In a recent question & answer session with the Journal of Commerce, newly-appointed Federal Maritime Commission Chairman Mario Cordero discusses how he envisions the FMC possibly overhauling intermediary rules of ocean transportation, promoting shipping exports and assisting port authorities.
Below are some informative highlights from the recent conversation…
FMC Chairman on Ocean Transportation, Shipping Exports
Q: Your predecessor, Richard Lidinsky, was widely seen in the industry as an activist FMC chairman. Do you see yourself continuing such an approach or will you take a different direction?
A: Our agenda over the last several years has called us to be more active in regard to issues such as infrastructure, and issues linked to port authorities and marine terminals.
My vision is to continue with the whole drive of making sure we have an efficient and responsible ocean transportation system. In today’s world, what we are talking about are the infrastructure issues as they relate to our nation and specifically port authorities. In my mind, trade begins at the port. It is safe to say I come from a port authority perspective.
Q: How can the FMC aid port authorities?
A: I think the answer to the question has two parts: With regard to our specific regulatory purview, we need to be very cognizant of practices, agreement and policies that raise costs and ocean shipping rates. As it relates to the issue of infrastructure, I think it’s even more important for the FMC to comment on these issues as a stakeholder.
Q: How does the FMC’s regulation of shipping rates affect port authorities?
A: We need to make sure our port authorities, (whether on the East, West or Gulf Coasts), remain competitive. The indirect impact on a port authority with regard to costs, shipping rates and ocean transportation could mean that a particular port authority could be affected.
Q: Can you provide an example of this?
A: The Harbor Maintenance Tax issue and the study we released 2 years ago, known as the Canadian study, is a good example. The FMC undertook that study as a result of inquiries from Congressional members with regard to the diversion of ocean cargo, and what does or doesn’t have impact on that.
As it relates to the Harbor Maintenance Tax, certain port authorities felt that they were giving a percentage of revenue through the HMT, but not receiving it back. This directly impacts their operations. The FMC is not taking a specific position on issues relating to the HMT, but the study did recommend options for Congress to consider. We have valuable resources at this agency who can study these issues and provide guidance with regard to congressional inquiries.
I would like to think that because of the study and the work the FMC did here, congressional members are looking at this and addressing the relevant issues. Our staff, including myself, has reached out to Congress to provide ourselves as resources. Looking at the Canadian study, what was the common denominator when we looked northward to Canada and southward to Mexico? The common element in both scenarios was that those countries have a national ocean freight policy.
Q: How will the FMC handle the recently announced P3 Network?
A: There has been no agreement filed with the FMC, although I suspect one will be. And once it is filed, our staff will scrutinize its contents, (as they do all agreements), in terms of how it may affect costs. More specifically, we are talking about how they cover port authorities, and how they impact cargo capacity, sailings and ocean transportation times.
Q: What is the status of the proposal to create an agricultural index to help U.S. exporters?
A: It is an ongoing discussion, which I think comes under the caption of “what can the FMC do to facilitate exports?” There has been a lot of discussion on that, and I am definitely interested in feedback from the shipping industry. What is certain is the volatility of ocean shipping rates. Whatever we can do to mitigate that, I think should be up for discussion. What is interesting to note, from the ocean cargo carrier perspective, is that I haven’t seen any specific carrier totally dismiss this concept.
Q: The World Shipping Council came out strongly against the agricultural index proposal, and the agricultural export associations I spoke with were optimistic about the index, but unsure what value it would bring.
A: You hit the nail on the head regarding the agriculture issue and stakeholders. They are still debating on themselves.
Q: But couldn’t part of the reason they are still debating be that they don’t have enough information from the FMC on what an agricultural index would look like?
A: What we do know for sure is that grain and agriculture commodities are going to be key in the future, with regard to exports. The question is whether these models will facilitate and lower the cost, and I’m hopeful that as the discussion continues, I will have the opportunity to hear shippers’ concerns.
Again, I don’t see the issue as one that has been categorically dismissed by the shipping industry. With regard to grain and agriculture, I will say that whether you are the World Shipping Council or a shipping carrier, everybody agrees this is going to a valuable commodity.
Shipping Exports & Imports
If your business or corporation relies on ocean shipping exports of merchandise to retailers and consumers, this topic is of great interest to you, as ultimately the costs associated with ocean shipping will trickle down to you.
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