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Chairman Cordero Addresses 40th Annual NCBFAA Conference

April 8, 2014

Remarks at the 40th NCBFAA Annual Conference
Summerlin, Nevada

Chairman Cordero Speaking at NCBFAA 2014Thank you for that kind introduction. I am honored to be here at the 40th Annual Conference of the National Customs Brokers and Forwarders Association of America. More so, to be addressing this distinguished audience who have come together to dialogue on the growth of the maritime industry in the U.S. and worldwide. Before I begin, I want to note that my comments here today are my personal comments and do not necessarily reflect the views of the entire Commission.

Many of you know me already from my service on the Port of Long Beach Harbor Commission, and I have had the pleasure of meeting many more of you in my role as Chairman of the Federal Maritime Commission. In all those years of service, I have voiced a deep and abiding interest in promoting economic cooperation and trade with the United States, both import and export, as well as in facilitating a critical and ongoing dialogue between the private sector and the public sector, our ports, agencies like the FMC, and our representatives on Capitol Hill, in developing and refining maritime policies that best serve economic growth, cargo security, environmental stewardship, and protection of our U.S. shipping public.

A few months back, Ed Greenberg, your maritime counsel, reached out to my office with the invitation to speak today, helpfully offering that the topic of my comments should be "FMC: Where are We"? In reply, I would like to say "Moving forward." Candidly, as recently as February of this year, the Internet summarized the FMC’s status in a single bold headline. The story read: "FMC Faces New Questions Over OTI Proposal." The reference, of course, was to the FMC’s Advance Notice of Proposed Rulemaking (ANPR) to revise our OTI rules, and the 85 public comments received from the NVOCC, ocean common carrier, forwarder and OTI surety industries addressing the various proposals outlined in the ANPR.

Speaking personally, I much prefer the status update offered up by the Internet on this same topic just a little less than two weeks ago. That headline reads: "FMC Considering More Business-Friendly OTI Rules." Our younger generation might well look upon that summary and conclude that all OTI problems have been solved. After all, it says so on the Internet, therefore it must be true.

I think we all know that nothing works quite that easily. I can confirm to you that there is, in fact, a staff recommendation before the Commission seeking guidance and further instruction towards proceeding with a "more business-friendly" set of OTI rules. The specific issues are presently before the Commissioners, with instructions to staff to soon follow up on what items should be moved to a Notice of Proposed Rulemaking (NOPR). I am just one vote among the Commissioners, so I am wary of predicting the outcome of any vote or series of votes with respect to the ANPR proposals. For myself, I anticipate that a number of issues seen to have substantive and economic impact upon the OTI or surety communities likely will not proceed to the NOPR stage. Others will be modified in ways that will indeed make them more business friendly, so as to reduce the burden to the industry in responding, and remove or reduce fees or financial burdens associated with licensing and OTI registration.

We should refocus our controls and qualifications as to those who operated unlawfully as unlicensed OTIs, and not expand our reach into substantively regulating OTI advertising. Of course, these are just few of the items. The Commissioners have not yet completed their deliberations nor directed preparation of a NOPR. Please stay tuned.

Whether an NOPR is issued by the Commission or not, let me commend those of you who took the time to submit thoughtful and original comments detailing your concerns, support or objections to the proposals outlined in the ANPR. This was designated as an "Advance" notice, specifically for the purpose of communicating an early sharing of FMC concepts. You responded in writing and e-mails with individual and association comments. Through my office, those of the individual Commissioners, and through FMC staff, we have hosted visiting delegations of NCBFAA, regional OTI affiliates, other companies and their counsel, by which to continue the dialogue about developing and refining our maritime policies as to OTI licensing and regulation. That process is a success only to the extent that you have participated, informed and educated us about your needs, helping us to make agency procedures work better, while limiting the chances for any "unintended consequences." For those who did not comment earlier, a new opportunity may soon open to further refine a new set of business-friendly OTI rules.

With this topic of communication and dialogue being foremost, I would like to turn for a moment to the FMC’s recent consideration of the so-called P3 Agreement. As many of you know, that agreement, between A. P. Moller-Maersk, CMA CGM, and Mediterranean Shipping Company, authorizes the parties to share vessels and engage in related cooperative operating activities in the trades between the U.S. and Asia, North Europe, and the Mediterranean. The Commission decided to allow the Agreement to become effective as scheduled on Monday, March 24, 2014, based on our determination that the agreement is not likely at this time, by a reduction in competition, to produce an unreasonable increase in transportation cost or unreasonable reduction in transportation service under section 6(g) of the Shipping Act.

Concerns for the size and breadth of this combination among three of the largest shipping lines serving the U.S. were noted in many of the roughly 67 comments filed. Our staff in the FMC’s Bureau of Trade Analysis initially recommended the Commission issue a formal Request for Additional Information (RFAI) to assist in the section 6(g) analysis of the Agreement. The RFAI to the P3 carriers was issued on December 6, 2013; the P3 carriers answered on February 7, 2014. While not meeting the rigid legal standard imposed upon the FMC under section 6(g) to authorize injunctive relief against the agreement, the Commission’s action on the P3 Agreement imposed reporting requirements specifically tailored to this agreement’s unique authority to ensure the FMC has timely and relevant information to act quickly should action against P3 ever become necessary. FMC monitoring includes regular communication with FMC staff to discuss operations, schedules and business rules; ensuring the continued independence of individual lines; advance notice of cancelled sailings, service modifications, or changes in capacity; and monitoring activities in connection with third parties such as suppliers, small businesses and other service providers.

I again underscore the importance of the comments received from shippers and other stakeholders, as aiding and focusing the competitive analysis conducted by our FMC staff in reviewing the potential effects of the P3 carrier agreement. While not the ultimate result that perhaps some commenters wanted, at least two groups, the Global Shippers Forum and the European Shippers’ Council, have been heard to welcome "the fact that the FMC is to implement alternative reporting requirements." We need your help and your continued public participation to get the FMC’s job done.

A final note on the P3 Agreement. The FMC’s action to permit the P3 Agreement to take effect in the U.S. trades cannot, and does not, occur in isolation, not in today’s global marketplace. While the U.S. is a key shipping market, I convened a regulatory summit in December 2013 with the FMC’s national counterparts in the People’s Republic of China (PRC), and the European Commission to confer, for the first time, about the evolving international maritime landscape, and the potential effects of new forms of carrier cooperation on international trade. The summit provided an opportunity for our respective governments to share our views on global regulatory challenges, and to commence a new dialogue on issues affecting the economies of all our trading partners.

As the alliance continues to await a green light from Chinese and European regulators to start worldwide operations, authorities with South Korea’s Fair Trade Commission have now called upon neighboring authorities in China to work jointly to ensure fair treatment for smaller carriers and others in trades impacted by the P3 agreement. As world trade gets ever more complex and interconnected, facilitating an ongoing dialogue between the private and public sectors, and between our respective governments, will become ever more critical to ensuring economic growth and promoting the efficient operation of the international supply chain for all parties.

Thank you again for this opportunity to address all of you and continue an open dialogue on matters that affect the maritime industry.