act of 1984, Section 6(g), is 
modeled on the same laws administered by the Department of Justice, and 
the FMC employs the same pre-merger analysis and tools as the DOJ. Even 
after an agreement has gone into effect, the FMC continually monitors 
the parties' activities and the market for any competition concerns. 
Essentially, the Commission ``investigates'' our agreement parties 
continually.
    The Commission can move to challenge an agreement in Federal Court 
at any time. The Commission is THE independent, specialized agency of 
expertise in this arena, and this is our priority. We work with our 
international partners, including the European Commission, in 
overseeing this industry. The insertion of the Department of Justice as 
an agency that could seek injunctive relief would be potentially 
inconsistent and counterproductive, causing confusion with the industry 
and our international trading partners--to the detriment of shippers 
and consumers. Finally, without the focused information the Commission 
demands from our agreement parties as part of our competition 
enforcement program, the Commission would be essentially ``blind.''
    If any changes were to be made, it makes more sense to give the 
Federal Maritime Commission authority over mergers, similarly to the 
Surface Transportation Board in rail matters. A greater similarity to 
the other major independent agencies in the U.S. international ocean 
supply chain would allow greater collaboration on competition and other 
issues affecting the performance of the U.S. international freight 
delivery system.
    Without the knowledge gained by the Commission as part of our 
competition enforcement program, the Commission will lack a critical 
understanding of conditions in the ocean carrier and marine terminal 
marketplaces necessary for us to professionally perform our regulatory 
responsibilities.

    Question 8. I understand the Department of Justice and the FMC are 
sharing staff to review the ocean shipping system. Would you be 
concerned if the Department of Justice received more authority to 
investigate ocean shipping issues currently under the FMC's 
jurisdiction?
    Answer. The Federal Maritime Commission and the Department of 
Justice do not share staff. In the past, the Commission has, as the 
independent agency of expertise in this area, provided information, 
assistance, and advice to the Department of Justice on maritime issues 
that fall within DOJ's jurisdiction--collusive international carrier 
activities that exceed the authority provided for in agreements filed 
at the FMC. The Commission and DOJ recently entered into a Memorandum 
of Understanding (MOU) to further this relationship. As noted above, 
injecting the DOJ into ocean shipping issues currently under the FMC's 
jurisdiction would be counterproductive, causing confusion within the 
industry and with our international trading partners. This uncertainty 
and confusion will not be of benefit to U.S. shippers or consumers.

    Question 9. As the Fact Finding Officer for Fact Finding 28 and the 
point person for the Commission in developing the Interpretive Rule on 
Detention and Demurrage, would you explain why the Commission chose to 
use an interpretive rule to address this issue rather than seeking a 
legislative change or using another type of administrative rule?
    Answer. The Commission used a variation of the Interpretive Rule to 
provide a standard--the incentive principle--to govern analysis of 
potential detention and demurrage violations. This standard is enforced 
under the requirement in 46 U.S.C. 41102(c) of the Shipping Act that 
ocean carrier and marine terminal operators ``may not fail to 
establish, observe, and enforce just and reasonable regulations and 
practices relating to or connected with receiving, handling, storing, 
or delivering property.'' Under the interpretive rule, the Commission 
considers the extent to which detention and demurrage charges and 
policies serve their primary purpose of incentivizing the movement of 
cargo and promoting freight fluidity. The rule also provides notice on 
how the Commission may apply that principle in the context of cargo 
availability (and notice thereof) and empty container return.
    The Commission may also consider in assessing the reasonableness of 
detention and demurrage practices factors related to content and 
clarity of carrier and MTO policies addressing detention and demurrage 
and clarity of carrier and MTO detention and demurrage terminology. 
Unlike mere ``guidance,'' the Interpretive Rule was developed using 
``notice and comment,'' and provides an enforceable standard for the 
Commission.
    Because of the complexity of the supply chain and the many 
variables from port to port and carrier to carrier in detention and 
demurrage charges, it would be impossible to flesh out in a statutory 
provision or Legislative Rule governing all of the possibilities that 
would need to be covered in that type of rule. The Interpretive Rule 
provides an enforceable standard that can be used to address fact-
specific examples of detention and demurrage practices brought before 
the Commission through complaints and agency investigations.

