we certainly appreciate it. without the executive session is over. we will now go to the u.s. senate committee on commerce science and transportation full committee on ocean shipping reform act legislation cosponsored by my colleague sutter klobuchar and senator thune. i want to, at the start welcome her to nominees i'm sorry our two commissioners thank god. [laughter] thank you.

our two federal maritime commissioners who are here this morning to join us and testify. we will evaluate bipartisan act which was introduced by my colleagues klobuchar and thune and cosponsored by 24 bipartisan members. during the covid team pandemic consumers spent more on e-commerce goods that are shipped from overseas them from 2019, to 2020 was sought 32% increase in e-commerce spending. from 2020 -- 2020 when we saw another 14% increase. so the arrival of these imports have led to record volumes in 2021 reports of los angeles and long beach move 19 million containers for the i'm 10 million containers for the first time ever. in the state of washington the

northwest east alliance saw 15.4% increase in container volume over the last year. this unprecedented volume continues to cause massive backups of ships offshore and as of yesterday are anchored for loitering waiting to access ports los angeles and long beach. as the economy comes back ocean companies have struggled to keep with the demand and freight costs have soared. the pandemic shipping rates for 40-foot container was about $1300 by 2021 it jumped to $11000. that is a 746% increase in freight costs. this means u.s. consumers are paying higher prices for goods every day. in november of 2021 a united nations report found if container freight rates continued at this pace, through 2023 the cost of importing goods could increase by 11% which

would raise consumer prices again for the committee work tirelessly with numerous provisions with bipartisan infrastructure law and made historic two-point to 5 billion-dollar investment important development for the total bill included 28 billion we also know federal maritime of robust federal maritime sworn in for member today would take another important step by holding this shipping reform act hearing for this bill was significantly strengthen the commission provide tools to crackdown on unfair practices it would direct commissioners these

unfair on the 20 business ports found charges nearly doubled i will have specific questions about the members today about that. as we have heard from her witnesses at a previous hearing that we had on unfair shipping practices shared by our colleagues from michigan, we know these costs are being passed on to the consumers. in addition these unreasonable charges we need to address the complaints that our constituents have that we have heard from many of the important industries across the state of washington. according to the agriculture transportation coalition, impacted farmers include hay and potato farmers from washington bird cotton growers are mississippi, pork from south dakota, paper products in

tennessee, all months from california, derry from wisconsin, poultry from georgia, and from florida. our pride we can make grow the united states of america expected get to its destination in a timely fashion. it is unfair these consumers are being gouged with these high prices and are very important growers cannot get their products to market in a timely fashion. 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 and the ocean shipping reform back to you can use immediately if passed into law that would help you find real solutions. so with that i will turn over to my colleague senator wicker for his opening statement by. >> thank you so much.

with supply chain disruption a portion of these bottlenecks show no signs of letting up with great expected throughout the year. let me just note members of this committee have had to feel scattered any number of important meetings. that does not take away from the fact this is of vital importance subject. we have seen the image of dozens of ships waiting to unload braid the lack of import terminals and warehouse space, limitations are just as consequential but less visible. all of this makes it harder for truckers and railroads to move containers on top of all of this vaccine mandates and or landlords are getting

transportation of goods. in be impossible to cover the challenges and one sitting i appreciate today's targeted hearing on ocean shipping reform act. in other relevant measures. i hope this' next step is a markup on supply chain legislation. i, along with others have a bill would help ease the movement. additional hearings with witnesses from the administration and a land site transportation operators. a portion of the administration reported solutions have had little impact. around-the-clock staffing. at the los angeles and long beach these ports are still not open. in fact one port of los angeles terminal was 24 hour operations. as of last week there 74 ships

awaiting the president tried to distract and shift blame ocean carriers are the issue for supply chain crisis. other than trying to address the bottlenecks in a way that will help americans agricultural shippers, retailers and businesses. the present appears more interested in finding someone to blame rather than to find solutions. i missed ration is also been pushing contradictory policy for the one had the administration want to stop unreasonable attention which i agree with. ruth the administration supports that have been threatened by the ports of los angeles and long beach. these are just fees.

further i've been disappointed by the administrations resistance to modernizing port and operations. automated terminals and transparency. i welcome the president's signature on the bipartisan infrastructure bill. much needed investment in traditional infrastructure such as the infrastructure development program. this worker my offered in 2018 is funding efficiency and reliability of goods movement and porch. last year i introduced the freight act. what centers cap at so young, blackburn, thune and sullivan. this would streamline the licensing process for truck drivers, address unlawful shipping conduct senator blackburn legislation private sector led marine containers

needs to operate more efficiency i want to applaud senator klobuchar and thune for introducing the ocean shipping reform act. american importers fair and transparent rules this would take steps to eliminate harmful practices within that shipping industry. many solutions to our supply chain crisis should come from the private sector. congress should avoid new federal regulation which might undermine the fluidity of the freight system. i want to thank chairman and commissioner rebecca dunn for being here today pray appreciate the chance to hear the commissioners and views on the tools they have to prove the oversight of the shipping industry.

my friend senator thune has worked diligently on ocean shipping reform act. do you have an opening statement? what's madam chair i request an indulgent -- make indulgence of the committee. >> is going to let senator klobuchar. [inaudible] okay senator thune. >> thank you madam chair and thanks to chairman and commissioner for being here today supply chains continue to operate with americans encountering empty store shelves long wait times and rising costs are basic goods. continues to worsen. agricultural producers and across the country who have especially feeling the crunch with capacity for the goods reduced by combination of surging demand note backlog at

the nation's ports particularly l.a. long beach. despite record agricultural exports the inefficiency have downstream effects on commodity prices hurting farmers and ranchers across the country including south dakota. that is why setter klobuchar and i introduced the ocean shipping reform act of 2022 in late february. this bipartisan legislation which was cosponsored by 24 centers in supported 100 organizations take steps to curb unreasonable or anticompetitive behavior also provides a commission with new tools to move to more quickly resolve disputes. particulate or detention charges. unmet and try to ask unanimous consent the support letters the american trucking association and the national association state department of agriculture be entered into the hearing record. >> without objection. >> i believe these changes will provide the commission with clear authority to investigate

