[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                      MARITIME TRANSPORTATION SUPPLY CHAIN 
                                   ISSUES

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

                                (118-9)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 28, 2023

                               __________

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


     Available online at: https://www.govinfo.gov/committee/house-
     transportation?path=/browsecommittee/chamber/house/committee/
                             transportation
                             
                             
                                ________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
54-882 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------                                 

             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

  Sam Graves, Missouri, Chairman
Rick Larsen, Washington,             Eric A. ``Rick'' Crawford, 
  Ranking Member                     Arkansas
Eleanor Holmes Norton,               Daniel Webster, Florida
  District of Columbia               Thomas Massie, Kentucky
Grace F. Napolitano, California      Scott Perry, Pennsylvania
Steve Cohen, Tennessee               Brian Babin, Texas
John Garamendi, California           Garret Graves, Louisiana
Henry C. ``Hank'' Johnson, Jr., Georgiavid Rouzer, North Carolina
Andre Carson, Indiana                Mike Bost, Illinois
Dina Titus, Nevada                   Doug LaMalfa, California
Jared Huffman, California            Bruce Westerman, Arkansas
Julia Brownley, California           Brian J. Mast, Florida
Frederica S. Wilson, Florida         Jenniffer Gonzalez-Colon,
Donald M. Payne, Jr., New Jersey       Puerto Rico
Mark DeSaulnier, California          Pete Stauber, Minnesota
Salud O. Carbajal, California        Tim Burchett, Tennessee
Greg Stanton, Arizona,               Dusty Johnson, South Dakota
  Vice Ranking Member                Jefferson Van Drew, New Jersey,
Colin Z. Allred, Texas                 Vice Chairman
Sharice Davids, Kansas               Troy E. Nehls, Texas
Jesus G. ``Chuy'' Garcia, Illinois   Lance Gooden, Texas
Chris Pappas, New Hampshire          Tracey Mann, Kansas
Seth Moulton, Massachusetts          Burgess Owens, Utah
Jake Auchincloss, Massachusetts      Rudy Yakym III, Indiana
Marilyn Strickland, Washington       Lori Chavez-DeRemer, Oregon
Troy A. Carter, Louisiana            Chuck Edwards, North Carolina
Patrick Ryan, New York               Thomas H. Kean, Jr., New Jersey
Mary Sattler Peltola, Alaska         Anthony D'Esposito, New York
Robert Menendez, New Jersey          Eric Burlison, Missouri
Val T. Hoyle, Oregon                 John James, Michigan
Emilia Strong Sykes, Ohio            Derrick Van Orden, Wisconsin
Hillary J. Scholten, Michigan        Brandon Williams, New York
Valerie P. Foushee, North Carolina   Marcus J. Molinaro, New York
                                     Mike Collins, Georgia
                                     Mike Ezell, Mississippi
                                     John S. Duarte, California
                                     Aaron Bean, Florida
                                ------                                7

        Subcommittee on Coast Guard and Maritime Transportation

                   Daniel Webster, Florida, Chairman
Brian Babin, Texas                   Salud O. Carbajal, California,
Brian J. Mast, Florida                 Ranking Member
Jenniffer Gonzalez-Colon,            John Garamendi, California
  Puerto Rico                        Chris Pappas, New Hampshire
Jefferson Van Drew, New Jersey       Jake Auchincloss, Massachusetts
Mike Ezell, Mississippi, Vice        Mary Sattler Peltola, Alaska
    Chairman                         Hillary J. Scholten, Michigan,
Aaron Bean, Florida                    Vice Ranking Member
Sam Graves, Missouri (Ex Officio)    Rick Larsen, Washington (Ex 
                                         Officio)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................     v

                 STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. Daniel Webster, a Representative in Congress from the State 
  of Florida, and Chairman, Subcommittee on Coast Guard and 
  Maritime Transportation, opening statement.....................     1
    Prepared statement...........................................     2
Hon. Rick Larsen, a Representative in Congress from the State of 
  Washington, and Ranking Member, Committee on Transportation and 
  Infrastructure, opening statement..............................     3
    Prepared statement...........................................     5
Hon. Salud O. Carbajal, a Representative in Congress from the 
  State of California, and Ranking Member, Subcommittee on Coast 
  Guard and Maritime Transportation, opening statement...........     6
    Prepared statement...........................................     7

                               WITNESSES

Charles ``Bud'' Darr, Executive Vice President, MSC Group, on 
  behalf of the World Shipping Council, oral statement...........     8
    Prepared statement...........................................    10
Matthew Leech, President and Chief Executive Officer, Ports 
  America, on behalf of the National Association of Waterfront 
  Employers, oral statement......................................    13
    Prepared statement...........................................    15
William H. ``Buddy'' Allen, Chief Executive Officer, American 
  Cotton Shippers Association, oral statement....................    20
    Prepared statement...........................................    21
Mario Cordero, Executive Director, Port of Long Beach, oral 
  statement......................................................    23
    Prepared statement...........................................    24

                       SUBMISSIONS FOR THE RECORD

Proceeding No. 1966(I), Served Order of December 29, 2022, 
  Affirming the Initial Decision, TCW, Inc. v. Evergreen Shipping 
  Agency (America) Corporation & Evergreen Line Joint Service 
  Agreement, Submitted for the Record by Hon. Daniel Webster on 
  behalf of witness Mr. Leech....................................    15
Submissions for the Record by Hon. Sam Graves:
    Letter of March 23, 2023, to Hon. Sam Graves, Chairman, and 
      Hon. Rick Larsen, Ranking Member, Committee on 
      Transportation and Infrastructure, from Rodger Rees, Port 
      Director and Chief Executive Officer, Galveston Wharves....    45
    Letter of March 24, 2023, to Hon. Sam Graves, Chairman, and 
      Hon. Rick Larsen, Ranking Member, Committee on 
      Transportation and Infrastructure, from Dr. Raymond W. 
      Wolfe, Executive Director, San Bernardino County 
      Transportation Authority...................................    46

                                APPENDIX

Questions from Hon. Daniel Webster to Charles ``Bud'' Darr, 
  Executive Vice President, MSC Group, on behalf of the World 
  Shipping Council...............................................    47
Questions from Hon. Daniel Webster to Matthew Leech, President 
  and Chief Executive Officer, Ports America, on behalf of the 
  National Association of Waterfront Employers...................    49
Questions to Mario Cordero, Executive Director, Port of Long 
  Beach, from:
    Hon. Daniel Webster..........................................    50
    Hon. Salud O. Carbajal.......................................    51

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                             March 24, 2023

    SUMMARY OF SUBJECT MATTER

    TO:      LMembers, Subcommittee on Coast Guard and Maritime 
Transportation
    FROM:  LStaff, Subcommittee on Coast Guard and Maritime 
Transportation
    RE:      LSubcommittee Hearing on ``Maritime Transportation 
Supply Chain Issues''
_______________________________________________________________________


                               I. PURPOSE

    The Coast Guard and Maritime Transportation Subcommittee 
will meet on Tuesday, March 28, 2023, at 2:00 p.m. ET in 2253 
Rayburn House Office Building to receive testimony on 
``Maritime Transportation Supply Chain Issues.'' The hearing 
will focus on the Federal Maritime Commission's (FMC) 
implementation of the Ocean Shipping Reform Act of 2022 (P.L. 
117-146) and the Maritime Administration's (MARAD) management 
of the Port Infrastructure Development Program (PIDP). Members 
will receive testimony from the World Shipping Council, 
National Association of Waterfront Employers, the American 
Cotton Shippers Association, and the Port of Long Beach.

                             II. BACKGROUND

FEDERAL MARITIME COMMISSION (FMC)

    FMC was established in 1961 as an independent agency that 
regulates ocean-borne transportation in the foreign commerce of 
the United States.\1\ FMC protects shippers and carriers from 
restrictive or unfair practices of ocean carriers, including 
foreign-flagged carrier alliances. FMC also enforces laws 
related to cruise vessel financial responsibility to ensure 
cruise vessel operators have sufficient resources to pay 
judgments to passengers for personal injury or death or for 
nonperformance of a voyage.\2\
---------------------------------------------------------------------------
    \1\ 46 U.S.C. Sec.  46101.
    \2\ FMC, Federal Maritime Commission FY 2024 Budget Justification, 
(Mar. 2023) available at https://www.fmc.gov/wp-content/uploads/2023/
03/FMCFY2024CongressionalBudget
Justification.pdf.
---------------------------------------------------------------------------
    FMC is composed of five commissioners appointed for five-
year terms by the President, with the advice and consent of the 
Senate.\3\ The Honorable Daniel B. Maffei was designated as 
Chairman of the Commission by the President in March 2021.\4\
---------------------------------------------------------------------------
    \3\ Supra note 1.
    \4\ FMC, Chairman, Daniel B. Maffei, available at https://
www.fmc.gov/commissioners/daniel-b-maffei/.
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SUPPLY CHAIN

    The Supply Chain is an intricate logistical system 
consisting of several sequential steps to produce and 
distribute products.\5\ The Marine Transportation System is an 
integral link in a long chain of serialized processes that make 
up the supply chain and facilitates the transport of goods to 
our shores and around the country.\6\ During the COVID-19 
pandemic, the supply chain faced unprecedented strain. With 
activities and travel limited and hindered by COVID-19 spread 
and government responses, consumers repurposed their cash 
toward manufactured goods and merchandise instead of going to 
the movies, dining out, or other activities.\7\ This increased 
demand for manufactured consumer goods, a large part of which 
are moved by shipping containers, strained shipping 
capacity.\8\ The pandemic challenged the traditional market 
scheme of ``just-in-time'' supply chains with ``little 
inventory'' as consumer appetite for manufactured goods 
grew.\9\ As inventory began to run low, manufacturers and 
retailers pressured shipping companies to expeditiously move 
cargo, as they frantically tried to keep up with the outsized 
demand.
---------------------------------------------------------------------------
    \5\ Anshu Siripurapu, What Happened to Supply Chains in 2021, 
Council on Foreign Relations, (Dec. 13, 2021) available at https://
www.cfr.org/article/what-happened-supply-chains-202 [hereinafter 
Siripurapu].
    \6\ United States Marine Transportation System, MTS Fact Sheet, 
available at https://www.cmts.gov/assets/uploads/documents/
MTS_Fact_Sheet_2018_07_25.pdf.
    \7\ Siripurapu, supra note 5.
    \8\ Shipping during COVID-19: Why container freight rates have 
surged, United Nations Conference on Trade and Development, (Apr. 23, 
2021) available at https://unctad.org/news/shipping-during-covid-19-
why-container-freight-rates-have-surged.
    \9\ Siripurapu, supra note 5.
---------------------------------------------------------------------------
    The resulting consequence was an imbalance in maritime 
trade flows. Consumer demand in the Western Hemisphere for 
goods like electronics, furniture, and clothes outpaced that of 
the Eastern Hemisphere where goods are ordinarily 
manufactured.\10\ This imbalance drove shipping companies to 
ship empty containers to Eastern countries like China, Japan, 
India, and South Korea, examples of top manufacturing 
countries, for rapid loading of cargo to be transported to 
countries like the United States, where demand for consumer 
goods surged.\11\ This induced a sharp rise in ocean shipping 
costs creating a seller's market for global container shipping 
and allowing shipping companies to charge four to ten times the 
normal price to ship cargoes.\12\ At its peak, the cost to ship 
one container from China to the United States reached a record 
high of over $20,000.\13\
---------------------------------------------------------------------------
    \10\ Roslan Khasawneh & Muyu Xu, China-U.S. container shipping 
rates sale past $20,000 to record, (Aug. 5, 2021) available at https://
www.reuters.com/business/china-us-container-shipping-rates-sail-past-
20000-record-2021-08-05/ [hereinafter Khasawneh & Xu].
    \11\ See Top 10 Manufacturing Countries in the World, Safeguard 
Global, (Dec. 20, 2022) available at https://www.safeguardglobal.com/
resources/blog/top-10-manufacturing-countries-in-the-world; Khasawneh & 
Xu, supra note 10.
    \12\ Khasawneh & Xu, supra note 10.
    \13\ Id.
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                  Global Shipping Costs Surged in 2021

            Market rates for forty-foot shipping containers
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Chart from Council on Foreign Relations.\14\

    In\\ addition to increased container shipping rates, cargo 
wait times soared as cargo volumes at major United States ports 
rose precipitously. Large ports like the Port of Los Angeles 
and Long Beach experienced long delays for ships waiting to 
berth, at one point reaching a peak of 109 ships in January 
2022.\15\
---------------------------------------------------------------------------
    \14\ Siripurapu, supra note 5.
    \15\ Paul Berger, Southern California's Notorious Container Ship 
Backup Ends, The Wall St. J., (Oct. 21, 2022) available at https://
www.wsj.com/articles/southern-californias-notorious-container-ship-
backup-ends-11666344603.
---------------------------------------------------------------------------
    Excessive demand and insufficient shipping capacity were 
not the only contributors to the disruption in the supply 
chain. The crisis was multi-faceted, highly complex, and 
heavily nuanced created by a perfect collision of ill-timed 
events--including degradation of shoreside infrastructure, the 
Suez Canal week-long blockage, poor information sharing, low 
cargo unloading/loading equipment, closure of major Chinese 
ports, and workforce decreases.\16\ In recent months, the 
crisis has stabilized with shipping rates returning to normal 
as demand weakens. For instance, Asia to United States West 
Coast prices have fallen about 90 percent since December 2021, 
to $1,426 per forty-foot equivalent unit (forty-foot 
container).\17\
---------------------------------------------------------------------------
    \16\ FMC, Fact Finding Investigation 29 Final Report, (May 31, 
2022) available at https://www2.fmc.gov/readingroom/docs/FFno29/
Fact%20Finding%2029%20Final%20Report.pdf/ [hereinafter Fact Finding 
Investigation 29 Final Report].
    \17\ Lori Ann LaRocco, Freight Rates from China to West Coast Down 
90% as Global Trade Falls Off Fast, CNBC, (Dec. 7, 2022) available at 
https://www.cnbc.com/2022/12/07/freight-rates-from-china-to-west-coast-
down-90percent-as-trade-falls-rapidly.html.
---------------------------------------------------------------------------

                 III. OCEAN SHIPPING REFORM ACT OF 2022

    Congress passed the Ocean Shipping Reform Act of 2022 (P.L. 
117-146) in an effort to alleviate many of the challenges and 
issues faced by United States exporters within the ocean 
transportation system.\18\ It became law on June 16, 2022.\19\ 
The Ocean Shipping Reform Act of 2022 strengthened FMC 
authorities to promote the growth and development of United 
States exports through an ocean transportation system that is 
competitive, efficient, and economical.\20\ This legislation 
authorizes appropriations for FMC through Fiscal Year (FY) 
2025; sets standards for detention and demurrage charges, as 
well as penalties for charges deemed inaccurate; allows FMC to 
set minimum contract standards for ocean shipping service 
contracts to protect United States shippers from actions which 
leave export cargoes stranded at United States ports; and 
increases protections for United States shippers from 
retaliation by foreign ocean carriers.\21\
---------------------------------------------------------------------------
    \18\ Ocean Shipping Reform Act, Pub. L. 117-146, 136 Stat. 1272.
    \19\ Id.
    \20\ Id.
    \21\ Id.
---------------------------------------------------------------------------
    The FMC is currently taking actions to enact the 
requirements of this law. Since the Act's enactment on June 16, 
2022, FMC has:
     LProvided industry guidance on filing charge 
complaints with respect to charges assessed by a common carrier 
that the complainant believes may not comply with statute.\22\
---------------------------------------------------------------------------
    \22\ FMC, Industry Advisory--Interim Procedures for Submitting 
``Charge Complaints'' Under 46 U.S.C. 41310, (July 14, 2022) available 
at https://www.fmc.gov/industry-advisory-interim-procedures-for-
submitting-charge-complaints/.
---------------------------------------------------------------------------
     LProvided industry guidance on the applicability 
of self-executing provisions of the law to common carriers, 
including compliance with demurrage and detention billing 
practices.\23\
---------------------------------------------------------------------------
    \23\ FMC, Industry Advisory--Applicability of Provision Contained 
in PL 117-146, (June 24, 2022) available at https://www.fmc.gov/
industry-advisory-applicability-of-provisions-contained-in-pl-117-146/.
---------------------------------------------------------------------------
     LSolicited public comments on a new data 
collection system for containerized vessel imports and exports 
to and from the United States.\24\
---------------------------------------------------------------------------
    \24\ Agency Information Collection Activities: 30-Day Public 
Comment Request, 87 Fed. Reg. 75629 (Dec. 9, 2022).
---------------------------------------------------------------------------
     LSolicited public comments on a proposed rule 
requiring inclusion of specific information on demurrage and 
detention invoices.\25\
---------------------------------------------------------------------------
    \25\ FMC, FMC Proposing New Demurrage & Detention Billing 
Requirements, (Oct. 7, 2022) available at https://www.fmc.gov/fmc-
proposing-new-demurrage-detention-billing-requirements/.
---------------------------------------------------------------------------
     LSolicited public comments on a proposed rule that 
would define unreasonable refusal to deal or negotiate with 
respect to vessel space accommodation provided by an ocean 
common carrier.\26\
---------------------------------------------------------------------------
    \26\ FMC, FMC Seeking Public Comment on Unreasonable Refusal to 
Deal Proposed Rule, (Sept. 13, 2022) available at https://www.fmc.gov/
fmc-seeking-public-comment-on-unreasonable-refusal-to-deal-proposed-
rule/.
---------------------------------------------------------------------------
     LEstablished the Bureau of Enforcement, 
Investigations, and Compliance for improved effectiveness of 
the Commission's enforcement and compliance activities.\27\
---------------------------------------------------------------------------
    \27\ FMC, New FMC Enforcement Structure, (July 29, 2022) available 
at https://www.fmc.gov/new-fmc-enforcement-structure/.
---------------------------------------------------------------------------
     LEntered into an agreement with the National 
Academies of Sciences, Engineering, and Medicine to carry out a 
study to develop best practices for the efficient supply of 
chassis for transporting intermodal containers.\28\
---------------------------------------------------------------------------
    \28\ Nat'l Academies of Sciences, Engineering, and Medicine, Best 
Practices for the Efficient Supply of Chassis for Transporting 
Intermodal Containers, available at https://www.nationalacademies.org/
our-work/best-practices-for-the-efficient-supply-of-chassis-for-
transporting-intermodal-containers#sectionContact.
---------------------------------------------------------------------------
     LPublished on their website the ``Fact Finding 
Investigation 29 Final Report on the Effects of the COVID-19 
Pandemic on the United States International Ocean Supply Chain: 
Stakeholder Engagement and Possible Violations of 46 U.S.C. 
41102(c).'' \29\
---------------------------------------------------------------------------
    \29\ Fact Finding Investigation 29 Final Report, supra note 16.
---------------------------------------------------------------------------

              IV. PORT INFRASTRUCTURE DEVELOPMENT PROGRAM

    The PIDP administered by MARAD has grown exponentially over 
the last several years with the Infrastructure Investment and 
Jobs Act (IJJA) (P.L. 117-9) providing advanced appropriations 
of $450 million per year through FY 2026, totaling $2.25 
billion, which is in addition to annual appropriations the 
program receives.\30\ PIDP provides grants for coastal 
seaports, inland river ports, and Great Lakes ports 
infrastructure to improve the safety, efficiency, or 
reliability of the movement of goods, and to reduce 
environmental impacts in and around ports.\31\
---------------------------------------------------------------------------
    \30\ Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 
135 Stat. 429.
    \31\ 46 U.S.C. Sec.  54301.
---------------------------------------------------------------------------

                              V. WITNESSES

     LBud Darr, Executive Vice President, MSC Group, on 
behalf of the World Shipping Council
     LMatthew Leech, President and Chief Executive 
Officer (CEO), Ports America
     LWilliam H. ``Buddy'' Allen, President and CEO, 
American Cotton Shippers Association
     LMario Cordero, Executive Director, Port of Long 
Beach, California

 
              MARITIME TRANSPORTATION SUPPLY CHAIN ISSUES

                              ----------                              


                        TUESDAY, MARCH 28, 2023

                  House of Representatives,
                    Subcommittee on Coast Guard and
                           Maritime Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2 p.m. in room 
2253 Rayburn House Office Building, Hon. Daniel Webster 
(Chairman of the subcommittee) presiding.
    Mr. Webster of Florida. The Subcommittee on Coast Guard and 
Maritime Transportation will come to order.
    I ask unanimous consent that the chair be authorized to 
declare a recess at any time during the subcommittee hearing. 
Without objection, so ordered. I also ask unanimous consent 
that Members who are not on the subcommittee be allowed to 
participate in asking questions and other items. Without 
objection, so ordered.
    As a reminder, well, I'm not going to remind you of that, 
just, if you have an amendment, make sure it gets emailed to 
the Transportation and Infrastructure Committee.
    I recognize myself for the purpose of an opening statement 
for 5 minutes.

