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Remarks of Chairman Blust at the New York/New Jersey Freight Forwarders and Brokers Association Dinner, January 28, 2004

January 28, 2004

Remarks of Steven R. Blust, Chairman,
Federal Maritime Commission

to the

New York/New Jersey Freight Forwarders and
Brokers Association Dinner


January 28, 2004


Thank you so much. I am delighted to be here this evening and deeply honored to be receiving this celebrated award.

Evolution of Ocean Trading

This award has given me the opportunity to reflect on the evolution of U.S. ocean trading. The necessity and desire for trade has driven human exploration and innovation for centuries.

While the Phoenicians were believed to be the first international traders to use ships in the Mediterranean, approximately 500 years ago, explorers traveled to more distant lands, looking for new trade opportunities. One of these explorers was Christopher Columbus, who was looking for a better, faster and cheaper route to move cargo between Europe and Asia. Unfortunately for him, but fortunate for us, he discovered what is now North and South America.

Our great country was founded on trade. A defining moment, commonly called the Boston Tea Party, occurred in 1773, and was the result of preferential tax treatment of a British company (East India Co.) at the expense of the colonial importers and merchants. Today, such an issue might fall under the FMC's jurisdiction as a foreign shipping practice.

In 1784, General George Washington, called for the improvement of the Potomac River, by building a canal, so that it might be the door between the headwaters of the Ohio River and the East Coast and trans-Atlantic trade. The General believed at that time that the western frontier would be drawn into the United States by better transportation and trade. Washington wrote of establishing "a smooth way for the produce of that Country to pass to our Markets." The Patowmack Canal locks at Great Falls, VA, were completed in 1801. Eventually, the company was acquired by the C&O Railroad, and the canal was closed.

Less than twenty years later, in 1803, President Thomas Jefferson, looking for even greater trade opportunities, sent the Lewis and Clark expedition beyond the Potomac and Ohio Rivers, to seek out a northwest passage from the U.S. East coast to Asia via the lands obtained in the Louisiana Purchase. Unfortunately, they found a mountain range in the way.

With the current importance of the US/Asian container trade now ranked number one worldwide, I believe that our forefathers would be please with what we have accomplished today.

Importance of OTI Community

At this moment in history, the services provided by the organization honoring us all with this dinner and ocean transportation intermediaries in general, are a growing and critical component to international trade. Shippers are becoming more diverse and their needs more specific. In all sectors of our economy, shippers are relying more on outsourcing to meet their logistics needs and have come to rely on the expertise of the forwarding industry.

I have a great respect for the creativity and entrepreneurial spirit that embody this industry. I believe that the Commission has a responsibility to ocean transportation intermediaries, or forwarders, equal to that of the other components of the ocean transportation community to ensure fairness and balance.

Currently, the Commission licenses approximately 3500 OTIs, plus another 700 foreign based with financial guarantees.

Petitions

The Commission in the last few months has received a total of seven petitions from NVOs seeking various forms of Commission action to address what they see as a burdensome regulatory structure. An NVOCC may enter into a service contract with an ocean common carrier as a shipper, or customer of the ocean common carrier. However, the Act does not allow NVOCCs to offer service contracts as carriers to their shipper customers. Instead, NVOCCs must provide service pursuant to their tariffs, which are open for public inspection. The distinction drawn between VOCCs and NVOCCs in the area of service contracting was and continues to be a disappointment to the NVO community.

They believe that the inability to offer service contracts to their customers puts them at significant competitive disadvantage to ship owning and ship operating VOCC's. The Petitions ask for various forms of relief. Some ask the Commission to exercise its exemption authority to provide certain, specific entities or types of entities the right to offer service contracts. Another asks the Commission to exempt NVOCCs from the requirement to file tariffs. Each petition is aimed at leveling the playing field, on the rate side, between VOCCs and NVOCCs.

The scope of the issues and options presented and the high level of interest by the shipping public in these issues quickly put these petitions in the industry spotlight.

We at the Commission recognize the significance of any action or inaction on our part on this matter. As with any matter before the Commission, the authority to take the actions requested and the implications to the industry of doing so will be considered carefully. As some commentors have suggested, I believe it is crucial that the Commission be enlightened with as much industry wide and OTI specific intelligence as possible when considering the questions raised by the petitions.

Cooperation and Collaboration

Regardless of how the industry may change or the Commission's regulations may change, the mandate given to us by Congress will drive our policies. The Commission will continue to strive for fairness and equality among industry components while monitoring to ensure our industry remains competitive. At the same time, the Commission aims not to impose requirements that will impede the efficiency or growth of the industry.

I don't think many would argue, that the ocean shipping industry faces many challenges in today's world - from the need to increase security to the impact of globalization with resultant trade imbalances and the effects of economic recovery. I would like to propose that these challenging times can be more easily weathered when the industry continues to seek balance - balance between shipper and carrier interests, balance between governmental and commercial interests, balance in the international trades, and so forth. It is my belief that we are entering an era where the industry will come to value cooperation and collaboration over confrontation. Collaborative efforts among segments in the ocean shipping industry, or among maritime nations will work more effectively than what can be achieved alone.

Again, my sincere thanks for this most renowned honor.