and intervene unreasonable practices are discovered. the changes to improve the efficiency and transparency of the complaint dispute resolution process will benefit shippers, especially small businesses who currently find the process frustrating. this bill not fixed supply chain problems overnight but it will result in long-term positive changes to that maritime supply chain which i hope will benefit exporters, importers and consumers alike. beyond reforms of the commissioner nations ports are desperately needed two things. monetization and transparency. failure to invest in terminal automation report efficiency initiatives such as data sharing compounds the problem we are facing today, puts the united states below the global average and vessel wait times. because i'm also proud to be a cosponsor of ranking members freight act which takes strong actions to improve the movement of freight across the supply chain. in light of this crisis, i appreciate the commission's ongoing initiatives to alleviate

supply chain problems and address reports of any competitive behavior included this race and my favorite 2021 letter with senator klobuchar. both chairman and commissioner di have spearheaded efforts to convene stakeholders launch investigation on even issue an advance notice of proposed rulemaking with the practices. set madam chair i look forward to today's discussion on the ocean shipping reform act. and they commission's current actions to address the challenges at our nations ports. thank you. >> thank you setter klobuchar big. >> thank you for introducing this legislation and your comments. >> thank you very much chair cantwell. thank you tore two witnesses. i was amused as you came in and saw 25 senators sitting here you thought this was going to be a very different hearing. there was a markup and all is good. i went to also thank my

colleague, senator thune. we worked well together on many, many issues across the board in minnesota and south dakota 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 disruption vulnerabilities for u.s. exporters including many in my home state. whether it's a soybean farmer of minnesota or pointed out by the chairwoman of citrus producer in florida, whether it's a beefy producer in south dakota or a dairy farmer and wisconsin, people have felt this in a big, big way. doesn't just and there it ends up on the grocery store and people are trying to buy milk or people are trying to buy eggs or beef. we have seen this across the board. so while he it we have seen consumers and the producers of

the goods socked by this, what do we see on the shipping side? it is estimated the container shipping industry made a record 190 billion profit in 2021 sevenfold increase from the previous year. this is not because it increase performance we know that because we have heard all these complaints of our people stuff not getting shipped. they are simply fleecing consumers and exporters because they know they can get away with it. the cost of shipping containers has quadrupled u.s. exporters have also been slapped with unexpected and often illegitimate fees this hit small businesses and agriculture communities hard. carriers demand they pay these extraordinary 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 am going to use today with someone who did not want to be

identified a company they were very afraid there would be retaliation. that is what happens when you have a concentrated market and in this case just a few major alliances foreign based leaving our people here at home often with little choice in terms of shipping their product and exorbitant ways to do it. we can't let ocean carriers slow down our supply chain while they are shaking down her exporters for their own profits. that is why senator thune and i introduced our bipartisan solution. the ocean shipping reform act which he has discussed. it clearly makes it better by protecting american farmers and manufacturers making it easier for them to ship limiting foreign ocean ability to impose added fees i was pleased president biden raised this issue in the state of the union. on our bill aims to level the

playing field for american exporters by updating federal regulations in the global shipping industry we are pleased to have the federal maritime commission witnesses here who have the know-how and the facts on the ground. we have been pleased to work with them in the past and into the future. so, what our bill does is it directs the fm see the federal maritime commission to issue a rule prohibiting international ocean carriers from unreasonably declining shipping opportunities for u.s. exports making it harder for them to unfairly leave our products behind in favor of importing products from state china. it also gives the fmc more authority to investigate bad practices by ocean characters and direct to set new rules for what the international carrier companies cannot reasonably charge exporters and require ocean carriers to certify. senator thune and knight worked on this and our staff did i want to thank for my staff

particularly over a period of months but wanted to make sure nothing be put in the bill would have unforeseen consequences i would provide some flexibility for the commission. as you noted there's 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 like to enter into the record to letters in support of our bill for the first is an endorsement letter by a coalition of 89 trade associations. that includes the american trucking association for the agricultural transportation coalition, the national retail federation and they consumer technology association. the second letters from the american soybean 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 we first started working on this,

given may not know this madam chair the port of duluth the twin ports the president just visited yesterday very timely. and i wanted to make sure and hear senator baldwin who is also on that visit it was rather freezing cold as we stood outside at the port. the point of it is, it is a really good we also have the support of the port association. so we are excited about this bill, excited to hear from you today, thank you madam chair for. >> thank you setter klobuchar. again welcome to the commissioners from the federal maritime commission will start with you chairman mcveigh welcome. >> thank you very much madam chair i used to work at the port in new york pretty soon to talk about cold with great lakes ports. thank you so much cap chair cantwell, ranking member wicker, members of the committee been so honored to appear today with my colleague rebecca died to discuss best legislative proposals to strengthen them.

the dramatic surge spurred reduced reliability higher cost not just in the united states but around the world. pictures of winds to container said the ranking member at mention and credit with high stacks of containers draw the attention they can be somewhat misleading because what you see in america's ports is largely manifestation of inland supply chain problems cargo facilities, shortages of equipment such as containers and shortages of warehouse workers and truckers. in fact america's ports have handled safely and efficiently millions more containers than ever before in u.s. history. the record number are attribute to the port companies and workers who have never stopped even in the worst days of covid. but even with increased productivity reports the ethical demand first-rate service overwhelm the capacity and freight rates have gone up dramatically compared to pre-covered levels. unfortunately the biggest increases are hitting small and medium-sized shippers and farmers who do not have the

shipping volumes the nation's biggest retailers have. and thus select the bargaining power of the ocean carries and terminals for the situation does defy the answers. federal maritime commission has responded to the supply chain as aggressively, creatively and comprehensively as we can sum it mentioned already be of intensified enforcement paying particular attention to the ocean carriers. we have challenge the surcharge they slap on already high freight rates they would increase the alliances provide guidance to shippers and bring complaints of the fmc implement a program to audit the nine largest carrier lines and we continue to work to achieve compliance with our interpretive rule. person my highest priority chairman is for the fmc to promote access to export markets for u.s. producers including farmers pray the supply chain situation is especially difficult for agricultural exporters. who are at the greatest disadvantage due to the scarcity the unpredictability when they come into ports part of fact 29