    Follow-up:. Does your Interpretive Rule provide the Commission with 
an enforceable standard under 46 U.S.C. 41102(c) to address 
unreasonable Detention and Demurrage practices by ocean carriers and 
marine terminal operators and, if so, how is the Commission enforcing 
this Interpretive Rule today?
    Answer. As noted above, the Interpretive Rule is not merely 
``guidance'', but an enforceable standard that the Commission is 
already using to define and address ``unreasonable'' detention and 
demurrage charges. Cases have been filed giving the Commission the 
opportunity to define unreasonable charges. Based on information 
developed as part of our Bureau of Enforcement's ``Carrier Compliance 
and Audit Program''. the Commission is moving forward strategically to 
investigate several allegations brought to our attention.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Marsha Blackburn to 
                             Rebecca F. Dye
    Question 1. As you may know, Senator Wicker and I introduced the 
Improving Memphis' Supply Chain Act that would require DOT, in 
consultation with the FMC, to issue a request for proposals to develop 
an operating model for an interoperable gray chassis pool at the rail 
ramps around Memphis, Tennessee. This legislation builds off your 
extensive work in Memphis. Could you please explain why this is 
important, not only to Memphis, but to the rest of the U.S.?
    Answer. I have been involved since 2018 with the members of the FMC 
Memphis Supply Chain Innovation Team to develop and promote practical 
models for chassis provisioning in the rail heads in Memphis. The White 
paper authored by the Memphis Innovation Team articulates the essential 
qualities of a high performing grey chassis pool that is essential for 
efficient chassis provisioning in the rail heads in Memphis. The 
qualities articulated in the White Paper not only are essential for 
chassis provisioning in rail heads in Memphis, but also in other rail 
facilities and seaports around the country.
    This 4-year long experience with chassis provisioning problems 
gives the Federal Maritime Commission unique experience with chassis 
provisioning shortcomings. The information we receive about our ocean 
shipping and ports markets gives the Commission a systems-wide 
perspective on this essential matter. There is no question that chassis 
provisioning is a challenge not only in Memphis but in other rail 
facilities and seaports around the country. This is a matter of 
national significance and must be addressed for the United States to 
increase the performance of our international ocean supply chain 
performance.
    The FMC stands ready to work with the Department of Transportation 
on this matter or in any other context the Congress may desire to 
address this urgent problem.
F.F. 28 Memphis Supply Chain Team White Paper
    Question 2. The way ocean common carriers have been treating U.S. 
exporters raises serious concerns. There have been countless reports of 
foreign-owned ocean common carriers that have neglected American 
products at our ports. According to a California Globe report, ``China 
pays shipping carriers so much money to export Chinese-made goods. They 
are then paid a premium to carry the empty containers from America back 
to China.'' As a result, hundreds of thousands of containers with 
American products sit idle at our ports while foreign customers wait. 
Could you please explain why ocean common carriers continue to revoke 
the cargo space of American exporters?
    Answer. The global pandemic, coupled with unprecedented consumer 
demand for imports from China, complicated an already strained supply 
chain. While there have certainly been problems, particularly for some 
U.S. exporters in securing space aboard vessels at a price they can 
afford, the data I have seen from the Department of Agriculture 
indicates that ocean carriers are carrying a record level of U.S. 
exports. It is true that rates for U.S. exports have gone up 
dramatically. In part that reflects the historically low rates U.S. 
exporters have received in the past due to chronic overcapacity in the 
ocean carrier industry coupled with a need to fill ships and return 
cargo for customers with whom they have binding contracts.
    The Commission has ongoing contact with our international 
competition partners. The European Union, China, and the United States 
have examined our ocean shipping markets and observed no indication 
that the current prices are a result of collusive or illegal conduct on 
the part of the ocean carriers. The current return of empty containers 
to China reflects not only the higher revenue those boxes can earn in 
the import trade, but the obligation of the ocean carriers to honor 
binding legal obligations embodied in their contracts with U.S. 
importers for goods going to U.S. markets and consumers. For some time, 
I have been concerned that the contracts negotiated by U.S. exporters 
are not tightly drawn, lack mutuality of obligations, and are not 
enforceable. Without enforceability in their contracts, shippers do 
often find themselves forced to the more expensive spot market and 
having shipments rolled to a later ship.
    I continue to believe that one of the most important things U.S. 
exporters can do is to tighten up the contracting process in the same 
way as U.S. importers have done to ensure mutual and legally 
enforceable obligations in their ocean contracts. I will recommend as a 
final recommendation from Fact Finding 29 that the Commission engage 
directly with U.S. exporters to help them negotiate binding contracts 
with ocean carriers to protect themselves from future market 
disruptions.

