FMC Reports to Congress, Requests Greater Authority Over Carrier Contracts

SIGNALS NEWSLETTER – JULY 6, 2010 EDITION

Chairman Richard A. Lidinsky, Jr. and Commissioner Rebecca F. Dye of the Federal Maritime Commission (FMC) visited the House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation for a Subcommittee hearing which focused in part on the status of the Commission’s investigation into vessel capacity. The Commission recently initiated Fact Finding Investigation No. 26 into vessel capacity and equipment availability in the United States export and import liner trades, in response to shipper complaints.

At the June 30 hearing Commissioner Dye reported in detail of the status of the investigation. According to Commissioner Dye the investigation focused on vessel space shortages, chronic container shortages in certain parts of the U.S., and ocean carrier practices regarding service contracts. The FMC recently conducted a series of confidential interviews around the country to gather information for the investigation. Commissioner Dye along with FMC Chairman Richard Lidinsky reported that while vessel capacity has increased in recent months, this increase has not kept pace with growth in U.S. trade. Furthermore, growth in demand for container imports and exports in the upcoming peak shipping season may strain current vessel capacity. Container availability for export cargo in some regions of the country may continue to be difficult and expensive to arrange. In March of this year, President Barack Obama directed agencies “to use every available federal resource” to increase U.S. exports over the next five years, and the FMC is making a strong effort to support this directive. Commissioner Dye presented the following recommendations for immediate action which were approved by the Commission at its meeting on June 23rd:

• Rapid Response Teams: Teams within the Commission’s Office of Consumer Affairs and Dispute Resolution Services (CADRS) have been organized to quickly address and help resolve disputes between shippers and carriers – particular problems involve cancelled bookings, rolled cargo, and container unavailability.
• TSA and WTSA Oversight: The Commission will increase oversight of the Transpacific Stabilization Agreement (TSA) and the Westbound Transpacific Stabilization Agreement (WTSA) by requiring transcripts of certain Agreement meetings of these groups whose member Carriers service the USA-Asia trade lanes.
• Global Alliance Oversight: The Commission has directed staff to prepare recommendations for prompt Commission action on ways to increase oversight of global vessel alliances.
• Extend Fact-Finding Investigation: The Fact Finding Investigation No. 26 is extended to November 30, 2010. This will allow the Commission to continue the investigation through the peak shipping season and to fully develop additional solutions. The interview process also will continue during this time.

Chairman Lidinsky also suggested to the Subcommittee that Congress begin considering adjustments to the Shipping Act that would complement Commissioner Dye’s initiatives. He suggested a modification to give the Commission a greater role in resolving disputes between importers or exporters and ocean carriers quickly through mediation or arbitration. He also suggested a regulatory or legislative response to ocean carriers who refuse to provide or accept shipping containers from U.S. exporters. Representative Elijah E. Cummings, Chairman of the Subcommittee on Coast Guard and Maritime Transportation, requested a preliminary list of such legislative proposals from the Chairman within 30 days.