word. if it happens here, or here, or here, or anywhere that matters, america is watching on c-span. powered by cable. >> members of the federal maritime commission testified about the dramatic rise of shipping container costs during the covid-19 pandemic which resulted in higher prices for consumer goods. senator maria cantwell of washington state shared this committee hearing. >> we will now go to the u.s. senate committee on commerce and transportation, full committee hearing on ocean shipping reform act, legislation cosponsored by my colleagues senator clobachar, i want to, at the start, welcome

our two nominees, i'm sorry, our two commissioners, thank god. yeah, thank you, thank you, our two federal maritime commissioners here this morning to join us and testify, mr. mavey and ms. dye. we will evaluate bipartisan ocean shipping reform act which was introduced by my colleagues clobachar and thune and cosponsored by 24 bipartisan members, during the covid-19 pandemic consumers spent more on e-commerce goods shipped overseas than 2019 to 22, saw nearly 32% increase in e-commerce spending and 2020 to 2021, another 4% increase so the arrival of these imports led to record volumes at ports, ports

of los angeles and long beach moved 19 million containers -- sorry, 10 million containers for the first time ever. in the state of washington, the north west seas port alliance saw 15.4% increase in container volume over the last year. this unprecedented volume continues to cause massive back-ups of ships at shore and adds as of yesterday, 30 vessels are anchored, loiterring, waiting to access ports at long beach. as the economy warred back, ocean shipping companies have struggled to keep with the demand and freight costs. the pandemic shipping rates for a 40 foot container was about $1,300 by 2021, the cost jumped to $11,000. that's a 746% increase in freight cost. this increase means u.s. consumers are paying higher prices for goods everyday. in november of 2021, a united

nations report found that if container freight rates continue at this pace through 2023, the cost of importing goods could increase by 11% which would raise consumer prices again. the committee worked tirelessly with numerous provisions that were included in the bipartisan infrastructure law and made a historic $2.25 billion investment in port infrastructure and development. the total bill included 28 billion for freight infrastructure over the next five years including 3 billion for at rate crossings known to be part of the supply chain bottleneck problem. we also know there was a robust federal -- we also know we need a robust federal maritime commission and passed out a nominee to join you, max vekich who i think has been sworn in as a member. today, taking another important step holding this ocean shipping reform act hearing. this bill would significantly

strengthen the commission and provide tools to crack down on unfair practices, direct commissioners to establish rule making for unfair attention and diverge charges, these fees being passed down to consumers. a 2021 report on the business reports found that charges nearly doubled between 2020 and 2021, i will have specific questions to the f & c members today about that. as we heard from witnesses at a previous hearing we had at shipping practices shared by our colleague for michigan, we know these costs are being passed on to consumer. in addition, these unreasonable charges we feed to address the complaints our constituents have that we heard from many of the important industries across the state of washington. according to the agriculture

transportation coalition, potato farmers, cotton growers, pork from south dakota, soy beans from minnesota, almonds from california, dairy from wisconsin, citrus from florida, we're proud of what we make and grow in the united states and expect it to get to its destination in a timely fashion, it is unfair these consumers are being gouged with high prices and our very important growers can't get their products to market in a timely fashion, so today we'll hear from the commissioner daniel mafay and rebecca dye. we want to hear from you about what you think needs to be done to help address this issue. we want to know what tools in the ocean shipping reform act you can use immediately if passed into law that can help you find real solutions for the market today. we need a commission to offer

real solutions to those farmers to get the products to global markets so with that i turn to my colleague senator wicker for his opening statement. >> thank you so much, madam chair. americans continue to feel the impacts of transportation supply chain disruptions, unfortunately, these bottle necks show no signs of letting up with freight congestion expected throughout the year of 2022, and lit me note, madam chair, only 100 senators, members of this committee have had to scatter for any number of important meetings but that does not take away from the fact that this is a vitally important subject today. we've seen the images of dozens of ships waiting to unload, but the lack of port terminal and warehouse space, limitations on equipment and work force disruptions are just as

consequential but less visible, all this makes it harder for railroads and truckers to move containers, on top of this, vaccine mandates on borders inhibiting the transportation of goods, it would be impossible to cover the spot chain challenges in one sitting but i appreciate today's targeted hearing on ocean shipping reform act, and other relevant measures. i hope the committee's next step is a mark-up on supply chain legislation. i, alone with others, have bills that would help ease the movement of goods. i also want to reiterate my call for additional hearings with witnesses from the administration and landside transportation operators. unfortunately, the administration's pro importanted solutions have little impact, despite the administration's announcement in october of around-the-clock staffing at the porlts of los angeles and long beach, these ports are still not

open 24/7, terminals fragmented with 24 hour operations, as of last week were 74 ships awaiting at the ports of los angeles and long beach. during a state of the union address, president tried to distract and shift blame by saying the ocean carriers are the reasons for the supply chain crisis, get into that today. rather than trying to address the bottle necks in a way that will help american agricultural shippers, retailers and businesses, president appears more interested in finding someone to blame rather than finding solutions. administration has also been pushing contradictory policy. on the one hand, the administration wants to stop unreasonable detention and diverge these, which i agree, on

the other hand, administration tout reports on high fees by the ports and long beach, these are just by another name. further, i've been disappointed by the administration's resistance to modernizing port and freight operations, automated terminals and trucks would improve efficiency and transparency. i welcomed the president's signature on the bipartisan infrastructure bill which includes much needed investments in traditional infrastructure, such as the port infrastructure development program. this program, which i authored in 2018, provides funding to improve the safety, efficiency and reliability of goods, movement and port facilities. i introduce the freight act, with senators young, blackwell, sullivan, this would streamline the licensing process for truck

drivers, reduce unneeded conduct and provide oversight for shipping operations, senator blackburn has legislation to provide in memphis as a hub for marine containers and memphis needs to operate more efficiency. i want to applaud senators clobeshar and thune for introducing the ocean shipping reform act. american importers and exporters expect fair and transparent rules. this bill would take step to see eliminate harmful practices within the shipping industry. many of the solutions to our supply chain crisis should come from the private sector. and congress should avoid new federal regulation or legislation which might undermine the fluidity of the freight system. i thank chair, daniel mafey and

rebecca, for being here today. i look forward to the chanceto hear the commissioner's options for tools, my friend senator thune has worked on the reform act. do you have opening statement? madam chair, i request, the indulgence of the committee -- >> okay, senator thune. >> thank you, madam chair and senator wicker. and thanks to chairman lafey and commissioner dye being here today. supply chains continue under unprecedented strain with americans encountering empty store shelves, long wait times for goods, i've seen poor congestion continues to worsen.

i continue to hear from agricultural producers in south dakota and across the country especially feeling the crunch with capacity for their goods reduced with surging demand for container rates, high shipping and consistent backlog at our nation's ports, particularly la/long beach, despite agricultural exports this deficiency has effects on farmers and ranchers across the country including south dakota, that's why senator clobechar and i introduced the act in late february, despite legislation cosponsored by 24 senators and over 100 organizations, takes significant steps to clarify federal maritime commission authority on unreasonable or anticompetitive behavior while also providing the commission with new tools to more quickly resolve disputes, particularly over detention and demerged charged and madam chair, ask consent for the letters from the american trucker associations

and national association of state department of agriculture be entered into the hearing record. >> without objection. >> i believe these changes will improve transparency, through the resolution process will benefit shippers, especially small businesses who currently find the process frustrating, bill will not fix supply chain problems overnight but will result in long term positive changes to maritime supply chain which i hope will benefit exporters and importers and consumers alike. our nation's ports in desperate need of two things, modernization and transparency. failure to invest in our ports compounds the problems today of united states well the global average in vessel wait times.