    Follow-up. Could you also tell me if ocean common carriers allocate 
their space by commodity? If so, why?
    Answer. There are many different considerations that an ocean 
carrier may use in allocating vessel space, including loading and 
safety considerations, vessel itinerary, revenue, and contractual 
commitments. I am not aware that any ocean carrier allocates space 
based on commodity type (other than perhaps for vessel weight and 
loading considerations).

    Question 3. Do demurrage charges ever originate with ocean carriers 
or only with terminals?
    Answer. Demurrage charges are port or marine terminal charges for 
use of facility space and services. They originate with the ports or 
marine terminal operators and are sometimes billed directly by the port 
or terminal but are often passed to the shippers through the ocean 
carriers.

    Question 4. Do the ocean carriers mark-up or make a profit on 
demurrage charges?
    Answer. Because of the nature of the maritime industry, as noted 
above, there is no one way in which demurrage charges are assessed and 
paid. It is my understanding that when demurrage charges are passed 
through ocean carriers to the shippers, the charges may in some 
circumstances add to a carrier's bottom line. A carrier, for instance, 
may charge and administrative fee for collecting the demurrage charge 
for the port or terminal operator. Depending on how the demurrage 
charge is calculated in the agreement between the terminal and the 
ocean carrier, the result may be different.

    Question 5. Are carriers permitted to have a list of goods they 
will not carry?
    Answer. While outside of the Commission's jurisdiction, ocean 
carriers have some types of cargoes they are prohibited from carrying 
for a variety of reasons: health, safety, environmental or national 
security. There are some types of cargoes that because of inherent 
characteristics are challenging for ocean carriers to carry because the 
containers may have to be cleaned or may be unusable for other types of 
cargo after use. These considerations are ultimately built into the 
shipping costs and balanced against other commitments a carrier may 
have. Within the Shipping Act, a shipper is protected from an ocean 
carrier's unreasonable refusal to deal or negotiate.

    Question 6. How can we automate the demurrage and detention process 
to allow for on-line resolution (for example, eliminating checks and 
couriers delivering documents)?
    Answer. Efforts are already underway to digitize and facilitate 
data exchange in the maritime industry. I support any approach that 
makes it easier for parties to avoid, mitigate, and resolve shipping 
disputes.

    Question 7. Is there a way to standardize the amount of charges (at 
least across the ports)?
    Answer. I do not believe that it would be desirable to standardize 
demurrage and detention charges for all U.S. Ports. The supply chain is 
global in nature. Even in the United States, there are regional 
differences among competitive ports reflecting State and local 
interests and are organized and managed in many ways. There are a whole 
host of different forces and interests at play in the complex supply 
chain. To a certain extent, the dynamics of this industry reflect these 
differences and the variety of approaches to solving problems. That 
being said, some clarity about what detention and demurrage 
unreasonable practices are will help mitigate conflicts and help the 
supply chain perform better. The Commission's competition expertise 
allows us to harmonize processes in situations in which it would 
increase supply chain performance without compromising dynamic 
competition.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Shelley Moore Capito to 

                             Rebecca F. Dye
    Question 1. The ongoing supply chain crisis continues to impact a 
whole host of industries across the Nation. The congestion of freight 
movement has affected specifically West Virginia, among other states. 
Additionally, railcar shortages have resulted in shipment cancelations 
or delays. While railcar congestion and cancellation issues 
traditionally falls under the jurisdiction of the Surface 
Transportation Board (STB), can you speak to the impact on freight 
movement more broadly, and the impact on available railcars? 
Specifically, has the congestion at various inland terminals also 
impacted the availability of railcars?
    Answer. One area where there is an intersection between the Federal 
Maritime Commission and the Surface Transportation Board in this area 
is the availability and allocation of chassis at freight rail yards. 
The lack of clear and consistent rules in this area is inefficient and 
contributes to congestion and bottlenecks in the ocean supply chain. 
The development of ``best practices'' for chassis in this area would be 
a major step in helping to address this problem.

