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Comments of Federal Maritime Commissioner Rebecca Dye National Association of Waterfront Employers

October 27, 2009

  • Thank you for inviting me to your Association's dinner.
  • My remarks tonight reflect my own individual views and are not offered as the official position of the Federal Maritime Commission.
  • Marine terminal operators are critical players in determining American success in international trade. Your companies are working with U.S. importers and exporters to develop complete logistics operations which allow American companies to thrive in a fiercely competitive world market.
  • I do not need to tell any of you that the maritime industry, like every other sector of the global economy, is facing the most significant economic challenges of at least a generation.
  • International trade volumes have stabilized but are still down dramatically and overcapacity in liner ocean shipping has grown to where over 560 container ships are idle throughout the world.
  • Major ocean carriers reported a net loss of $6 billion for the first half of this year.
  • Your businesses are continuing to suffer financially from the same drop in trade volumes that affects carrier profitability.
  • Just today the Wall Street Journal reported that American companies are postponing hiring decisions because of doubts about the durability of the upturn.
  • Economists are debating whether we will have a V-shaped or W-shaped economic recovery.
  • As I said in London earlier this year, I support moving forward on the deregulatory path, but I think it is unwise to consider major reform in the U.S. system of ocean transportation regulation under current economic conditions.
  • I think this period of economic volatility would be the worst time to increase regulatory burdens on our regulated entities, absent some overriding necessity.
  • I do believe, however, that the Commission should use its liberalized exemption authority to provide reasonable regulatory relief and preserve critical business resources.

Port and Marine Terminal Environmental Agreements

  • As you know, last July, the U.S. District Court for the District of Columbia issued a voluntary dismissal of our motion for a preliminary injunction against certain portions of the Los Angeles and Long Beach Clean Trucks Program.
  • In August, the Commission granted a motion by our Bureau of Enforcement to dismiss our investigation of certain aspects of the Clean Trucks Program.
  • Both actions were taken because of changed circumstances, including the existing injunction against the employee mandate in unrelated litigation, the current economic downturn, and voluntary changes to the Clean Truck Program on behalf of the Ports.
  • Currently, the Commission has seven environmental marine terminal agreements on file and seven others with environmental aspects to the agreement.
  • I look forward to working with the Ports of Los Angeles and Long Beach to promote the continuing success of their Clean Trucks Program.
  • I am also pleased that the Federal Maritime Commission is assisting other ports around the country to develop similar environmental programs.

Antitrust Immunity

  • I know that many of you are interested in how the European Commission's decision to repeal the exemption from the ban on restrictive business practices for liner conferences will affect marine terminal and carrier antitrust immunity in the United States.
  • As I said earlier, although I support moving forward on the deregulatory path, I think it is unwise to consider major, comprehensive reform in the U.S. system of ocean transportation regulation under current economic conditions.
  • However the E.U. ultimately decides to treat the international liner industry, I expect the U.S. will continue to rely on certain aspects of our current ocean regulatory system for several reasons.
  • One reason involves U.S. antitrust law. The potential chilling effect of exposure to U.S. antitrust law is considerably greater than to European Union competition law.
  • There is the threat of treble damages for violation and the fact that private parties may also bring antitrust actions.
  • U.S. antitrust laws are also criminal statutes. Executives of companies found guilty of violating these laws can face substantial jail terms and fines.
  • Many shipping executives may shun even potentially legal partnering activities due to the severity of U.S. antitrust law.
  • In addition, the Shipping Act is broader and more complex than the E.U.'s conference exemption.
  • The U.S. ocean shipping regulatory system is comprehensive, and includes not only antitrust immunity for vessel operators, but also for marine terminals, and certain port authorities. Antitrust immunity is offset in the Shipping Act by the "prohibited acts" contained in section 10 of the act.
  • Finally, the Federal Maritime Commission has the authority to seek injunctive relief against agreements that are substantially anticompetitive because they either unreasonably increase prices or decrease service.
  • Terminal operators, port authorities, maritime labor, freight forwarders, cargo consolidators, not just ocean carriers and shipper organizations, are affected by comprehensive shipping reform efforts. The impact of legislative change, and the potential for unintended consequences, is great.
  • With the end of European antitrust immunity, the Commission staff plans to assess what competitive impacts the change will have on all U.S. liner trades.
  • We will also include in that assessment the recent European Union decision to extend antitrust immunity for liner shipping consortia, such as alliances and vessels sharing agreements, until 2015.

Regulatory Relief

  • While I have concerns about comprehensive statutory reforms at the present time, I believe the Federal Maritime Commission can use the liberalized exemption authority that Congress gave us under the Ocean Shipping Reform Act to consider certain regulatory relief.
  • The Commission has received a petition to exempt non-vessel operating common carriers from the provisions of the Shipping Act requiring NVOCCs to publish and adhere to rate tariffs in those instances where an NVOCC has individually negotiated rates with its shipping customers.
  • Our staff is currently examining the comments received on the petition and will come to the Commission shortly with a recommendation for action.
  • Since this petition is currently pending before the Commission, I must limit my comments about the Petition.
  • However, I would like to comment on the FMC's exemption authority generally as well as reiterate my past comments about tariff reform.
  • Besides introducing confidential contracting, and eliminating conference regulation of members' service contracts, the Ocean Shipping Reform Act contained a third potentially deregulatory element, more liberal exemption authority.
  • By liberalizing the terms under which the Commission can exempt entities that are subject to the Shipping Act from particular regulatory requirements, Congress allowed the Commission to reduce unnecessary regulatory burdens. If the Commission identifies regulatory relief measures that would not substantially reduce competition or be detrimental to commerce, I believe we may and, that we should, provide this relief.
  • As I have stated a number of times in recent years, given what appears to be the lack of practical usefulness of the current tariff system, I believe it is time to revisit the traditional notion of tariff filing and enforcement. Over 90 percent, and in some trades 95 percent, of freight carried to and from the United States is currently under contract.
  • Thank you again. I look forward to working with you to carry out the Commission's responsibilities in a manner that promotes our economy, protects American consumers and increases American jobs.