that's why i'm also proud to be a sponsor of senator wicker's freight act which takes action to improve the movement of freight across the supply chain. in light of this crisis, i appreciate the commission's on going initiatives to alleviate supply chain problems and address reports of anticompetitive behavior including those raised in my 2021 letter with senator clobuchar, both fay and senator dye have efforts, investigations such as fact finder 29 and even an issue of advanced notice on demerged billing practices. so madam chair, i look forward to today's discussion on the ocean shipping reform act, and the commission's current actions to address challenges at our nation's ports. thank you. >> thank you, senator clobuchar, thank you for introducing this legislation and look forward to your comments today. >> thank you very much, chair cantwell and thank you to our

two witnesses, i was moouzed as you came in and saw 25 senators sitting here thought it would be a different hearing but there was a mark-up and all is good. i also thank my colleague, senator thune, we work well together on many issues in minnesota and south dakota and this is certainly a very important one. as has been pointed out now by my colleagues, the past two years have highlighted significant supply chain disruptions and vulnerabilities for u.s. exporters, including many in my home state, whether it is a soy bean farmer in minnesota or as pointed out by the chair woman, a citrus producer in florida, whether it is a beet producer in south dakota or dairy farmer in wisconsin, people felt this in a big, big way. now it also ends up in the grocery store when people are trying to buy milk and see a

price or when people are trying to buy eggs or beef, we have seen this across the board. so while we've seen consumers and the producers of the goods socked by this, what do we see on the shipping side? it's estimated the shipping container industry made a record 190 billion profit in 2021, a seven-fold increase from the previous year. this isn't because of increased performance, we know that because we heard all these complaints of our peoples' stuff not getting shipped. they are simply policing consumers and exporters because they know they can get away with it. the cost of shipping containers has quadrupled, u.s. exporters also slapped with illlegitimate fees, this has hit exporters and agriculture hard, demanding they pay these fees with little

explanation or opportunity for appeal. they carry so much market power, some fear retaliation for speaking out. in fact, one of the examples i'm going to use today was someone who didn't want to be identified, a company, because they were very afraid there would be retaliation. that's what happens when you have a concentrated market in this case, just a few major alliances of shippers, foreign based, leaving our people here at home often with little choice in terms of shipping their in exorbitant ways to do it. we can't let ocean carriers slow down our supply chain while shaking down exporters for their own profit. that's why senator thune and i introduced bipartisan solution, ocean shipping reform act which he has discussed. it clearly makes it better by protecting american farmers and manufacturers, making it easy for them to ship, limiting

foreign carriers ability to impose added fees. i was pleased that president biden raised this issue in the state of the union and our bill aims to level the playing field by updating federal representationulations for the global shipping industry, pleased to have the maritime industry representatives here, have the facts on the ground and are pleased to work with them in the past, and into the future. so what our bill does is direct the fmc, federal maritime commission, for those not up on the latest acronym to issue a rule prohibiting international ocean carriers to decline shipping opportunities for u.s. exports making it unfairly for them to leave our products behind in favor of importing products from, say, china. it also gives the fmc authority to investigate more bad practices by ocean carriers and

set new rules for what the international carrier companies can recently charge exporters. senator thune and i worked on this and our staffs did, i want to thank my staff particularly over a period of months because we wanted to make sure nothing we put in the bill would have unforeseen consequences and that it would provide some flexibility for the commission. as he noted, we have a bipartisan group of 24 cosponsors including nine other members of this committee, in addition to the letters senator thune put on the record, i would enter two in support of our bill, first an endorsement letter from coalition of 89 trade associations, that include the american trucking association, the agriculture transportation coalition, the national retail federation, and the consumer technology association. the second letter is from the american soy bean association, expressing support for our senate bill. our bill is also endorsed by the

american association of port authorities along with over 100 other groups, by the way that was one of my first questions when we started working on this given that i have, you may not know this, madam chair, the port of deluth, twin ports that the president just visited yesterday, very timely. and i wanted to make sure and your senator baldwin also there on that visit where it was rather freezing cold as we stood outside at the port. and the point of it is that it is really good that we also have the support of the port associations. so we're excited about this bill, excited to hear from you today, thank you madam chair. >> thank you, senator klobuchar and again, welcome to the commissioners for the federal maritime commission, we'll start with you chairman mavay, thank you. >> thank you very much madam chair, i used to represent the port of oswego, new york, if you want to talk about cold great

lakes ports. i represent that. thank you, members of the committee, i am pleased to appear today especially with my colleague rebecca dye to discuss the legislative proposals, the cargos spurred by covid-19 pandemic led to reduced reliability, higher cost and port congestion not just in the united states but around the world, pictures of lines of hulking container ships, and stacked with containers drawing attention but can be somewhat misleading because what you see in america's ports is largely a manifestation of inland problems, such as inadequate cargo, shortages of warehouse workers, and truckers, in fact, america's ports handled safely and efficiently millions more containers than ever before in u.s. history. the record numbers of through-put are attributed to the companies and workers who never stopped even in the worst days of covid, but even with increased productivity at our

ports, the demand over run the capacity and freight rates gone up dramatically. unfortunately, biggest increases are hitting smaller and medium sized shippers and farmer who did a do not have the shipping resources as the biggest retailers have, and the situation does defy easy answers. federal maritime commission responded to the supply chain challenge as aggressive, creatively and comprehensively as we can, as someone mentioned already, intensified enforcement, paying particularly attention to the ocean carriers, challenged the fees and surcharge some carriers slap on top of already high rates, provided guidance to shippers on bringing complaints to the fmc, implemented a program to audit the nine largest carrier lines and continue to work for compliance on our rule of attention demerge. personally, my highest priority is to promote access to export markets for u.s. producers including farmers. the supply chain situation is

especially difficult for agricultural exporters put at the greatest disadvantage and the unpredictability of when ships come into ports are be ready to take on export boxes. as part of fact finding 29, commissioner dye done tremendous work with stake holders to get more box on ships, i leave it to her for recommendations but the know i fully support them. one earlier was the ocean industry, as an export advocate in the affairs bureau, also announcing fmc's audit team will expand scope to get carriers and how to do better and bureau of enforcement especially prioritizing any case involving exporters. i sincerely believe we are now pushing up to the limits of our authority under the shipping laws. since the enactment of those laws, ocean shipping of 1998,

global container trade risen exponentially. over years, consolidation means there are less than half of major competitors and as some of you point the out, not one of the major ones is based in the united states. in my view, the laws governing container shipping need updates even before covid triggered this demand surge. that's why i'm so grateful to senators klobuchar and thune, and chair cantwell and wicker for holding this hearing, providing new methods and better protection from unfair price increases. now while we can do better will making and have done some, updating the statute would remove any ambiguity on congress's matters such as attention demerge, and to be clear, as senator klobuchar states, any law should reduce needless new compliance costs,

it should be a balanced approach, applicable both now and in the future when we do eventually get past the supply chain disruptions we face today and freight rates come down again. thank you for your attention and i look forward to answering your questions. >> thank you, chairman mafae, ms. dye, welcome, thank you for being here. >> thank you. >> could you pull the microphone a little closer? >> better? chair cantwell, ranking member wicker and members of the committee, thank you for the ability to appear here today with my colleague, chairman mavae and i second his remarks. also, thank you for your strong support for the legislation establishish the first federal maritime commission shipper advisory committee, they're hard at work.