ways easier to leave it to her to discuss recommendations i fully support them. one recommendation implemented earlier was supporting a veteran of the ocean shipping industry in-house export advocate within the consumer affairs bureau. also him announcing fmc auditing will expand its scope to get information for carriers or handling of exports helps to do better on our bureau of enforcement is especially prioritizing any cases involving exporters part i sincerely believe we are not pushing up to the limits of our authority in the shipping laws. since the enactment of those laws a shipping act of 1984 the ocean shipping reform in 1998 global containerized trade has well exponentially. over the years consolidation of the carrier companies mean there are now less than half of the major competitors. as some of you pointed out, not one of them -- make the major

one is space the united states and leg and the laws governing container ship and updates even before cobra triggered this demand surge. that is why i'm so grateful to centers klobuchar and thune enter chair cantwell and ranking member wicker for holding this hearing the bill we are talking but includes new authorities that would provide the fmc with additional leverage over regulated entities and better protections for unfair and deceptive practices. now all they can do some immediate rulemaking even without enacting new legislation updating or statute, remove any ambiguity about congress priorities on matters such as export issues and ocean shipping contractor form. to be clear, as setter klobuchar stated any minimize unintended consequences such as disruption chain service disruption or needless. i should be a balanced approach now and in the future it when we do eventually get past the supply chain disruptions we face today rates to come down again thank you for your attention and

i look forward to answering your questions very. >> thank you chairman. ms. dyke, welcome thank you for being here. >> thank you very much. >> thank you. >> could you pull the microphone a little closer, thank you. >> is that better? >> yes. chair cantwell, and of course ranking member wicker and members of the committee thank you for the opportunity to appear here today. with my colleague. and i second his remarks. also, thank you for your strong support for the legislation establishing the first federal maritime commission shipper advisory committee hard at work. we had a great turnout of appointments. the fourth major investigation i have conducted for the federal maritime commission.

following a brief explanation of relevant issues and observations you may wish to consider. detention enforcement is on everyone's mind. the 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 an allotted time. but, and the interpretive rule we've shifted the risk where it belongs. for problems in the port, especially port congestion ocean carriers and terminals imports should bear the risk of those charges. i major misunderstanding surrounds the nature of the interpretive rule. the rule is not mere guidance. the rule provides the

interpretation of detention charges as potential unreasonable practices under section of the shipping act that requires carriers ports and terminals and intermediaries that housed reasonable. today were actively investigate potential violations in resolving file complaints concerning attention unreasonable practices. of course whether it is through filing a complaint or giving notice to the commission's bureau of enforcement, we need faxed from shippers to pursue violations i can assure the committee that if any of my colleagues heard any indication of retaliation we would act. we appreciate your strengthening those retaliation revisions and

legislation. commission recently moved forward on my last fact finding nine recommendation by publishing advance notice of proposed rulemaking to respond shipper concerns diverting attention billing problems. they commission also cooperated with the port of los angeles the six week experiment to determine the information contained in the port optimizer whether or not it would be useful to our enforcement actions. the ultimate goal of these efforts of course are to require ocean carriers to change their billing system and avoid billing shipper for on reasonable charges in the first place. for some time i have been concerned of service contracts for carriage of cargo entered into between shippers and ocean carriers lack mutual commitment.

this ambiguity without mutual enforceability in the so-called contracts cause severe consequences to shippers. especially exporters during times of high demand for cargo space. because they are not protected with binding contracts on the space they need. i do not recommend the commission regulates service contracts but i do support the commissions providing greater information 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 are useful and other areas of imports. : : :

>> the commission will continue to focus resources on several interim final recommendations that i've included in my written statement.

it's important and what i do is target particular problems and work diligently to fix those. a program that i started years ago that they found was responsive to their problems called rapid response programs, all the ceos of carriers usa promised and have promised me personally again to respond if the head consumer affairs calls and says we have an emergency right now and you need to respond and of course you could imagine the ceo makes a call and the problem gets fixed. we are starting that again and

like my colleague we are doing this and other things and are pleased to hear from you today and continue to work with you to improve the shipping environment. i appreciate it. >> thank you, commissioner. i'm going to start with commissioner klobuchar and its and go to commissioner fisher. >> thank you madam chair for allowing me to do that. from the great city of seattle i will start with you we all talked about how extensive it'ss gotten for consumers and manufacturers and for those farmers and ranchers and we also know they've been sitting in

imports while ocean carriers returning to asia with mg comes handers. your testimony you note that this legislation would help protect from unfair or deceptive practices. do you agree we need to make it hard to unreasonably decline the shipping opportunities? >> i do. i think one of the things could not have been anticipated but there is not even though it is in the purpose section there are no authorities that address whether or not ocean carriers can take experts or not. there is an unreasonable refusal to deal but in order to prove that we have to prove the carrier is refusing to deal with exporters so one example, there's a lot of pop up carriers showing up making a lot of money because there's such a demand. they don't take any exports they just drop it off but i'm not

sure the individual cases and situations if they have no infrastructure at all to deal with exports they could make the argument that is not reasonable so we need some sort of a time specific. >> i heard from one company that was build 100,000 because it took months for them to make an appointment to return the container simply because of the overcapacity so it wasn't really their fault. do you agree we need a stronger rules on what the carriers can reasonably charge? >> when you're talking about these fees and we need to make the world even more clear about the commissioner is right that is already illegal and against the rules. i'm not sure that should have been billed at all.

the work you've already begun what challenges do you face when looking to update the current system? >> i think first of all we have to agree on particular places in the supply chain. for example i am working for exporters on a problem when with your exports on the ship and we are also going to start an advanced notice on that particular service because it's out of hand. but there is a point at which many exporters charge for

storage. the ship hadn't even arrived so directly we never charged that. >> i want to get to one other thing in my remaining minute. do you agree there should be stronger regulations protecting against retaliation? >> i certainly support the provision both in your bill and the senator's bill. >> one more question here can you speak to the investments in the infrastructure and this is the bipartisan infrastructure bill supporting how this could add at the ports. >> it's like water on a dry desert. i just came from the la 48 hours

ago. they need more and they can scribble about the number but finally they recognized and feel there's a line item specifically that will do tremendous good. that takes a while to build out these facilities and particularly -- >> one thing i want to point out as the chair of the antitrust committee, and we talked about this at the end it could be like 95% of the trade lines for us to consider a separate bill on the antitrust side but how would you characterize the challenging alliance agreement?