OPENING STATEMENT OF HON. DANIEL WEBSTER OF FLORIDA, CHAIRMAN, 
    SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

    Mr. Webster of Florida. Today, we will receive testimony 
from stakeholders regarding the maritime supply chain, 
including their views on the implementation of the Ocean 
Shipping Reform Act and the Maritime Administration's 
management of the Port Infrastructure Development Program.
    I would like to welcome our witnesses: Bud Darr, executive 
vice president of MSC Group; Matthew Leech, president and CEO 
of Ports America; Buddy Allen, president and CEO of American 
Cotton Shippers Association; and Mario Cordero, executive 
director of the Port of Long Beach, California. Small port out 
there, right?
    These witnesses represent crucial aspects of the supply 
chain, including shippers, ports, marine terminal operators, 
and ocean carriers, and we look forward to having them share 
their valuable insight.
    During the COVID-19 pandemic, a sudden and massive increase 
in consumer demand, combined with labor shortages, 
manufacturing disruptions, and other factors fueled a supply 
chain crisis that continues to strain the capacity of our 
maritime transportation system. This led to significant 
increases in ocean shipping costs, delayed shipments, and 
extended cargo wait times at ports, as well as an imbalance in 
maritime trade flows, leading to frequent export of empty 
containers from the United States rather than moving those 
containers inland to be filled with domestically produced 
goods, particularly agricultural products.
    Consumers were left with higher prices. American companies 
seeking to export their goods faced hurdles in getting their 
products to the ports. In response, Congress passed the Ocean 
Shipping Reform Act of 2022.
    Among its provisions, the law sets standards that detention 
and demurrage charges must comply with; sets penalties for 
charges deemed inaccurate; allows the Federal Maritime 
Commission to set minimum contract standards for ocean shipping 
service contracts to protect U.S. shippers from actions that 
leave export cargo stranded at United States ports; and 
increases protections for United States shippers from 
retaliation by foreign ocean carriers.
    Last week, the subcommittee heard from the Federal Maritime 
Commission on their efforts to implement the Ocean Shipping 
Reform Act. We look forward to hearing your views as well. To 
provide support for our maritime supply chain, Congress 
authorized significant funding for the Port Infrastructure 
Development Program, known as PIDP, which is operated by the 
Maritime Administration and provides grants for coastal ports, 
inland river ports, and Great Lakes port infrastructure to 
improve the safety, efficiency, and reliability of the movement 
of goods.
    Last week, we also heard from the Maritime Administration 
regarding the President's budget request for this program, 
which in addition to the $450 million in advanced 
appropriations the program received through the Infrastructure 
Investment and Jobs Act. Though this program is intended to 
help optimize and improve port operations, I am concerned that 
the program's ability to fully realize this goal is limited by 
language Congress has routinely included in the program's 
authorization that prohibits the use of funds for automated 
cargo handling equipment.
    I look forward to hearing your views on how port operations 
can be optimized and the role automation can play in improving 
port operations in our Nation's supply chains.
    [Mr. Webster of Florida's prepared statement follows:]

                                 
    Prepared Statement of Hon. Daniel Webster of Florida, Chairman, 
        Subcommittee on Coast Guard and Maritime Transportation
    Today we'll receive testimony from stakeholders regarding our 
maritime supply chain, including their views on implementation of the 
Ocean Shipping Reform Act and the Maritime Administration's management 
of the Port Infrastructure Development Program.
    I'd like to welcome our witnesses--Bud Darr, Executive Vice 
President, MSC Group; Matthew Leech, President & CEO, Ports America; 
William ``Buddy'' Allen, President and CEO, American Cotton Shippers 
Association; and Mario Cordero, Executive Director, Port of Long Beach, 
California. These witnesses represent critical aspects of the supply 
chain, including shippers, ports, marine terminal operators, and ocean 
carriers, and we look forward to them sharing their valuable insight.
    During the COVID-19 pandemic, a sudden and massive increase in 
consumer demand, combined with labor shortages, manufacturing 
disruptions, and other factors fueled a supply chain crisis that 
continues to strain the capacity of our maritime transportation system. 
This led to significant increases in ocean shipping costs, delayed 
shipments, and extended cargo wait times at ports, as well as an 
imbalance in maritime trade flows leading to the frequent export of 
empty containers from the United States rather than moving those 
containers inland to be filled with domestically produced goods, 
particularly agricultural products.
    Consumers were left with higher prices, and American companies 
seeking to export their goods faced hurdles in getting their products 
to the ports. In response, Congress passed the Ocean Shipping Reform 
Act of 2022.
    Among its provisions, the law sets standards that detention and 
demurrage charges must comply with; sets penalties for charges deemed 
inaccurate; allows the Federal Maritime Commission to set minimum 
contract standards for ocean shipping service contracts to protect 
United States shippers from actions that leave export cargoes stranded 
at United States ports; and increases protections for United States 
shippers from retaliation by foreign ocean carriers.
    Last week, this Subcommittee heard from the Federal Maritime 
Commission on their efforts to implement the Ocean Shipping Reform Act. 
We look forward to hearing your views as well. To provide support for 
the maritime supply chain, Congress authorized significant funding for 
the Port Infrastructure Development Program, also known as PIDP, which 
is operated by the Maritime Administration and provides grants for 
coastal seaports, inland river ports, and Great Lakes port 
infrastructure to improve the safety, efficiency, and reliability of 
the movement of goods.
    Last week, we also heard from the Maritime Administration regarding 
the President's budget request for this program, which is in addition 
to the $450 million in advanced appropriations the program received 
through the Infrastructure Investment and Jobs Act. Though this program 
is intended to help optimize and improve port operations, I am 
concerned that the program's ability to fully realize this goal is 
limited by language Congress has routinely included in the program's 
authorization that prohibits the use of funds for automated cargo 
handling equipment.
    I look forward to hearing your views on how port operations can be 
optimized and the role automation can play in improving port operations 
and our Nation's supply chains.

    Mr. Webster of Florida. Thank you for participating today. 
I look forward to your testimony. I now recognize Ranking 
Member Carbajal for an opening statement for 5 minutes.
    Mr. Carbajal. Thank you, Mr. Chairman. As in the past, I 
will yield the floor to Ranking Member Larsen, with your 
consent?
    Mr. Webster of Florida. Ranking Member Larsen, you're 
recognized for 5 minutes.

 OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING 
     MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

    Mr. Larsen of Washington. Thank you, Mr. Chair, and thank 
you, Ranking Member.
    If the last 3 years has taught us anything, it is how a 
robust and resilient supply chain is essential to our economic 
and national security.
    Last week, this subcommittee heard from the Federal 
Maritime Commission and the Maritime Administration on the 
fiscal year 2024 budget request and the implementation of the 
Bipartisan Infrastructure Law and the Ocean Shipping Reform 
Act.
    Today we will hear from industry representatives on how 
they think implementation of these laws is going and what more 
we can do to prevent disruption to our supply chain in the 
future.
    There is no better demonstration of the supply chain 
backlog during the COVID-19 pandemic than at the Ports of Los 
Angeles and Long Beach, although I think the Port of Everett 
came in at a close second, where nearly 100 vessels were forced 
to idle offshore. However, the problem was nationwide, and the 
Puget Sound saw more vessels seeking anchorage than ever 
before.
    As imported goods were in high demand, carriers rushed to 
return containers, often empty, to Asia, so they could be 
loaded again. Meanwhile, U.S. companies struggled to obtain 
cargo space at a reasonable price in a timely manner, which 
meant their exports, often perishable, languished landside. The 
icing on the cake was when they were given a bill for unfair 
and unreasonable detention and demurrage fees as a result of a 
situation over which they had no control.
    Thankfully a bipartisan Congress and President Biden moved 
quickly to address the supply chain crisis, passing historic 
legislation like the Bipartisan Infrastructure Law and the 
Ocean Shipping Reform Act of 2022.
    Included in the BIL was $6\1/2\ billion exclusively for 
ports and $27 billion that ports would be eligible for.
    The creation of the Supply Chain Disruptions Task Force and 
the Freight Logistics Optimization Works initiative, or the 
FLOW initiative, optimized funding for ports to improve supply 
chain fluidity and increase coordination among every link of 
the supply chain.
    Since the passage of OSRA, the FMC has moved quickly to 
establish a process for accepting, investigating, and 
adjudicating charge complaints, update regulations on 
penalties, and issue a final rule on detention and demurrage.
    The pandemic made clear the need for investments in 
maritime infrastructure. Maritime commerce is a significant 
contributor, as well, to global carbon emissions, and both the 
BIL and the Inflation Reduction Act demonstrate that targeted 
investments can improve resiliency in the maritime supply chain 
and reduce emissions.
    Investing in low- or no-emission technology at ports does 
not mean sacrificing efficiency. Projects like the Middle 
Harbor Terminal zero-emission conversion project at the Port of 
Long Beach demonstrate that fact clearly. That project will 
lower emissions, create a more resilient port, and make the 
movement of cargo more efficient. This project funds the 
replacement of aging diesel tractors with electric tractors, 
construction of electric charging infrastructure, and 
installation of software equipment to streamline cargo handling 
operations.
    Mr. Cordero, I look forward to hearing about this and other 
projects underway at the port.
    Despite the congestion we saw at the ports in 2021 and 
2022, one thing never slowed: the hard-working and dedicated 
longshore workers. They put in long hours each day to keep 
containers flowing, despite the constant threat of exposure to 
COVID-19 and a massive backlog of cargo waiting to be shipped.
    Our human infrastructure is critical to the U.S. economy, 
and I want to be clear that I think Federal dollars should not 
be used to put longshore workers out of a job. The Port 
Infrastructure Development Program prohibits Federal dollars 
from being used to eliminate jobs, and I will work to ensure 
that prohibition remains.
    If we want to prevent the next supply chain crisis, we have 
to invest in ports. They serve as the gateway for international 
trade, and without modern infrastructure, our businesses, 
consumers, and communities are at risk.
    So, I look forward to hearing from our witnesses on what 
they are doing and what the Federal Government can do to work 
with them to prevent another supply chain crisis.
    And with that, I yield back.
    [Mr. Larsen of Washington's prepared statement follows:]

                                 
 Prepared Statement of Hon. Rick Larsen of Washington, Ranking Member, 
             Committee on Transportation and Infrastructure
    If the last three years have taught us anything, it's that a robust 
and resilient supply chain is essential to our economic and national 
security.
    Last week, this subcommittee heard from the Federal Maritime 
Commission and the Maritime Administration on the fiscal year 2024 
budget request and implementation of the Bipartisan Infrastructure Law 
(BIL) and Ocean Shipping Reform Act (OSRA).
    Today we will hear from industry representatives on how they think 
implementation of these laws is going and what more we can do to 
prevent disruption to our supply chain in the future.
    There was no better demonstration of the supply chain backlog 
during the COVID-19 pandemic than at the ports of Los Angeles and Long 
Beach where nearly 100 vessels were forced to idle offshore.
    However, the problem was nationwide and the Puget Sound saw more 
vessels seeking anchorage than ever before.
    As imported goods were in high demand, carriers rushed to return 
containers, often empty, to Asia so they could be loaded again. 
Meanwhile, U.S. companies struggled to obtain cargo space at a 
reasonable price and in a timely manner which meant their exports, 
often perishable, languished landside. The icing on the cake was when 
they were given a bill for unfair and unreasonable detention and 
demurrage fees as a result of a situation over which they had no 
control.
    Thankfully, Congress and President Biden moved quickly to address 
the supply chain crisis, passing historic legislation like the 
Bipartisan Infrastructure Law and the Ocean Shipping Reform Act of 
2022.
    Included in the Bipartisan Infrastructure Law was $6.5 billion 
exclusively for ports and $27 billion that ports would be eligible for.
    The creation of the Supply Chain Disruptions Task Force and Freight 
Logistics Optimization Works (FLOW) initiative optimized funding for 
ports to improve supply chain fluidity and increased coordination among 
every link of the supply chain.
    Since the passage of OSRA, the FMC moved quickly to establish a 
process for accepting, investigating and adjudicating charge 
complaints, update regulations on penalties and issue a final rule on 
detention and demurrage.
    The need for investments in maritime infrastructure was also made 
clear by the pandemic. Maritime commerce is a significant contributor 
to global carbon emissions. Both the Bipartisan Infrastructure Law and 
the Inflation Reduction Act demonstrate that targeted investments can 
improve resiliency in the maritime supply chain and reduce emissions.
    Investing in low or no emission technology at ports does not mean 
sacrificing efficiency.
    Projects like Middle Harbor Terminal Zero Emission Conversion 
Project at the Port of Long Beach demonstrate that fact clearly. That 
project will lower emissions, create a more resilient port and make the 
movement of cargo more efficient. This project funds the replacement of 
aging diesel tractors with electric tractors, construction of electric 
charging infrastructure and installation of software equipment to 
streamline cargo-handling operations.
    Mr. Cordero, I look forward to hearing about other projects 
underway at the Port of Long Beach.
    Despite the congestion we saw at ports in 2021 and 2022, one thing 
never slowed: our hardworking and dedicated longshore workers. They put 
in long hours each day to keep containers flowing, despite the constant 
threat of exposure to COVID-19 and a massive backlog of cargo waiting 
to be shipped.
    Our human infrastructure is critical to the U.S. economy and I want 
to be clear, federal dollars should not be used to put longshore 
workers out of a job. The Port Infrastructure Development Program 
prohibits federal dollars from being used to eliminate jobs and I will 
work to ensure that prohibition remains.
    If we want to prevent the next supply chain crisis, we have to 
invest in ports. They serve as the gateway for international trade, and 
without modern infrastructure, our businesses, consumers and 
communities are at risk.
    I look forward to hearing from our witnesses on what they are doing 
and what the federal government is doing to prevent another supply 
chain crisis.

    Mr. Webster of Florida. Thank you very much.
    Mr. Carbajal, you are now recognized for your remarks.

  OPENING STATEMENT OF HON. SALUD O. CARBAJAL OF CALIFORNIA, 
   RANKING MEMBER, SUBCOMMITTEE ON COAST GUARD AND MARITIME 
                         TRANSPORTATION

    Mr. Carbajal. Thank you, Chairman Webster, for scheduling 
this important ``Maritime Transportation Supply Chain Issues'' 
hearing. While we touched on aspects of the supply chain and 
the bipartisan Ocean Shipping Reform Act in the previous 
hearing, I look forward to a deeper discussion on this 
important topic.
    The maritime industry is a critical pillar of our economy. 
In 2020, oceangoing trade accounted for 40 percent of U.S. 
international trade value, amounting to 18 percent of our 
country's GDP. In 2020, the top 25 tonnage ports alone handled 
alone over 1.7 billion tons of cargo, including vital goods 
like food, medical supplies, and everyday household items. It 
is an understatement to say that our economy would not function 
without a reliable and fair maritime industry.
    In fact, the COVID pandemic highlighted the importance of 
our supply chain and the devastating impacts that can occur if 
we do not invest in our maritime industry and the agencies that 
regulate them, like the FMC, Federal Maritime Commission, and 
the United States Coast Guard.
    During the height of COVID, I heard from exporters across 
dozens of industries about unfair shipping practices and 
exorbitant costs, which put companies out of business and 
resulted in higher prices for their customers.
    To be clear, the astronomical profits realized by foreign 
shipping companies contributed to inflation in the United 
States.
    Some supply chain gridlock and unfair shipping practices 
caused the value of California food exports to fall by $2.1 
billion, or about 17 percent. That's just in California.
    I was proud to work across the aisle to pass OSRA last 
Congress. Since its passage, we have already seen a decrease in 
vessel congestion at the ports and significant refunds in undue 
charges by carriers.
    As we heard last week, the FMC moved quickly on rulemaking 
and the self-executing policies included in the law. I look 
forward to hearing from our witnesses today about how our 
supply chain has become more resilient, fair, and transparent 
as a result of the passage of this bill.
    I am also eager to hear about how the investments in our 
ports and port infrastructure will continue to support robust 
international trade and American jobs. As the nexus where cargo 
moves in and out of our economy, ports have an important role 
to play in our supply chain.
    There is no doubt that our supply chain remains susceptible 
to major market fluctuations and international events. With the 
passage of OSRA and the Bipartisan Infrastructure Law though, 
we have already made significant progress in building a more 
resilient supply chain.
    Thank you to our witnesses for being here today. I am eager 
to dive into a conversation about how Congress can further 
support a strong maritime industry and resilient supply chain.
    Mr. Chair, I yield back.
    [Mr. Carbajal's prepared statement follows:]

                                 
  Prepared Statement of Hon. Salud O. Carbajal of California, Ranking 
    Member, Subcommittee on Coast Guard and Maritime Transportation
    Thank you, Chair Webster, for scheduling today's hearing on 
``Maritime Transportation Supply Chain Issues.'' While we touched on 
aspects of the supply chain and the Ocean Shipping Reform Act in the 
previous hearing, I look forward to a deeper discussion on this 
important topic.
    The maritime industry is a critical pillar of our economy. In 2020, 
ocean-going trade accounted for 40 percent of U.S. international trade 
value, amounting to 18 percent of our country's GDP. In 2020, the top 
25 tonnage ports alone handled over 1.7 billion tons of cargo, 
including vital goods like food, medical supplies and everyday 
household items.
    It is an understatement to say that our economy would not function 
without a reliable and fair maritime industry.
    In fact, the COVID pandemic highlighted the importance our supply 
chain and the devastating impacts that can occur if we do not invest in 
our maritime industry and the agencies that regulate them, like the 
Federal Maritime Commission and the United States Coast Guard.
    During the height of COVID, I heard from exporters across dozens of 
industries about unfair shipping practices and exorbitant costs, which 
put companies out of business and resulted in higher prices for their 
customers.
    To be clear, the astronomical profits realized by foreign shipping 
companies contributed to inflation in the United States.
    Supply chain gridlock and unfair shipping practices caused the 
value of California's food exports to fall by $2.1 billion, or about 17 
percent. That's just in California.
    I was proud to work across the aisle to pass OSRA last Congress. 
Since its passage, we have already seen a decrease in vessel congestion 
at ports and significant refunds in undue charges by carriers.
    As we heard last week, the FMC has moved quickly on rulemaking and 
the self-executing policies included in the law. I look forward to 
hearing from our witnesses today about how our supply chain has become 
more resilient, fair, and transparent as a result of the passage of 
this bill.
    I'm also eager to hear about how investments in our ports and port 
infrastructure will continue to support robust international trade and 
American jobs. As the nexus where cargo moves in and out of our 
economy, ports have an important role to play in our supply chain.
    There is no doubt that our supply chain remains susceptible to 
major market fluctuations and international events. With the passage of 
OSRA and the Bipartisan Infrastructure Law though, we have already made 
significant progress in building a more resilient supply chain.
    Thank you to our witnesses for being here today. I am eager to dive 
into a conversation about how Congress can further support a strong 
maritime industry and resilient supply chain.

    Mr. Webster of Florida. Thank you so much. First of all, 
let me introduce the mayor of Petersburg, Alaska, who happens 
to be here. Yes. Good to have you.
    [Applause]
    Mr. Webster of Florida. Now, I would like to welcome our 
witnesses and thank them for being here today. Briefly, I would 
like to take a moment to explain our lighting system. There is 
red: you're out of time, but yellow means you are leading up to 
it, and green means you still have time. So, just watch that.
    I would also like unanimous consent for the witnesses' full 
statements to be included in the record. Without objection, so 
ordered.
    As your written testimony has been made part of the record, 
the committee asks you to limit your remarks to 5 minutes, and 
with that, Mr. Darr, you are recognized as the first to give 
your 5-minute testimony.

 TESTIMONY OF CHARLES ``BUD'' DARR, EXECUTIVE VICE PRESIDENT, 
  MSC GROUP, ON BEHALF OF THE WORLD SHIPPING COUNCIL; MATTHEW 
LEECH, PRESIDENT AND CHIEF EXECUTIVE OFFICER, PORTS AMERICA, ON 
  BEHALF OF THE NATIONAL ASSOCIATION OF WATERFRONT EMPLOYERS; 
 WILLIAM H. ``BUDDY'' ALLEN, CHIEF EXECUTIVE OFFICER, AMERICAN 
   COTTON SHIPPERS ASSOCIATION; AND MARIO CORDERO, EXECUTIVE 
                  DIRECTOR, PORT OF LONG BEACH

 TESTIMONY OF CHARLES ``BUD'' DARR, EXECUTIVE VICE PRESIDENT, 
       MSC GROUP, ON BEHALF OF THE WORLD SHIPPING COUNCIL

    Mr. Darr. Thank you, Mr. Chairman; thank you, Ranking 
Members; thank you, Members, for the opportunity to be here 
today and speak with you about this important topic.
    My name is Bud Darr. I'm the executive vice president for 
maritime policy and government affairs at the MSC Group. MSC 
stands for Mediterranean Shipping Company. We are the world's 
largest liner shipping company.
    I'm also here today on behalf of the World Shipping 
Council, which represents 90 percent of the liner shipping 
industry worldwide.
    I'm not going to repeat what's in my written statement, you 
have it, but I would like to just highlight a few points for 
you to consider.
    First of all, with regard to what we've just been through: 
It has been an extraordinary excursion in supply, demand, 
volumes, rates, and congestion, the likes of which we've not 
seen in this industry, ever. All related to, in one way or 
another, the COVID pandemic.
    We made it through that, and now we've seen an environment 
where, as quickly as rates went up, rates came down even 
faster, volumes came down faster, and we're now at the point 
where the supply chains are fluid once again, but quite 
honestly, not for necessarily the best of reasons.
    Supply chains opened up because demand fell way off, not 
necessarily because of things collectively that we have 
accomplished, although we did a lot to get through it together. 
And I have to say, commerce kept moving, world trade kept 
moving because the liner shipping industry and others in the 
shipping industry, with the great, great assistance of our 
seafarers who endured terrible hardship during the pandemic, 
managed to keep it all flowing. And I do really want to 
recognize that as a fact.
    Three points I'd like to leave you with briefly. One is the 
market has reacted as if market dynamics would suggest it 
should. That we immediately saw when the pandemic began a drop-
off in demand, capacity was taken out of the networks, and then 
when demand came back very, very quickly in the third quarter 
of 2020, we saw an enormous rebound in volumes, which together 
with congestion, overloaded supply chains around the world 
resulted in a decrease in capacity to meet that demand and, as 
you might expect, rates went up accordingly.
    But what comes up must come down. We predicted that would 
happen. It has happened. Now that volumes have dropped off, the 
cliff on the way down has been very steep as well, and we're 
now at the point of essentially similar market dynamics of both 
volumes and rates to what we saw pre-pandemic.
    I will add, as an illustration of that, that we could have 
had 7,000 ships in our network instead of 700, and it still 
wouldn't have made a difference. Those 7,000 ships would have 
been piled up outside the ports rather than the numbers that we 
did have.
    So, fundamentally, what we had here, and this is my second 
point, about the supply chains themselves and what it takes to 
make them more resilient and more capable to meet the needs of 
commerce of the United States market in the future, is let's 
not persuade ourselves that it's a job done with that regard, 
because it's not.
    And the fundamentals about both infrastructure and the way 
that we operate the supply chains on the inland side of the 
supply chain needed work before the pandemic, became painfully 
illustrated during the pandemic, and continue to need work 
today so that we'll be better prepared for whatever the next 
catalyst is for disruptions in the supply chain. And hopefully 
we'll be better prepared at that point to deal with it, but we 
need to do those things and do them in a serious way up and 
down the supply chain.
    You didn't see a meltdown of ocean shipping. We didn't 
suddenly forget how to operate ships. We did that very, very 
well. What you saw was a meltdown of the shoreside elements 
causing congestion in the terminals, congestions in the ports, 
and the symptoms of seeing ships anchored, numbers larger than 
100, for example, in San Pedro Bay, which I hope in my lifetime 
we never see again.
    The last point that I'll leave you with for your 
consideration is about caution in Government intervention in 
the market at this moment. OSRA 2022 was just enacted not too 
many months ago. The FMC, I don't believe, has actually 
completed yet the first of numerous rulemakings they have to 
do, and I think that we would all benefit from seeing where 
that lands and how it goes. But this was a market system that 
functioned quite well and delivered extraordinarily low-cost 
shipping services worldwide pre-pandemic, and I think it can do 
so again, but we do need to be somewhat cautious to make sure 
that well-intentioned efforts do not have the opposite effect 
of perhaps what's intended.
    Thank you very much, and I look forward to your questions.
    [Mr. Darr's prepared statement follows:]