we had a great turnout for our appointments. that finding 29 is the fourth major investigation conducted for the federal maritime commission. following is a brief explanation of relevant issues and observations you may wish to consider. demerge and detention enforcement is on everyone's mind. united states is the first nation in the world to take steps to confine these charges to the purpose for which they are intended, to incentivize shippers to pick up cargo and return equipment during allotted time periods. but in the interpreted rule, we shifted the risk for demerge and detention where it belongs. for problems in the port, especially port congestion, ocean carriers and marine terminals and ports should bear the risk of those charges.

a massive misunderstanding surrounds the nature of the interpretive rule. the rule is not mere guidance. the rule provides that interpretation of demerge and detention charges as unreasonable practices under the section of the shipping act that requires carriers, ports and terminals and intermediaries to have reasonable practices. today, we're actively investigating potential violations and resolving file complaints, concerning demerge and detention, unreasonable practices. of course, whether it's through filing a complaint or giving notice to the commission's bureau of enforcement, we need facts from shippers to pursue demerge and detention violations and i can assure the committee that if any of my colleagues

heard even any indication of retaliation, we would act, and we appreciate your strengthening those retaliation provisions in legislation. commission recently, went forward on my last fact finding 29 recommendation by publishing advanced notice of proposed rule-making to respond to shipper concerns regarding demerge and detention billing problems. the commission's also cooperated with the port of los angeles, the six week experiment, to determine the information contained in their port optimizer, whether or not it would be useful to our enforcement actions on demerge and detention. the ultimate goal on these efforts, of course, is to require ocean carriers to change their billing systems and avoid billing shippers for unreasonable demerge and detention charges in the first place. for some time, i've been

concerned that monday service contracts for carriage of cargo in between shippers and ocean carriers lack mutual commitment. this ambiguity about mutual enforceability in these so-called contracts may cause severe consequences to shippers, especially exporters during times of high demand for cargo space, because they are not protected with binding contracts or the space they need. i do not recommend that the commission regulate service contracts, but i do support the commission's providing greater information to shippers on the value of mutual commitment and contracting. and also, the availability of shippers associations to leverage volume for freight charges and service contracts. shippers' associations with useful in other areas of imports

and i believe they can be extremely useful especially to our medium and small exporters to band together to get good deals and commitment from ocean carriers. i will continue to work with our stakeholders and fmc supply chain innovations teams as we work to bring 29 to a close. i promised my colleagues i would continue this effort as long as the pandemic continues, and now we all hope and pray we're moving out of this, and we are bringing this, this investigation to a close, moving on to our next phase. of course, the commission will continue to focus enforcement resources on run reasonable demerge and detention, and have several interim, final

recommendations that i included in my written statement. one of those is beginning a new outreach program to begin guidance on maritime terminology a very important call on emmersion college, what i do is work on problems in the supply chain and work diligently to fix those. one extremely important to exporters is a program i started years ago that they found was very responsive to their problems called rapid response program. all of the ceos of carriers, usa, promised and have promised me personally, again, to respond by picking up the phone if our head of consumer affairs calls us and says we have an emergency

right now and you need to respond. and of course, you can imagine, if the ceo makes a call, the problem gets fixed. and we're, we're starting that again, and like my colleague we are doing this and other things and pleased to hear from you today and continue to work with you to improve the shipping environment for american exporters. i appreciate it, thank you. >> thank you commissioner dye, i want to start with senator klobuchar then to senator fisher. >> thank you, madam chair, for allowing me to do that. i know you know a little bit about shipping being the chair of the community as well as from the great city of seattle. so i'll start with you chairman mafay. we all talked about how much

more expensive it has gotten for consumers as well as for manufacturers and those farmers and ranches and know agg exports sitting in ports while ocean carriers returning to asia with empty containers. mr. mafay you note this legislation would protect shippers from unfair practices, do you agree we need to make it harder for ocean carriers to decline shipping opportunities? >> i do, i do, it could not have been anticipated but even though it's in the purposes section of the shipping act, there are no authorities that really address whether or not ocean carriers are going to take exports or not. there is an unreasonable refusing to deal, but in order to prove that, we have to prove a carrier is both refusing to deal with exporters and that refusing to deal is

unreasonable, so one example, a lot of pop-up carriers showing up. these aren't the biggest ones but are making a lot of money because there's such a demand. these carriers don't take any exports. they just drop it off. but i'm not sure, an individual case is individual situations but if they have no infrastructure at all to deal with exports they could make the argument that that is not unreasonable, so we need some sort of a specific ex- -- >> reason for the bill. okay. chairman maffei -- i'll go to you ms. dye, you heard from one trucking company that was built $100,000 in late fees by an ocean carrier because it took months for them to make an appointment to return their empty container simply because of the over capacity at the terminal, so it wasn't really their fault. do you agree that we need stronger rules on what carriers can reasonably charge shippers? >> i mean what you're talking about there are these fees and

we need to make our rules even more clear, but the commissioner dye is right, that's already illegal and already against our rules. i'm frankly not even sure if that trucking company should have been billed at all so it depends on the case. >> okay, ms. dye i highlight the work you've already begun. what challenges do you face when looking to update the current billing system. >> well, i think that first of all, we have to agree on particular places in the supply chain. charges should be interrupted, for example, i'm working for exporters on a terrible problem with what they call earliest return date when you ingate with exports to be loaded on the ship. and we're also going to start an advance notice on that particular service, because it's

out of hand. but there was a point at which many exporters were charged for storage, for sitting on dock. the ship hadn't even arrived. and we talked directly with the ocean carriers and they said we never charged that, so don't send a bill. right? >> exactly. i want to get to one other last thing in my remaining minute. number of colleagues here. do -- i'll ask you first, chairman maffei, do you agree there should be stronger regulations that protect against retaliation from ocean carriers? >> yes, and i certainly support the provision in both your bill and mr. senator wicker's bill. >> very good. ms. dye? >> yes. >> very good. guess i have one more question here. can you speak to the investments in our infrastructure? and this is the bipartisan infrastructure bill, number of

senators, also supported this, how this could help at the ports? >> it's like water on a dry desert. i just came from la, there less than 48 hours ago. the ports, they need more, you know, and they can quibble about the number but finally feel they've been recognized, finally feel a line item specifically for them and it will do tremendous good. unfortunately that's not overnight, it takes a while to build out these facilities and particularly the rail and inyard things you need. >> very good. one thing i want to point out as chair of antitrust subcommittee, and i'll have you just maybe talk about this at the end when our colleagues are done. >> take as long as you want, senator. >> the top three allowances control 80%, as you know, of foreign shipping of the global container ship capacity and 95% of asia-pacific tradelines. so i think that's an important thing for us to consider.