>> that goes for general councils. in 86 it made sense. but now that we know how difficult it is you see the burden of proof right now it's on the government employee lawyers. for me, i think my colleague may have a different view but i would put the burden of proof as you say they are very expensive law firms. >> chair man and commissioner. when they filed a complaint they would see retaliation and you gave a short answer to senator

klobuchar with regards to your bill. but what can the fmc do to protect the shippers from retaliation? >> anything to investigate would be unforgivable. >> you would immediately begin the investigation. >> if the merits were there, we would immediately as soon we could with the best case. >> and how many detention complaints have been filed with of the fmc against ocean carriers for any unfair practices since the start of the pandemic? >> like you, we've got hundreds of complaints where people don't want to put their name on it. in terms of the complaint that

we've gotten where people are really filed on the complaint we have three cases already, specific cases and i expect more to come, but there are a number of them following but there are also legitimate cases. >> can something be changed in the filing process to improve it so it isn't such an arduous process? >> we have a consumer affairs bureau as the commissioner and i discussed long before that we are trying to figure out ways. i think the kind of coalitions

can help but it doesn't mean i don't want to do more. any ideas you or your staff were constituents have. >> did you have anything to add to that? >> we have a complaint process and many have had good results with that and i would like for you to expanded. what you hear will be valuable to us. i spend most my time talking to shippers. >> commissioner, you've made a significant contribution to the format in 1988 and i think you offer a unique perspective. what other tools are at the disposal to prevent congestion

when they fail to influence to pick up that cargo? >> for a small agency the chair man and i have lots of additional thoughts. i prefer outreach. the ocean carriers will say the business is not that complicated. terribly complex. podcasts, for example, a way for us to talk to our shipping public and help them through some of these complexities to their benefit. >> can you explain how it works

and what the advantages are to manage containers in this matter? >> it's extremely useful especially some of the marine terminals and long beach and large shippers simply validate cargo in one area and take it to a different location to pick up. it doesn't work for all of them on the business model. in october of 21, the white house announced that the port of los angeles would expand to a 24 hour operation, which would be consistent with the port of long beach. however, the local warehouses don't operate those same hours. mr. chair man, what benefit is therefore los angeles and the

24/7 operation if the warehouses don't have the same hours? >> the answer is of course you beat them. it's a chicken and egg problem. why would we open 24 hours if the port is not open? we have to work together. this problem isn't going to be solved by the fomc or the senate by the stakeholders and that's where we focus so much with the incredible connections to try to convene and talk to them and frankly occasionally to callout when we don't think various parties are willing to discuss stuff. i will say 24/7 is the phrase and the particular it doesn't have to be 24/7 but late nights, saturday, sunday whatever works it shouldn't be dictated before hand but we need everybody to

sort of jumped out once, so the point is well taken. >> thank you madam chair. >> senator baldwin. >> thank you, madam chair. good to see you again. i understand that you will be in milwaukee tomorrow. >> i will be. >> so i really wanted -- >> it's not cold enough here. >> it's warmer in milwaukee for wisconsin it's down south. >> we had a chilly but warm experience in northern wisconsin. i just wanted to express my appreciation for speaking directly with the growers and agricultural shippers across the midwest about the solutions to challenges in the global supply chain. the agriculture industry is bearing the ground of supply chain disruptions and dairy farmers and other exporters in

my state are looking for immediate and long-term solutions for these issues. so i am a cosponsor of the legislation and wanted to interpretative your visit to milwaukee wisconsin. >> i will share that with the other commissioners. the four of us to travel a lot. one of the components is getting out and we appreciate the independence. we served one term together so you may not know about my families background we grew up on dairy in upstate new york. >> in testimony before the marine subcommittee, the maritime subcommittee last

summer you noted that improving the availability would be critical as they recover from the pandemic. home to one of the domestic manufacturers and just so happened i visited that facility last week to discuss my supply chain resiliency act with critical supply products. i would like to have you talked about strengthening the industrial base for the critical supply chain products and in your view, has that helped the u.s. supply chain better manage the covid-19 pandemic and what

threats do you see out there and opportunities? >> i understand, senator. it's a huge challenge for the country. i worked particularly with an innovation team in memphis, tennessee and the senator had mentioned that i would be delighted to talk to your company. i would be interested to see what they do and get their perspectives. i would appreciate it. >> as an aside, there's been dumping of product that have

acknowledged that is a problem and a challenge, but they are persevering. we have heard stories time and time again about departing the coast and leaving made in america products behind as much as 70% of the containers with major ports being shipped empty and that deprives american agricultural exporters of the important means of transportation so a two-part question. the fmc do they have the authority to regulate the reasonable availability for the exporters and if not should we address this legislation?

