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Interim Report and Immediate FMC Actions on Vessel Space and Container Shortages Presented to Congress

July 1, 2010

NR 10-18

Contact: Karen V. Gregory, Secretary (202-523-5725)

Chairman Richard A. Lidinsky, Jr. and Commissioner Rebecca F. Dye appeared yesterday before the House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation to update the Subcommittee on the status of the Commission's Fact Finding Investigation No. 26, Vessel Capacity and Equipment Availability in the United States Export and Import Liner Trades; the current state of the U.S. economy and liner trade growth; and progress of the Container Availability Pilot Project.

In Commissioner Dye's testimony, she outlined her approach and status of the investigation, noting that the first phase focused on soliciting information on problems in three main areas: vessel space shortages, chronic container shortages in certain parts of the U.S., and ocean carrier practices regarding service contracts. An intensive series of confidential interviews were conducted around the country and included participation from all sectors of the maritime industry.

While vessel capacity has increased in recent months, the Commissioner reported that this increase has not kept pace with growth in U.S. trade. Both shipper and carrier practices with regard to cargo bookings have exacerbated the capacity problems. In addition, 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.

Commissioner Dye presented the following recommendations for immediate action which were approved by the Commission on June 23rd:

  • Rapid Response Teams: Teams within the Commission's Office of Consumer Affairs and Dispute Resolution Services 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.
  • 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 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.

The following additional solutions were also reported by Commissioner Dye, which will continue to be developed during the second phase of the investigation: best practices discussion pairs between shippers and carriers, carrier representatives to serve on Rapid Response Teams, development of model service contract terms, and the establishment of industry and FMC staff working groups to address export capacity and container availability.

Commissioner Dye stated that "These immediate and longer-term actions will result in a more efficient ocean transportation system and improve the international supply chain for American exporters and importers."

In Chairman Lidinsky's testimony, he noted President Obama's initiative to increase exports, and said that "as you survey the government-wide response to assist U.S. exporters thus far, I cannot think of a better example than the extraordinary efforts of Commissioner Dye and her team."

During questioning from the Congressional Subcommittee, Chairman Lidinsky suggested that Congress could 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.