                                 
 Prepared Statement of Charles ``Bud'' Darr, Executive Vice President, 
           MSC Group, on behalf of the World Shipping Council
  1. Introduction: Mediterranean Shipping Company, the World Shipping 
               Council, and the Liner Shipping Industry.
    Chairman Webster, Ranking Member Carbajal, and Members of the 
Subcommittee, thank you for the invitation to testify today. My name is 
Bud Darr. I am Executive Vice President for Maritime Policy & 
Government Affairs of MSC Group. MSC stands for Mediterranean Shipping 
Company.
    MSC is a global leader in transportation and logistics. As one of 
the world's leading container shipping lines, MSC's fleet sails on more 
than 260 trade routes, calling at 520 ports, and is targeting net-zero 
decarbonization by 2050. The global footprint of our cargo businesses 
also includes container terminal investments, as well as inland 
transportation and logistics networks around the world. To support our 
customers, MSC has 675 offices across 155 countries worldwide, 
including here in the U.S. where we employ more than 1,300 staff in 10 
office locations. Together with the cruise and other passenger 
transportation businesses in the MSC Group, we employ more than 150,000 
people onboard and ashore.
    MSC is also a member of the World Shipping Council (WSC). The World 
Shipping Council (WSC) is a non-profit trade association that 
represents the liner shipping industry, which is comprised of operators 
of containerships and roll-on/roll-off (ro-ro) vessels (including 
vehicle carriers). Together, WSC's members operate approximately 90 
percent of the world's liner vessel services including more than 5,000 
ocean-going vessels of which approximately 1,500 vessels make more than 
27,000 calls at ports in the United States each year.\1\
---------------------------------------------------------------------------
    \1\ A full description of the Council and a list of its members are 
available at www.worldshipping.org.
---------------------------------------------------------------------------
    The liner shipping industry provides American importers and 
exporters with door-to-door delivery service for almost any commodity 
to and from roughly 190 countries. Approximately 35 million TEU2 of 
containerized cargo are currently imported into or exported from the 
United States each year. The container shipping industry is one of the 
most important facilitators of the nation's growth and ongoing economic 
activity. Ocean shipping is also--by far--the most fuel-efficient form 
of mass cargo transportation on the planet.
   2. The U.S. Supply Chain is Back to Normal after 3 Years of COVID-
                           driven Congestion.
    The U.S. international ocean supply chain has returned to normal. 
The return to pre-pandemic trade volumes has alleviated the severe 
congestion caused by the COVID-driven consumer demand for imported 
goods. U.S. consumers have resumed more normal spending patterns and 
are once again spending their disposable income on travel, 
entertainment and services. Unfortunately, inflationary pressures have 
also reduced U.S. consumer spending, resulting in retail importers 
holding large volumes of inventory, which has further reduced import 
orders. While the emergence from COVID-driven supply chain congestion 
is welcomed, the drop in import demand has caused cargo volumes to 
plummet. U.S. imports from Asia plunged 31 percent year over year in 
February 2023, which is the lowest level since March 2020, extending 
the sixth consecutive month of year-over-year declines in Asian imports 
that began in September.

     Asia imports to U.S. in February slid to lowest in three years

    U.S. containerized imports from Asia with year-over-year change
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The plummet in import demand has resulted in a corresponding drop 
in freight rates, which are now generally at or below pre-pandemic 
levels.

                Asia-U.S. spot rates near three-year low

        Trans-Pacific eastbound spot rates as assessed by Drewry
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     3. U.S. Agricultural Exports Smashed Records in 2021 and 2022.
    Ocean carriers continue to work closely with U.S. agricultural 
exporters to provide innovative solutions to carry their goods to 
foreign markets. While all shippers, both importers and exporters, were 
affected by the COVID-driven bottlenecks resulting from import demand, 
allegations that agriculture exporters were disproportionately affected 
are not supported by U.S. government data. Rather, according to the 
U.S. Department of Agriculture (USDA), U.S. agriculture sector exports 
in FY 2022 reached a new record, up $24.7 billion from the previous FY 
2021 record of $172.2 billion (which was a 23% increase from FY 2020). 
Moreover, the value of sales increased in all of the United States' top 
10 agriculture markets--China, Mexico, Canada, Japan, the European 
Union, South Korea, Taiwan, the Philippines, Colombia and Vietnam, with 
sales in seven of the 10 markets (China, Mexico, South Korea, Taiwan, 
the Philippines and Colombia) setting new records. The increase in U.S. 
Agriculture exports in FY 2022 was principally due to record sales of 
these top commodities:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Soybeans......................................  $33.3 billion
Corn..........................................  $19.5 billion
Beef & Veal...................................  $10.8 billion
Feeds & Fodders...............................  $10.6 billion
Tree Nuts.....................................  $ 9.8 billion
Dairy Products................................  $ 9.1 billion
------------------------------------------------------------------------
Source: U.S. Department of Agriculture, Foreign Agricultural Service.

   4. The Latest Developments and Trends Reflect a Competitive Ocean 
                            Shipping Market.
    Increased freight rates and reduced reliability during the pandemic 
were not attributable to carriers or alliances. Instead, both the 
Federal Maritime Commission \2\ and the European Commission \3\ 
concluded that these developments were caused by several other factors 
wholly outside ocean carriers' control, including exceptional supply 
and demand imbalances, a surge in U.S. import demand, labor shortages, 
and port and inland congestion that removed effective capacity from the 
market. Over the past 24 years, as carriers have worked hard to 
increase operational efficiency and reduce costs, freight rates have 
fallen considerably compared to the consumer price index. While 
consumer prices globally more than doubled from 1998 to 2019 due to 
inflation, freight rates have actually decreased, acting as a 
deflationary factor to push consumer prices down. Reliability impacts 
during this crisis were generally due to supply chain disruption 
ashore, which led to congestions in ports and terminals, whereas the 
operation of our ships at sea remained highly efficient and essentially 
unchanged.
---------------------------------------------------------------------------
    \2\ FMC Fact Finding Investigation, Final Report ``The Effects of 
COVID-19 on the U.S. International Ocean Transportation Supply Chain'' 
FactFinding29FinalReport.pdf (fmc.gov).
    \3\ Answer given by Executive Vice-President Vestager on behalf of 
the European Commission (23.5.2022), Parliamentary question / Answer 
for question P-001454/22 / P-001454/2022(ASW) / European Parliament 
(europa.eu)
---------------------------------------------------------------------------

     Freight Rate Discount Compared to Global Consumer Price Index
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

5. Ocean Carriers are Highly Concerned that the FMC has Abandoned their 
   ``Incentive Principle'' in their OSRA 22 Detention and Demurrage 
                              Rulemaking.
    For the better part of the last five years, the Commission has 
consistently worked through its Fact Findings, policy guidance, and 
case law to make clear to the regulated industry that the ``Incentive 
Principle,'' as set forth in its final Interpretive Rule on Demurrage 
and Detention,\4\ is the touchstone of its detention and demurrage 
policy. The Incentive Principle states that in assessing the 
reasonableness of detention and demurrage practices, the Commission 
will first consider the extent to which those practices are serving 
their primary purpose of financially incentivizing cargo interests to 
remove their cargo from the terminal promptly and to return equipment 
in a timely manner. The Interpretive Rule also states that the concept 
of reasonableness is fact-specific, and therefore the application of 
the Incentive Principle will ``vary depending on the facts of a given 
case.'' \5\
---------------------------------------------------------------------------
    \4\ See Interpretive Rule on Demurrage and Detention Under the 
Shipping Act, 85 Fed. Reg. 29665 (May 18, 2020), 46 CFR Sec.  545.5 
(Interpretation of Shipping Act of 1984--Unjust and unreasonable 
practices with respect to demurrage and detention) (2020).
    \5\ See Interpretive Rule on Demurrage and Detention Under the 
Shipping Act, 85 Fed. Reg. 29665, 29641 (May 18, 2020).
---------------------------------------------------------------------------
    Congress in the Ocean Shipping Reform Act of 2022 (OSRA 22) 
directed the FMC to initiate a rulemaking that, ``shall only seek to 
further clarify reasonable rules and practices related to . . . the 
final rule published on May 18, 2020, entitled `Interpretive Rule on 
Demurrage and Detention Under the Shipping Act' '' \6\. The 
Interpretive Rule that Congress told the FMC to make the basis of its 
detention and demurrage rulemaking is built around the Incentive 
Principle, but the Commission's proposed rule never once even mentions 
the Incentive Principle. Instead, the Commission's proposed rule 
abandons the Interpretive Rule's fact-specific analysis and focus on 
the Incentive Principle and replaces those concepts with absolute 
prohibitions on charging detention or demurrage to broad classes of 
entities. Because the proposed detention and demurrage rule does not 
consider how billing certain parties other than shippers incentivizes 
freight fluidity through the supply chain, it runs a real risk of 
increasing supply chain congestion, which is the opposite of what 
properly structured detention and demurrage charges are supposed to do.
---------------------------------------------------------------------------
    \6\ See Public Law No: 117-146 (June 16, 2022), Section 7, 
paragraph (b)(2).
---------------------------------------------------------------------------
    Ocean carriers, ports, marine terminal operators and shippers are 
concerned that the Commission's rule, if adopted as proposed, will 
disincentivize many players in the supply chain from timely collecting 
goods from marine terminals and returning empty equipment for use by 
other customers. That in turn will only increase congestion in our 
nation's ports--threatening to worsen the very problem that properly 
applied detention and demurrage charges are designed to minimize. 
Congress was clear in instructing the Commission to use this rulemaking 
to provide further clarification on how to reasonably use the tools of 
detention and demurrage to incentivize cargo velocity. Given that we 
are only now clearing the congestion that snarled our ports and inland 
supply chains during the pandemic, it is hard to imagine a Commission 
initiative that is worse aligned with Congress' objectives in passing 
OSRA 22. The shipping industry welcomes clear regulations that ensure 
that everyone is treated fairly. But what the Commission has proposed 
will make some people pay when they have no ability or incentive to 
keep cargo moving, and it will prohibit some people from paying even 
when they are precisely the people that decide whether and when the 
cargo moves. This is exactly backwards, and it needs to be fixed before 
the FMC issues a final rule.
    WSC looks forward to continuing to work with the Congress, and to 
encourage the Commission towards a rule that implements OSRA consistent 
with Congressional intent and sound policy, to ensure a workable and 
fluid international ocean transportation system for U.S. businesses and 
consumers.
                             6. Conclusion.
    The work of thousands of supply chain stakeholders enabled the U.S. 
international ocean supply chain to move record amounts of import and 
export cargo throughout the COVID-19 pandemic. The return to normal 
volumes and balance of import and export cargo has resulted in 
relieving congestion throughout the supply chain. We must continue to 
collectively address the operational and commercial challenges we 
faced, to ensure our supply chain has the capacity and resiliency to 
meet the next challenge. We also need the support of reasonable 
regulations, consistent with Congressional direction in OSRA 22, to 
incentivize cargo velocity and fluidity. The ocean common carrier 
community is committed to serving the international trade of the United 
States, and the historical volume of cargo that we moved throughout the 
pandemic, and continue to move, is the evidence of that commitment.

    Mr. Webster of Florida. Thank you so much.
    Mr. Leech, you are recognized for 5 minutes.

   TESTIMONY OF MATTHEW LEECH, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, PORTS AMERICA, ON BEHALF OF THE NATIONAL ASSOCIATION 
                    OF WATERFRONT EMPLOYERS

    Mr. Leech. Chairman Webster, Ranking Member Carbajal, and 
members of the subcommittee, my name is Matthew Leech, and I 
serve as president and CEO of Ports America.
    I appreciate the opportunity to appear before you this 
afternoon. Ports America is the largest marine terminal 
operator, or commonly known as MTO, and stevedore in the United 
States.
    As an American company, we've been operating for over 100 
years, and we are one of the largest U.S. maritime employers. 
Currently, Ports America manages operations in 33 ports in 70 
locations throughout the country.
    The highest priority in our operations is the health and 
safety of our indispensable workers. I'm also here today on 
behalf of the National Association of Waterfront Employers, 
NAWE, of which Ports America is a proud member.
    NAWE is a nonprofit trade association who ensures that 
there are open lines of communication between Congress, 
regulatory agencies, and the gateways to our Nation's 
international commerce through proactive advocacy.
    MTOs are the linchpin of our maritime transportation 
industry, employing thousands of American waterfront workers, 
investing in U.S. port infrastructure, and serving as the 
critical link moving cargo between sea and land.
    We all understand and witnessed the significant supply 
chain disruptions experienced during the COVID-19 pandemic. 
However, the current maritime supply chain is vastly different.
    Maritime cargo volumes and freight rates have normalized to 
pre-COVID-19 levels, and in many cases, they are lower. In 
2022, Congress responded to this crisis, including leaders 
within this subcommittee, and enacted the Ocean Shipping Reform 
Act, commonly referred to as OSRA.
    OSRA directed the Federal Maritime Commission to undertake 
several administrative and regulatory actions to implement the 
Commission's new authorities. I applaud the efforts of the 
Commissioners and their staff in taking rapid action through 
repeated public engagement.
    In some cases, the Commission has gotten it right, such as 
increasing investigation of improper charges and practices, and 
diligently implementing the new charge complaint process.
    In other cases, however, the Commission doesn't appear to 
be getting it right. Notably, in the issuance of its October 
2022 notice of proposed rulemaking regarding demurrage and 
detention billing requirements, I offer two specific examples.
    First, the proposed rule as drafted would penalize MTOs and 
threaten an MTO's ability to charge terminal demurrage, which 
we consider a storage fee.
    Second, in a recent informal adjudication decision taken up 
by the FMC, a majority of the Commissioners determined that the 
imposition of equipment detention--essentially a fee charged by 
ocean carriers for the use of their equipment beyond free 
time--on a holiday weekend when the equipment return location 
was normally closed, was at odds with the incentive principle 
and therefore unreasonable under the Shipping Act.
    The application of the interpretation of this recent 
decision falls short of the Commission's own incentive 
principle as noted in Commissioner Bentzel's sole dissenting 
opinion.
    Mr. Chairman, I ask unanimous consent to submit for the 
hearing record Commissioner Bentzel's dissenting order, TCW, 
Inc. v. Evergreen Shipping Agency America Corp. and Evergreen 
Line.
    Mr. Webster of Florida. So ordered.
    [The information follows:]

                                 
 Proceeding No. 1966(I), Served Order of December 29, 2022, Affirming 
the Initial Decision, TCW, Inc. v. Evergreen Shipping Agency (America) 
Corporation & Evergreen Line Joint Service Agreement, Submitted for the 
      Record by Hon. Daniel Webster on behalf of witness Mr. Leech
The 20-page order is retained in committee files and is available 
online at https://
www2.fmc.gov/readingroom/docs/1966(I)/
1966(I)%20Order%20Affirming%20Initial
%20Decision.pdf/. Note: Commissioner Bentzel's dissenting opinion is on 
pages 16-20.

    Mr. Leech. Thank you.
    Despite this clear notice and the fact that the shipper's 
agent had every opportunity to return the equipment before the 
holiday weekend, the Commission deemed the detention charges 
unreasonable.
    Some in the industry believe that this logic could be 
extended to terminal demurrage or storage, even though the 
terminal demurrage or storage is qualitatively different from 
equipment detention.
    The analysis under the incentive rule should consider both 
the actual differences in the charges, as well as the costs 
associated for the services that the fees are compensating.
    In this industry, fees for storage of goods are and always 
have been a time-based service, irrespective of the day of the 
week.
    In the interest of time, my written testimony includes 
relevant information regarding investments MTOs have made on 
operations and cargo handling equipment. Our industry 
appreciates congressional support to modernize port 
infrastructure and achieve decarbonization of the entire 
maritime sector, including our local communities.
    I want to thank you all for inviting me to share these 
updates and these concerns on critical issues which impact our 
industry.
    [Mr. Leech's prepared statement follows:]