>> it isn't a shortage of containers if you look at all the containers. we have too many in some places but the shortage particularly of those used by agriculture and the shortage of the containers in those places they are in the wrong place, they are sitting at a port as opposed to getting out in the countryside. a lot of the work, and i will answer the second question completely but the first answer part of what we're doing and what she is doing on the front lines is trying to figure out exactly how they get their therecontainers and how best wen help. we have no specific authorities on containers obviously equipment, there are some provisions and that's where we

get the charges but directly there is no provision that says we can't tell the carriers they have to provide to a certain place and i will be honest with you people talk about the prizes and certainly export prices are a problem, but those will come down again. they may even go back to normal. the problem that will persist as isthe logistical problem the exporters face because they tend to be heavier. it's not so much about the number of containers but the quality getting them in the right place and getting it at the right time. if you get it there too early, your stuff will rot if you get it there too late, you are not even going to get on the ship and it's a big challenge and it's a logistical challenge that we need to focus on. >> thank you, madam chair.

i really don't know where to start. all i know is that are they still lined up outside of the harbors or are they pretty much emptied out? there are some smart people putting things together but they are not actual, they are virtual. they've been hit exceptionally hard that we cannot get off our shores so then correct me if i'm wrong on this, p pandemic a container was about 1300 and now it's 11,000. >> it's so dependent unfortunately not very transparent. it doesn't mean, it means they

are looking at different things. >> so why isn't it a transparent? >> because of market power. we get a lot of stuff reportedly contracts but we are not allowed to share that with the public. it's proprietary information. >> the difference is in the governing laws. >> there's nothing wrong with transparency any level of government including that one. >> we are huge advocates and i will say to answer the question about the specific rate they've gone up dramatically but much more for smaller shippers and in a market where you've got the sort of scarcity if there's more capacity but more demand, they

worry about their biggest customers. >> senator klobuchar said they control 80% of the freight. >> the alliances of carriers. >> is there a difference between what i just said and the truth of the alliance? >> the carriers that are part of the alliance are not allowed to discuss prices with each other and if they do they are violating the antitrust law. they have no immunity discussing the rage. >> i would say it's a shared oversight of the department of justice can look into it. >> how do you get information you have subpoena authority.

it is the fact you have shippers that are screwing the little guy. how do you get that information? >> we have a broad capacity to request information as they have to provide it and as we have already discussed it is proprietary so that does create an issue we can't publicize it. we have asked for much more since the crisis has begun. >> i think that it's fundamentally wrong to meet up small businesses in this country because of small businesses. i think it is fundamentally wrong. but that is just my opinion. so, they dump off a lot of goods because the trade difference is still big, and then they leave the ports and don't take

anything on the ship going back. obviously doing that because they can make more money. >> yes. they argue, because i share with you what you just said i do think it is fundamentally wrong to victimize a small businesses but they will make the argument that it costs so much in this time of demand. >> we allow them to charge us more because we are the united states of america. to charge us more so they are going to screw us not taking our products out and there's nobody watching the shop?

>> somehow it was interpreted the other day. that is a false statement and what i will say is we are looking at all of these reports and if any sort of wrongdoing that we find we are ready to investigate or we may already be investigating. and that goes to the alliance of any individual carriers to the full extent of the law if the evidence is there. my time is way over. i'm going to tell you that it doesn't make any sense we allow the ships to leave the ports. we have stuff that needs to be shipped out. if the big guys are more powerful than the united states, then we've got to figure out something else because it sounds like they do what they want, when they want but have little transparency, don't let that

information get out to the general public so they know how bad they are getting taken to the cleaners and we don't have the tools to deal with it. the senate doesn't fix much, but man, if we can fix this that would be a giant step forward. >> one of the things the legislation has is if we could collect and report to the public the aggregate numbers of exports at least the public would know who the good guys are and the bad guys are. >> but in the end, what we need to know is why can't we export the products with other countries, 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. i'm going to follow up on your line of questioning because i

wholeheartedly agree and somebody that's spent time on another agency with the time of another crisis, we need these agencies to be more robust and if that means giving them more power, we need to do that. i saw senator young remotely. i don't know if he's available or not but we will go to senator lee. thank you, madam chair. the rate we are experiencing in this area, are they tied to supply and demand restraints? in other words, is there any evidence of this resulting from an artificial constraint of cargo supply?

>> it's primarily do to the huge demand in the wake of covid that has hit the country. we have examined and will continue to examine whether there is any artificial lowering of supply. we found a fair amount of increase of supply. some of the carriers ordered more ships and there's been basically more than 99% of what can go out in the ocean is on the ocean. >> so in other words, they've increased capacity in response to increased demand. if there are anti-competitive practices occurring, does the fomc have the authority under the existing law to take legal action? >> i would say the legal burdens are rather high in a technical sense but we do have the

authority and we will use it whether or not you pass legislation if we have the merits of the cases allow it. >> the reason i ask, i hate to see these things happen. it's hard to deal with the outgrowth of this with the supply chain network. i hate seeing these increases as a result of it and it's hurting everything. i also want to make sure that we are throwing the right resources in the right way. i appreciated a statement that you made in an article from a couple of days ago when you said the ocean carriers as a whole are moving more containers than pre- pandemic and the ports are

by and large doing their job. that is on the inboard side butt yes that is absolutely true. we started seeing the sales hitting a pretty unprecedented rate and that frustrated or complicated the supply chain infrastructure and workforce. some of the challenges were spread out over a broad spectrum, but they included thed things like truck drivers shortages, outdated scheduling technology, work concentration, lack of storage for containers, labor difficulties and scarce equipment including truck chassis. the ocean shipping reform act, which we are considering today

is something being presented as a way to address these issues. can you help me understand how exactly would this address the supply chain challenges mentioned? it gives the commission a lot more leverage in dealing with these issues in convening groups as has been pointed out and if you have time i would yield to the commission on the specific equipment pieces. the solution isn't going to come from the government but a catalyst to the solutions on the various stakeholders. they are complicated. overall they look simple but they are complicated to solve

them. >> i'm almost out of time. i appreciate you asking that, raising that because i want to make sure we first do no harm and because i don't see anything in the bill that addresses those issues, i, my instinct to do no harm kicks in because increased government involvement can often take things more difficult. section five prohibits from retaliating by refusing or threatening to refuse cargo space accommodations when available for any reason. it seems the goal is to respond to the controversy the carriers are taking empty containers and not the experts back to asia. they bring more back to the united states. now, my understanding is the supply chain prices and some of

the things we've had significant problems with these are all creating a serious backlog but if the provisions were passed, could they end up slowing down the availability to move them out of the port and exacerbate the current backlogs? it's my assessment they would have that effect. how am i wrong in thinking that? >> obviously they would have to be administered. there are some who advocate the quota. they have to take this number specifically. that could lead to what you are worried about because if they feel that that's not in their own business interest they might avoid them altogether.