i have a separate bill on this on the antitrust side, but how would you characterize the fmc's experience in challenging alliance agreements. >> it's been, i mean we've now even tried and that goes for many, many many years, different chairman, different general councils. i think it is an, in '86 it made sense, but now that we know how difficult it is. see now the burden of proof now if we challenge the alliances son the commission, on the government employee lawyers, but for me, and, you know, i think my colleague we have a different view but i would put the burden of proof on the carriers and their law firms. >> commissioner. >> thank you madam chairman, thank you both for being here today. chairman maffei and commissioner dye, i've heard from a number of

agricultural exporters that they fear when they file a complaint with the commission. they would see retaliation. you gave a very short answer to senator klobuchar with regards to her bill, but what can the fmc do now to protect those shippers from retaliation when they do file complaints. >> i think commissioner dye already spoke to it which is absolutely anything on that, immediately would rise to top priority of anything we investigate. absolutely would be unforgivable. >> so you would immediately begin an investigation. >> absolutely. and if the merits were there, we would immediately, swloon as we could, have the best case. >> and how many detention and demerge complaints have been filed with the fmc against ocean carriers for any unfair practices since the start of the pandemic? >> well, one way i could answer

that question is not enough, because we've gotten, like you, you know, hundreds and hundreds of complaints where people don't want to put their names on it because they're concerned about one thing or another. in terms of the complaints we've actually gotten where people are willing to file a formal complaint. it is, you know, in over 100, we're trying to investigate every single one of them, we have cases already, specific cases, essentially indictments but of three specific carrier lines and i expect more to come, but there are a number of them, sometimes the facts don't allow it, sometimes the carrier lines are following the letter of the rules but not the spirit, but there are also legitimate cases i believe. >> do you think that something can be changed with the filing process to improve it, so it's not such a long arduous process for -- >> i would love suggestions. you know, we've tried, we have a consumer affairs bureau, beef

ed up that, this export, commissioner dye and i discussed long before that, you know, we're trying to figure out ways to help them file it. i actually think the kinds of coalitions that rebecca dye is talking about, they can help, but that doesn't mean i don't want to do more but any ideas you or your staff or constituents have, i'd be very willing to listen to. >> did you have anything to add on that, commissioner? >> yes, senator, i went with the chairman, we have a complaint process that's sort of like a small claims court. and many of our shippers have had good results with that and i like to see that expanded. and adapted in other ways. and as the chairman says, what you hear will be valuable to us to know. i spend most of my time talking to shippers, but there's always more. so we appreciate it. thank you. >> commissioner, you've made a

significant contribution to the ocean shipping reform act in 1988 and i think you offer a unique perspective. what other tools are at the fmc's disposal to prevent congestion when merge charges fail to influence the shippers to pick up that cargo? >> we have, we have just about reached the limit on our ambitions for a small agency. but we have a lot, so i know the chairman and i have lots of additional thoughts and programs. i prefer outreach. i think that our ocean carriers will say oh, our business is not that complicates, it's terribly complex, it's hard to understand and about podcast for example, ways to talk to our shipping

public and help them through some of these complexities. to their benefit. >> okay. can you explain how peel-off works and what advantages are there to manage containers in this manner? >> yes, ma'am. peel-off is extremely useful, especially to some of the marine terminals in long beach and large shippers just simply consolidate cargo in one area and they take it to a different location for the shipper to pick up, and it's effective. it doesn't work for all of them, as a business model, but it's a good idea. >> in october of 2021, the white house announced that the port of los angeles would expand to a 24 hour operation which would be consistent with port of long

beach. however, the local warehouses don't operate those same hours. mr. chairman, what benefit is there for the ports of long beach and los angeles to have the 24 seven operation, if the dock warehouses don't have the same hours. >> well the answer is you need them both to and there's a chicken and egg problem here. where do you start? you know, because of the warehouses would say why do we open 24 hours if the ports not open? that's why the stakeholders have to work together. this problem isn't solved by fmc or u.s. senate, it's solved by stakeholder and see that's why we focus so much with commissioner dye and her incredible connections to convene and talk with them and call out when we don't think various parties are even willing to discuss stuff. i will say 24/7 is a phrase -- any kind of off-peak ability, anything that gives truckers and

shippers, flexibility doesn't have to be 24/7 maybe but late nights, saturday, sunday, whatever works. it shouldn't be dictated before hand, but we need everybody to sort of jump at once so your point is well-taken. >> thank you, both, thank you madam chair. >> senator baldwin. >> thank you, madam chair. chairman maffei, good to see you again. i understand that you will be in milwaukee tomorrow. >> i will be. >> and so i really wanted to just -- >> it's not cold enough here, ma'am. [ laughter ] >> well it's warmer -- milwaukee for wisconsin is down south. >> i know, i apologize, of course. >> and we had a very chilly but warm experience in northern wisconsin. >> talking to the soy growers and -- >> yeah, so i just wanted to express my appreciation for speaking directly with growers and agricultural shippers across

the midwest on solutions to challenges in our global supply chain. the agriculture industry is really bearing the brunt of supply chain disruptions and dairy farmers and other agriculture exporters in my state are looking for immediate and long-term solutions for these issues. so it's why i'm a cosponsor of the klobuchar-thune legislation and want to appreciate your visit to wisconsin. >> thank you -- the four of us, we travel a lot. covid made that difficult so we had to travel virtually but one of our key components is getting out. one of the things we appreciate is our independence and having five of us, frankly, is very helpful for doing that so i appreciate it and i know we served one term together when i was very junior and you were of course very senior, but my family's background, my grandmother grew up on a dairy

in up state new york, we don't do dairy anymore for the reasons you might guess. >> well thank you, commissioner dye, in testimony before the marine subcommittee, maritime subcommittee last summer, you noted that improving the chassie critical as trade volumes recovered from the pandemic. wisconsin is home to one of the largest momentum manufacturers of chassis, are trailers. so just so happened that i visited that facility last week to discuss my supply chain resiliency act which provides companies federal support to expand production and meet demand for critical supply chain products like chassises. i would like you to talk about strengthening our industrial base for critical supply chain products like chassises and

containers and in your view has that helped the u.s. -- would that help the u.s. supply chain better manage the covid-19 pandemic? what sort of threats do you see out there and opportunities? >> i understand, senator, and i agree about chassis supply in particular. also chassis provisioning is a problem. and it's a huge challenge for the country. i have worked particularly with innovation team in memphis, tennessee, as senator wicker mentioned. but i would be delighted to talk to you or accompany -- i'd be very interested to see what they do and get their perspective. i'd appreciate it. >> yeah. and i know just as an aside that

there has been dumping of product -- >> a trade commission issue. >> yes, indeed. >> yes. >> and the trade commission has acknowledged that that is a problem and a challenge. but they are persevering. we've heard stories time and time about the empty containers departing our coast and leaving made in america products behind. as much as 70% of containers from major west coast -- west coast u.s. ports are being shipped empty. and that deprives american agricultural exporters of this important means of transportation. so two-part question. first, in the short-term what steps are being taken to address the empty containers issue? and second, does the fmc have the authority to regulate a

reasonable availability of containers for exporters? and if not, should we address this in legislation? >> yes. thank you for the question, senator. it's a little bit more complicated than that. it isn't exactly a shortage much containers, if you look at all the containers. we have too many containers in some places. what it is is the shortage of containers, particularly most used by agriculture and shortage of containers in those places. they are in the wrong place. they are sitting in a port or a city as opposed to getting out to the countryside. i'll answer your second question completely, but the first answer, you know, i want -- i would like commissioner dye to speak to, too, because part of what we are doing on the front lines and what i'm doing in talking to wisconsin is trying to figure out exactly how farmers get their containers now and how west we can help. in terms of -- we have no

specific authority on containers. obviously, equipment, you know, there are some provisions in the current shipping acts if, you know, if equipment was lent out and that's where we'd get, you know, d and d charges and other kinds of things. in terms of directly, there is no provision that says we can tell the carriers or the mtos that they have to provide containatories a certain place. i will be con exist with you. people talk about prices. certainly export prices are a problem. but the price -- those prices will come down again. they may even go back to normal. the problem that will persist is the logistical challenges in the exporters face. it's not about the number of containers, it's the quality, getting the right container, getting it in the right place and to the ship in the -- at the right time when it can take it. if you get it too earlier stuff will rot. if get it late it will rot and

