Freightwaves: US has lost its maritime focus, says FMC’s DiBella

WASHINGTON — Not even six months into her term leading the maritime regulator, and Federal Maritime Chairman Laura DiBella is confronting transformational crises from within and without.

“Every every major, shall we say, conflict or issue around the world largely incorporates the maritime space,” DiBella said in an interview at FMC headquarters. “We are playing either a lead or supportive role in nearly everything that is going on right now. The Middle East, Strait of Hormuz, the situation at the Panama Canal, Chinese ship detentions, flags of convenience, issues with Spain … it’s like it’s never-ending right now. And I don’t get me wrong, I appreciate it. I’d rather be busy than not and certainly be involved, and try to help support any and every which way that cargo can move more efficiently — U.S. cargo, in particular.”

DiBella went from FMC nominee to commissioner to chairman in just four months, a mercurial dash for the avid marathoner. She’s been tasked by President Donald Trump to lead a federal regulator that, along with the Maritime Administration, is now squarely in the eye of the global shipping storm. 

The agency’s priorities have been re-shaped by the pandemic supply chain crisis, forcing a wider, more global approach. “What is taking more of our time, right now, is what’s happening abroad than here in the continental United States,” she said. 

Geopolitics and a changing mindset were at the heart of the commission’s latest decision when it rejected Maersk’s request, for the third time, for special permission to implement emergency fuel surcharges without the statutory 30-day waiting period. Maersk (OTC: AMKBY) and other companies urgently claimed the rapid rise in bunker prices since the start of the Iran war in late February were severely straining operations. DiBella says carriers should have known better.

“I’m sensitive and empathetic to the need to absorb these costs,” she said. “The carriers certainly are absorbing [increases], and shippers are, too. I don’t want to say that that’s been largely ignored but it is a major factor in all this. The disruption was very big on the shipper’s end, especially in the beginning [of the war].”

Maersk’s requests were denied after the Danish company repeatedly failed to provide details on just how higher fuel prices were affecting its business.

But DiBella, who comes out of a commercial background as Florida Secretary of Commerce and chief executive of Enterprise Florida, a public-private development office, said that shippers’ concerns have been overlooked by the focus on crude oil and naval blockades.

“It’s not that this [war] started out of nowhere,” said DiBella. “There was an awareness that this was coming, and that there was potentially a conflict arising. There were a lot of threats around Trump wanting to take action should negotiations go sideways. There was an inherent risk built-in to certain charges.”

DiBella noted that this represented an important first test since the authority to grant special permissions requests was taken away from staff level and elevated to a commissioner vote.

“I think it allows for better accountability across-the-board, accountability for not only us here at the FMC, but also for the carriers and shippers. From an accountability standpoint I would like to be extraordinarily transparent to the shipping community as to why we vote the way we do.” 

DiBella ascribes that to the FMC’s service to the public, as far as consumer protection is concerned. 

“I’d like to say we’re helping people understand fully the reasoning behind our decisions. I’m not going to say that every request that’s going to come in is going to be a ‘no’. Give us more and help us help you get to a ‘yes’.” 

One-size regulation does NOT fit all

Surprisingly, DiBella said she has the least regular communications with ocean carriers. “I hear a lot from the shippers, and from truck drivers. There’s just a whole host of challenges around that last mile, the handoff, the transitions from the terminal, from the rail yard to the [intermodal] chassis. 

“It’s such a complicated, century-old system that it’s very hard to regulate, because it’s tied to an ocean contract. We are authorized to regulate that space, but it’s very hard to, ultimately, implement any broad regulation because everything is local. What happens at Maher Terminals [in Newark, N.J.] is completely different than what happens in Memphis. So, there’s not a one size fits all scenario that satisfies, as far as I can see, all of the issues that exist in that element. 

“I don’t want to say I’m having a hard time with it, but I have spent the majority of my time trying to wrap my head around the best way to approach that right, and I’ll probably continue to do so for until the end of my tenure here.” 

Further complicating the situation, said DiBella, is a progressive  evolution that is seeing more carriers enter the multimodal transportation operator (MTO) space, single-contract service providers that coordinate the movement of goods from origin to destination over at least two different transportation modes.

“You’re seeing more and more vertical integration by the carriers. It adds to our regulatory oversight of the entire system. [The cargo] is off the ship but now you have the terminal operators, such as MSC [Mediterranean Shipping Co.] or whomever, charging detention and demurrage but also the port authority. And then there are the relationships they have with the chassis companies. I would rip my hair out! You know, if you’ve seen a port, you’ve seen a port. But I’m really having a hard time saying, okay, this regulation will work for everyone.” 

DiBella said that the process relies on sharing as much information as possible, and getting into the weeds of the maritime supply chain.

“I think we’ve largely identified the pain points in a sense, but I like to really understand the problem, and therefore try to try to back into some sort of solution to alleviate all of this. Do we want to put more regulations in place? No, but in the end, the evolution of shipping practices just continues to keep us on our toes. It’s a constant education and awareness of what’s happening.” 

Expert help points the way forward

To help improve communications, DiBella pointed to the FMC’s Consumer Affairs and Dispute Resolution Services (CADRS), a customer-facing bureau which takes in initial complaints and decides how best to go about dealing with those issues. 

“One thing that is not probably not advertised enough, that I’m reinforcing at every chance I get, is availing of the team to talk to shippers ahead of time. To basically help consult on the best way forward for them, given the uncertainties that are out there, and to be proactive instead of reactive.

“That’s something that I don’t think the shipping public knows, that we have some really great experts that are from the transportation space that can help provide some guidance. Shipping is full of uncertainty, now it’s probably a bit more acute. They’re a free service to those that have questions and just want to know the best way forward.” 

SHIPS Act and Maritime Action Plan

While Marad is guiding support for potentially transformative SHIPS Act legislation and the Trump administration’s Maritime Action Plan  plan, to advance American shipping and shipbuilding, DiBella said “I think we’re in a good place. I think the right conversations are happening, across-the-board, on the Hill.  Now, it’s a matter of putting resources towards the effort.”

While the prospects for meaningful development are generational in scope, DiBella said there is evidence that change can occur in years, not decades. India, for example, has garnered its first orders for large ships, expanded its registry to include major liners, and formulated plans for a national carrier.

“What’s happened in India is remarkable, really, really remarkable, but they are proof-positive that this could be done, because they did it. They’re standing up their industry in a matter of years.”