                                 
  Prepared Statement of Matthew Leech, President and Chief Executive 
   Officer, Ports America, on behalf of the National Association of 
                          Waterfront Employers
    Good morning, Chairman Webster, Ranking Member Carbajal, and 
members of the Subcommittee. My name is Matt Leech, and I serve as 
President and Chief Executive Officer of Ports America. Thank you for 
the invitation to be here today. I appreciate the opportunity to 
discuss the status of the maritime supply chain and the implementation 
of S.3580, Ocean Shipping Reform Act of 2022 (``OSRA''), enacted into 
law last year.
    Ports America is the largest marine terminal operator and stevedore 
in the United States. The company has been operating for over 100 
years, is one of the largest U.S. maritime employers with approximately 
945 full-time employees and hires more than 12,000 union workers on a 
daily basis to operate our terminals. Currently, Ports America manages 
operations in thirty-three ports and seventy locations. In 2022, Ports 
America handled over 19.25 million twenty-foot equivalent units, 1.6 
million vehicles, 8.27 million tons of general cargo, and 4.4 million 
cruise passengers. In the industry, our marine terminals and cargo 
handling operations are commonly known by the acronym ``MTOs.'' At the 
corporate level, Ports America maintains its focus on key areas, 
including terminal concessions, joint venture partnerships, 
infrastructure funding, public-private partnerships, labor management, 
and relationships with the world's leading shipping lines. Above all is 
Ports America's commitment to a culture of safety. The health and 
safety of our dedicated workforce is our single highest priority.
    I am also here today on behalf of the National Association of 
Waterfront Employers (``NAWE''), of which Ports America is a proud 
member. NAWE is a non-profit trade association whose member companies 
are privately-owned stevedores, MTOs, and other U.S. waterfront 
employers. NAWE's member companies engage in business at all major U.S. 
ports on the Atlantic and Pacific Coasts, the Gulf of Mexico, the Great 
Lakes, and Puerto Rico. In that manner, NAWE, as the voice of MTOs in 
Washington, DC, ensures that there are open lines of communication 
between Congress, regulatory agencies, and the gateways to our Nation's 
international commerce.
                Importance of Marine Terminal Operators
    As the American public has come to understand more acutely in 
recent years, MTOs are the critical lynchpin of our maritime 
transportation industry. MTOs employ hundreds of thousands of American 
waterfront workers, privately fund the purchase of cargo handling 
equipment at U.S. ports, and most importantly, serve as the critical 
link moving cargo between the sea and the land.
    MTOs are the bridge between ocean transportation and inland land 
transportation. All U.S. imports and export cargo using international 
ocean transportation--which is [the vast majority] of all commercial 
cargo--rely on MTOs to perform a combination of essential and critical 
links in the supply chain. MTOs transition cargo from very different 
modes of transportation (ships, trucks, and rail cars), and MTOs manage 
the orderly, safe, and secure collection and distribution of cargo from 
a vast array of different parties. It is the work of MTOs that connects 
the products of American workers to the global economy and, in turn, 
ensures that global commerce constantly flows in support of our 
Nation's economy.
    The national economy increasingly demands just-in-time delivery and 
associated reductions in container turn time throughout the maritime 
supply chain. Accordingly, MTOs must be adaptive and forward-thinking, 
looking to leverage new technologies and advanced infrastructure to 
ensure that the operators' skilled workforce can meet stakeholder needs 
in a safe operating environment that seeks to mitigate the risk of 
injury. However, while MTOs can create efficiencies through 
infrastructure and equipment investment, the waterfront land upon which 
MTOs operate (some of the most expensive real estate in the country) 
remains finite.
    Supply chain challenges from 2020 through late 2022 demonstrate 
this basic supply and demand problem. Unprecedented consumer demand 
following the COVID-19 pandemic and limited capacity in other parts of 
the supply chain led directly to a scarcity of capacity at marine 
terminal property. Two main factors drove MTO congestion: (1) an 
extraordinary increase in container volumes and (2) an unprecedented 
decrease in container throughput--the period of time a container stays 
on a terminal. Marine terminals are a zero-sum game--each container 
sitting on a terminal is occupying space that is needed for another 
container coming off of (or going on to) the next ship. The analogy of 
an MTO as a bridge between transposition modes is very apt. The 
capacity of a bridge is a function both of how many cars it can hold at 
any one time, i.e., how many lanes and the speed that those cars can 
safely and efficiently move over the bridge from one side to the other. 
Marine terminal throughput works just the same. Increased demand (for a 
bridge, traffic on labor day weekend, for a terminal, a peak season 
before Christmas) is enough to stress capacity. Still, anything that 
slows down throughput can have catastrophic effects (for a bridge, 
think of how road construction on one lane at the other side can back 
up traffic for miles on a busy day, and for a terminal, any number of 
backups outside of a terminal and beyond an MTO's control can do the 
same--shortage of truckers, availability of chassis, rail congestion, 
not enough warehouses to unload containers, and, sometimes, even bridge 
traffic.). Terminals, like bridges, are also very expensive, have 
finite capacity, and are difficult to expand without major 
infrastructure development.
    But there is a big difference between bridges and marine terminals 
that is part of the reason for my testimony today. No one would think 
it is okay use a bridge for long term parking. Indeed, if cars parked 
on a bridge in rush hour, everyone would expect--demand even--that the 
bridge operator has the ability and the tools to get parked cars 
moving. Yet, containers are often improperly ``parked'' at marine 
terminals for excessive periods of time, which was a particularly acute 
problem during the pandemic, but ``warehousing'' containers at marine 
terminals is an ongoing problem. Worse, the critical tools that MTOs 
have available to move containers off terminals are at risk. Well-
meaning efforts to regulate excessive and unreasonable charging 
practices in certain areas of the supply chain, perhaps inadvertently 
or as an unintended consequence, are threatening essential tools used 
by MTOs to charge for use of services and to promote movement of 
cargo--namely assessment and collection of ``terminal demurrage.''
    Accordingly, it is imperative that MTOs have the flexibility to use 
all available tools--including the assessment of terminal demurrage--to 
ensure the expedient retrieval of containers from a terminal property 
and to avoid a repeat of the congestion issues of recent years.
           Status of the Maritime Transportation Supply Chain
    It is well known that the exceptional levels of consumer demand 
that began in 2020 have receded, and the overall flow of cargo has 
returned to relatively normal levels, with accordant reductions in 
ocean transportation freight rates. For example, Freight Waves reported 
that unlike in January 2022, when over 100 container ships were stuck 
waiting off the Ports of Los Angeles and Long Beach, in January 2023, 
no ships were waiting offshore to enter San Pedro Bay. Moreover, this 
turnaround is not unique to the Pacific Coast. Major Atlantic and Gulf 
Coast ports have experienced similar reductions in vessel queues 
despite increased port calls. Overall, marine exchange data indicates 
that vessel queues and container dwell times at North American ports 
and marine terminals have essentially returned to pre-COVID norms.
    The current status of the maritime supply chain now must be one of 
reflection, focused on the implementation of important lessons of 
recent years to mitigate the risk of future congestion issues. When 
examining how MTOs were able to address these historic cargo volumes 
and throughput pressures, it becomes clear that the availability of two 
tools was critical.
    First, the assessment and collection of terminal demurrage and long 
dwell fees was decisive in ensuring that containers were removed from a 
terminal yard in a timely manner. While marine terminals are not 
warehouses, part of moving containers through a marine terminal 
requires short-term storage between the time a container is discharged 
from a ship until it is loaded on a truck or rail car (and the 
reverse). That period of time, which is referred to as ``free time,'' 
is the intended period of time to move cargo off the terminal without 
additional changes. But when containers remain on the terminal after 
free time, terminal demurrage is charged.
    Simply put, terminal demurrage is part ``rent'' or a ``storage 
fee'' for the use of the space and extended care and custody of the 
container and cargo on a terminal after free time. It is also an 
incentive for cargo interests to remove cargo in a timely fashion to 
avoid using the terminal as a warehouse. In many situations, even with 
demurrage and dwell fees, MTOs are not compensated for the negative 
impact of overstaying containers, and some cargo interests persist in 
abusing marine terminals as de facto warehouse storage because other 
options are less convenient or more expensive.
    As noted above, terminal space is finite; therefore, it is critical 
both to the health of the American supply chain and the basic business 
principles of MTOs that containers be retrieved as quickly as possible. 
Managing the time a container is on terminal--``dwell time'' as it is 
known--is critical to managing throughput and ultimately maintaining 
capacity. Think of cars at an airport. Cars at arrivals and departures 
are not charged for quick and usually well-monitored periods, and some 
airports have short-term pickup lots that may offer a first hour free. 
But virtually all major airports manage the efficiency and availability 
of short- and long-term parking through the application of rates and 
charges. As with marine terminals, there are both cost differences and 
incentive differences at play in service charges. Close-in parking 
buildings tend to cost more than more distant open lots, and close-in, 
short-term parking tends to have higher charges than more distant open 
lots to incentivize efficient use of time and space.
    MTOs similarly use terminal demurrage to manage the on terminal 
dwell time of containers. After free time there is a cost recovery 
element to terminal demurrage and an incentive element (often reflected 
in the use of tiers or rate increases over time) to incentivize shorter 
stays and more prompt removal.
    Terminal demurrage, therefore, ensures that marine terminals are 
the bridge that is needed for the supply chain to function properly, 
not a very expensive and under-compensated warehouse that risks supply 
chain congestion. If additional warehouse space is needed, the industry 
should invest in warehouse capacity, not unduly burden MTOs and risk 
untenable supply chain congestion.
    Second, MTOs were able to work together to create operational 
efficiencies and--as necessary and when appropriate and feasible--
extend gate hours to expedite the flow of cargo through U.S. ports. 
This coordination was only possible through the ability to coordinate 
facilitated by the limited antitrust immunity afforded to MTO 
agreements filed with the Federal Maritime Commission (``FMC'') under 
the Shipping Act. Without this immunity, competitor MTOs operating on 
the same public port property would be unable to coordinate efforts and 
share data, which would have made it virtually impossible to address 
the supply chain capacity issues of recent years.
                          OSRA Implementation
    OSRA directed the FMC to undertake a number of administrative and 
regulatory actions to implement the Commission's new authorities. I 
applaud the efforts of the Commissioners and their staff in taking 
rapid action through repeated public engagement. In some cases, the FMC 
has gotten it right, such as increasing investigation of improper 
charges and practices, following Congress' directive to implement 
OSRA's requirements for ocean carrier demurrage and detention invoices, 
and diligently implementing the new charge complaint process. In other 
cases, however, the FMC appears to be getting it wrong, notably in the 
issuance of its October 2022 Notice of Proposed Rulemaking (``NPRM'') 
regarding demurrage and detention requirements mandated by Section 7(b) 
of OSRA. We offer two examples.
(1) Proposed Rules Would Penalize MTOs, threaten MTO Ability to Charge 
        Their Own Terminal Demurrage, and are Inconsistent with how the 
        Supply Chain Really Works
    First, the FMC's October 2022 NPRM, unfortunately, chose to ignore 
the express directive from Congress in Section 7(b) of OSRA to initiate 
a very specific rulemaking: clarifying reasonable rules and practices 
identified in the FMC's May 18, 2020, ``incentive rule,'' but it was 
not an invitation to re-write the common carrier provisions enacted by 
Section 7(a) of OSRA to apply wholesale to MTOs. Aside from not 
following the express directive, the FMC should not be engaging in 
proposed regulation that would do by regulation what Congress chose not 
to do by legislation. Indeed, instead of further clarifying issues not 
resolved in the inventive principle rulemaking, the NPRM broadly and 
inexplicably sweeps MTOs into such requirements, notwithstanding the 
impossibility of complying with the proposed regulations. Specifically, 
the NPRM proposed rules would require MTOs to have a ``direct 
contractual relationship'' with cargo owners in order to bill them for 
terminal demurrage. This is not only inconsistent with longstanding 
relationships in the supply chain but quite frankly astonishing that 
the FMC would suggest a rule that a terminal not be able to charge for 
services it actually performs and which are the essential tool that 
MTOs have to facilitate cargo movement. MTOs are also in the best 
position to efficiently assess and collect demurrage-type charges 
because the amount due is generally only known at the time a container 
is removed from a terminal, which MTOs directly facilitate and manage. 
If anything, MTOs should be the only party to charge terminal 
demurrage, not the other way around.
    The FMC's proposed rules on MTOs are inconsistent with OSRA 2022, 
target the wrong part of the supply chain, and would almost certainly 
not only do more harm than good but would very likely have the direct 
opposite effect than Congress intended. Accordingly, not only would the 
Commission's proposed changes be impossible without senselessly 
prohibiting MTOs from charging for their owner services, but they would 
also slow the flow of cargo, undermining the recent successful efforts 
to mitigate supply chain congestion.
    We hope the FMC takes this issue into consideration.
(2) Demurrage and the Incentive Principle
    In addition to the FMC's rulemaking efforts, I am concerned about 
some of the related policy directions of the Commission. For example, 
in a recent informal adjudication decision taken up by the FMC, a 
majority of the Commissioners determined that the imposition of 
equipment detention (essentially a fee charged by ocean carriers for 
the use of their equipment beyond ``free time'') on a holiday weekend 
when the equipment return location was normally closed was at odds with 
the ``incentive principle'' and therefore unreasonable under the 
Shipping Act. The ``incentive principle''--a creation of the FMC's own 
regulatory efforts--considers as a factor in the reasonableness 
analysis the degree to which detention and demurrage charges act as 
``financial incentives to promote freight fluidity.'' As noted in 
Commissioner Bentzel's dissent, the ``incentive principle'' does not 
replace the statutory test under Shipping Act, i.e., whether or not the 
charge is ``reasonable.''
    I am extremely concerned about what this recent decision could mean 
for the imposition of terminal demurrage. Not because the decision 
applies to marine terminal demurrage, as it does not. And not that it 
should be applied to marine terminal demurrage, as it should not. But 
my concern is that in the absence of clear legislation or a normal 
rulemaking process--like the process Section 7(b) of OSRA mandated that 
FMC undertake, the decision has created a significant amount of 
uncertainty among various industry segments, and thus the potential for 
rash operational changes that are both unnecessary as a matter of law 
and regulation and detrimental to the interests of MTOs.
    Notably, in this recent case, the shippers had advanced notice that 
the marine terminal (the designated return location) would be closed on 
the holiday weekend. Nonetheless, they chose to continue to hold the 
ocean carrier's equipment.
    Despite this clear notice and the fact that the shipper's agent had 
every opportunity to return the equipment before the holiday weekend, 
the Commission deemed the detention charges unreasonable. Some in the 
industry believe that this logic could be extended to terminal 
demurrage, even though terminal demurrage is qualitatively different 
from equipment detention (e.g., the charge for the use of space), and 
the analysis under the incentive rule should consider both the actual 
differences in the charges as well as the different incentivizing facts 
at issue. Despite this, the uncertainty is already affecting 
stakeholders, and the results, if continued to their (il)logical 
conclusion, would be illogical and potentially devastating.
    The costs borne by the MTO in storing a container at the terminal 
that has improperly exceeded its free time remain constant, whether or 
not the terminal is open. To repeat, a marine terminal is not intended 
to be used as a warehouse. The business model of a marine terminal 
depends on a constant flow of cargo through the terminal. Accordingly, 
the MTO must be compensated for a party failing to remove a container. 
This is quite different from the ``lost opportunity'' costs of already 
unused equipment at issue in equipment detention.
    Moreover, it is clear that the imposition of weekend and holiday 
terminal demurrage promotes freight fluidity, consistent with the 
incentive principle. If free time has expired, cargo is incentivized to 
remove a container before the weekend or holiday to avoid paying for 
such additional storage costs. In addition, the availability of free 
storage on the weekend is likely to disincentivize the flow of cargo, 
when the alternative is relocating cargo to an offsite facility where 
fees would be incurred. The aggregate result, therefore, would be an 
increase in supply chain congestion at U.S. ports. Because the 
potential implications of the FMC's recent decision fly in the face of 
the incentive principle, we urge this Subcommittee to encourage the FMC 
to avoid extending its scope to terminal demurrage.
              MTO Investments in Cargo Handling Equipment
    Notwithstanding the success of reducing supply chain congestion 
through the use of terminal demurrage and filed MTO agreements, new 
challenges are emerging. For example, Congress passed the Inflation 
Reduction Act (``IRA'') last August, which appropriates $3 billion for 
maritime decarbonization. The government's investment is intended to 
help MTOs switch to zero- or near-zero emissions equipment to 
decarbonize port operations and improve air quality in port 
communities. NAWE and its members are extremely grateful to Congress 
for its leadership in passing the IRA and supporting MTO investment in 
next-generation cargo handling equipment. However, although MTOs and 
other stakeholders want cleaner, safer, and healthier ports, the IRA's 
timelines for getting new equipment are challenging for several 
reasons, including:
    1.  The much higher cost of electric equipment;
    2.  Lost value in replacing existing equipment before the end of 
its useful life;
    3.  The need for expensive electric infrastructure; and
    4.  The lack of U.S.-manufactured zero- or near-zero emissions 
cargo handling equipment.

    NAWE and its members continue to investigate the anticipated costs 
and timelines of switching from existing cargo handling equipment to 
zero- or near-zero emissions equipment. However, given the above-listed 
challenges, we anticipate that the aggregate costs to bring U.S. ports 
into compliance with the IRA's decarbonization goals will be in the 
tens (and possibly hundreds) of billions of dollars and will far exceed 
the IRA's timelines, even if U.S. manufacturing of next-generation 
cargo handling equipment can be rapidly expanded.
    Given these challenges, Ports America and NAWE will continue to 
engage with Congress to find flexibility in the IRA to account for the 
realistic costs, timelines, and U.S. equipment availability to achieve 
the Act's policy goals. While the IRA is outside this Subcommittee's 
jurisdiction, we appreciate the members' support for our efforts. We 
will keep you apprised of these implementation challenges as they 
directly impact the U.S. maritime supply chain.

                                 * * *

    In closing, I want to thank you all for inviting me to share 
updates and concerns on these critical issues that impact our industry. 
I am truly grateful for your support of American marine terminal 
operators in ensuring resilient maritime supply chain and safe working 
environment for our waterfront workforce. I am happy to respond to any 
questions you may have.

    Mr. Webster of Florida. Thank you very much.
    Mr. Allen, you are recognized for 5 minutes.

   TESTIMONY OF WILLIAM H. ``BUDDY'' ALLEN, CHIEF EXECUTIVE 
         OFFICER, AMERICAN COTTON SHIPPERS ASSOCIATION

    Mr. Allen. Thank you very much.
    Chairman Webster, Ranking Member Carbajal, and members of 
the subcommittee, thank you for holding this hearing. I'm 
honored to have the opportunity to contribute my testimony and 
the perspective of the American Cotton Shippers Association or 
ACSA.
    ACSA is a trade association primarily made up of cotton 
merchants founded in 1924. Our members handle the vast majority 
of U.S. cotton and foreign growths of cotton traded around the 
world.
    Our services consist of merchandising, delivery logistics, 
and risk management. Simply put, we buy cotton from farmers, 
and sell and deliver it to yarn spinners in the U.S. and around 
the world.
    We harmonize our customers' very different needs while 
managing many of their risk, including price, time, 
transportation, currency, geopolitics, and quality. With 
approximately 85 percent of U.S. cotton exported in a 
containerized and nonfungible manner, a functional and reliable 
intermodal supply chain that provides adequate service to 
exporters is mandatory to support overall risk management and 
U.S. competitiveness in the global marketplace.
    During the supply chain crisis that stemmed from the COVID-
19 pandemic, our members experienced unprecedented challenges 
and risk. Cotton is produced and concentrated in our country's 
interior and moved intermodally to domestic mills or ports of 
export around the world. Efficient performance requires harmony 
in sequencing and executing appointments with warehousemen, 
equipment providers, draymen, rail providers, ocean shippers, 
and terminal operators. Challenges at each point within our 
industry's procedures created collective dysfunction.
    Our industry has enjoyed a long and fruitful relationship 
with ocean carriers. We are not here today to assign blame to 
any single party for these events. We must work together to 
develop practical solutions moving forward.
    We believe that meaningful structural changes must be made 
to prevent similar dysfunction from occurring. Our view is that 
current relief in our supply chain is solely based on global 
economic downturn that curtailed consumption of goods and 
related volumes of inbound cargo.
    Inundation has been replaced with elasticity in our supply 
chain. This reprieve is temporary. Our economy will strengthen, 
cargo volumes will increase, and we must capitalize on this 
opportunity to prepare for renewed cargo saturation within our 
supply chain.
    ACSA applauds Congress and the Federal Maritime Commission 
or FMC for the passage and aggressive implementation of the 
Ocean Shipping Reform Act, referred to as OSRA. Key elements of 
ACSA policy positions are addressed in OSRA, including the 
categorical denial of service to exporters, reasonableness when 
levying fees, and choice in the procurement of chassis.
    The results of OSRA's implementation, related rulemaking, 
and administrative processes are pending and appear to be, in 
our opinion, of varying value. We believe that OSRA will likely 
fall short of providing the needed assurance exporters seek 
concerning the availability of service when economic conditions 
favor empty sailings or imports.
    Concerning detention and demurrage, we find value in the 
documentation regime created by FMC, although we request 
further establishment of causation in these submissions.
    ACSA is supportive of FMC's recent decision of denial of 
choice in chassis procurement for merchant haulage is 
unreasonable and in violation of the Shipping Act, a decision 
that has been broadly advocated for by an extensive coalition 
of importers, exporters, and their service providers. We also 
want to flag the importance of OSHA's prescribed study on best 
practices for chassis. This should be done in a comprehensive 
manner.
    ACSA was a proponent of creating the National Shipper 
Advisory Committee and is supportive of their recommendations 
to the FMC. Specifically, we endorse measures to bring clarity 
to jurisdictional questions and expanded oversight to FMC 
throughout the entirety of maritime bills of lading, the 
establishment of uniform and reasonable terms concerning cargo 
receiving, and active steps to enhance data visibility and 
integrity.
    In addition to the reform and commercial practices outlined 
in my testimony, I'd like to acknowledge ACSA's commitment to 
the development of a modernized culture in containerized 
shipping--one that embraces digitalization and the utility of a 
blockchain ledger to streamline data management and expand 
opportunities for global cotton merchandising.
    In conclusion, I would be remiss not to acknowledge how 
valuable our experience working with the FMC has been in recent 
years. Given their size and given their resources, they have 
been asked to punch above their weight class throughout this 
process. I'm pleased to report that they are doing so while 
maintaining active engagement with stakeholders and seeking 
equitable outcomes that will promote a sound supply chain. We 
hope this will be taken into consideration as FMC appeals for 
critical resources to manage their expanding scope.
    Mr. Chairman, thank you for this opportunity to testify. I 
look forward to answering your questions.
    [Mr. Allen's prepared statement follows:]

                                 
   Prepared Statement of William H. ``Buddy'' Allen, Chief Executive 
             Officer, American Cotton Shippers Association
    Chairman Webster, Ranking Member Carbajal, and Members of the 
Subcommittee, thank you for holding this hearing. I am honored to have 
the opportunity to contribute my testimony and the perspective of the 
American Cotton Shippers Association (ACSA).
    ACSA is a trade association primarily made up of cotton merchants 
founded in 1924. Our members handle the vast majority of U.S. cotton 
and foreign growths of cotton traded globally. Our services consist of 
merchandising, delivery logistics, and risk management. Simply put, we 
buy cotton from producers, sell, and deliver it to yarn spinners in the 
U.S. and around the world. We harmonize our customers' very different 
needs while managing many of their risks such as price, time, 
transportation, currency, geopolitics, and quality. With approximately 
85% of U.S. cotton exported in a containerized and non-fungible manner, 
a functional and reliable intermodal supply chain that provides 
adequate service to exporters is mandatory to support overall risk 
management and U.S. competitiveness in the global marketplace.
    During the supply chain crisis stemming from the COVID-19 pandemic, 
our members experienced unprecedented challenges and risks. Cotton is 
produced and concentrated in our country's interior and moved 
intermodally to domestic mills or ports of export. Efficient 
performance requires harmony in sequencing and executing appointments 
with warehousemen, equipment providers, draymen, rail providers, ocean 
shippers, and terminal operators. Challenges at each point within our 
industry's procedures created collective dysfunction.
    Our industry has enjoyed a long and fruitful relationship with 
ocean carriers, and we are not here to assign blame to any single party 
for these events. We must work together to develop practical solutions. 
We believe that meaningful structural changes must be made to prevent 
similar dysfunction from recurring. Our view is that current relief in 
our supply chain is based on a global economic downturn that curtailed 
consumption of goods and related volumes of inbound cargo. Inundation 
has been replaced with elasticity in the supply chain. This reprieve is 
temporary. Our economy will strengthen, and cargo volumes will 
increase. We must capitalize on this opportunity to prepare for renewed 
cargo saturation within our supply chain.
    ACSA applauds Congress and the Federal Maritime Commission (FMC) 
for the passage and aggressive implementation of the Ocean Shipping 
Reform Act (OSRA). Key elements of ACSA policy positions are addressed 
in OSRA, including the categorical denial of service to exporters, 
reasonableness when levying fees, and choice in the procurement of 
chassis.
    The results of OSRA's implementation, related rulemaking, and 
administrative processes are pending and appear, in our opinion, of 
varying value. We believe that OSRA will likely fall short of providing 
the needed assurance exporters seek concerning the availability of 
service when economic conditions favor empty sailings and imports.
    Concerning detention and demurrage, we find tremendous value in the 
documentation regime created by the FMC, although we request further 
establishment of causation in these submissions.
    ACSA is supportive of FMC's recent decision that denial of choice 
in chassis procurement for merchant haulage is unreasonable and in 
violation of the Shipping Act, a decision that has been broadly 
advocated for by an extensive coalition of importers, exporters, and 
their service providers. We also want to flag the importance of the 
OSRA's prescribed study on best practices for chassis. This should be 
done in a comprehensive manner.
    ACSA was a proponent of creating the National Shipper Advisory 
Committee (NSAC) and is supportive of their recommendations to the FMC. 
Specifically, we endorse measures to bring clarity to jurisdictional 
questions and expanded oversight to FMC throughout the entirety of 
maritime bills of lading, the establishment of uniform and reasonable 
terms concerning cargo receiving, and active steps to enhance data 
visibility and integrity.
    In addition to the reform in commercial practices outlined in my 
testimony, I would like to acknowledge ACSA's commitment to the 
development of a modernized culture in containerized shipping. One that 
embraces digitalization and the utility of a blockchain ledger to 
streamline data management and expand opportunities for global cotton 
merchandising.
    In conclusion, I would be remised not to acknowledge how valuable 
our experience working with the FMC has been in recent years. Given 
their size and resources, they have been asked to punch above their 
weight class throughout this process. I am pleased to report that they 
are doing so while maintaining active engagement with stakeholders and 
seeking equitable outcomes that will promote a sound supply chain. We 
hope that this will be taken into consideration as FMC appeals for 
critical resources to manage their expanding scope.
    Mr. Chairman, thank you for this opportunity to offer my testimony. 
I look forward to answering your questions.