not get on the ship. it's those logistical challenges we need to focus on. >> thank you, madam chair. >> i really don't know where to start. all i know is -- are the is ships lined up outside the harbors? >> no. there are still lines. for environmental reasons the lines have moved further out to sea. and there are some smart people putting together things to -- if they are not actual lines, they are virtual lines. >> then we have the fact as was pointed out a lot of ag products. milk has been hit exceptionally hard. that we can't get off our shores? so -- and then just correct me if i'm wrong on this, pre-pandemic a container 40-foot

container was about 1,300 bucks. now it's 11,000? >> it is so dependent. unfortunately, it's not transparent -- if you heard different statistics it doesn't mean people are -- it means they are locking at different things. >> why ain't it transparent? one of the reasons is market power. we get a lot of stuff reported to us about contracts but we are not allowed to share that with the public. it's proprietary information, sir. >> i know how much bnf -- the rails charge. what's the difference? >> the difference is in the governing laws, sir. i mean, but -- but -- >> my take is there is nothing wrong with transparency at any level of government, including that one. >> both my fellow commissioner and i are huge advocates of transparency. to answer your question about the rates, they have gone

dramatically but more for larger shippers because of the market power the larger shippers have and because in a market where you have this scarcity, there is actually more capacity but so much demand, the big shipping companies are worried about their biggest customers. >> gotcha. so as senator klobuchar said, three carriers control 80% of the freight? >> three alliances of carriers. >> there a difference between what i said and the truth other than alliance -- >> there is. the carriers that are part of an alliance are not allowed to discuss prices with each other. if they do, they are violating the united states antitrust laws. they have no immunity regarding discussing rates. they can -- >> and who -- does the department of justice have oversight? >> i would say shared oversight. certainly they can look into it just as the fmc can. >> how do you get information from shippers? do you have subpoena authority?

>> we do have subpoena authority. from shippers, i mean, you mean from the big carriers, the ones that carry the stuff or the actual -- >> i will tell you if there is one thing that really boils me is the fact that you have shippers that are screwing the little guy. >> right, right. >> how do you get that information? we have very broad capacity to request information and they have to provide it as we've already discussed. it is proprietary, so that creates an issue with -- you know, we can't publicize it. >> do you -- >> but we have it and we asked for much, much more since the crisis began. >> i think it's fundamentally wrong to beat up small business in this country because it's small businesses, they are the smaller shippers. i think it's fundamentally wrong to beat up production agriculture. but that's just my opinion. so is there -- so you got ships

that come into our ports that trump off a lot of goods because the trade difference is still big and then they leave the ports and don't take anything on it, on their ship going back. obviously, they are doing that because they can make more money? >> yes. they argue -- because i share with you what you just said and i think it's fundamentally wrong to victimize small businesses from farmers. they will make the argument or analysts make the argument that it costs so much -- that the rate they make is so much more for an import in this time of -- >> yeah, because we -- we allow them to charge us more because we're the united states of america. this reminds me of prescription drugs. they allow us to charge more and so they are going to screw us, not taking our products out? and nobody watching the shop here?

>> we are watching. if i -- >> but you don't have the authority -- >> let me -- i do want to clarify one thing though because, you know -- i apologize, but somehow intercepted the other day as saying that the fmc found no collusion. that is false. that is a false statement. and when what i will say is we are looking at all of these reports and any sort of wrongdoing, anything against the shipping act we find we are ready to investigate. we may already be investigating. i can't speak of particular cases. that goes to the alliances and the individual carriers to the full extent of the law if the evidence is there. >> my time is way, way over. i'm going to tell you that it doesn't make any sense that we're low ships to leave our ports empty. i don't think there is anybody in this country that would say if we have stuff to ship out, we should allow ships to do that. if the big guys are more

powerful than the united states, then we ought to figure out something else because it sounds like they do what they want whenever they want with damn little transparency, charge whatever they want, don't let that information get out to the public so they know how bad they are getting taken to the cleaners and we don't have the tools to deal with that. this is a hell of a problem. you know, the senate doesn't fix much, but, man, if we can fix this, this would be a giant step forward. >> one of the things the legislation is we would collect and be able to report to the public aggregate numbers on exports at least the public would know who the good guys are and who the bad guys are. >> i apologize, madam chair. in the end why can't we export our products when china can import? why can't we export? what is going on? and somebody needs to get out a big baseball bat and educate some folks.

>> we'll be talking in the future, senator. >> thank you, senator. senator, i'm going to follow up on your line of questioning because i wholeheartedly agree with you. and as somebody who spent time at ferk we need these agencies to be more robust.c we need the to be more robust. i saw senator young remotely. if he is not available, we will go to senator lee. senator lee. >> thank you, madam chair. chairman maffei, the soaring rates that we are experiencing with our -- in this area, are they tied to supply and demand

constraints? in other words, is there any evidence of this resulting from an artificial constraint of cargo supply? >> there is -- it's primarily due to the huge demand in the wake of covid that has hit the country. we, of course, have examined and will continue to examine whether there is any artificial lowering of supply. so far we have actually found a fair amount of increase of supply. some of the carriers have ordered more ships. there have been a number -- and basically only more than 99% of what can go on the ocean is on the to ocean. >> right. so, in other words, carriers have increased capacity. they have added capacity in response to increased demand since covid, right? >> yes. >> and if there are anti-competitive practices occurring, does the fmc have the

authority under existing law to take legal action? >> we do. i would say the burden -- the legal burdens are rather high in a technical sense, but we certainly have the authority and we will use it whether or not you pass legislation if we have the -- if the merits of the cases allow it. >> right, right. because, i mean, the reason i ask is because i hate to see these things happening. it's hard for all americans to deal with the outgrowth of this. we have serious supply and demand challenges with our supply chain network. and i hate seeing these rate and fee increases as a result of it. it's hurting everything. i also want to make sure that we're throwing the right resources in the right way. and i appreciated the statement you made in a bloomberg article from a couple of days ago about 48 hours ago when you said, the

ocean carriers on the whole are in fact moving many more containers than pre-pandemic and the ports are by and large doing their job. >> yeah, that is on the import side, but, yes, that's absolutely true. >> right. >> they are moving more than they had before. >> now, so when covid-19 began we started seeing e-commerce sales hitting an unprecedented rate. and that complicated -- it frustrated or at least complicated the supply chain infrastructure and the work force. some of these challenges were spread out over a pretty broad spectrum, but included things like truck driver shortages, outdated scheduling technology, port concentration, lack of storage for containers, port labor difficulties and scarce

equipment, including truck chassises. now, the ocean shipping reform act, or osra, which we're considering today, is something that's being presented as a way to address these issues. can you help me understand how exactly would this bill address the supply chain challenges that i just mentioned? does it address those? does it address the lack of container storage, equipment storage, et cetera? >> it certainly gives the commission a lot more leverage in dealing with all of these issues in convening groups as has been pointed out, and actually if you have time, i'd yield to commission dye on the specific equipment pieces. but the solution isn't going to come from the government, but we can be a catalyst to working out solutions among the various

stakeholders. a lot tv these issues -- you're quite right. they are quite complicated to solve them. will be done by that. >> right. and i'm almost out of time. i appreciate you asking that, raising that issue, because i want to make sure we do no harm first. and because i don't see anything in this bill that addresses those issues, my instinct to first do no harm kicks in because i realize increased government involvement can often make things more difficult, they can often slow things down. now, section 5 of os ra prohibits a carrier from retaliating against a shipper by threatening to refuse space accommodations for any reason. seems the goal of these changes is to respond to the controversy that carriers are taking empty containers and not exports back to asia to bring more imports back to the united states.