they wouldn't stop it and even if we try to close that loophole may be that would put more on the import or cost so you are right to feel worried about that. it will give the flexibility we need without going too far but that is my own personal view. >> this is my concern is you have reiterated it perfectly and it's why i've introduced legislation and i will be reintroducing shortly with some updates. that will address some of the challenges we are facing. this bill will not if it threatens to make them worse. >> senator warnock? >> i hear about the rising costs every day and its impact on their lives part of the rising costs it seems to me is cracking down on the corporations and of

the wealthy executives taking advantage of the market volatility. making decisions with their pocketbooks it's hard to wrap your mind around how much money large ocean carriers are making in the shipping industry has made during this global crisis. the numbers speak for themselves. industrywide quarterly profits increased nearly 2000% since early in the pandemic. one ocean carrier reported $17 billion in profits for a single order 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 companies raking in the record profits and it's also why i am a proud cosponsor of the bipartisan shipping reform act, the whole bad actors in the shipping industry accountable. i think the onus is on those that want to explain the 2000% increase in the profit in the middle of a pandemic. commissioner as you've observed these record profits over the last two years, have you seen improved shipping services to account for these kinds of problems where the complaints are increased?

>> senator, of course we don't regulate the rates in the federal maritime commission. but is the difference between a contract rate and default rate and some of the extremes have been when they are literally bid up. we need to put more work into letting the exporters understand. in the few times that we find ourselves in this extreme demand, so of course you are right. we've all read about those

spikes. have we seen improved shipping services that would account? >> we have not. what i do is not so much look at the rate or other things we literally cannot deal with. to tell them although you can't fix the warehouse there are measures we can do to move forward and we are doing that.

it's not only colleagues and friends. the commission stands ready to enforce the act we've been investigating many specific cases. those enforcement actions can come at any time and no one is off the hook in terms of whether the service has gotten better. there's a lot more shipping. more shipping, more quantity than ever before. the quality has gone down a lot. i wish i had better metrics for you in terms of the timely arrivals and in terms of predictability and any measure you could have.

you can't be laid out in those executives. >> i don't think anybody's arguing that there is any single reason. i mean, we are dealing with supply chain disruptions. does the federal maritime commission currently have all the tools it needs from congress to fulfill its mission and assure competitive and reliable ocean transportation's? >> senator, i am extremely glad you asked that question. i do not feel we do. people feel we are doing our best with the resources given us and it's less than 120 employees. we do have authorization for more than that and we are a very small agency. we certainly could use more resources. the amount depends if you are giving no more authority or not and how quickly, how feasible it is to hire them to ramp up on

those sort of decisions but there's no question many of the members of the committee already a lot of work in doing that. there's a lot of good efforts to try to do that so i appreciate you asking that, senator. >> we could pursue more but we simply don't have enough tools. >> which is why i support the ocean shipping reform act in an effort to close the gaps and protect the public from the unfair deceptive practices. thank you so much. >> thank you. senator soon. >> thank you, madam chair. the practices that also establish a separate streamline

complaint process to move or i should say to more efficient results. do you believe that further constitutes an unreasonable charge to help alleviate some of the confusion surrounding the current process? >> thank you, senator soon. of course. and i would add the commission would enforce any law that is enacted. we are interpreting and enforcing the rule so i wouldn't want anyone to think that we are waiting around for the new authority but we will continue to work with you on those issues and of course, yes. if there was a particular ready that would help enforcement, of course we would favor it. >> let me ask you a question and you can both respond to this,

but i want to correct the record on the intent of the reform act, and i think i said this in the opening. our bill is not intended to fix the supply chain crisis overnight. instead, this bill makes improvements and clarifications to the authorities that allow it to more easily intervene when truly egregious and anticompetitive behavior is discovered, and i realize fully that the supply chain crisis goes well beyond the ports and this bill is just one piece of the puzzle but could i have you comment on how clarifying, or the clarifications i should say to the fomc authority will improve the fluidity of the ocean shipping. do you care to comment on that? >> i think there's a lot of provisions in the bill that would help certainly provisions on making it clear where the

congress stands on detention. make no mistake, the recommendation that came out of the previous fact that set this rule, it is a very simple rule if attention to help move cargo they are okay, if they don't, they are not. i would have thought that was enough. i was naïve so we have to do more. having congress behind that is very important. it also gives more leverage in many different ways in terms of the burden shifting and detention so no longer will a small agricultural shipper have to take a picture of every little thing. and i'm asking people, take a picture of the sign that says you can't get in the port. the carrier has to prove that it's legitimate. that's huge. that's just a couple of

examples. >> i think the issue that we talked about earlier and the problems with paying storage is a very clear example. and there are a few others like that that are more obscure, but i agree with the chairman. if they are helpful to us, we would be delighted to have the authority. i also believe our outreach to help them understand first of all we are determined and second of all, to understand this principle that we used is working. >> i appreciate the statement with the options for shippers to

file complaints and don't have a lot of time but is there anything else you believe the commission can do to improve transparency and efficiency of the complaint process? >> we have literally revamped the enforcement approach. we have 35 cases i think outstanding and that will proceed to final case law to provide precedence. but you should be assured that we are doing everything we can and i have had personal conversations with ocean carriers whom i believe get it and are going to change, if they

don't, we have revised a lot of our rules on ways that they can recover their payments even if we charge for violations of the law which is a unique approach to law enforcement so we are pulling out all the stops on this because the world is watching us. i hear from our friends in australia, they want to follow this approach, and that would be great globally. >> my understanding is the fomc maritime initiative regularly