    Mr. Webster of Florida. Thank you very much.
    OK. Former FMC Chairman Mario Cordero, you are recognized 
for 5 minutes.

 TESTIMONY OF MARIO CORDERO, EXECUTIVE DIRECTOR, PORT OF LONG 
                             BEACH

    Mr. Cordero. Thank you, Mr. Chairman.
    OK, here we go, all right. Thank you, Mr. Chairman.
    Chairman Webster and Ranking Member Carbajal, thank you for 
inviting me to testify before the subcommittee today regarding 
the state of maritime transportation supply chain issues.
    My name is Mario Cordero, and I am the executive director 
of the Port of Long Beach. The Port of Long Beach is the 
premier U.S. gateway for transpacific trade, and nearly 40 
percent of the container cargo entering the United States comes 
through the Port of Long Beach and our neighbor, the Port of 
Los Angeles.
    The port welcomes the largest vessels in operation and is 
the Nation's leading export port with more than 1.4 million 
TEUs of loaded exports that have been moved. The port is 
building some of the most modern and sustainable marine 
facilities in the world, and we are committed to a zero-
emission future.
    We all remember not so long ago when ships were waiting in 
the San Pedro Bay Complex for days before they were able to 
unload their vessels. While trade has slowed, we need to take 
into consideration the past and not make the mistakes of the 
past, and take action to ensure that we do not have supply 
chain interruptions in the future.
    Recognizing the need for technology solutions that would 
enable terminal operators, ocean carriers, and shippers to 
efficiently coordinate the movement of goods, the port 
developed the Supply Chain Information Highway, a digital 
solution that provides shippers and the supply chain with data 
that can be integrated into their own systems.
    Congress' passage of the Ocean Shipping Reform Act will be 
a catalyst to ensure goods move efficiently through our ports. 
As a former Chairman of the FMC, I am well aware of the balance 
that the FMC must strike by enabling competition among ocean 
carriers and terminal operators, while protecting shippers and 
consumers from unfair practices.
    OSRA will give the FMC additional authority to promote the 
growth of U.S. exports through an ocean transportation system 
that is competitive, economic, and efficient.
    The Port of Long Beach is in the midst of a $2.6 billion 
program of capital improvements for the next decade. New grant 
programs create opportunities to secure funds for projects that 
will put more containers on rail, reduce truck traffic, and 
reduce carbon emissions.
    The port has benefited greatly from the Port Infrastructure 
Development Program. Most recently, the port secured FY 2022 
funding for $30.1 million to deploy the Nation's largest fleet 
of manually operated, zero-emission cargo handling equipment at 
the Long Beach Container Terminal.
    PIDP funds, however, do fall short of what is necessary. 
PIDP is oversubscribed at the rate of four to one, and I call 
on Congress to fully fund the PIDP at its $750 million 
authorization level.
    Permitting delays are also making the program more 
difficult, such as MARAD's unnecessary barriers that prevent it 
from using the categorical exclusions of other U.S. DOT modal 
agencies. Congress should require U.S. DOT to update its 
regulations to allow modal agencies to use the same categorical 
exclusions.
    We also have concerns about the level of data that's 
requested by the port performance reporting requirements. We 
are interested in exploring how we can coordinate data-sharing 
efforts in place through U.S. DOT's FLOW initiative and our 
Supply Chain Information Highway.
    The Port of Long Beach is investing in a state-of-the-art 
rail facility--a Pier B On-Dock Support Facility, which will 
enhance on-dock rail capacity and expedite cargo movement. We 
are building the $1.5 billion project in phases and are 
pursuing competitive grants for Federal funds from the U.S. 
DOT.
    I have six recommendations as follows. One, encourage an 
investment in technology so that the shippers, ocean carriers, 
container terminal operators, and trucking companies are able 
to efficiently plan and schedule their operations to prevent 
bottlenecks. In essence, maximizing digital transformation.
    Two, encourage the supply chain to operate within a 24/7 
framework, when needed, to reduce bottlenecks and promote 
efficiency.
    Three, direct Federal funding to projects that will 
facilitate goods movement and reduce greenhouse gas emissions, 
such as the Mega program.
    Four, I ask Congress to fully fund the PIDP at its $750 
million authorization level. It will take more than $2 billion 
to achieve our goals of zero-emission cargo handling equipment 
by 2030 and zero-emission drayage trucks by 2035.
    Five, likewise, funds in the IIJA and IRA directed to 
reducing emissions at ports are invaluable and will spur 
investments to expedite port electrification.
    And last, continue to support the required resources to the 
FMC to ensure a competitive and reliable international ocean 
transportation supply system.
    In conclusion, I appreciate the opportunity to testify 
before the subcommittee. This is an exciting time, in terms of 
technology and innovation, to enable U.S. ports to be true 
economic drivers. I am happy to offer my views and look forward 
to any questions the committee may ask. Thank you, Mr. Chairman 
and Ranking Member.
    [Mr. Cordero's prepared statement follows:]

                                 
 Prepared Statement of Mario Cordero, Executive Director, Port of Long 
                                 Beach
    Chairman Webster, Ranking Member Carbajal, thank you for inviting 
me to testify before this Subcommittee today regarding the state of 
maritime transportation supply chain issues. My name is Mario Cordero 
and I am the Executive Director of the Port of Long Beach.
    The Port of Long Beach (Port) was on the frontline of experiencing 
supply chain disruptions, but has also been at the forefront of making 
transformational investments in infrastructure and technology that not 
only have addressed supply chain issues but also reduced emissions from 
port operations. As the former Chairman of the Federal Maritime 
Commission (FMC), I also have first-hand experience with balancing the 
regulatory regime ensuring the efficient and nondiscriminatory movement 
of goods by ocean carriers. I look forward to sharing my views on what 
we have done at the Port of Long Beach to facilitate goods movement and 
how Congress can ensure ports are able to make critical investments in 
infrastructure that enable efficient, and ultimately zero emissions 
port operations.
                             I. Background
    The Port of Long Beach is the premier U.S. gateway for trans-
Pacific trade and a trailblazer in innovative goods movement, safety, 
environmental stewardship and sustainability. Nearly forty percent of 
the container cargo entering the U.S. comes through the Port of Long 
Beach and our neighbor, the Port of Los Angeles. As one of the busiest 
container seaports in the United States, the Port handles trade valued 
at $200 billion annually and supports 2.6 million jobs across the 
nation and more than 575,000 in Southern California. Altogether, the 
Port generates $374 billion in total economic output across the U.S. 
economy and $46 billion in local/state and federal tax revenues 
annually.
    The Port of Long Beach welcomes the largest vessels in operation, 
serving 175 shipping lines with connections to 217 seaports around the 
world. In 2022, the Port handled more than 9 million twenty-foot 
equivalent units (TEU), achieving the second-best year in its history. 
The Port of Long Beach remains the nation's leading export port for a 
second consecutive year with more than 1.4 million TEUs of loaded 
exports moved. As part of an industry-leading $2.6 billion capital 
improvement program this decade, the Port is building some of the most 
modern, efficient and sustainable marine facilities in the world to 
accommodate larger ships and move cargo faster, while generating 
thousands of new jobs.
    The Port is also committed to a zero-emissions future--testing and 
deploying new technology and infrastructure, including zero-emission 
terminal equipment, a microgrid project, zero-emission cargo handling 
vehicles and a blueprint for broad use of electric vehicles.
    This month, the Port of Long Beach announced its participation in a 
new effort between California and Japan to collaborate on strategies 
aimed at cutting planet-warming pollution at seaports and establishing 
green shipping corridors. The letter of intent, signed in Tokyo during 
a trade mission to Japan led by California Lieutenant Governor Eleni 
Kounalakis, is part of a series of international partnerships the Port 
is engaged in to tackle climate change and improve air quality. The 
Port is already engaged in a similar agreement with the Port of Kobe 
and is collaborating with the nation of Singapore on a green and 
digital shipping corridor that will focus on low- and zero-carbon ship 
fuels, as well as digital tools to support deployment of low- and zero-
carbon ships.
                        II. Supply Chain Issues
    We all remember not long ago when ships were waiting in the San 
Pedro Bay Port Complex for days before they were able to unload their 
vessels. At the same time, exporters were unable to ship their goods 
out of the United States and manufacturers were waiting weeks and 
sometimes months for parts or finished goods to arrive. While trade has 
slowed following the record-breaking numbers of last year, it is 
important that we learn from the past and take action to ensure we do 
not have supply chain interruptions in the future. I would like to 
address some of the initiatives that have been key to addressing supply 
chain challenges and offer recommendations on what more we should be 
doing.
1. Implementation of Technology Platforms
    Recognizing the need for a technology solution that would enable 
terminal operators, ocean carriers and shippers to efficiently 
coordinate the movement of goods through the Port, the Port of Long 
Beach developed the Supply Chain Information Highway. The project is a 
digital solution that provides shippers and the supply chain with data 
that can be integrated into their own systems, enabling them to track 
cargo from origin to destination and make better operational decisions. 
This digital infrastructure should enable shippers to better schedule 
container pick-ups at the Port based on real-time information regarding 
when ships will arrive at the Port and be unloaded. The Port of 
Oakland, the Northwest Seaport Alliance, a marine cargo operating 
partnership of the ports of Seattle and Tacoma, the Port of New York/
New Jersey, the Port of Miami, the South Carolina State Ports 
Authority, the Port of Hueneme and the Utah Inland Port Authority are 
collaborating with the Port of Long Beach on the Supply Chain 
Information Highway. The goal is to offer access to data that will 
result in increased delivery visibility for authorized supply chain 
partners nationwide.
    The Port appreciates the Biden-Harris Administration's recognition 
and support to invest in projects like the Supply Chain Information 
Highway and the U.S. Department of Transportation's major supply chain 
initiative, Freight Logistics Optimization Works (FLOW), to help speed 
up delivery times and reduce consumer costs.
    In June of 2022, Governor Gavin Newsom signed the California Budget 
Act of 2022, which included a one-time investment of thirty million 
dollars that will support direct cloud-based port data system 
development at California's containerized ports and support emerging 
data aggregation and analysis to support port operations.
    Investment by the federal government in developing common data 
standards to facilitate freight movement is an important part of 
bringing the supply chain industry into the 21st century. Together, 
they are clearing obstacles for much needed coordination across the 
supply chain to make goods movement more efficient.
2. 24/7 Operations
    I also have been a leading proponent of ports operating 24/7 to 
reduce bottlenecks and create efficiencies. President Biden announced 
his support for this effort in the fall of 2021.
    Dockworkers, terminal operators and railroad labor took this mantra 
to heart during the height of port congestion. Thanks to their 
unwavering commitment, we did not shut down our operations amidst the 
pandemic. They stepped up and helped us move 1 million more containers 
in 2021 than previous years.
    Unfortunately, implementing 24/7 operations is a work in progress 
since it must be coordinated with container terminal operators, 
shippers, trucking companies and warehouses. This has happened at ports 
in other parts of the world and the U.S. needs to catch up.
3. Reasonable Regulation by the FMC
    Congress' passage of the bipartisan Ocean Shipping Reform Act 
(OSRA) gives the FMC greater oversight over international ocean 
carriers that, among other things, should ensure that goods move 
efficiently through ports. Having previously served as Chairman of the 
FMC, I am well aware of the balance the FMC must strike between 
enabling competition among ocean carriers and terminal operators, while 
also protecting shippers and ultimately consumers from unfair 
practices. OSRA will give the FMC additional authority to promote the 
growth and development of U.S. exports and businesses through an ocean 
transportation system that is competitive, economical, efficient, and 
one that brings strategic advantages to the U.S. OSRA seems to strike 
that balance and I commend Congress for its leadership in developing a 
compromise package of reforms.
    OSRA came as a result of trying times in the industry, with a focus 
on preparing the maritime transportation system for the future, while 
addressing inefficiencies and disruption within the supply chain. These 
changes are still being implemented and the industry has been an active 
participant in the rulemaking process surrounding many of OSRA's 
provisions.
    The American Association of Port Authorities and its members have 
been clear during the OSRA detention and demurrage rulemaking that 
changes to the way these charges are billed to motor carriers should 
not upend the status quo. Prohibiting motor carriers from being billed 
for these charges risks congestion and slowdowns.
4. Investment in Infrastructure
    The Port of Long Beach is in the midst of a $2.6 billion program of 
capital improvements over the next 10 years. The funding increases and 
new competitive grant programs in the Infrastructure Investment and 
Jobs Act (IIJA) and Inflation Reduction Act (IRA) create opportunities 
for the Port to secure funds for priority projects that will put more 
containers on rail and reduce truck traffic as well as reduce carbon 
emissions from port operations.

      Port Infrastructure Development Program. The Port of Long 
Beach and other ports around the country have benefitted from the Port 
Infrastructure Development Program (PIDP), which provides funding for a 
broad range of infrastructure at ports and enables public ports to 
partner with their container terminal operators to deliver 
infrastructure improvements through public private partnerships. Most 
recently, the Port of Long Beach secured fiscal year 2022 funding of 
$30.1 million to deploy the nation's largest fleet of manually 
operated, zero-emissions cargo handling equipment at a single marine 
terminal. The project will replace diesel yard tractors at Long Beach 
Container Terminal with approximately 60 electric human-operated yard 
tractors and includes construction of electric equipment charging 
stations with energy efficiency-enhancing software, training for 
operators and maintenance personnel, and installation of software 
equipment to streamline cargo-handling operations within the terminal.
          PIDP is delivering record levels of funding to the port 
industry, with over $700 million awarded last year. However, the 
funding levels still fall short of what is necessary. PIDP is 
oversubscribed at a rate of over 4:1. There are so many more critical 
projects across the country that are going unfunded. I call on Congress 
to fully fund PIDP at its $750 million authorization level.
          Permitting delays are also making the program more difficult 
for ports. There are bipartisan steps Congress can take to get shovels 
in the ground faster without sacrificing environmental protection. For 
example, the U.S. Maritime Administration (MARAD) has unnecessary 
barriers that prevent it from using the categorical exclusions of other 
U.S. Department of Transportation (USDOT) modal agencies, like the 
Federal Railroad Administration or Federal Highways Administration. 
Congress should require USDOT to update its regulations to allow MARAD 
and all modal agencies to use the same categorical exclusions, freeing 
up staff resources to focus on more.
          An area we need further coordination with MARAD and Bureau of 
Transportation Statistics on is Port Performance Reporting 
requirements. We have concerns about the level of data that is 
requested, some of which is proprietary and terminal-specific. We are 
also interested in exploring how we can coordinate data sharing efforts 
already in place or under development through USDOT's FLOW initiative 
and the Port's Supply Chain Information Highway. This would help to 
address managing resources related to data collection, synthesis, and 
sharing. How we resolve this issue has implications for implementing 
projects through PIDP, particularly zero emission infrastructure and 
tenant-led improvements.

      Funding for On-Dock Rail. The Pier B On-Dock Rail Support 
Facility will enhance on-dock rail capacity and expedite the movement 
of cargo. We are building the $1.567 billion project in phases and are 
pursuing competitive grants for federal funds from the Department of 
Transportation. The Pier B Rail Program is a project of national 
significance that will reduce port congestion, increase cargo velocity 
and enhance rail connectivity with key inland points. Together, these 
benefits will strengthen supply chain resilience and complement private 
sector investments such as the planned Barstow International Gateway 
project announced by BNSF Railway on October 1, 2022. Shifting cargo 
movements to trains will reduce greenhouse gases and other harmful 
emissions that disproportionally impact port-adjacent communities. 
Furthermore, the construction and future operation of the project will 
create good paying jobs for American workers.
        III. Recommendations to Spur Further Investment at Ports
    While volumes of goods moving through ports may be down temporarily 
in light of the current economic climate, this is not a time to be 
complacent. We should learn from the past and invest now to ensure that 
we do not have supply chain issues in the future. I have the following 
recommendation for the Subcommittee:

      Encourage investment in technology that provides 
transparency and an open platform so that shippers, ocean carriers, 
container terminal operators and trucking companies are able to 
efficiently plan and schedule their operations to prevent bottlenecks.

      Encourage the supply chain to operate 24/7 when needed to 
reduce bottlenecks and promote efficiency.

      Direct federal funding to projects that will facilitate 
goods movement and reduce greenhouse gas emissions. Congress should 
direct more money to the National Infrastructure Project Assistance 
program (known as Mega grants), which funds complex projects that will 
have a significant effect on the economy--such as the Pier B on-dock 
rail project. A project like the Pier B project will benefit the entire 
country since goods from the Port end up in literally every 
Congressional District in the United States, and projects that have 
national significance such as Pier B should be prioritized for funding.

      Congress should continue to recognize the benefits of the 
PIDP program since ports are critical economic engines, while at the 
same time they historically have been polluters. The Port of Long Beach 
is known as the Green Port as we have made significant strides to cut 
greenhouse gas emissions and tackle the effects of climate change. It 
will take more than $2 billion to achieve our goals of zero emission 
cargo handling equipment by 2030 and zero emission drayage trucks by 
2035. Ports like the Port of Long Beach that are making significant 
investments to operate as ``clean ports'' should receive federal 
funding to enable further investment. I also ask Congress to fully fund 
PIDP at its $750 million authorization level.

      Likewise, funds in the IIJA and IRA directed to reducing 
emissions at ports are invaluable and will spur investments to expedite 
port electrification.
          Of note, between 2010 and 2020, West Coast ports lagged 10 to 
1 in federal investments in comparison to Gulf and East Coast ports, 
the latter having received more than $11 billion compared to just over 
$1.2 billion for the West Coast.
          On the rail side, the Canadian government has invested 
heavily in its west coast rail system that has resulted in taking away 
approximately 22% of business from our U.S. West Coast ports. In 
addition, the Canadian Pacific Railway Ltd, recently received 
regulatory approval from the Committee on Foreign Investment in the 
United States for its acquisition of Kansas City Southern, thus 
allowing a foreign company to strategically create the only single-line 
railroad linking the United States, Mexico and Canada. Investments in 
rail and on-dock rail infrastructure projects at West Coast ports are 
critical to remaining competitive, growing our national economy, and 
creating a more efficient, environmentally sound and faster method of 
moving goods.
                             IV. Conclusion
    I appreciate the opportunity to testify before the Subcommittee. 
This is an exciting time in terms of technology and innovation to 
enable our ports to be true economic drivers. I am happy to offer my 
views and look forward to answering your questions.