now, my understanding is that our supply chain crisis and some of the things we have had a significant problem with, even these empty containers, these are all creating a serious backlog. but but if these provisions were passed, could it -- could they end up slowing down the ability to move empty containers out of the port and exacerbate our current backlogs? it's my assessment that they would have that effect. how am i wrong in thinking that? >> obviously, there is -- they would have to be administered, you know. i think if we took two heavy a hand in administering -- let me say this. there are some who advocate an export quota. this ship has to take this number of exports specifically. that may sound good to a lot of us, including myself, on the

surface, but that could lead to what you are worried about because at the lines would -- if they feel that's not in their own business interest, they might avoid exports all together. they wouldn't stop at oakland, wouldn't stop in houston. if we close that loophole, they may not service the united states as much or put more on the importer costs. you are right to be worried about that. i feel the bill gives us the flexibility that we need without going too far. but that is my own personal opinion. >> this is exactly my concern and you have reiterated it perfectly. this is why i introduced legislation called the stop the grinch act, which i will be reintroducing shortly with some updates to it. that would address some of the real challenges that we are facing. this bill with would not. and this bill threatens to make many of those problems worse. thank you. >> senator warnock. >> thank you so very much, chair cantwell. i hear from georgians about the

rising costs every day and its impact on their lives. part of fighting against rising costs, it seems is cracking down on large corporations. and their wealthy executives taking advantage of market volatility to pad their bottom line and enrich themselves. meanwhile, hard-working americans are making difficult decisions with their pocketbooks. it's really hard to wrap your mind around how much money large ocean carriers are making, the shipping industry has made during this global crisis. the numbers speak for themselves. industrywide quarterfinal profits increased nearly 2,000% since early in the pandemic. and one ocean care your reported

$17 billion in profits for a single quarter. last year. so consumers are seeing record prices, corporate entities in this case large ocean carriers, record profits. and that's why i wrote a letter calling on the white house supply chain disruption task force to investigate what appears to be price-gouging by some of these foreign-based shipping companies raking in record profits. it is also why i am a proud co-sponsor of the bipartisan ocean shipping reform act to hold bad actors in the shipping industry accountable. i think the onus is on those who want to explain 2,000% increase in profit in the pandemic. chairman maffei and commissioner dye, as you observe these record

profits over the last two years, have you seen improved shipping services to account for these kinds of profits? or have shipper complaints increased? >> senator, of course, we don't regulate rates at the federal maritime commission. but there is a difference between a contract rate and what we call a spot rate. and some of these extremes that we have seen have been when spot rates are literally bid up and all of us are horrified by that in particular. but one of the reasons that i emphasize that we need to put more work into letting our exporters understand that a contract for space as well as rate is so valuable to them because it protects them in the few times which we find ourselves in this extreme

demand. so of course you're right. we've all read about those spikes and they are literally incredible, and -- >> but have we seen improved shipping services? that would account for this kind of increase in profits? >> we have not. what i do is not so much look at rates or the things that we can literally not deal with right now. these problems are not new. and no one supply chain actor can fix them alone. and so what we do is get people together in a room and tell them although you can't fix the warehouse, you can't fix every piece, that there are measures that we can do to move forward

for exporters. and we're doing that. it's hard work for everybody, but it's immensely satisfying to help the people, to us they're not only colleagues, but they are friends. so i appreciate your comments. >> thank you so much. chairman maffei? >> i will say that as i said, the commission stands ready to enforce the shipping act. we have been investigating many specific cases. we will continue to do so. those enforcement actions could come at any time and no one is off the hook. in terms of whether the service has gotten better, there is a lot more shipping. there is more shipping, more quantity than ever before. the quality has gone down a lot for a lot of shupers. i wish i had better metrics for you. we get a lot of reports in terms of timely arrivals, in terms of

predictability, in terms of -- basically any measure you could have, it's gotten much worse. to be fair, that's because the entire world has congestion. it's not just -- you can't be just late on those executives. certainly -- >> i don't think anybody is arguing that there is any single reason. >> yes. >> i mean, we are dealing with supply chain disruptions. the question is to what degree are folks exploiting this larger situation. let me ask something else. does the federal maritime commission currently have all the tools it needs from congress to fulfill its mission and ensure competitive and reliable ocean transportation system? >> senator, i'm extremely glad you asked that question. i do not feel we do. we are doing our very, very best with the resources given us. the federal maritime commission is less than 120 employees. we have authorization for more than that and we're hiring. but we are a very small agency

and we certainly could use more resources. the exact amount of resources depends on what you pass, you know, if you are giving us more authority or not, and exactly how quickly, just how feasible it is to hire the people fast enough to ramp up those sorts of decisions. but there is no question we need more resources. many of the members of this committee have already put a lot of work into doing that. so this is a not a, you know, please, please, nobody's paying attention. there is a lot of good efforts to try to do that. i really appreciate you asking that, senator. >> i appreciate your response. >> let me just say, there are cases we could pursue more, we pursue the best we can. cases we could pursue more but we don't -- >> you don't have the tools. which is why i support the bipartisan ocean shipping reform act in an effort to close these gaps and to protect the public from unfair and deceptive practices. thank you so much. >> thank you. senator ma thune. >> thank you, madam chair. commissioner dye, as you know, the bill i introduced with

senator klobuchar code nice fmc's current actions to further define what con opportunities unreasonable detention to merge practices while establishing a separate streamline complaint process to move -- i should say to more efficiently resolve disputes. do you believe that further defining what con opportunities an unreasonable detention will help alleviate some of the confusion surrounding the current process? >> thank you, senator. of course. and will have add, of course, the commission would thankfully enforce any that that is enacted. we are interpreting -- we are enforcing the interpretative rule now. so i wouldn't want anyone to that we are waiting around for new authority. but we'll continue to work with you on those issues and, of course, if there is a

particularity that will help enforcement, of course we'd favor it. >> so let me just ask you a question, and you can both respond t this, too. i want to correct the record on the intent of the openings hipg reform act. our bill is not intended to fix the supply chain crisis overnight. instead, this bill makes improvements and clarifications to fmc's authority that allow it to more easily intervene when truly egregious and anti-competitive behavior is discovered. and i realize fully that the crisis crisis goes well pond the ports and this is bill is one piece of the puzzle. could you comment on how clarifying -- or clarifications, i should say, to fmc's authority will improve the fluidity in

ocean shipping? either of you care to comment on that? >> i think there is a lot of provisions in the bill that would help. certainly provisions on making it clear where the congress stands on detention demerge. make no mistake. the recommendation that came out of the previous fact finding commission that set this rule, it's a very simple rule. if detention to merge fees help move cargo, they are okay. if they don't help move cargo, they are not. i would have thought that was not. i was naive. so we have do more. having congress behind that is very, very important. it also gives us more leverage in many different ways in terms of the burden shifting in detention and demerge. so no longer will a shipper, a small shipper have to take pictures of every lillard thing, you know, here i -- and i am asking people, take a picture of

that sign that says you can't get in the port. no, it will be the carrier that has to prove it's legitimate. that's huge. that's just a couple of examples. >> commissioner dye? >> well, i think that the issue that we talked earlier about for exporters and their problems with paying storage when the ship hasn't even arrived is a very clear example that they shouldn't have to pay. shouldn't get a bill. and there are a few others like that that are more obscure. but i leave it with the chairman. if they are helpful to us, we will be delighted to have the authority. i honestly believe that our outreach with our ocean carriers to help them understand, first of all, that we are determined to enforce the rule. and second of all, to understand this incentive principle that we

use is working. >> i appreciate your recent statement providing further guidance on options for shippers to file complaints. and i don't have a lot of time, but is there anything else you believe the commission could do to improve the transparency and efficiency of the complaint process? >> we have literally revamped our enforcement approach for demerge and detention. we have 35 cases, i think, outstanding demerge and detention. that will proceed to final case law to provide precedence. this is not nearly so fast as any of us wanted. but you should be assured that we are doing everything we can, and i have had personal

conversations with ocean carriers who i believe get it and are going to change. if they don't, the federal maritime commission will be there and we've revised a lot of our rules on ways that they can recover their payments even if we charge these for violations of the law, which is a unique approach to law enforcement. so we're pull out all the stops on this because the world is watching us. i hear from europeans. i hear from our friends in australia who want to follow this approach.

