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Remarks by Commissioner Louis E. Sola, Federal Maritime Commission International Trade Day World Trade Center Miami

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Thank you very much.  It is my honor to be here today with all of you.  In my short time at the FMC, I have had the opportunity to meet with many of our stakeholders and visit several different ports; but coming home to Miami is a special treat.  Estoy en Casa!  And in reference to the former Governor of Alaska, I can see PortMiami from my living-room balcony.  It is good to be home; and I am excited to be here in my new role as a Commissioner of the Federal Maritime Commission – especially as we take this opportunity to celebrate National Maritime Day.

The SS Savannah was an early hybrid vessel built in America which employed both a steam engine and sails.  On May 22, 1819, she departed Savannah harbor and arrived in Liverpool, England on June 20th, thus marking the first successful crossing of the Atlantic Ocean by a vessel with steam propulsion.  Congress declared May 22nd as National Maritime Day in 1933 to celebrate the SS Savannah’s historic achievement.

Maritime Day is a time-honored tradition that recognizes one of our country’s most important industries. This year, ceremonies and celebrations throughout the country will recognize Maritime Day and the people on which our great maritime nation depend.

While I am most looking forward to learning how all of you interact with international trade community, I thought I would take the opportunity to introduce myself, discuss the role of the Federal Maritime Commission and then provide a few comments about some of the current events at the Commission.

I don’t think I need to impress upon you how vital international trade and the maritime industry is to our national economic interests.  So let me take a few minutes to discuss what we do, including who we regulate and how we go about doing so.

As many of you know, the FMC is an independent regulatory agency established in 1961 with 5 Commissioners appointed by the President and confirmed by the Senate.  We are headquartered in Washington, DC, with field offices in New Orleans, Houston, New York/New Jersey, Miami, Los Angeles/Long Beach and Seattle.

The agency’s critical mission is to ensure a competitive and reliable international ocean transportation system – a system which supports the U.S. economy while protecting the public from unfair and deceptive practices.  To carry out that mission, we focus on promoting competition, not individual competitors.

The Commission not only implements the Shipping Act, but also portions of the Merchant Marine Act of 1920 and the Foreign Shipping Practices Act of 1988.  Collectively, the latter two allow the Commission to take steps to remove non-market barriers to ocean transportation in U.S. foreign commerce, and to redress foreign carriers or governments adversely affecting U.S.-Flag carriers in U.S. foreign commerce.  We also have a role with respect to Cruise lines, where we issue certificates to ensure that lines are financially prepared in the event of death or injury of a passenger or in the event of a nonperformance of a cruise.

The purpose of the Shipping Act is to: establish a nondiscriminatory process with minimal government intervention and cost; provide an efficient and economic transportation system; encourage development of a U.S. flag liner fleet for national security needs; and to promote the growth of U.S. exports with a reliance on the marketplace. The Commission overseas a regulatory regime that includes: Vessel-Operating Common Carriers (VOCCs); Marine Terminal Operators (MTOs); Ocean Transportation Intermediaries (OTIs) – which includes; Non-vessel Operating Common Carriers (NVOCCs), and Freight Forwarders, and finally, cruise lines (for the purpose of non-performance and casualty)

As it relates to VOCCS and MTOs, and on the 10,000-foot level, the Commission administers a focused antitrust regime by continually monitoring cooperative agreements which are filed at the Commission.  The system allows the parties to achieve operating efficiencies and cost savings through their collaborative agreements; and it affords the Commission the ability to monitor for signs of improper collusion or overly anticompetitive behavior, and to then respond accordingly. Our ongoing monitoring and compliance system are constantly evolving in response to changes in agreements, the industry, and the marketplace.

On the 100-foot level, and as I’m sure many of you know, Ocean Transportation intermediaries (including NVOCCs and Freight Forwarders) operate as the middlemen between shippers and the VOCCs.  We license OTIs by reviewing their experience and character to identify, and weed out, the unscrupulous operators.  OTIs are then required to provide proof of financial responsibility to protect the shippers.  A list of the licensed OTIs is available to the public on our web page.  This system provides clarity in the marketplace by affording the public with a resource to be able to assess the companies with whom they are choosing to do business.

OTIs, MTOs and VOCCs are all further regulated through several prohibited acts which aim to ensure that their activities do not amount to unfair or deceptive practices.  Just a few examples of the prohibited acts include: cargo misdescription or misdeclaration, illegal rebating, unlicensed or unbonded OTI activities, unfair or unjust discrimination and unreasonable practices. Our stakeholders all have recourse at the Commission if a regulated entity runs afoul of the prohibitions.  Private parties can file a complaint at the Commission seeking damages; and our Bureau of Enforcement enforces the provisions through penalties.

We also work with other federal agencies by sharing information so that we can all meet our missions most effectively.

  • On the import side, since 2013, we have been a Participating Government Agency in the Automated Commercial Environment (ACE) system with U.S. Customs and Border Protection;
  • And on the Export side, since 2012, we have been a Participating Government Agency in the Automated Export System (AES) with U.S. Census, as well as a member of the Board of Directors of the International Trade Data System (ITDS);
  • We are also a Member of the National Intellectual Property Rights Coordination Center led by U.S. Immigration and Customs Enforcement (ICE).

Collaboration with other federal agencies is a win-win.  It provides efficiencies for the shipper by eliminating redundancy in the collection of information – and affords the federal agencies access to information which may otherwise be more difficult to obtain.

This is a very active time at the Commission as we are continually looking for ways to better serve an ever-changing industry.

  • We are engaged in a systematic review of our rules to continue implementing the Administration’s regulatory reform initiative. The initiative ensures that we will be able to effectively reduce regulation and control regulatory costs while fulfilling our mission.  I strongly support both the Administration’s and Chairman Khouri’s efforts to review regulations to promote job growth and to address regulations that are outdated, unnecessary or not cost effective.
  • Commissioner Rebecca Dye is leading an investigation to examine carrier and marine terminal practices in assessing detention, demurrage, and per diem charges. These are fees cargo shippers pay when a container sits on a terminal beyond allowed “free time” or a container is not returned to an ocean carrier within an agreed period. Commissioner Dye is in the final phase of this effort and we all look forward to her recommendations in September.
  • This is also a time of significant transition in the industry. One area of uncertainty in the coming year is the International Maritime Organization’s mandate for vessels to either burn low Sulphur fuel or to install exhaust stack scrubbers to remove sulphur from higher sulphur bunker fuels. The mandate begins in January 2020 and estimated implementation and industry wide compliance costs will run as high as $15 billion a year. Normally, ocean carriers will try to pass these added direct costs on to shippers. The Commission is monitoring this issue to ensure that carrier cost recovery efforts do not violate the Shipping Act and harm U.S. exporters and consumers.

With that, let me again say thank you for the opportunity to be here today.  I look forward to working with all of you in the days ahead.   I’m happy to answer any questions you may have.