    Mr. Webster of Florida. Thank you very much. We will go to 
questions, and I will ask my questions first.
    Mr. Darr, you expressed concerns about FMC's proposed 
rulemaking that would limit detention and demurrage charges for 
certain entities and the potential impact on the incentive 
principle. What would you like to see as a better alternative, 
and how can we find balance between incentivizing the movement 
of cargo while ensuring the charges are fair?
    Mr. Darr. Thank you, Mr. Chairman. First of all, I think 
we're all in agreement here, it sounds like among the 
witnesses, that detention and demurrage has an important role 
to play in ensuring fluidity.
    So, it has some role. The question is: What's the right 
framework? And the challenge that we raised, with regard to the 
rulemaking, is that the proposed rule seems to abandon the 
incentive principle that the FMC had previously embraced, which 
basically judges it on a fact-specific, case-by-case basis on 
if a charge actually improves fluidity and resiliency in the 
supply chain, and instead specifies specific parties that can 
be charged and those that cannot.
    And the real fundamental problem with that is it could 
leave you in a situation where, in many cases, a party gets 
charged that is not in a position to actually improve that 
fluidity and other cases where the party that could actually 
make a difference cannot be charged.
    So, it would seem to miss the mark on the direction that it 
is headed right now with--and certainly that can't be what 
Congress actually intended from my perspective, because I think 
the intention was to improve fluidity.
    Mr. Webster of Florida. Mr. Leech, do you have anything to 
add to that?
    Mr. Leech. I concur with that, and I think I clarified that 
pretty well in my oral statement, Mr. Chairman. And one of the 
distinctions I would like to make very clearly amongst the 
committee is the demurrage on terminal.
    Terminal demurrage, as I call it, is just storage. And when 
goods are moved through the transport chain, terminal, off 
terminal, to destination, there is storage along that way for 
those goods, whether it's in a warehouse, a depot, or a 
terminal.
    So, there is no distinction, in terms of that as a 
reasonable charge. And one way to facilitate better engagement 
is for shippers to directly engage with MTOs who have that 
capacity inside of their asset base and can offer different 
service levels under different pricing levels.
    So, part of the issue we have as an industry is MTOs are 
operating underneath a supply chain that's being managed end-
to-end typically by a liner company.
    Mr. Webster of Florida. Mr. Allen, do you have anything to 
add to that?
    Mr. Allen. I would simply say that the amount of erroneous 
charges and the lack of an efficient appeal process begged for 
reform and improvement. Is this perfect? Arguably not. What is 
it exactly is still somewhat to be determined, but we believe 
that significant progress has been made.
    Mr. Webster of Florida. The Shipping Act provides for 
certain anti-trust exemptions for ocean carriers. Can you talk 
about the role of these anti-trust exemptions and how they are 
used in the industry? What would be the impact of removing 
them?
    Anybody want to respond to that? Yes.
    Mr. Darr. Thank you, Mr. Chairman. I'd certainly be happy 
to comment.
    First of all, I'd like to put it in perspective. I checked 
this morning to make sure my recollection was accurate, and of 
our 700 or so ships in our network, we have 86 that are 
actually in the 2M alliance, which is our alliance.
    So, you need to be careful not to overstate what role the 
alliances play in the overall picture and in the market, 
because it can be kind of distorted if you're not careful with 
the numbers.
    The reason that the alliances are very useful and vessel 
sharing agreements, which is a broader term which is used 
sometimes in very small agreements too, is that it provides 
additional capacity because you can better utilize the 
available capacity that's out there.
    You can provide more services to more ports, particularly 
smaller ports that might not end up getting services at all if 
a carrier had to rely simply on their own very capital-
intensive resources to serve those. And the efficiencies that 
are gained, not just as far as managing cost, but also 
efficiency with energy consumption and therefore, greenhouse 
gas emissions are minimized, that would change.
    And those additional costs that come from that ultimately 
would find their way back into the market if the VSAs were not 
allowable in some form, as we understand them today. They serve 
a very valuable purpose and particularly with smaller ports and 
niche shippers.
    Mr. Webster of Florida. Thank you very much. My time is 
expired. OK. Mr. Carbajal, you are recognized for your 
questions.
    Mr. Carbajal. Thank you, Mr. Chairman.
    Mr. Allen, in your testimony you expressed concern 
regarding the FMC's ``refusal to deal'' rulemaking. What do you 
believe should be the result of rulemaking, and are there any 
issues Congress should be considering?
    Mr. Allen. Thank you, Mr. Carbajal. As we can all imagine, 
this is a complex matter to resolve. I enjoyed the exchange 
this subcommittee had with Chairman Maffei last week where he 
testified if you built a bridge in the interior it would help 
him. We tend to agree with that. I think all of these witnesses 
appreciate the complexity.
    With that said, we think there are some commonsense 
improvements. We do desire some form of assurance or mandate 
that in all economic conditions, exporters, particularly 
agricultural exporters like our members, would be afforded 
access to services that we depend upon, and we're very good 
customers of our colleagues here at the table today.
    With that said, we think there's some low-hanging fruit in 
the cultural practices within the U.S. that don't necessarily 
cost a lot of money, or time, or change, if we can work 
together.
    One is coming up with a reasonable regime for cargo 
receiving that's consistent. When carriers are sharing space in 
the alliances that Mr. Darr just described, if we could find 
harmony in their procedures and requirements, as well as the 
terminal operators, it would bring great visibility and 
opportunity for us to make our scheduling.
    When we're weeks out at interior warehouses and days out 
from change with ocean carriers, it just simply does not 
synchronize. At the same time, data sharing, visibility, and 
communication is ripe for improvement.
    We need every measure to open systems for equipment use and 
introduce additional assets. And the thing that I would flag 
for this subcommittee to please consider focusing on is 
jurisdictional clarity--jurisdictional clarity across the full 
entirety of maritime bill of lading. Through what extent is it 
governed, or is the oversight provided by the Federal Maritime 
Commission, and at what point is it the Surface Transportation 
Board?
    And we would ask an expansion of the Federal Maritime 
Commission's jurisdiction to cover the entirety of that 
maritime move.
    Mr. Carbajal. Thank you.
    Mr. Cordero, you have highlighted the work the Port of Long 
Beach has done to reduce emissions at the port. By investing in 
emissions reduction, are you losing out on efficiency, or is 
the port becoming more efficient at the same time?
    Mr. Cordero. Thank you, Ranking Member Carbajal, for the 
question. And my answer to that question is, there is no 
question that we are creating more efficiency in my view.
    So, I think, again, over the many years that the port has 
moved forward, pursuant to the Green Port Policy that was 
initially passed back in 2005, I think that we have been 
environmental stewards and operational stewards in terms of 
proving to the fact that not only have we increased, in terms 
of our ability of how we move cargo in good times, but also how 
efficient we do it in a sustainable fashion in reducing 
emissions.
    So, I think, again, and I will say our partner in doing 
this at the Port of L.A. and the San Pedro Bay Complex, I think 
it's a gateway that has proven the fact that the efficiency is 
in fact further with our reducing emissions gameplan, in terms 
of going towards zero emissions.
    Mr. Carbajal. Thank you.
    Mr. Darr, in your testimony you mentioned MSC's goal of 
achieving net-zero emissions by 2050. How will investments in 
ports from the funds in the Bipartisan Infrastructure Law 
support MSC's goal and benefit industry overall? What is the 
magnitude of shoreside investments needed to bring on new 
alternative fuels?
    Mr. Darr. Thank you, sir. The role of shoreside investments 
is key, in part minimizing the amount of wasted transit time 
and moving to a system that's much more of a just-in-time port 
arrival, rather than a hurry-up-and-wait, sort of, port arrival 
system, could make an enormous difference.
    We've kind of done that on the west coast to relieve 
pressure on the anchorage, but I was literally sitting in 
Glasgow at the climate conference there when we enacted that as 
an industry initiative, and it made a huge difference, as well, 
in efficiency of how we operate the ships.
    The fuel itself, that energy transition will be between $1 
and $2 trillion at a minimum to actually help the shipping 
industry fully transition to net zero by the fuels in 2050.
    So, investments in fuel development, fuel infrastructure, 
delivery, and making them available particularly on the largest 
of the trade lanes could make a huge difference sooner rather 
than later, and we would certainly encourage all of those types 
of investments, as well as those in terminal efficiency.
    Mr. Carbajal. Thank you. I am almost out of time, so, I am 
going to ask my question. If you could submit the answer for 
the record?
    Mr. Cordero, I am greatly concerned by the impact of 
emissions and poor air quality on the oftentimes disadvantaged 
communities that live around ports.
    Can you discuss, not necessarily discuss, but forward some 
information, some of the environmental justice work the Port of 
Long Beach has done and how smaller ports can replicate that?
    If you could submit that for the record, that would be 
great.
    Mr. Chairman, I am out of time. I yield back.
    Mr. Webster of Florida. Mr. Babin, you have 5 minutes.
    Dr. Babin. Yes, sir. Thank you very much, Mr. Chairman. I 
want to thank all the witnesses for being here today. I 
appreciate it.
    The U.S. maritime industry keeps our Nation's economy 
running. The ongoing growth seen in southeast Texas is a great 
example of that. We have some great ports there, including the 
number one port in the Nation by tonnage, the Port of Houston, 
which is in my district.
    The entire Houston Ship Channel is busy day and night, the 
conduit for shippers sending and receiving goods to and from 
all around the world. COVID brought new attention to port 
operations in ocean shipping, shining a light on the importance 
of an industry that many folks, in fact, I think most of our 
country, simply doesn't understand.
    Last Congress, we tried to address both new and 
longstanding issues with our ocean transportation system when 
we passed OSRA, the Ocean Shipping Reform Act. However, even as 
we have heard so much about supply chain issues and the need to 
improve the status quo, I have heard concerns from industry 
about the direction that regulators want to move forward with.
    My colleagues and I are all too familiar with unelected 
Federal employees in Washington taking a completely different 
direction from the intent of Congress, resulting in new, 
unintended problems rather than the intended solutions.
    So, Mr. Leech, thanks for your testimony earlier. Given 
your background and industry knowledge, you should be well-
qualified to answer these questions.
    Last week, FMC Chairman Maffei testified that the 
Commission must avoid actions that would disincentivize the 
timely retrieval of cargo from marine terminals. Do you believe 
that if cargo owners are given free weekend and holiday storage 
at marine terminals, that it would disincentivize cargo owners 
from removing their cargo in a timely manner?
    And also would the resulting Monday traffic increase be 
potentially dangerous?
    Mr. Leech. In response, I've made some commentary already 
in my statement----
    Dr. Babin [interposing]. Right.
    Mr. Leech [continuing]. Regarding this issue, and clearly, 
we are very clear to the industry, in terms of the disincentive 
principle and the availability of cargo and giving free, 
another free use of the asset to the cargo community ultimately 
is a disincentive.
    We want to encourage pickups. We want to encourage 
fluidity. We can manage those parties who wish to have an 
engagement, a long-stay engagement. We can segregate and 
operationally change what we do to manage efficiently and 
provide a service, but we need to know about it. There needs to 
be an open channel of communication.
    Dr. Babin. Would the resulting Monday increase in traffic 
be potentially dangerous too?
    Mr. Leech. That's very difficult to predict.
    Dr. Babin. OK. All right. Marine container terminals lease 
waterfront property in most U.S. ports and that property is 
typically finite.
    When containers are not picked up in a timely manner, how 
does that affect your operations?
    Mr. Leech. Typically, the longer the container stays, the 
denser the facility becomes, the more nonrevenue work we do to 
manage an operation, which reduces fluidity.
    So, it directly affects capacity and capability.
    Dr. Babin. Congestion will be back sooner or later, and we 
need to get away from the idea that terminals are waterfront 
warehouses. How do you suggest we change this perception?
    Mr. Leech. We in the industry, from a terminal operator 
perspective, are flexible to be a solution provider to storage, 
but it is something we need to plan for in advance and a 
dialogue with the cargo owner and not be caught with 
unexpected.
    Again, to manage that capacity, manage fluidity, we can 
provide solutions with the right sharing of information.
    Dr. Babin. Absolutely. I still have another minute, so, I 
will yield that back to the whole committee.
    Mr. Webster of Florida. It is too hard to divide. Mr. 
Larsen?
    Mr. Larsen of Washington. Thanks. I appreciate that. One of 
my questions was asked by Mr. Carbajal's last one, which Mr. 
Cordero will get back for the record, so, I don't want you to 
answer that. You will get back to him for the record.
    I want you, though, for Mr. Cordero, sorry, I can't read 
that far without my glasses----
    Mr. Allen [interrupting]. Allen.
    Mr. Larsen of Washington. Allen. Mr. Allen, to discuss two 
things you alluded to and just very briefly, your 
recommendation to encourage investment in technology that 
provides transparency on an open platform that shippers, 
carriers, and such can use to plan and schedule.
    Mr. Cordero, can you select that right now? It was an issue 
that came up obviously during COVID. Is there a platform to be 
used right now that provides better transparency to all the 
players about where things are, when they are going to be 
there?
    Mr. Cordero. Yes, Congressman. Individual stakeholders, be 
it carriers, be it the terminals, or truckers, the movement in 
terms of augmenting technology to achieve transparency and 
visibility is a very aggressive one.
    So, there are platforms. I think from the Port of Long 
Beach's perspective, I think what we're doing is putting 
together a system that is integrated, so, no matter what 
platform you use, again, it will be integrating into a system 
and that everybody can participate.
    So, I think, again, the answer to the question is, yes. And 
it's, again, I think what's in the future, in the next 5 years, 
the shape of things to come is that we are going to be better, 
in terms of how fast this is moving.
    Mr. Larsen of Washington. Yes, I think we heard last year, 
during some testimony, that it is not integrated. There are a 
lot of platforms, but there is not a picture that folks can 
use.
    Mr. Allen, can you talk a little bit about where you think 
the technology ought to head?
    Mr. Allen. Well, I think you have laid it out very well, 
Mr. Larsen. And Mr. Cordero, I'll commend the Port of Long 
Beach for being the tip of the spear on leading this effort.
    I hope that we can build continuity in the systems and we 
can integrate them. To your point, this needs to be done in a 
comprehensive manner across terminal operators' ports and ocean 
carriers so that we can utilize that information as efficiently 
as possible in one place.
    Mr. Larsen of Washington. That is fair enough. I appreciate 
that, and I will yield back 2 minutes and 43 seconds.
    Mr. Webster of Florida. Mr. Ezell?
    Mr. Ezell. Thank you, Mr. Chairman.
    Mr. Leech, thank you for your testimony today before our 
subcommittee. Last week, Ports America announced a critical 
agreement with the Port of Gulfport. This agreement will 
significantly benefit my constituents and add value to one of 
the gulf coast's most underutilized gateway ports.
    Can you begin by talking about the importance of private-
public partnerships, such as the one Ports America has at the 
Port of Gulfport, to our Nation's supply chain and critical 
infrastructure?
    Mr. Leech. Thank you. Yes, in terms of the public-private 
partnerships, which is what we've endeavored to put forward and 
now agreed with the Port of Gulfport, provides leverage for us 
to play a different role, more than just a service provider 
doing stevedoring, we're moving into a space where we're 
coinvesting and taking a role in the infrastructure 
development, as well as the marketing of that facility and the 
utility of that facility to a broader marketplace.
    So, actively partnering with a port to be a steward of 
those assets to develop that economic and trade platform. Not a 
port, but an economic engine.
    Mr. Ezell. Thank you.
    Despite the impressive amount of annual imports and exports 
that are handled at the Port of Gulfport, a shallow shipping 
channel remains a challenge for local and regional importers 
and exporters. What opportunities would be realized in the Port 
of Gulfport if the Gulfport Shipping Channel was dredged to a 
competitive depth?
    Mr. Leech. The marine access is a critical issue for many 
ports, not just Gulfport. But Gulfport, as you highlighted, is 
in an uncompetitive position relative to its port peers in the 
gulf.
    And so, the opening up of marine access in an efficient 
way, essentially opens the entire market for Gulfport to 
compete with New Orleans, with Houston, with Mobile, that it 
doesn't have the capacity to do today.
    Mr. Ezell. Thank you. So, you agree that dredging projects, 
in general, would lead to greater resilience in ports and 
marine terminals, which also would prevent some further future 
supply chain disruptions?
    Mr. Leech. Yes, it's a critical element of our overall 
strategy or what should be our overall strategy from a national 
perspective is marine access to ensure that all ports can 
compete with each other. And we have an obligation to create 
resiliency through greater choice of port of entry for cargo.
    The broader we have that base for both import and export 
goods, the better we are, in terms of supply chain resiliency. 
Trying to force through the entire import base for the entire 
country through six or seven ports is not a sustainable future.
    Mr. Ezell. Right. Thank you. Thank you again for your time 
today, and I thank all the folks for coming out and testifying, 
and we look closely to working with all of you to help create 
some jobs on the Mississippi coast.
    Mr. Chairman, I yield back.
    Mr. Webster of Florida. Thanks so much. Mr. Garamendi.
    Mr. Garamendi. Thank you, Mr. Chairman.
    The Ocean Shipping Reform Act, I see Mr. Dusty Johnson here 
and the pleasure of working with him to get that enacted. 
There's an enforcement issue in that any effort by the FMC to 
enforce the existing law or any future law would require them 
to go to court first to get permission from the court to carry 
out the enforcement. That's backwards.
    No other independent agency has that requirement. They 
issue a enforcement and then the entities that are affected by 
that enforcement have the opportunity, if they disagree, to go 
to court to get it overturned.
    So, Mr. Leech, don't you think it is a good idea that the 
FMC do it the same way as others? Other independent agencies?
    Mr. Leech. I haven't examined this in close detail to 
really----
    Mr. Garamendi [interrupting]. Well, you will because I'm 
introducing a bill to require just that. How about you, Mr. 
Darr? Don't you think it's a good idea that the FMC have the 
same power as every other regulatory agency? That is to issue 
an enforcement, and then if you don't like it, go to court.
    Mr. Darr. So, my understanding is that the change that's 
proposed would actually be limited to their review of the 
competitive nature of agreements between carriers. And it's 
important that an agency have authority to carry out whatever 
they're tasked with, however, adjudication is a very 
complicated matter for an agency, and it is even more 
complicated to do correctly----
    Mr. Garamendi [interrupting]. So, you don't like the idea 
that the FMC have the same enforcement mechanisms as others?
    Mr. Darr. I'm----
    Mr. Garamendi [interrupting]. Other independent agencies?
    Mr. Darr. I'm saying I don't know that it is the same, sir, 
and I leave the judgment to Congress as to how much power to 
vest in an agency.
    Mr. Garamendi. Then you're neutral on it. Thank you.
    Let's see, Mr. Allen, you said that you don't have access 
to ships. What if the queuing of ships that are waiting to get 
to port were to be done in such a way that those ships that 
would take your product and other agricultural and other export 
products, would get to the dock ahead of those that would not? 
Do you think that is a good idea?
    Mr. Allen. We reviewed that concept, Mr. Garamendi, and 
appreciate you identifying ways to provide service for 
exporters. We think that would be effective and should be 
considered with the broad suite of ideas for additional steps 
that may be considered going forward.
    Mr. Garamendi. Very good. Then we will look for your 
support, once again, as you did with the Ocean Shipping Reform 
Act, as we deal with the queuing opportunity, which is a 
nonregulatory thing, it is just simply if your ships are going 
to take American cargo, you can go to the head of the line; if 
you don't, you can wait at the outer harbor.
    Let's see. Mr. Leech and Mr. Darr, do you believe that 
international trade should be reciprocal? That is, if you want 
to import, you also have to take exports?
    Mr. Leech?
    Mr. Leech. Well, it's not certainly part of our scope of 
business. We're a service provider to handle all trade. We are 
a facilitator, and we're indifferent. Our job is to ensure that 
there is capacity and capability to export and import----
    Mr. Garamendi [interrupting]. I just want to get down to 
the principle here. The principle that trade is reciprocal. If 
importers enter the United States have access to the American 
market, then the American exporters ought to also have access, 
that is to export.
    Mr. Darr, do you think that is a good principle?
    Mr. Darr. In principle, our business is founded on that.
    Mr. Garamendi. Perfect.
    Mr. Darr. How to balance----
    Mr. Garamendi [interrupting]. Then you would support 
legislation that would require such reciprocal nature that as 
the ocean carriers, if you want to bring exports into the 
United States, then you ought to be willing to take exports out 
of the United States so that Mr. Allen and others would have 
access to the space on your ships?
    Mr. Darr. I think the details on how to do that would 
matter.
    Mr. Garamendi. Oh, yes, always the details----
    Mr. Darr [interrupting]. But in principle----
    Mr. Garamendi [interrupting]. Well, there's going to be a 
bill to give you the opportunity to look at those details.
    Final point has to do with the anti-trust exemption that 
the ocean shipping carriers have. Do you believe in free trade? 
A capitalistic system of competition? All of you? Yes, yes, 
yes? I suppose all of you would think that is a good idea.
    Well, it just turns out that the ocean carriers are exempt 
from the monopoly and the anti-trust laws of the United States, 
and there ought to be a law that the ocean carriers are subject 
to anti-trust laws like other parts of our economy.
    Don't you think that is a good idea? Mr. Darr? Mr. Leech?
    Mr. Darr. Sir, if you mean with regard to pricing? I----
    Mr. Garamendi [interrupting]. I mean, with regard to all 
monopolistic exercises.
    Mr. Darr. I'm not sure what that means.
    Mr. Garamendi. I believe I am out of time.
    Mr. Darr. But the vessel sharing----
    Mr. Garamendi [interrupting]. That means that the 1980 
exemption from the anti-trust law be repealed.
    Mr. Darr. I don't think that's a good idea. No, sir.
    Mr. Garamendi. I thought you might not. I yield back.
    Mr. Webster of Florida. Thank you. Mr. Johnson?
    Mr. Johnson of South Dakota. Well, I think you can see my 
partner, John Garamendi, can be a dog with a bone when we are 
trying to figure out what is the best way to regulate this 
marketplace and ensure that American exporters are being 
treated fairly and that we have the data and the authority for 
the FMC to do a good job.
    And I want to thank John, and frankly, everybody who has 
helped us put together the Ocean Shipping Reform Act 2.0, which 
is being introduced today and does address a number of the 
issues that Mr. Garamendi talked about in his line of 
questioning.
    And I think we look forward to having another robust, 
bipartisan success related to ocean shipping. Critically, 
critically important.
    So, Mr. Allen, I want to talk with you. You had mentioned 
that you weren't sure that OSRA was going to provide enough 
assurance to folks that they will have the capacity, they will 
have the resources needed when the marketplace otherwise wants 
empty exports.
    Help me understand that a little bit more and, in 
particular, did OSRA fall short someplace?
    Mr. Allen. Well, the first thing I would say is that we 
believe, when you consider the data that supports the total 
volume of inbound cargo, and you then compare it to the spread 
between import and export costs, you will see a direct 
correlation to empty sailings. That concerns us.
    On its face, we feel like there should be guardrails around 
that. We do not know if OSRA creates those guardrails. As many 
people have said, the implementation and regulatory regime 
around OSRA is very much ongoing, and there will be complaints, 
and there will be rulings, and there will be rules that stand 
up over time.
    Your exchange with Chairman Maffei last week, Mr. Johnson, 
you suggested that this is a meal that may be consumed in 
courses. I think it was around a bowl of cereal, and I tend to 
agree with you.
    And when we understand the impact that comes from OSRA, we 
will have a better view to what needs to be done next. And I am 
certain there is more work to be done and very grateful for the 
energy in this room to do that work.
    Mr. Johnson of South Dakota. Well, since the second bowl of 
Cheerios is being introduced today, Mr. Cordero, our bill does 
address some of the things you have talked about, which is 
having data standards and making sure we have got the 
information we need to try to harmonize some of the data-
sharing efforts, and you have been involved in the DOT's FLOW 
initiative.
    Talk to us a little bit about where we should be headed 
from a data-sharing and harmonization perspective?
    Mr. Cordero. That's a great question, Congressman. And I 
think the answer is that, as I mentioned before, I think it's 
fair to say that every sector in the industry has their 
respective platforms that are evolving, so, where we should be 
heading is how do we integrate these platforms into one 
integrated system?
    And I think that's the key that I think we've received, 
that is the Port of Long Beach, a lot of accolades from other 
ports, initially, given that we just announced this just a year 
ago or so.
    So, I think that's the direction and the more funding that 
we have for those opportunities, the better, because I think 
we've gone beyond the question of proprietary interest issues.
    Not that it's not there, but I think everybody has the 
comfort that this has to move forward in a way to provide 
visibility and transparency in the supply chain and this is 
what, in fact, the pandemic surfaced of many issues of the lack 
of visibility and transparency for the American shipper.
    Mr. Johnson of South Dakota. I think you said that very 
well. And we do need this information. The marketplace needs 
this information to really be efficient and to well serve 
American import and export interests.
    You mentioned proprietary. I mean, help us--listen, we are 
going to solve the problem, but give us some guidance on how do 
we balance the need to protect proprietary information as well 
as making sure we have enough granularity so that people can do 
something with the data?
    Mr. Cordero. Well, I think we're there. I only say that 
because through technology, stakeholders have been convinced 
that it's not about the proprietary interests, in terms of the 
data sharing that we're requesting, everybody has a comfort now 
that all we're seeking is information to further the visibility 
and transparency of the cargo movement.
    So, I think if the individual companies or sectors, whether 
you're a trucking company, a BCO, or terminal, or a carrier, I 
think they now have adjusted to the fact that this is not about 
providing data that's not relevant to the visibility and 
transparency issue.
    So, we're there as opposed to where we were even 5 years 
ago when that was a real concern.
    Mr. Johnson of South Dakota. Yes. We just--we have got to 
have this information if we are going to have the system that 
we deserve.
    Thanks, Mr. Chairman. I yield, and thanks for the 
subcommittee for letting me waive on. I'm grateful for your 
indulgence, and I yield back.
    Mr. Webster of Florida. Ms. Scholten, you are recognized 
for 5 minutes.
    Ms. Scholten. Thank you, Mr. Chairman. Thank you so much to 
our witnesses for being before the committee today and 
discussing such an important topic.
    I am so proud to represent miles of beautiful Lake Michigan 
shoreline on the west coast of Michigan, including the 
wonderful Port of Muskegon. Ports play such an important role 
on the Great Lakes and are lifelines to their communities.
    Ranking Member Larsen mentioned last week, but I want to 
stress again, the importance of the small ports set-aside under 
the Bipartisan Infrastructure Law and the Port Infrastructure 
Development Program, that it has to ensure the movement of 
cargo between Canada and the U.S. on the Great Lakes.
    One project funded under the Bipartisan Infrastructure Law 
provided Monroe, Michigan, which sits on Lake Erie, an $11 
million grant for funding in 2022, and for energy resilience to 
build shore power and invest in the local waterfront.
    I'm really looking forward to other projects following suit 
just like this, and I'm wondering, Mr. Allen, can you please 
talk about the importance of investing in small ports and 
particularly the impact for your members and others in 
agricultural?
    Mr. Allen. Thank you, Congresswoman. I would just say, as 
has been said already: The concept of moving cotton, in our 
members' case or all commodities for U.S. agricultural 
stakeholders, cannot be consolidated into three, or four, or 
five, or six major hubs. We need a broader base.
    We need to utilize your port and your district. We need to 
utilize Mr. Ezell's Port of Gulfport as he's described. We see 
opportunities in the near future for containerized shipping in 
ports that we're not using now, and that excites us.
    We can lower costs, we can add efficiency, we can increase 
the competitiveness of U.S. agriculture if we can broaden our 
base. We completely support that. Thank you for the question.
    Ms. Scholten. Yes, that's wonderful. We would love to have 
you out and take a look at the port.
    My next question is for Mr. Cordero. Thank you so much. I 
want to give you a kudos for your Port of Long Beach, one of 
the most environmentally friendly in the country.
    My district is over 2,000 miles from the Port of Long 
Beach, but I can assure you that we have felt the effects of 
inflation and supply chain related increases just as much. What 
will broad investments in ports like those in the BIL and the 
IRA do to increase the flow of cargo and therefore, some of the 
inflationary conditions that have existed for the last few 
years?
    Mr. Cordero. That's a great question because for the Port 
of Long Beach, as I mentioned, we are, at least for 2022, the 
number one containerized export port. And just recently I had a 
conversation with one of your constituents there from the dairy 
industry. How important that market is as it comes to the San 
Pedro Bay Complex, and in my case, the Port of Long Beach. So, 
I think the answer to that question is, it's an unprecedented 
funding for the supply chain that we are now receiving, 
including for the intermodal facilities.
    And we talk about inland ports, intermodal facilities are 
just as important because again, at the end of the day, a 
supply chain throughout the Nation is going to be crucial to 
make this connectivity whether you're a small port, whether 
you're an inland port, whether you're a waterway port, marine 
transportation highway, or a seaport like the Port of Long 
Beach.
    So, I think, again, at the end of the day, the U.S.A. has a 
big market in the global arena with regard to exports, 
particularly ag, and protein, and dairy. So, I think, yes, 
funding for intermodal facilities is just as important.
    Ms. Scholten. Thank you so much.
    Mr. Chairman, I yield back the rest of my time.
    Mr. Webster of Florida. Mr. Auchincloss.
    Mr. Auchincloss. Thank you, Chairman.
    So, I voted against the OSRA twice in the House precisely 
because of concerns about the detention and demurrage charges 
and what that would do to shippers and MTOs. The Senate 
version, I got on board with finally because I thought that the 
AAPA's recommendations for improvement were well taken and 
hopefully would keep the incentive principle in place.
    Unfortunately, we are seeing, to your excellent written 
testimony, both of you, that it doesn't seem to be the case 
right now. Unfortunately, they are going in the opposite 
direction with broad classifications and Mr. Leech, in 
particular, I liked your analogy of, for my simple politician's 
mind of just long-term parking on a bridge.
    And we don't want that. It is not a good use of the 
capacity. I have been heartened to hear from Mr. Allen and from 
you, Mr. Leech, though, it doesn't feel like we are that far 
apart here. It really doesn't.
    I hear from Mr. Allen, really a good faith desire to move 
quickly in and out, but you want predictability, if I am 
hearing you correctly, sir, and Mr. Leech, that you are willing 
to provide some storage, but you need also some heads up on 
that and then a market-based way of supplying it.
    So, what, given this, given that we are like, I feel you 
two are reaching out, trying to hold hands here, there it is, 
the bridge. What can the FMC do to get that, to close this and 
keep the incentive principle in place, which I think has served 
us pretty well, recognizing that you, Mr. Allen, and your co-
travelers in the export industry do need some certainty?
    What are the final steps here? I invite you both to 
participate in a colloquy.
    Mr. Leech. Allow me to weigh in first, and I've engaged the 
FMC on this topic in the very same way. And that is partly the 
recognition, and I highlighted it earlier, that the MTO has a 
critical role to play, but how they engage, not simply as a 
supplier to somebody else as a third party, but as an active 
participant with direct commercial and product engagement with 
that cargo owner, with that shipper, with the consignee.
    That's the critical element here that needs to change. So, 
it is in part about engagement and that we become an active 
partner in providing a service, but it's also about the 
information.
    We all agree that data sets need to be better, there needs 
to be better access. A cargo owner shouldn't have to go 
uniquely to our portal to get information.
    Mr. Auchincloss. Information is important. Incentives are 
also very important, and we do want to keep those incentives in 
place for demurrage and detention, pick them up, and bring them 
back, fast.
    Mr. Allen?
    Mr. Allen. Again, we do want to move cargo fast, and we 
want to take costs off the table. We want certainty, we want 
choice, we want an open marketplace in the manner by which we 
procure and utilize assets so that we can move as fast as 
possible and reduce costs to our customers as much as possible.
    At the same time, we incurred $1.3 billion worth of 
unbudgeted costs during this timeframe--not all of which were 
detention or demurrage, but certainly some were--and other 
storage related malfunctions, carrying costs, and credit risks. 
In addition to the monetary costs, U.S. agriculture lost market 
share and faced reputational risk, and we simply must do a 
better job of communicating so we can operate more efficiently 
together.
    Mr. Auchincloss. I can understand the frustrations that 
would be there when you are picking up those kind of charges 
for issues that are probably largely out of your control, 
certainly during the pandemic. Couldn't that be addressed, 
though, not with a broad exclusion of categories, but with just 
faster resolution of specific claims?
    Mr. Allen. Maybe. Sir, there are lots of elements to the 
change in this regime of who is responsible, who has the burden 
of proof. I think we are sending shockwaves through the 
industry, and I think all participants in the industry are 
going to be responsive, and we're going to be stronger because 
of that.
    Mr. Auchincloss. OK. Well, I want to make sure the FMC 
hears now from a Democrat. We heard from Mr. Babin before as a 
Republican, that we do need to get this right. The incentive 
principle does matter, and it doesn't need to be adversarial.
    I think there does seem to be strong aligned incentives 
here. Finally, in the last 30 seconds, Mr. Darr, we have heard 
in the previous line of questioning pressure to take our MTO 
and our shipping plumbing in this country and use it as a 
cudgel on trade-related issues. Do you want to comment 
specifically on any dangers of politicizing our shipping 
industry on trade disputes?
    Mr. Darr. I think it's fraught with quite a bit of peril 
and unintended consequences and some of, whether we like it or 
not, some of the major shipping companies that the world relies 
upon are state-backed or state-owned to some degree as well.
    We face that competition every day. Given the right 
framework, we'll continue to compete and compete successfully, 
and we will continue to serve the commerce needs of the United 
States, which is my country, and I'm very proud to work for a 
company that believes in that every bit as much as I do.
    Mr. Auchincloss. Thank you, sir. I yield back.
    Mr. Webster of Florida. Mr. Van Drew, you are recognized 
for 5 minutes.
    Dr. Van Drew. Thank you, Chairman, and thank you all for 
being here today.
    In this Congress, one of my agendas is going to be to focus 
on the impact, and you have heard me speak about it before, 
that offshore wind industrialization has on the Atlantic 
maritime supply chain.
    Safe access to the east coast is essential to many maritime 
users, including the maritime shipping industry, and all of you 
are represented on this panel today. Unrestrained shore wind 
threatens this safety.
    In fact, the Bureau of Ocean Energy Management has 
determined that the impacts of offshore wind on navigation and 
vessel traffic, and this is the Bureau of Ocean Energy 
Management, would be, quote, ``major,'' and that it would 
increase, quote, ``the risk of collision, '' and could, quote, 
``result in personal injury or loss of life and limb.'' The 
reasons for this are obvious.
    First, offshore wind leases obstruct maritime traffic lanes 
and force vessels into tight bottlenecks.
    Second, offshore wind structures interfere with 
navigational radar. In 2022, the National Academies of 
Sciences, Engineering, and Medicine released a report 
concluding that offshore wind structures can interfere with 
ship radar and with ship's navigation.
    This is a result of the electromagnetic reflections from 
wind, a name that you are all familiar with: the Doppler 
effect. And it is caused by the spinning of the blades. And 
let's understand, just off my east coast, what kind of presence 
we are speaking about. We are speaking about thousands of 
windmills.
    We are speaking that each one of them would be 1,000 feet 
high. We are speaking about millions, no embellishment, 
millions of acres of ground used for this. Today I chose to 
speak about this because it is appropriate for you, but you 
also could talk about the environmental issues.
    You could speak about the issues as related to the tourism 
industry, as related to the fishing industry. I would love for 
everybody to hear from some fishermen on what they are going 
through. Some of them are going to lose their businesses 
completely. Lose their businesses completely.
    Our energy is going to be controlled by foreign countries, 
over 50 percent of it, and it is going to change the entire 
landscape. One thousand feet tall. Taller than Lady Liberty and 
thousands of them. Imagine what it is going to look like.
    Last week, I questioned the Maritime Administrator who 
admitted that the Government has not scrutinized this issue. I 
mean, she is for the issue, but still had to admit that we had 
not even scrutinized it. I am hoping that with some of the work 
that I am doing and others are doing now that we will.
    I direct my questions to Mr. Bud Darr, executive director 
of the Mediterranean Shipping Company, or known as MSC, also 
here on behalf of the World Shipping Council.
    Mr. Darr, you have an extraordinary breadth of maritime 
experience, including service in the Navy Submarine Force, and 
thank you for that, and the U.S. Coast Guard legal office.
    Thank you for your service, and I hope you can provide some 
information and some clarity on these issues, Mr. Darr. Is it 
safe, let me put it this way: Is safe access to east coast 
ports important to the maritime shipping industry? Is safe 
access important?
    Mr. Darr. Yes, sir, and thank you for your compliment. I 
will say it was my absolute honor to serve.
    Dr. Van Drew. I know. It is an honor, and we are honored 
that you did.
    Can physical bottlenecks impact the safety of maritime 
operations?
    Mr. Darr. Yes, sir.
    Dr. Van Drew. Do large maritime shipping vessels rely on 
radar for safe navigation?
    Mr. Darr. Yes, sir. It's a very important component of 
navigation.
    Dr. Van Drew. Have you heard of the Doppler effect before?
    Mr. Darr. Yes, sir.
    Dr. Van Drew. These things considered, do you agree with 
BOEM's assessment that these offshore wind projects--and this 
was BOEM, it was even supporting this--would have a major and 
potentially dangerous impact on maritime shipping on the east 
coast?
    Mr. Darr. I can't say with precision what impact it will 
have, but I can say for the reasons you laid out, it must 
undergo close scrutiny through a proper marine spatial planning 
analysis to ensure those usages are deconflicted or we may 
create something very unintended and very negative.
    Dr. Van Drew. Exactly. And we have not done that. Thank 
you, Chairman. I yield back.
    Mr. Webster of Florida. Ms. Peltola.
    Mrs. Peltola. Thank you, Mr. Chairman. I am really 
impressed with the depth and breadth of the expertise that the 
panel has, and I have enjoyed learning a lot from you all 
today.
    I was going to say something like, add it up, there would 
be 100 years of experience, but I don't think it is that much. 
I don't want to say that.
    Dr. Van Drew. It doesn't make them feel good either, right?
    [Laughter]
    Mrs. Peltola. Yes, no. And my question is to Mr. Cordero, 
and am I pronouncing that right?
    Mr. Cordero. Yes.
    Mrs. Peltola. OK. I think a couple other Members touched on 
it earlier, but my question is really about cold ironing, also 
known as shore power, and Juneau, Alaska, started doing this 
with their cruise ships back in 2002, and I am just wondering 
why more ports in America don't do this, and I am not really 
sure if it's the short timeframe a vessel is at port or the 
technology not being available?
    What are some of the reasons why we don't--I think a lot of 
people know that when you idle your motor, it is worse for the 
environment than when you are in gear, and so, having all these 
vessels just in neutral at the dock to make sure they have 
power, it just doesn't make sense environmentally.
    So, I was wondering if you could touch on why we haven't 
made more progress in this in the last 20 years?
    Mr. Cordero. Well, as you mentioned, I think the Port of 
Long Beach has made a lot of progress. We shore powered our six 
terminals in the early, mid-2000s. The last one was completed 
in 2014.
    And I think the answer to your question, Congresswoman, one 
big factor is cost. I mean, it was a $200 million endeavor for 
us to do that. Now, what happened to assist that, at a later 
point, the State of California did mandate, by regulation, 
shore powering of containerized cargo terminals, so, I think, 
one, it's an example of what you do as an initiative as a port 
authority in conjunction with our regulatory agencies, here 
being the State of California, so, I think, again, we've been 
able to develop that technology at the Port of Long Beach.
    So, at this point, I think it is safe to say for any port 
that wants to put that in place, that technology is there. It's 
very simple, so to speak, in other words, you are not 
reinventing the wheel anymore. It is just a matter of cost.
    Mrs. Peltola. Would you mind following up on that question, 
Mr. Darr?
    Mr. Darr. I would, and I apologize, Mr. Chairman, if I'm 
standing between you and perhaps ending this hearing. But I 
just want to offer a couple of comments, because we deal with 
this worldwide in both our cruise and our cargo business.
    And first of all, shore power, unfortunately, is today 
mostly a theoretical conversation because it is a relatively 
very small number of ports, where Alaska has been a leader, 
where it has actually been installed.
    So, even if you make the investment on the shipside, which 
is modest and we are prepared to do that where necessary, the 
investment on the shoreside has just not been made, not been 
prioritized high enough, but one of the fundamental problems 
is, you have to think about where the electricity is coming 
from.
    Because particularly with greenhouse gas emissions, if I 
plug into a grid that's being powered from coal, I am not sure 
I gained anything over the power that could have been generated 
on the ship.
    So, the business case is actually very poor unless the 
shoreside energy production infrastructure is really there. 
Those are two of the major things. It's not an unwillingness on 
the part of the industry, and where it's provided, you 
generally see very high levels of uptake.
    Mrs. Peltola. OK. And that makes sense because in Juneau 
and southeast Alaska, it really is hydropower, which is very 
environmentally friendly. So, thank you.
    Thank you, Mr. Chairman. I yield back for real.
    Mr. Webster of Florida. Well, that concludes our meeting, 
and we want to thank the witnesses for being here. Every one of 
you has provided some very, very good input, and we will be 
back to hear more, maybe at some point in time. We will see.
    I ask unanimous consent that the record of today's hearing 
remain open until the time as our witnesses have provided 
answers to any questions that may be submitted to them in 
writing. Without objection? So ordered.
    I also ask unanimous consent that the record remain open 
for 15 days for additional comments or information submitted by 
the Members or witnesses to be included in today's hearing 
record. Without objection? So ordered. The committee stands 
adjourned.
    [Whereupon, at 3:45 p.m., the subcommittee was adjourned.]