that would be great globally. >> chairman maffei, i understand is the fmc's transportation data initiative has been meeting regularly, most recently this week, to discuss current challenges with maritime data and to suggest improvements. could you provide an update on that initiative and preliminary findings? >> quickly on the last question, we are working on a lot of different ideas. the best ideas don't come from us. they come from the shippers themselves. that's why we got the idea of the export advocate to help individuals navigate. in terms of look, we know that data is going to be a huge part of the future. one of the things we wanted to do is, you know, as i mentioned to senator tester and he wasn't happy about it, the stuff we get to proprietary. just right now there is in standardization. it is a complex issue. i asked one of my colleagues, a

former commerce committee staff person, carl againstle, to look into the issue. some of you know commissioner benzle. he gets into this stuff and he is talking to everybody. i am proud he is having open meetings. anyone can join into these meetings. it's a series of meetings. i can't tell you any conclusions so far. we are looking into it and we hope to be, you know, a bipartisan help to guide all of these data issues because it's certainly a huge component. >> thank you. senator hickenlooper. >> thank you, madam chair. thank both of you for your efforts on this. if you need more metrics, i am sure you have lots of anecdotal, but colorado is awash in anecdotal evidence. kielty is one of our -- it's a boulder-based outdoor equipment company. their shipping containers increased from $1,500 to $2,000

pre-pandemic to $15,000 in 2021. they are a small outdoor toy company. they could suffer $2 million in losses this year, which for them would be catastrophic. typical shipping costs increased what they could ship for $6,000 now suddenly is $30,000. another 99% of 2021 ocean shipments delayed or rebooked for a different time. everyone hundred bookings for shipping were rebooked 17 times in a five-month delay. so chairman maffei, with the skyrocketing costs, how has the export officer of consumer affairs get that information to you about unfair ocean carrier practices without, obviously, fear of retaliation? >> yeah. i mean, the fear of retaliation

we are doing everything about it, and the additional help that the committee would give would be god. i can say anecdotally, i know of some people who did file complaints. they just -- they just where those people this the guts, had their names on them, settled and believe it or not the relationship with the carrier is better. i don't know if -- you know, if the carrier just sort of found religion or whatever it is. but it does happen. each case is different. each case is different. so in some cases, consumer affairs and dispute resolution can solve it. i was a member of congress briefly. i know your governor well. and we used to get cases, you know, what you do? make a call. if you don't get the right answer, pick up the phone, call the executive. i we do that. i do that. commissioner dye does it. every commissioner does that. and we are proud to. so that's sometimes a help.

other times we advise them, do you want to file a complaint? you can file a formal complaint. also the law allows them to file their own case and, frankly, at the moment filing their own case is better because then if they get the damages they get to keep them. your legislation, by the way, would allow us to file a case and be able to revert some of the damages to the aggrieved party. current law doesn't allow that. that's why we try to help each and every case navigate. it will be honest, you know, candid. a lot of folks have a lot of complaints but at the end of the day the thing that they thought the contract said doesn't say it and the contracts are too often written just to protect the carriers and it's like when any of us sign those agreements online. i know every single of this member reads every word of those agreements before clicking yes. you know, some is just that sort of thing. small businesses, who haven't had a look at these contracts for years because before the pandemic there was plenty of

space. the carriers were willing to sell all of it. you know, they never ran out. now that's different. >> right. just looking into the issue, there is not a lack of competition really. there just is a lack of space. that backlog is getting processed. >> one could make the argument that the consolidation of shipping lines through these years -- market power does exist. the primary driver though is this incredible demand. we would not have this crisis today if this weren't this incredible demand. before this demand, there was oversupply. >> which means we should be able to accommodate the bottleneck pretty quickly. miss dye, the u.s. agriculture exports have really been hit hard by the disruptions in the delays and the supply chain. we have a company in colorado which is a multibillion-dollar global dairy distributor based out of denver and they conveyed to us that the shipping costs

for their products has increased 57% since the beginning of 2021. and shows no sign of stopping. this proposed rulemaking, how well does this reduce the cost of shipping of u.s. agriculture? >> well, that rulemaking that i mentioned was only one of my recommendation. i can assure you we've kept on top of the additional book from the ocean carriers, for example. if there is an overwhelming demand now of supply, what are we doing for the united states to correct that in the future? we don't -- none of us know exactly how long this is going to last. whether or not the demand will continue. but we understand.

this was information that was provided to me that 705 new ships are on order. and a lot of that capacity will be available to the united states. >> and how many ships were decommissioned in the last 18 months? that's -- my understand something they haven't decommissioned suddenly massive numbers of ships. they have got new ships on order, but it seems really to be a backlog, it's a result of backlog. any way, that's what we should be addressing. i think that's what you are addressing. >> absolutely. >> one of the issues, it would seem simple to add more ships. that's one of the reasons we have lines. they end up waiting in the line. you're right. it's not as simple as increasing capacity the overall supply chain capacity. as we have discussed, the chair and the ranking member mentioned there is a lot of these issues in land. that's really where the capacity strain is. >> right. that's why we did the bipartisan

infrastructure bill will address some of those. madam chair, i yield back. >> i don't know, senator klobuchar, if you have more questions. i am going to ask my questions now. i don't know if we have any of our other colleagues joining us online. if not, that will probably wrap this up for this hearing. that's kind of a last call announcement to anybody who might be out there joining us. i wanted to go back, for me in the northwest, this is about agricultural product that needs to get to international markets and it needs to get so in a timely fashion. there is some of these products that are highly perishable. so timing matters. so the way i see this, the reason why you even exist, is because the united states of america set some terms for people to come to our ports and deliver product. is that not right? that's the history of us in our -- >> yes. i mean, i think we've gotten away from that. certainly part of the purposes section. but, you know -- >> so part of what senator

tester was saying is we are letting everybody come here and make big bank, huge increases, longshoremen have increased their productivity, some died even doing it, and yet this issue is they are making bank and leaving our products on the dock. that's exactly what is happening. and you don't seem to have the authority, which i'm going to try to get at here, why you don't have the authority and what we need to do to change it because we are going to pass some legislation here. we are going to fight for these shippers who need to get their product to international markets. and as a very trade-dependent state, i will make this the biggest priority of this committee if it's what it takes. first and foremost, under section 4 # 104 of common carriers, it says any person directly or indrelgtly may not give any undo or unreasonable

preferences or advantage or improperly undo, unreasonable prejudice or disadvantages. and then that's in section -- that's section sub 8 and sub 9 is or give any undue preferences or unreasonable prejudice or disadvantage with respect to any port. so why doesn't that give you enough authority today? what is it about that language that doesn't allow you to say to these major shipping companies who have now basically been even more consolidated. so it's not like somebody says i will deal with the small shippers, take their product and get them to asia. that's not happening. these guys are hurrying back, getting more cargo and jamming them through our ports and leaving our shippers and our products there on the docks to rot. >> well, senator, madam chair, some of it has evolved over years. it has to do with the trade deficits. the carriers make their money on what's called the front haul coming to the united states. >> i know how they are making

money. it's in the paper. it's no "the wall street journal." they are making a lot of money. it's record profits. i am getting at what in the existing authority right there does not allow you to do something about these unreasonable rates? what is it? >> the carriers could defend themselves by saying we are offering space if they want to pay as much as the importer, we will give them space. therefore, we are not discriminating. >> what is the rate increase? over 100%? >> oh, well more than that. mr. hicker looper's people got a deal. >> how do you determine that reasonable? >> i don't believe it is, ma'am. >> okay. so as section 6 g of the shipping act allows -- empowers, the fmc to seek an injunction unlikely to produce an unreasonable increase in transportation costs.

