Richard Lidinsky, who in July stepped down after seven years as one the five members of the U.S. Federal Maritime Commission, kept a fanciful cartoon from the Baltimore Evening Sun hanging in his office showing George Washington standing atop of a tower searching for the ships that used to come from the Far East direct to Baltimore via the Panama Canal, only to spy them discharging cargo at West Coast ports to be moved to the Midwest and East by intermodal rail.
With the expanded Panama Canal opening this summer, Lidinsky believes Baltimore and other East Coast and Gulf ports may see a return of some of that cargo.
As he sees it, all-water service “empowers” shippers with alternatives to congested West Coast ports, allows East and Gulf Coast ports to utilize the improvements they’ve made, and makes cargo less susceptible to theft.
Lidinsky, whose successor is former Congressman Daniel B. Maffei, joined the FMC in 2009 as chairman, and then stayed on as commissioner when Mario Cordero became chairman in 2013.
In a discussion with American Shipper, he reflected on the changes he observed when compared with his first stint at the FMC as legislative counsel from 1973-1975.
Back then, U.S. carriers were powerhouses. On his return, the fleet controlled by U.S.-flag carriers in foreign trade was greatly diminished and he saw shippers as the major U.S. interest that the FMC had an obligation to protect and promote.
There was “shocking” conduct by carriers during the 2009-2010 downturn and rebound of the shipping industry, he said, when many shippers found cargo rolled or capacity unavailable. This not only impacted “little or medium-size shippers, but huge multinational shippers,” he said.
More recently, many shippers were hit with huge detention and demurrage bills because of the congestion caused by the contract impasse between the International Longshore and Warehouse Union and employers in 2014-2015 on the West Coast.
But Lidinsky was also critical of shipper timidity and fear over retribution from carriers, which kept them from filing a petition for a rulemaking or investigation of detention and demurrage.
He also points to shipper concerns over the requirement under the Safety of Life at Sea convention of the International Maritime Organization that shippers supply verified gross masses of their loaded containers.
“It’s almost as if shippers, at times, want the commission to sort of imagine their problems and solve them without their input,” he said. “Shippers should step up to the plate… if this particular abuse is happening or this conduct is not right.
“The relationship between carriers and the shippers should be more than the lowest rate in effect at the moment, and too many shippers gauge it that way,” he added. “If you’re getting excellent rates, that’s fine, but what about contingencies? What about when detention kicks in or there’s congestion, or do you have a plan B to come to the East Coast? What are you going to do if there’s a merger of a line with another line?
“All these things can be put into service contracts, and, sadly, they aren’t,” he said.
When Lidinsky returned to the FMC seven years ago, he noted the agency was much smaller than in the 1970s—about 125 employees last year compared to 330 back in the mid-1970s. He felt there was a need to strengthen the role of the chairman and commission and have it, not staff, set the direction of the agency.
He said his first goal was to “get the place moving again, get it relevant, move the items that have to be moved.” He pointed to a decision by the FMC to strengthen protections for cruise line customers that had languished for about 20 years.
During his time as a chairman and commissioner, the FMC advanced initiatives related to the regulation of ocean transportation intermediaries, such as non-vessel-operating common carriers, and became involved in issues related to port congestion.
“And we instilled some environmental awareness… made sure carriers were keeping their promises to, particularly the West Coast ports,” he said.
On his return, “the most important thing which I witnessed… was this transition into the alliance age,” he said.
Lidinsky believes the alliances, the large vessel-sharing agreements such as the G6, 2M, CKYHE, and Ocean3 (to be consolidated into the 2M, OCEAN Alliance and THE Alliance next spring) are “going to be with us for many years.”
But they need to be scrutinized, he said, adding that the most important vote he cast came in 2014, when he was the only FMC commissioner to vote against letting the world’s three largest container lines—Maersk, Mediterranean Shipping Co. and CMA CGM—form the P3 Alliance. (Chinese opposition ultimately torpedoed that plan.)
Lidinsky’s objection centered on a plan to set up an operations center in London to run the P3, which he said would have given an “obscene” concentration of power to Maersk, and he contended it really amounted to “an acquisition by Maersk…because the other two lines, surprisingly, yielded such authority to Maersk.”
He believes his stance helped “set in motion some guidelines and some conduct that these alliances should abide by if we’re ever going to have a hope of regulating this commerce.”
Lidinsky contrasted the P3 with the OCEAN Alliance, which filed its agreement with the FMC on his last day at the agency and plans to start up operations next April.
The agreement, “fulfills all the criteria that I was concerned about and spoke against in alliance activity,” he said. He added the members—CMA CGM, China COSCO Shipping, Evergreen and OOCL—“have shown great respect for the regulatory bodies” and that their alliance could be a model for others.
Chris Dupin is Maritime and Intermodal Editor of American Shipper. He can be reached by email at cdupin@shippers.com.