                       Submissions for the Record

                              ----------                              


 Letter of March 23, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick 
Larsen, Ranking Member, Committee on Transportation and Infrastructure, 
from Rodger Rees, Port Director and Chief Executive Officer, Galveston 
          Wharves, Submitted for the Record by Hon. Sam Graves
                                                    March 23, 2023.
The Honorable Sam Graves,
United States House of Representatives,
1135 Longworth House Office Building, Washington, DC 20515.
The Honorable Rick Larsen,
United States House of Representatives,
2163 Rayburn House Office Building, Washington, DC 20515.
    Dear Chairman Graves and Ranking Member Larsen,
    We congratulate the work of your Committee last year to pass the 
Infrastructure Investment and Jobs Act (IIJA). As you know, the bill 
has begun to boost the national economy through significant investment 
in the transportation sector.
    As the IIJA moved through Congress and your Committee, we were 
encouraged by the stated goal to rapidly address supply-chain 
transportation solutions, which many experts believe created the core 
of our nation's economic stagnation. As the Department of 
Transportation developed their grant programs to administer the record 
funding passed by Congress, they restated on numerous occasions the 
priority of addressing supply-chain solutions.
    Galveston Wharves, which is a critical Gulf Coast deepwater port at 
the mouth of the Houston Ship Channel, plays a critical role in the 
national supply-chain solution set. As you know, this is one of the 
busiest sea lanes in the world, creating a complex set of challenges 
for shippers, freight handling, and distribution logistics.
    In response to the stated goals of Congress and the Administration, 
we have submitted numerous grant applications for INFRA, RAISE, Port 
Infrastructure Development Program grants, and more issued by the U.S. 
Department of Transportation to make critical improvements to the Port 
of Galveston's docking freight handling capabilities. We believe we met 
every aspect of the funding objectives to relieve supply-chain 
challenges, especially as an overflow deepwater port with direct access 
to heavy rail lines.
    To our great surprise, we were not selected over projects which had 
little or nothing to do with supply-chain solutions.
    We respectfully request the Committee engage in a case study on 
what the real supply-chain solutions are and follow that with 
appropriate federal funding to address those communities most impacted 
by the cargo, which has such a large favorable impact on the national 
economy.
    We stand ready to assist with any such efforts by your Committee.
        Sincerely,
                                               Rodger Rees,
                          Port Director and CEO, Galveston Wharves.

                                 
 Letter of March 24, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick 
Larsen, Ranking Member, Committee on Transportation and Infrastructure, 
 from Dr. Raymond W. Wolfe, Executive Director, San Bernardino County 
 Transportation Authority, Submitted for the Record by Hon. Sam Graves
                                                    March 24, 2023.
The Honorable Sam Graves,
United States House of Representatives,
1135 Longworth House Office Building, Washington, DC 20515.
The Honorable Rick Larsen,
United States House of Representatives,
2163 Rayburn House Office Building, Washington, DC 20515.
    Dear Chairman Graves and Ranking Member Larsen,
    We congratulate the work of your Committee last year to pass the 
Infrastructure Investment and Jobs Act (IIJA). As you know, the bill 
has begun to boost the national economy through significant investment 
in the transportation sector.
    As the IIJA moved through Congress and your Committee, our Agency 
was encouraged by the stated goal to rapidly address supply-chain 
transportation solutions, which many experts believe created the core 
of our nation's economic stagnation. As the Department of 
Transportation developed their grant programs to administer the record 
funding passed by Congress, they restated on numerous occasions the 
priority of addressing supply-chain solutions.
    San Bernardino County Transportation Authority (SBCTA), is the lead 
transportation agency for the largest county in the contiguous United 
States and plays a critical role in the supply-chain distribution for 
the Ports of Los Angeles and Long Beach. As you know, these are 
America's busiest seaports and create a complex set of challenges to 
one of the most populated regions. Truck, rail, air, and storage 
logistics driven from the ports are one of our region's biggest 
challenges, not to mention the climate and air quality impacts.
    In response to the stated goals of Congress and the Administration, 
we submitted an SBCTA grant application for the INFRA and MEGA grants 
issued by the U.S. Department of Transportation with a very significant 
state match that was contingent on securing a federal grant. We believe 
we met every aspect of the funding objectives to relieve supply-chain 
challenges, especially as one of the Ports of Los Angeles and Long 
Beach's most impacted corridors.
    To our great surprise, we were not selected over projects which had 
little or nothing to do with supply-chain solutions. With more than 
$600 million in local and state funding already committed to the 
project, the decision resulted in our county losing $85 million in 
additional state matching funds. We once again find ourselves wondering 
when the federal transportation leaders are going to recognize the 
critical role San Bernardino highways, rail tracks, airports, and 
logistics warehouses play in the larger national economy driven by our 
regional seaports.
    We respectfully request the Committee engage in a case study on 
what are the real supply-chain solutions and priorities and follow that 
with appropriate federal funding to address those communities most 
impacted by the cargo, which has such a large favorable impact on the 
national economy.
    We stand ready to assist with any such efforts by your Committee. 
If you have any questions or need further input, please do not hesitate 
to contact me. Thank you.
        Respectfully,
                                      Dr. Raymond W. Wolfe,
Executive Director, San Bernardino County Transportation Authority.


