Remarks of Commissioner Rebecca Dye American Association of Port Authorities
I’ve had the opportunity to meet and visit many port officials in the United States and internationally.
It’s good to see you today. I look forward to visiting many more of you in the future.
Thanks to Kurt Nagle and Jean Godwin and everybody at the AAPA, for this invitation and for your support of the Federal Maritime Commission.
Last week I was in the Port of Baltimore, with Dave Thomas, Deputy Executive Director, and a group of terminal, trucking, and logistics company officials to talk about port operations and detention and demurrage charges.
It was great, as it always is, when I visit or have conversations with you and your customers.
When the discussion started, one of the group leaned over the conference table and said to me, “Commissioner, it’s an ecosystem.”
I was delighted to hear that, because I emphasized the systemic nature of our international supply chain as part of the FMC Supply Chain Innovation Teams project.
And to make it even more challenging to make successful operational changes in the supply chain, our international ocean transportation supply chain is a COMPLEX system, like an ecosystem, and it’s GLOBAL.
In the FMC Supply Chain Innovation Teams project, we assembled small teams of industry leaders representing major actors in the international ocean transportation supply chain, including seaport officials, to discuss the best way to increase supply chain reliability and resilience.
The teams agreed that end-to-end supply chain visibility would be the most effective way to improve supply chain reliability.
In the case of supply chain performance, what you don’t know, will hurt you.
There’s a lot of information on our FMC website about the Innovation Teams project.
Much of it is relevant to the FMC Demurrage and Detention investigation that’s ongoing now, because we’re building on the insights into port operations that we gained in the earlier Innovation Teams discussions.
The most important “take away” from the Innovation Teams conclusions, confirmed by what I’ve learned during the demurrage and detention investigation, is that what shippers most need to know—are desperate to know—is when will their cargo is actually available for pickup.
We call this “availability plus.”
Getting that information in a timely and accurate way is one of the crucial keys to improving throughput velocity and freight fluidity in our international freight delivery system.
Our investigation followed a three step process: Phase One: we gathered and analyzed substantial data and developed five areas to address shipper and intermediary demurrage and detention concerns:
- Standardized language concerning demurrage and detention charges;
- Clear, simple and accessible billing and dispute resolution processes;
- Explicit guidance regarding the types of evidence relevant to resolving disputes;
- Consistent notice to cargo interests of when their containers are actually available for pick-up; and
- An FMC Shipper Advisory Board
Phase two of the investigation involved “test marketing” of the five areas, with in-depth interviews, comments from shipper associations, and conference calls and many other conversations.
Much of this is continuing.
As an aside, we know that port challenges are not confined to the United States. I’ve received interesting comments from Canada.
When I was speaking at a conference in Melbourne, a group of Australian shippers asked to join our investigation!
We’re currently in Phase Three, the final phase, of the Demurrage and Detention investigation.
Soon we will hold meetings of industry leaders to discuss commercially practical demurrage and detention approaches in four of the areas identified: standardized language, clear billing and dispute resolution processes, guidance as to relevant evidence, and consistent notice of actual availability of cargo and a reasonable opportunity to pick up that cargo.
All of the discussions will take place in the context of the purpose of demurrage and detention: to provide incentives to shippers to pick up cargo and return containers.
The crucial question is are demurrage and detention charges, as currently applied, working as intended, as incentives to shippers to pick up cargo and return equipment?
Unlike in our earlier Supply Chain Innovation Teams project, these participants will not be asked to reach agreement, although we expect there to be substantial agreement on many points, thanks to the cooperation of all the interested parties.
These discussions, in addition to all the other information and discussions we’ve had involving demurrage and detention, will contribute to my final recommendations to the Commission.
I am confident that we can develop practical guidance in this area that will address customer frustration and also improve the operation of our freight delivery system to move more cargo!
The best part of this story is that under your leadership, there are ongoing discussions in your ports with the goal of continuously improving the performance of the international freight delivery system.
That’s in everybody’s interest!
Thanks again—you’re a pleasure.