do you agree that that dramatic increase during the pandemic is an unreasonable increase in transportation costs? >> i certainly agree that it's a colossal increase. whether it's unreasonable under the law is a complicated question. we don't have evidence -- well, we are looking into whether we can connect these costs to the alliances or to the individual carriers. either way, it's a huge problem. >> they are unreasonable costs. trust me. they are unreasonable costs and they aren't even able to pay it. so we are giving access to our ports and we basically believe in trade. i come from one of the most trade dependent states in the nation. believe me i probably believe in trade more than 98% in the senate. me and patty murray are like the top two, okay? we believe in it. it can't be a one-way street. we can't have our products left

on the docks. we want to have -- if you don't feel that you can go to court right now on unreasonable rates or you don't feel like the definition is strong enough, listen, i have authored three statutes related to unfair and deceptive practices and manipulation, and believe it or not there is a lot of case law already in these areas. so i do think -- so i really want to to nail down here what is it that -- >> under current -- well, under current law a rate, no matter how high, in itself is not unreasonable. it would be how it was arrived of, alliance, how they got to the rate. >> it's not about alliance. we found in so many aspects of manipulation of oil and natural gas and set new laws because it wasn't about collusion, it wasn't about somebody coming together and setting a price. it's about whether you have a market condition that basically serves the customer and you have small customers here who are not

getting served is the issue. and so -- and they can't get their products out of the ports. importers can't get their products out because they can make more money being exporters to the united states than bringing our product back to asia. >> there is no doubt that your observations are well taken. the last bill was written in 1986. 36 years ago. we didn't have mobile phones. the industry has changed so much. that's why it's so important that we update it. we don't have the authority to regulate rates, say that rate is too high, the authority to say you have to pay attention to small businesses, not just the big box stores. we don't have that authority. sometimes i wish we did. if you give it to me, i will use whatever authorities that the congress sees fit to give us. >> well, we are definitely going to give you new authority of the f. the question is whether we get it absolutely right. we can't afford not to get this right. we can't way ford this to continue this way.

so i will take for the record something more defining on the unreasonable rate. maybe you can go back to -- >> i would be very glad to give you something -- >> counsel at the federal maritime commission. we also sent a new nominee to you and, hopefully, that will be some more expertise at least from the real-life experience -- >> grad to have somebody who worked on the docks themselves. >> yeah, and i think that's good experience. i think we have to crystallize here what exactly are we talking about. to me when i read this authority it seems you should be able to go to court right now on unreasonable increases in transportation costs tcht seems you should be able to do that. but we'll write one for the record that gets you the -- the council gets you the right -- senator klobuchar. >> i have an additional

question. i appreciate senator cantwell and senator thune's questions. one of the things i just want to make clear is that these price increases, the consumers have experienced, are in fact related to the supply chain problems when it comes to shipping. and do you believe they are, mr. maffei? not the only reason, but a reason? >> with that qualification, yes, of course, they are a reason. >> okay. thank you so. so i look forward to moving our bipartisan legislation swiftly. i will note there is another bill that there is been some mention by me and a few others tangential about the antitrust piece of this and that in fact there is immunity right now, correct, mr. maffei? >> there is -- yes, there is limited immunity. as i said, that can be gained by filing with us and letting 45 days pass and we have the burden

of proving to the court that that wasn't be right within 45 days. i personally feel that's almost impossible, impossible standard. and by the way, those immunity never expires, which is something else that i would like to talk to you about, senator. >> okay. that would be very helpful because, of course, have a bill to get rid of the antitrust immunity and with members of the judicial committee for this industry because i just have seen no reason when you have this near monopoly situation when it comes to the alliances that this would remain. >> yeah, there is reasons why you might not agree that there ever should be an antitrust immunity. it depends on the circumstances. if prices stay as high as they are now, one could do that. there is a credible scenario if prices go back down getting rid of the alliances, which again these carriers -- already it's illegal for them to do price,

coclued on prices. it could create more consolidation, brupgss such as the hanjin bankruptcies. >> so what you're saying, in addition to getting rid of the community, you could do something to limit some of the times and the -- >> exactly. the context -- >> be more defined in terms of how you handle the antitrust -- >> precisely, hoping that it will solve things. you know, it would be more complex than that. you are right, senator. there are ways to do it. >> senator, we'd like to talk to you more, to your staff, about how we handle our competition laws because our 6g is modeled against the clayton act, section 7. and so, first of all, we have to show a reduction in competition. >> understand. that's why we are -- >> so we'd love to talk to you -- nobody is immune from competition laws.

>> well, given these prices, you know, given sevenfold increase in profits, something is going wrong here. that's why senator thune and i have this bill to take one approach similar to the house bill. the house bill also includes the antitrust. we have broken it up here. and that's why we're going to get something done here. hopefully, we'll never see anything like this again. but i do want to thank both of you for your hard work. and the work you have done here, it's opened up, i think, a lot of avenues for us here to pursue, and i believe that the maritime commission needs additional tools to do your work in a way that's good for consumers and producers. >> you will get no argument from the chair. >> thank you very much. you guys reduced fees over the -- fines over the last several years, is that correct? like we used to have a heavier stick and --

>> yeah, in fact, fines have gone down. there is some chronic issues with enforcement in my view that i've -- attempting to solve. it's my top priority to get enforcement back op track and i'm proud that we have three cases. you may say, wow, three cases, that's not that much. that's three more in the last decade against ocean carriers. there are some legacy issues we are dealing with together in a bipartisan way. can i say one quick thing? you know, i did -- i served in the house. i actually had the largest apple producing county outside of washington state, senator cantwell, wayne county, new york. there is not a whole lot of opportunities these days to do something bipartisan that's going to help people in farmland and inner cities and this is one of them. so i just -- >> it's why you're here. >> yeah, well, and i just -- i just -- it's a thank you because i -- you i really appreciate it. if i can encourage, you know, no

bill is perfect, but this will sure help. >> no, no, no. we are going to get something that works. it is too important to the growers and trust me not a fan of the trump tariffs. not a fan of the trade wars that got created. these people have taken it on the chin. and so we are not going to create more havoc. we are going to help them and get legislation that does so. with that, unless any of my other colleagues, the record will stay open -- i want to thank senator klobuchar and thune for producing this legislation, i think it's a very important piece of legislation. very important healthy start. as senator klobuchar reminded me, this also is in the house version of the bill that we are trying to work and negotiate out. so i personally would like it if the senate would show some initiative and action on this

legislation to clarify where we are in addition to the house. i think that would be helpful. the hearing record will remain open until march 17, 2022. submit things to the record by march 22. return your responses to the committee as quickly as possible and no later than two weeks after the receipt and that concludes today's hearing. again, thank you to the commission. ]. [background sounds]. [background sounds]. [background sounds].

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