    Follow-up. Has the Federal Maritime Commission (FMC) coordinated 
with other Federal agencies, like the Surface Transportation Board 
(STB), to address this issue?
    Answer. There has been substantial interest in this area and there 
are ongoing conversations among stakeholders and government agencies in 
resolving these issues. I am hopeful that these efforts, including 
conversations with the Surface Transportation Board, will continue.
    The Commission and the Surface Transportation Board have recently 
collaborated on issues involving rail and seaport demurrage and chassis 
provisioning. I support greater collaboration between our independent 
agencies on supply chain performance and other issues. Supporting 
Commission competition enforcement responsibilities would allow our two 
agencies to continue this productive relationship.

    Question 2. Congress was able to pass a historic, bipartisan 
legislation that reflected our commitment to nation's infrastructure, 
and just this last month it was signed into law. The Infrastructure 
Investment and Jobs Act (IIJA) will make significant investments across 
our Nation's transportation system and of that, $16.6 billion will be 
invested in port and waterway infrastructure. These investments once 
they come to fruition and will likely help the flow of goods for 
Americans. How will the multimodal and port infrastructure investments 
made in the IIJA help address the disruptions to container shipping and 
our Nation's supply chains?
    Answer. The advances in the maritime industry in the last two 
decades has been remarkable. The size of vessels has increased 
dramatically and the accompanying advances in technology has made 
possible the global supply chain and unprecedented volume of global 
trade. At the same time, these advances have created a critical demand 
that our transportation infrastructure be updated and adequate to meet 
these demands. The ILJA will provide much needed funding to modernize 
the transportation system. The port funding will help address the 
backlog of ships at ports created by the growing consumer demand.

    Question 3. On November 23, Ranking Member Wicker and I introduced 
the Facilitating Relief for Efficient Intermodal Gateways to Handle 
Transportation (FREIGHT) Act. This legislation will build on the work 
of the IIJA by minimizing barriers and harmonizing port operations in 
order to alleviate the current shipping crisis. In your opinion, would 
the provisions of the FREIGHT Act help alleviate the logistical 
challenges we are currently experiencing?
    Answer. Yes. In addition to the grant program to improve the 
movement of freight and the study on documentation of terms used in 
freight transportation, I am pleased that the legislation provides 
enhanced capabilities for the Federal Maritime Commission's 
investigations. An important initiative for the Commission is to focus 
on compliance with the standards required by the new Interpretive Rule 
on Detention and Demurrage. I am also pleased to see the new 
flexibility that would be provided to the Commission with respect to 
remedies, as well as enhanced protection for shippers from retaliation.

    Follow-up. What are some of the provisions that would have a 
significant impact on improving operational and logistical challenges?
    Answer. I am very pleased to see the provision regarding best 
practices for chassis pools. This provision alone will go a long way 
towards addressing some of the problems we have seen with chassis 
issues at our ports and inland terminals.

    Question 4. On November 19, Senator Moran and I sent a letter to 
Chairman Maffei expressing our concern with the new ``Container Excess 
Dwell Fees.'' We are concerned that these fees will ultimately be 
passed on to the American consumer. The clarification in your testimony 
that these charges are only targeting unreasonable practices regarding 
demurrage and detention was appreciated. What are some of the factors 
FMC considers when investigating whether these fees are leveraged 
against unreasonable practices verses being used for revenue 
generation?
    Answer. To the extent that dwell fees are intended to incentivize 
the flow of cargo they would be demurrage and would be evaluated for 
reasonableness under the Interpretive Rule on Detention and Demurrage. 
The interpretive rule describes a non-exclusive list of factors the 
Commission may consider in evaluating claims and complaints that come 
before the agency under 46 U.S.C. Sec. 41102(c) and 46 C.F.R. 545.4(d). 
The interpretive rule reflects three general principles: 1. 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. 2. Importers should be notified when their 
cargo is actually available for retrieval. 3. Demurrage and detention 
policies should be accessible, clear, and, to the extent possible, use 
consistent terminology. The complexity and variables presented by the 
supply chain are too multifaceted to capture in a Legislative Rule. The 
standards of the Interpretive Rule, however, which was developed 
pursuant to notice and comment, is enforced through the Commission's 
considerations of cases and through enforcement actions which gives the 
Commission the opportunity to further flesh out what the Commission 
considers unreasonable detention and demurrage practices in a 
particular set of facts.

                                  [all]