has been meeting to discuss current challenges with maritime data and to suggest improvements. could you provide an update on that initiative? >> quickly on the last question we are working on a lot of different ideas. the best ideas don't come from us but from the shippers themselves and that's where we got the idea of having the export to help individuals navigate. we all know the data is going to be a huge part of the future and as i mentioned to senator tester and the stuff we get is proprietary but that doesn't mean we can't do aggregate studies it's just right now there is no standard. it's a complex issue though so i asked one of my colleagues, the former commerce committee staff person, to look into the issue. some of you know he gets into

this stuff is talking to everybody. i'm proud he's having open meetings and anyone can join into these. it's a series of meetings and i cannot tell you any confusion so far but we are looking into it and hope to be with a bipartisan help to guide all of the use of data issues because it is a huge component. >> senator hagan luber. >> thank you, madam chair and both of you for your experts. i'm sure you have lots of anecdotal evidence. one of our outdoor companies the shipping containers increased from 1500 to $2,000 to $15,000 in 2021. small outdoor toy company that could suffer 2 million in losses this year which for them would

be catastrophic. the typical costs increase what they could ship for $6,000 now suddenly is $30,000. 99% of the shipments were delayed or booked for different time and were rebooked 17 times on a delay. so with the skyrocketing costs, how has the export position of the office of consumer affairs helped small businesses register complaints and get that information to you about the carrier practices without fear of retaliation? >> the fear of retaliation, we are doing everything about it and additional help in the committee would be good. i cannot say anecdotally that i know of some people who did file complaints.

they just were those people that had the guts to settle the complaints and believe it or not the relationship with the carrier is better. but it does happen. each case is different. so in some cases consumer affairs can solve it. i was a member of congress briefly. i know your governor well. we used to get cases, you know what you do. if you don't get the right answer you pick up the phone and call the executive. we do that. i do that, the commissioner does it. every commissioner does that and we are proud to so that sometimes helps. but other times. frankly at the moment filing their own case is better because if they get the damages, they

get to keep them. your legislation by the way he would allow us to file a case and then be able to revert some of the damages to the party. current law doesn't allow that. but in any event, that's why we do try to help each and every case navigate. also to be candid, a lot of folks have a lot of complaints but at the end of the day, the things they saw doesn't say it and they are too often written just to protect the carriers and it's like when any of us sign those agreements online i know every member reads every word of those agreements before clicking yes. but some of it is just that sort of thing. small businesses that haven't looked at the contracts for years because frankly before the pandemic there was plenty of space. they were willing to sell it because they never ran out. now that's different. >> looking into the issue it isn't a lack of competition but

a lack of space. one could make the argument through all these years the market power does exist. the primary driver though is this incredible demand we wouldn't have the crisis today if it were not for this. before, there was actually oversupplied. >> which means we should be able to accommodate that bottleneck pretty quickly. as you are aware, the u.s. and cultural experts have been hit hard by the destruction sand delay. we had a company in colorado with a multibillion-dollar distributor conveyed the shipping costs for the products increased 57% since the beginning of 2021 with no sign

of stopping. how well will this reduce the cost of shipping in u.s. agriculture? >> the rulemaking that i mentioned, i can assure you we kept on top of the ocean carriers for example how if there is an overwhelming demand now, what are we doing for the united states to correct that in the future? none of us know exactly how long, whether or not the demand will continue. but we understand of the information was provided that 705 new ships are on order and a lot of that capacity will be available to the united states.

>> and how many were decommissioned in the last 18 months? my understanding is they haven't decommissioned and suddenly the numbers. so they go to new ships on order but it seems to be a backlog, as a result of backlogs. that's what we should be addressing and what i think you are addressing. >> one of the issues if it seems simple to add more, that is one of the reasons we have these lines, they end up waiting in line so you are quite right it isn't as simple as that capacity and it's also the overall supply chain capacity that has both of us in disgust and the chair and ranking member both mentioned there's a lot on these issues and that is where the capacity is strained. >> the bipartisan infrastructure bill will address some of those. >> i will yield back. >> i don't know, senator klobuchar, if you have more questions. i'm going to ask my round of questions. i'm not sure if we have other

colleagues joining us online, but if not, that will probably wrap this up for the hearing. so, i'm just kind of a last call announcement to anyone that might be out there joining us. i wanted to go back and listen for me in the northwest this is about agricultural products that need to get to international markets and in a timely fashion. there are some of these products that are highly perishable, so timing matters. so, the way that i see this, the reason you exist is because the united states of america set the terms for people to come to the ports and deliver products, is that not right? that is the history? >> we've gotten away from that and part of the purpose is the section. >> part of what senator tester was saying is we are letting everybody come here and make bank. huge increases increased their productivity, and yet they are

making bank and that is what is happening. you don't seem to have the authority which i'm going to try to get at and what we need to do it. we are going to pass legislation. we are going to fight for these who need to get their product to international markets. first and foremost, under section 411 of the common carriers it says any person directly or indirectly may not give any undue or unreasonable preferences or on the properly unreasonable prejudice or disadvantages and then that is in section sub eight and nine is any undue preferences or

advantage for unreasonable prejudice or disadvantage with respect. so, why doesn't that give you enough today and doesn't allow you to say to these major shipping companies that basically have been even more consolidated so it's not like somebody that says i will deal with the shippers and get them to asia, that isn't happening. they are just coming back, getting more cargo and jamming them through the ports. .. >> coming to the united states. >> i know how they're making money, it's in the paper in the wall street journal, making a lot of money, when trying to get out is white in the existing authorities right there, does not allow you to do something about these unreasonable rates

and what is this make the carriers given themselves by saying the word we are offering space and if they want to pay, as much as the importer, we will give them space and therefore were not discriminating. >> what is the rate increase, over 100 percent increase. >> what was the net, we talked about this a great deal. >> how is that reasonable and how you determined that is reasonable. >> so as, 60 on the shipping act, allows empowered to get a federal court to get an injunction of the determines that agreements between carriers are likely to produce an unreasonable increase in transportation cost and do you agree that dramatic increase during the pandemic is an unreasonable increase of transportation cost. >> was certainly a great that is a colossal increase whether it would be unreasonable under the