                                Appendix

                              ----------                              


 Questions from Hon. Daniel Webster to Charles ``Bud'' Darr, Executive 
   Vice President, MSC Group, on behalf of the World Shipping Council

    Question 1. At the height of the pandemic, there were reports that 
lack of access to equipment, such as chassis, contributed to the delay 
in retrieving cargo and resulting congestion at the ports. How does an 
equipment shortage impact the assessment of detention and demurrage 
charges against a shipper who is delinquent in retrieving their cargo?
    Answer. The pandemic-caused congestion resulted in logjams across 
the entire supply chain, which at certain times made it challenging to 
access equipment such as chassis.
    The purpose of detention and demurrage fees is to incentivize the 
rapid retrieval of cargo and return of equipment to promote freight 
fluidity. The Federal Maritime Commission's Interpretive Rule on 
Demurrage and Detention Under the Shipping Act, 85 Fed. Reg. 29638, 
provides guidance on when it is reasonable to assess detention and 
demurrage charges by using a non-exclusive use of factors set forth in 
its rule.
    The FMC's assessment is case and fact specific, but it states that 
importers should not be penalized by demurrage and detention practices 
when circumstances are such that they cannot retrieve containers from 
marine terminals, because under those circumstances, the charges do not 
serve their incentivizing function.
    If a shortage of equipment impacted the ability of a shipper to 
retrieve its cargo, resulting in the issuance of detention and 
demurrage charges, the Interpretive Rule's factors would be applied to 
the specific facts of that case, to determine whether the issuance of 
the charges in that case was reasonable under the circumstances. 
Preferably, these issues are raised and resolved via the relevant ocean 
carrier's established processes, such as those we have implemented at 
MSC.
    Under an appropriate ``totality of the circumstances'' 
reasonableness analysis, one of the factors for consideration is the 
role that a shipper (cargo owner) has played in causing a shortage of 
equipment. During the pandemic, the problem of containers being left on 
marine terminals by cargo owners for long periods of time became so 
serious that various port authorities and marine terminal operators 
either threatened or imposed ``long dwell'' charges against containers 
stored on the port for excessive periods of time. One reaction by cargo 
owners was to remove the containers from the port, but then to store 
the full containers on chassis without unloading the containers and 
returning the containers and chassis. This resulted in both container 
and chassis shortages. This practice was driven by the fact that cargo 
owners' warehouses and distribution centers could not handle the volume 
of cargo that importers had contracted to have transported to the 
United States. This example illustrates why equipment ``shortages'' are 
not typically a matter of there not physically being enough equipment 
units, but rather shortages are driven by whether all players in the 
supply chain keep that equipment moving so that it can be used for the 
next shipment. In that context, an equipment shortage can be caused as 
easily by a shipper as by an ocean carrier, a trucker, or any other 
actor in the supply chain.

    Question 2. A leading challenge during the ocean freight crisis was 
that ocean carriers were shipping empty containers back to Asia or 
other import-origin locations, which resulted in American exports being 
stranded at our docks. Can you explain your views on why that occurred, 
and what steps are being taken to assure that American exporters have 
access to the containers and equipment they need to send their product 
to customers abroad?
    Answer. Ocean carriers operate services or routes, much like buses, 
that move on specific schedules to provide consumers reliable and 
frequent service. There is no separate import system or export system--
liner shipping routes are continuous loops--think of 8 ships 
continuously traveling along the same loop between a U.S. port and 
Singapore. If each ship carries about 8,000 containers, this single 
route or service is transporting 64,000 containers of cargo at any 
point in time.
    Due to the current U.S. trade imbalance, containerized imports to 
the U.S. generally outnumber containerized exports by a ratio of 2 to 
1--during COVID-19 this ratio surged due to altered consumer spending 
patterns. To keep the supply chain moving and provide sufficient 
equipment to meet both import and export demand, two-thirds of all 
containers leaving U.S. ports needed to be empty, on average. If those 
empty containers are not removed from U.S. ports, the resulting port 
congestion would slow the ocean transportation system for both 
importers and exporters. The challenge for both U.S. importers and 
exporters during the pandemic was getting the right equipment to the 
right place at the right time. Keeping empty containers moving 
throughout the global network was critical to maintaining service for 
both importers and exporters.
    Ocean carriers deployed every available ship and container to 
provide sufficient capacity in response to this demand. However, the 
U.S. landside logistics system was not able to efficiently process the 
historic surge of import cargo, resulting in bottlenecks throughout the 
supply chain. If MSC had 7,000 ships in its network rather than 700, it 
would not have alleviated any congestion because this would have just 
resulted in that many more additional ships trying to fit into an 
already over-burdened shoreside infrastructure.
    At the height of the congestion, in November 2021, there were more 
than 100 container vessels with hundreds of thousands of containers 
aboard stranded off the ports of Southern California waiting for up to 
4 weeks to come in and offload their cargo. Long vessel backups also 
occurred at East coast ports such as Savannah and Gulf ports such as 
Houston. It is important here to note that at no time did we have a 
container supply problem, or a shortage of container vessel capacity, 
we had a U.S. landside container movement problem.
    Notwithstanding the tremendous COVID-caused strain on the supply 
chain, it was met with a momentous and extraordinary response with the 
international ocean and U.S. intermodal supply chain moving more cargo 
than at any time in history.
    While there were allegations that exporters of agricultural 
products were disproportionately affected by the congestion or ocean 
carriers' operational requirement to balance import and export 
equipment demands to keep the supply chain fluid, U.S. government data 
does not support such claims; rather, despite the challenges in the 
supply chain, U.S. agricultural exports moved at record levels.
    The U.S. Department of Agriculture reported in FY 2022 U.S. 
agriculture exports hit a record $196.4 billion--which was a 14% 
percent increase from the previous FY 2021 record of $172.2 billion 
(which was a 23% increase from 2020). Source: U.S. Department of 
Agriculture, Foreign Agricultural Service.
    These record levels of both imports and U.S. agriculture exports 
during almost 3 years of a global pandemic are testament to ocean 
carriers working closely with their customers, and more broadly, all 
members of the supply chain working to meet the demands of both 
importers and exporters.
    Congress has since passed the Bipartisan Infrastructure Bill, which 
contains $17 billion dollars of directed funding to expand the capacity 
and resiliency of U.S. ports, and even billions more for landside 
infrastructure improvement. Ocean carriers believe this type of 
historic investment is the best way to ensure that when faced with 
future challenges such as a global pandemic, the U.S. supply chain can 
keep all goods--both imports and exports--efficiently moving to support 
the demands of consumers and businesses.

    Question 3. When ocean carriers delay vessel departures, leave 
early, or miss a port visit entirely, American exporters can face 
significant economic harm--which can mean lost sales, lost product 
value due to diminishing shelf-life, and product perishability. While 
trade flows are normalizing, should they pick up again, how can 
American exporters be confident that they can get their cargo shipped 
in a timely and reliable manner?
    Answer. Per our response to question 2, ship movements are dictated 
by the ability of shoreside infrastructure to handle the cargo 
transported by ships. If ships are delayed in entering ports and 
conducting cargo operations because of slow-downs driven by land-side 
infrastructure failures, then the entire system suffers--import and 
export. Vessel schedule reliability problems are typically a symptom, 
not the cause, of land-side failures. The best way to ensure the U.S. 
landside supply chain has sufficient capacity to handle crisis-driven 
cargo surges, such as the unprecedented import demand caused by 
homebound consumers in COVID-19, and prevent against future congestion, 
is to invest in the capacity and resiliency of U.S. ports and landside 
infrastructure, as well as to enhance operational practices ashore to 
ensure maximum fluidity and resiliency.
    Now that Congress has passed the bipartisan infrastructure bill 
which contains historic levels of funding for investments in U.S. ports 
and landside infrastructure, Congress must ensure this money is used to 
make the needed investments.
    The other critical tool to keep cargo moving expeditiously through 
the ports is to ensure that regulations on detention and demurrage 
retain the ability for carriers and marine terminal operators to 
provide economic incentives for cargo interests to timely pick-up 
loaded containers and timely return empty containers so that other 
customers may use that equipment.
    As highlighted in my written testimony, the currently proposed 
Federal Maritime Commission rule on detention and demurrage fails to 
provide the proper regulatory structure to insure fair, reasonable, and 
effective incentives for cargo movement. We need Congress's assistance 
to ensure the Commission's proposal is corrected before a final rule is 
issued.

    Question 4. West Coast ports, including Long Beach, have seen a 
significant drop-off in cargo year over year. While some of that 
decline can be attributed to a normalization in cargo volumes, to what 
degree is the uncertainty with labor negotiations at West Coast Ports 
impacting decisions to divert cargo to the Gulf and East Coast?
    Answer. The World Shipping Council does not oversee labor 
negotiations with the International Longshore and Warehouse Union--the 
ILWU negotiations are handled by the Pacific Maritime Association, and 
PMA is likely in the best position to answer whether labor uncertainty 
is a causal factor for the recent cargo volume shift to East and Gulf 
Coast ports.
    What we can say is that ocean carriers deliver the cargo to where 
its customers--shippers--direct the cargo to be delivered. Recent 
statistics document a cargo shift from U.S. West Coast ports to East 
and Gulf Coast ports. It is unclear whether this shift is permanent, or 
temporary. The cargo shift may be related to several factors beyond 
ongoing West Coast ILWU labor negotiations, including a recently 
expanded Panama Canal which can now support transits by larger vessels, 
investment in Gulf and East Coast ports that has deepened their harbors 
and expanded their cargo handling capabilities, as well as geographic 
reasons such as Gulf and East Coast ports proximity to major U.S. 
consumer markets and newly built manufacturing hubs in the southern 
United States.

  Questions from Hon. Daniel Webster to Matthew Leech, President and 
   Chief Executive Officer, Ports America, on behalf of the National 
                  Association of Waterfront Employers

    Question 1. Recent news reports have discussed the potential threat 
that Chinese manufactured cranes pose to national security, serving as 
intelligence gathering devices capable of tracking the movement of 
goods at our ports. What is being done to ensure the security of crane 
equipment at marine terminals?
    Answer. Response was not received at the time of publication.

    Question 2. As greater amounts of cargo come into our ports, many 
port and terminal operators are working to optimize and improve 
operations, including through use of technology and automated systems 
that have the potential to improve container throughput. At the same 
time, longshore unions have resisted a transition to these new 
technologies.
    Question 2.a. What role does technology play in improving and 
optimizing the capacity to move cargo through our ports?
    Answer. Response was not received at the time of publication.

    Question 2.b. Do policies or labor agreements that prevent the 
adoption of more efficient processes at ports contribute to supply 
chain bottlenecks?
    Answer. Response was not received at the time of publication.

    Question 2.c. In your opinion, should Congress consider removing 
limitations on Federal funding for ports that impede the adoption of 
automated technology?
    Answer. Response was not received at the time of publication.

    Question 3. You assert that ocean carriers are the marine terminal 
operators' only customers and, in turn, the cargo owners are solely the 
customers of the ocean carriers. In the Federal Maritime Commission's 
(FMC) proposed rule on detention and demurrage, the Commission 
suggested that contracts exist between terminal operators and cargo 
owners. Why is this contractual concept proposed by the FMC a problem 
for marine terminal operators?
    Answer. Response was not received at the time of publication.

    Questions from Hon. Daniel Webster to Mario Cordero, Executive 
                      Director, Port of Long Beach

    Question 1. At a Senate hearing last fall, Department of Homeland 
Security Secretary Mayorkas testified that the most significant threat 
to United States ports are cyberattacks. As technology at ports is 
becoming increasingly complex, cyber criminals and hostile nation 
states are using cyberattacks to target supply chains and cause 
disruptions and safety issues. I understand that your neighbor, the 
Port of Los Angeles, faces up to 40 million cyberattacks per month. 
Other ports have seen disruptions to their operations and successful 
ransomware attacks.
    Question 1.a. Please discuss the threats that cyberattacks pose to 
port operations.
    Answer. The Port of Long Beach (Port) continues to use holistic and 
layered defense methods to block ever-increasing cyber-attack attempts, 
which have quadrupled over the past few years. The continually shifting 
attack techniques pose an ever-changing threat to all Port 
stakeholders. Port operations continue to be targeted based on critical 
supply chain infrastructures that are essential for the smooth movement 
of goods through Port terminals.
    The blocked cyber-attacks come in a variety of methods including:
      Attempts to access data using phishing attacks (fake 
emails posing as a trusted source to deceive a person into clicking on 
malware or provide their passwords to business-critical systems);
      Opportunistic use of computer networks to gain access to 
data; and,
      Other sophisticated hacking techniques.

    If successful, the above methods could result in operational 
outages, ransomware, malware, a virus or other similar threats. The 
Port's holistic layered defense includes strengthening the potentially 
weak human link through a metrics driven cybersecurity awareness 
training program since trained users are 40% less likely to click on an 
email phishing link. The program is regularly run multiple times a year 
with a 100% staff completion rate. This is in line with best practices 
as 84% of leading organizations in recent studies cite cybersecurity 
awareness training as a key building block of cyber resilience.
    The current geo-political landscape has resulted in sharp increases 
of cyber-attack attempts aimed at the Port from nation-state sponsored 
actors, organized crime syndicates and splinter groups of ``lone wolf'' 
hackers.

    Question 1.b. What support is the Federal Government providing to 
ports to address these security threats?
    Answer. Currently, the primary source of support from the Federal 
Government to Ports is the Federal Emergency Management Agency's Port 
Security Grant Program (PSGP). Although authorized at $400 million, 
appropriation for this funding source has remained stagnant at $100 
million and it has multiple priorities, only one of which is 
cybersecurity. The Port has been awarded multiple cybersecurity related 
grants from PSGP and have utilized the funding to perform penetration 
tests, remediate vulnerabilities, install cyber protection mechanisms 
that are needed to address the current threat landscape, and develop 
plans for cloud-based resiliency for critical systems. Since 2013, the 
Port has received $4.7 million in federal funding that was geared 
toward cybersecurity enhancements in hardware, software, and 
resiliency. With cybersecurity risk growing and bad actors becoming 
ever more sophisticated, we urge Congress to increase funding for PSGP 
grants.
    Additionally, the State and Local Cybersecurity Grant Program 
(SLCGP) that was released in 2022 is a funding source that the Port 
hopes to leverage. However, the priorities for grant allocation from 
that program are currently being set at the state level and it is 
unsure at this time if ports will be given appropriate consideration.

    Question 2. Compared to major ports in Europe and Asia that operate 
24/7, United States ports tend to operate for only a fraction of the 
day. In your testimony, you discussed your support for implementing 24/
7 port operations, which would increase cargo throughput and 
efficiency. Can you describe some of the barriers to implementing 24/7 
operations, and what can be done to overcome them?
    Answer. The biggest challenge for implementing 24/7 operations at 
the Port is to strike the balance between continuous port operations, 
cargo demand and capacity challenges outside of the ports. Our terminal 
operators have demonstrated that they are capable and willing to 
deliver cargo utilizing three shifts of the work day. However, as the 
later part of 2022 has demonstrated, congestion in the inland rail 
ramps and warehouses that were no longer capable of accepting more 
freights have rendered 24/7 port operations ineffective. The ports and 
the terminals are ready to operate 24/7, but the supply chain outside 
of the ports have to keep up with the pace.

    Question 3. As greater amounts of cargo come into our ports, many 
port and terminal operators are working to optimize and improve 
operations, including using technology and automated systems that have 
the potential to improve container throughput. At the same time, 
longshore unions have resisted a transition to these new technologies.
    Given your experience with the introduction of automated 
technologies at the Port of Long Beach, can you describe the role 
technology plays in improving and optimizing the capacity to move cargo 
through our ports?
    Answer. Technology can improve supply chain efficiency in two main 
areas: operations and information. Certain technologies can help better 
plan and execute ship-side and yard operations as well as optimizing 
cargo delivery utilizing the skilled labor in the terminals. The other 
improvement is by providing cargo visibility throughout the supply 
chain utilizing data sources from various stakeholders such as 
terminals, ocean carriers and railroads.
    In December 2021, recognizing the need for a technology solution 
that would enable terminal operators, ocean carriers and shippers to 
efficiently coordinate the movement of goods through the Port, the Port 
developed the Supply Chain Information Highway. The project is a 
digital solution that provides the supply chain with data that can be 
integrated into their own systems, enabling them to track cargo from 
origin to destination and make better operational decisions. The Port 
of Oakland, Port of Miami, Port of South Carolina, Utah Inland Port 
Authority, and the Northwest Seaport Alliance, a marine cargo operating 
partnership of the ports of Seattle and Tacoma, are collaborating with 
the Port of Long Beach on the Supply Chain Information Highway. The 
goal is to offer access to data that will result in increased delivery 
visibility for authorized supply chain partners nationwide.

    Question 4. West Coast ports, including Long Beach, have seen a 
significant drop-off in cargo year over year. While some of that 
decline can be attributed to a normalization in cargo volumes, to what 
degree is the uncertainty with labor negotiations at West Coast ports 
driving cargo to the Gulf and East Coast?
    Answer. During our meetings with customers in recent months, we 
heard their concerns about the ILWU/PMA labor negotiations. Many of 
these customers have indeed diverted cargo to the East Coast and Gulf 
ports. However, there is a large consumption base served by the West 
Coast ports, especially in Southern California. Therefore, the same 
customers also indicated that they would re-start using West Coast 
ports once the negotiations have been completed. We are confident that 
the volume will return to the West Coast once the issues have been 
resolved.
    An imbalance of investments in East Coast and Gulf ports compared 
to West Coast ports has also led to diminished cargo volumes at the San 
Pedro Bay Ports (SPBP) Complex. Prior to the pandemic, the SPBP faced 
loss of market share due to infrastructure investments elsewhere and 
the lack of investments here. From 2010 to 2020, federal funding was 
invested heavily in smaller ports on the East Coast and in the Gulf--
$11 for every $1 spent on the West Coast. In addition, the SPBP 
contributes $380 million annually to the federal Harbor Maintenance 
Trust Fund, but receives less than 1.5% in federal investments back. 
Canada also out-invested the U.S. in freight rail projects causing 22% 
of rail cargo business to shift from West Coast ports to Canadian 
ports. The pandemic exposed how neglect in investments in port 
infrastructure, shared data systems and the workforce caused 
unprecedented backlogs throughout the entire goods movement industry.

   Question from Hon. Salud O. Carbajal to Mario Cordero, Executive 
                      Director, Port of Long Beach

    Question 1. Mr. Cordero, I am greatly concerned by the impact of 
emissions and poor air quality on the oftentimes disadvantaged 
communities that live around ports.
    Can you provide some information, including some of the 
environmental justice work, that the Port of Long Beach has done and 
how smaller ports can replicate that?
    Answer. I appreciate your question regarding steps that the Port of 
Long Beach (Port) has taken to improve air quality for our port-
adjacent communities and I am pleased to provide a written response 
detailing the environmental justice work that has been undertaken by 
the Port which may be replicated at smaller ports across the nation.
    As the nation's second busiest seaport and a vital economic engine 
for the City of Long Beach and the region, the Port recognizes that 
economic vitality comes at a cost to the local community, which bears 
the brunt of the environmental and public health impacts of port 
development and operation. Communities around the Port--including 
Wilmington, Carson, and West Long Beach--have a higher percentage of 
minority and low-income populations compared to the state. In general, 
these communities have worse public health factors and more social and 
economic disadvantages compared to the broader population.
    The Port has a responsibility to ensure that as the Port's business 
thrives, so do the lives of the surrounding communities. We have 
undertaken a comprehensive approach to being an environmental leader 
and giving back to the community through environmental stewardship, 
establishing a Community Grants Program and adopting the Green Port 
Policy. Many of the lessons learned for these actions could be 
replicated on a smaller scale.
    Environmental Stewardship. Over the last two decades, the Port has 
been a leader in environmental stewardship and has been committed to 
seaport sustainability and addressing environmental and health impacts 
through such groundbreaking efforts as the Clean Air Action Plan (CAAP) 
and Water Resources Action Plan. Since 2005, port-related emissions of 
NOx and SOx have dropped by 62% and 97% respectively, according to the 
Port's most recent emissions inventory, and port-related DPM has 
plunged 90%. The area around the San Pedro Bay Port Complex has seen a 
greater decline in air-related cancer risk than Southern California as 
a whole.
    According to the South Coast Air Quality Management District's 
MATES-V Study, between 2012-2019, cancer risk near the Port of Long 
Beach and Port of Los Angeles dropped 57% compared to a 53% reduction 
for the rest of the region. In April 2021, USEPA recognized CAAP as 
``an excellent example of what can happen when port operators work with 
neighboring communities to develop and implement a robust plan, leading 
to positive impacts on air quality and emissions.''
    Community Grants Program. The Port established the Community Grants 
Program (CGP) for community-based mitigation projects for three 
specific programs that alleviate impacts from port-related activities: 
Community Health; Facility Improvements; and Community Infrastructure. 
In March 2017, the Board of Harbor Commissioners allocated an initial 
$46.4 million for the implementation of CGP to be expended over 12-15 
years. Overall, the Port has set aside more than $65 million for this 
program, making it the largest voluntary port mitigation initiative in 
the country. Environmental justice is also a critical component in the 
environmental review process for all Harbor Development Permit 
applications. Public involvement ensures that the community has a role 
by providing input on potential environmental and health impacts.
    Green Port Policy. Fully committed to improving the environment, in 
2005 the Port adopted the Green Port Policy, which established a 
framework for environmentally friendly port operations. An emphasis is 
placed on community outreach programs that pursue engagement to enhance 
understanding of Port operations and encourage greater participation in 
decision-making. The Port engages regularly with neighborhood 
associations, community organizations, and environmental justice groups 
to provide outreach and updates on the Port's development projects. The 
Port also fosters opportunities for students to learn about careers in 
the trade and supply chain sectors through partnerships with the Long 
Beach Unified School District, Long Beach City College and California 
State University Long Beach. The Port's Academy of Global Logistics at 
Cabrillo High School is a 4-year program that combines an academic 
curriculum with industry-relevant training to support career 
development. In addition, the Port provides community sponsorships 
while expanding its reach into the local community. The hundreds of 
local nonprofit recipient groups each year represent a cross-section of 
the region.

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