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Brownwater News, May 2017

May 18, 2017 01:43 PM

AWO leader criticizes joint negotiation by cargo alliances

Thomas Allegretti, president and CEO of the American Waterways Operators, testified before a House panel on May 3 and warned of the “egregious competitive imbalance” that could result if foreign cargo alliances are allowed to negotiate collectively with U.S. maritime operators.

Allegretti, speaking to the House Coast Guard and Maritime Transportation Subcommittee, recalled that panel leaders have voiced dissatisfaction with the Federal Maritime Commission’s oversight of shipping alliance agreements. He suggested that Congress should consider abolishing the limited antitrust immunity granted to carrier alliances by the Shipping Act.

The AWO president said that despite his organization’s opposition, a group of Japanese ocean carriers recently filed the so-called Tripartite Agreement, which authorizes the parties to discuss, negotiate and implement contractual agreements with feeder, tugboat, barge and inland carriers.

Allegretti said the filing leads the AWO to the “troubling conclusion” that the FMC “intends to extend its regulatory review over the tugboat industry, over which it has no statutory authority, and in the process eviscerate the confidentiality of our contractual arrangements with ocean carriers.”

Allegretti testified that it was “fundamentally unfair and anticompetitive ... to skew the playing field in favor of massive international shipping conglomerates ... at the expense of American tugboat companies and other domestic service providers.” In urging Congress to reverse “this growing trend,” he said it is “unconscionable to us that an agency of the U.S. government should sanction the disadvantaging of an essential American industry in favor of foreign shipping alliances. Congress should act to rectify this injustice where the FMC has failed to do so.”

Among other witnesses at the hearing was FMC Acting Chairman Michael Khouri, who testified that each agreement or alliance is “reviewed and evaluated by the commission on a trade-by-trade basis and using the appropriate relevant product market and geographic market.” He said Congress charges the FMC with “ongoing and continuous monitoring after the initial review and following the effective date of the agreements.”

On another topic, Rear Adm. Paul Thomas, assistant Coast Guard commandant for prevention policy, updated the subcommittee on the final Subchapter M rules for mandatory towing vessel inspection, which became effective last July.

“We will begin issuing certificates of inspection to existing towing vessels on July 20, 2018, but are already well along in our outreach and TPO (third-party organization) approval process,” Thomas said. “This two-year delay permits Coast Guard review of TPOs, and allows existing vessels to implement SMS (safety management systems) and procure any equipment needed to comply with these new requirements.”

WCI, ports praise approval of $6 billion for Army Corps

The Waterways Council Inc. (WCI) and the American Association of Port Authorities (AAPA) praised congressional approval on May 12 of $6 billion for the civil works mission of the Army Corps of Engineers through the Consolidated Appropriations Act of 2017.

The AAPA said the $6 billion includes $2.7 billion for navigation projects and studies; $1.3 billion for the Harbor Maintenance Trust Fund; $3.1 billion for operations and maintenance; and $362 million for the Mississippi River and tributaries.

More time to calculate Great Lakes pilotage rates

The Coast Guard has added 30 days to the comment period on a notice of proposed rulemaking for Great Lakes pilotage rates for 2017. The notice, published in the Federal Register on April 4, had given interested parties until May 4 to file comments on a proposal to modify calculations for hourly rates. The comment period is now open until June 5.

The calculations would be modified by accounting for the “weighting factor,” which is a multiplier that can increase the pilotage costs for larger vessels traversing areas in the Great Lakes by a factor of up to 1.45.

The Coast Guard said that while the weighting factor has existed for decades, it has never been included in any of the previous ratemaking calculations. The proposed change in methodology would adjust for the factor charged for larger vessels.

“The result of the adjustment would be a reduction in the hourly pilotage rates in the Great Lakes region from amounts proposed in 2016,” the Coast Guard said. “This adjustment in hourly rates would allow us to more accurately project the amount of revenue to be collected that we consider necessary for the pilot associations to carry out their duties.”

Zukunft notes ‘critical importance’ of US waterways

In his annual State of the Coast Guard address, U.S. Coast Guard Commandant Adm. Paul Zukunft discussed “the critical importance” of America’s waterways as a major engine of the U.S. economy, and the Coast Guard's responsibility for facilitating that commerce.

Zukunft said that more than $4.5 trillion of this country’s economic activity occurs each year on its waterways.

“These waterways are a critical part of our infrastructure,” Zukunft said. “They provide resiliency while they relieve other modes of transportation. Case in point: Just one tank barge takes the equivalent of 144 trucks off our already congested highways. A single common tow arrangement on our inland rivers removes more than 2,000 tanker trucks from the road. Overall, I’m talking about millions of trucks removed from our roads.

“These waterways — our maritime highway — are maintained by our inland fleet of 35 cutters. Twenty-five of these cutters are more than 50 years old, with the oldest being 73. Most of them are not configured for mixed-gender crews. All of them are being monitored for lead abatement and asbestos mitigation. The time to replace this legacy — or perhaps geriatric class of cutters — arrived over a decade ago.”

Allegretti: Jones Act ‘not utterly secure’

Thomas Allegretti, president and CEO of the American Waterways Operators, said at the group’s spring convention that the Jones Act is not as “utterly and completely secure” as it may appear.

Allegretti said there are reasons why the American Maritime Partnership, of which he is chairman, continues to address Jones Act issues with urgency. He said that while the Trump administration may be on board, the president himself “has not articulated a position” on the law.

“Let’s just say I think we all would feel much better if he just did that,” Allegretti said. Furthermore, he noted that there are people in Trump’s administration who are strongly associated with organizations such as the Heritage Foundation “which have targeted the Jones Act. Obviously that is concerning.”

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