law, that's more complicated question but i will say that though i am not sure we do have evidence, we are looking into whether we can connect these costs to the individual carriers or others in either way, is a huge problem. >> they are unreasonable cost and they're not even able to pay it so were giving access to our course who basically believe in trade we are in one of the most trade -dependent state in the nation i believe the trend is probably more than 90 percent of the people in the united states, there like the top and we believe in it okay so we want to have the shipping industry work, effectively but it can be a one-way street as we cannot have products left on the docks so we want to have if you don't feel you can go to the course right now, for unreasonable rates are you do not feel like the

definition strong enough lesson, about those three statutes related to unfairness after practice and practice is immune oblation it or not there's lock is already in this area since i do think i really want to kneel down here what is it that you - >> undercurrent law, a right no matter how high an end of it not unreasonable, how that rate, is an alliance how to dig into the rate. >> it is not about alliance, we have 70 abstract immune ablation will natural gas and set new laws because it was my collusion on as many coming together and setting a price, is about you he a marketing condition basically service the customer and you have small customers here who are not getting served that is the issue and so they cannot get their products out of our course and the importers cannot get the product out because they can make more money being exported to the united states in bringing

our products back into asia to a doubt that your observations are well taken a points are right, this bill with us bill is written in 1986, 36 years ago and we didn't have mobile phones enemy, the industry changes so much that is why is so important that we updated we do not have the authority to relate the rights we don't have the authority to send an acute have to do this to small business and not just patent to the big box stores and we do not have that their authority and sometimes i wish i did if you give it to me, i will use whatever authority that the congress sees fit to give us that were definitely going to give you those authorities but the question is whether we get it because you cannot afford not to get this right we cannot afford this to continue to play and so i will say for the record, something more defining on are beyond the reasonable rate. >> would be be glad to give you something.

>> and also at the federal maritime commission, mall for a commission in a strong one and that is why we also send a new nominee to you and hopefully that will be smart expertise from the real-life experience. >> yes somebody is working the next. >> i think that is very good experience but i that we have to crystallize here, what exactly are we talking about enemy when i read this, the authorities intimated you should be able to go to the force right now and have reasonable increases in transportation costs and you should be able to do that but will write one for the record that will get to the right questions. >> i think eunice i have one additional question and i appreciate senator cantwell's line of questioning and cares a lot about this as well pretty so we will return i want to make something clear simply is that

these price increases in the consumer's have experienced are in fact related to the supply chain problems when it comes to shipping any believe they are mr. mckay, not the only reason but a reason. >> without qualification yes. >> okay and thank you. and so i look forward to moving our bipartisan legislation swiftly and i will not there's another bill that is been mentioned by me and a few others potentially about the anti- trust piece of this and that in fact there is immunity right now correct mr. mckay. >> correct yes limited immunity and as they say that immunity can be gained just by filing with us and letting 45 days past we have the burden of proving the court that would not be right within 45 days and i personally feel is almost impossible standard us and by the way, those of you, they

never expire do something else that would like to talk to you about senator. >> okay and that would be very hopeful because we of course have a bill to get rid of the antitrust immunity. and members of a dj sherry committee of this industry because i just see no reason when you have a new monopoly situation when it comes to the alliances that this would remain. >> there are reasons why that you might not agree there ever should be in antitrust immunity and i will say though that depends on the circumstances, and one could do that when they're high that they are now there certain incredible scenario that if they go down getting rid of the alliances which can you carriers are already, to collude in the prices, you can have the opposite effect and create more bankruptcies and we never thought that would happen so there could be unintended

consequences. >> you could also do something to eliminate some of the times. >> exactly. >> and be more defined in terms of how you handle the antitrust. >> precisely and i'm just talking beginning with of the immunity alone in a vacuum and hoping it was all things will be more complexly are quite right. >> we would like to talk you more we look forward to talking to your staff and you about how we handle the company's loss because we, it's against the clayton act and so personal, that we have to show reduction in competition. >> understand that is why we - >> so glad to talk to you about the competition laws. >> in these prices, you know, sevenfold increase in profit, something is going on here and that is why the senator soon and i have the builders take one

approach similar to the house bill for you to the house bill also includes antitrust and we broken it up. that's why reporting is something on here. and hopefully will never see anything like this again but i do want to thank for the hard work and the work that you have done here and is open up i think a lot of avenues for us here to pursue rated and a belief that the maritime commission needs additional tools to do your worn the way that is good for consumers and producers. >> no argument from the chair. >> okay thank you for mismatches to clarify career actually reduce these over these last several years, reduce fines is that correct least have a heavier stick. >> yes, the fines of god will, there is chronic issues with enforcement in my view, attempting to solve and is been my top priority to get his back

on track. after that we have cases and you may say well three cases, that is not that much, three more than we had in the last decade. so there are some legacy issues here that we are dealing with together in a bipartisan way in dealing with and can i say just one quick thing. i certain the house, the largest apple producing county outside of the washington state and not a lot of opportunities these days to do something bipartisan though how people in the farmland the sin industry and this is one of them so - >> that's why you are here. >> in order thank you is a really appreciated and i could encourage, no bill is perfect with this will sure help. >> no no no no no no we are going to get something to work so it is too important and trust

me, not a fan of the trump era, not a fan of the trade wars, these people have taking it on the chin are not going to create more havoc in come over and have them and get legislation today so and without the, and my other colleagues his record will stay open. thank you so much i want to thank the senators are producing this legislation i do think it is very important piece of legislation very important it helping start mass senator colby char reminded me this is also in the house version it which is the bill we are now trying to work and negotiate out so i personally would like it if the senate show some initiative action on this legislation the clarifies what we are in addition to the house and i think that would be helpful so the hearing record will remain open for two weeks until march 17, 2022 any senators would like to submit questions

should be sent by march 2022 and be returned to the committee as quickly as possible and no case later than two weeks after receipt that concludes today's hearing again thank you to commission. [inaudible]. [background sounds]. [background sounds]. [background sounds]. committee.

delaware senator carper chaired the hearing.