Statement of Chairman Michael A. Khouri: Letter to the Editor, Lloyd’s List

Chairman Michael A. Khouri released the below Letter to the Editor (paywall), submitted to Lloyd’s List earlier this month.  In his correspondence, Chairman Khouri answers an Opinion piece suggesting that regulatory agencies are an impediment to addressing the issue of misdeclared hazardous cargoes.  The Chairman stated the shared concern the Federal Maritime Commission has regarding misdeclared cargoes, clarified that mechanisms exist under U.S. law that allow ocean carriers to work cooperatively to address the issue, and provided assurances that the FMC would be receptive to considering any proposals from ocean carriers on this matter.

Dear Sir:

I am writing in response to the Opinion in your January 18 Daily Briefing entitled “Regulators’ distrust of container lines puts lives at risk.”  As Chairman of the U.S. Federal Maritime Commission, I must respectfully take issue with the overall conclusion as well as several specifics in the Opinion article.

The FMC is the U.S. agency responsible for economic regulation of ocean borne transportation in American foreign commerce. The U.S. Congress charged the FMC with responsibility to ensure competitive and efficient ocean transportation services for the shipping public and to protect the public from unfair and deceptive practices. The Commission’s prime meridian is Competition and Integrity for America’s Ocean Supply Chain.

While maritime safety itself is not the direct mission of the FMC, we do have a strong interest in this issue. Misdeclared hazardous cargoes stowed aboard vessels endanger lives, adjacent cargo, and the ship. Such cargo misdeclaration also threatens the integrity of our maritime supply chain and harms the Nation’s commerce. Further, misdeclaring cargo violates the U.S. Shipping Act, the statute that the FMC is charged with enforcing.

The FMC shares the concern expressed by senior container line executives about finding a mechanism to address misdeclaration of cargoes. While we are keenly watchful of commercial cooperation among competitors that might unreasonably reduce competition, reduce service, or unreasonably raise shipping rates; agreements by and among competitors filed with the FMC do allow ocean carriers to cooperate to achieve certain common objectives. Such agreements also provide for FMC oversight.

I personally have met with officials from the container line companies during my tenure as Chairman and encouraged them to use the approved mechanisms available through the U.S. Shipping Act with FMC monitoring to help address misdeclared cargoes that endanger mariners, cargo property, and vessels. My fellow Commissioners have joined me in this encouragement. In addition, the FMC actively cooperates with other U.S. agencies to detect and address misdeclared cargoes, and we will revoke the licenses of any ocean transportation intermediary who participates in such unlawful activity.

Finally, I take issue with the view that ocean carriers have had a difficult relationship with regulators in Washington and the conclusion that now might not the best time for carriers to engage with regulators on this issue by reason of soaring freight rates and disruption in the supply chain. I, and my fellow Commissioners, have had many conversations with ocean carrier executives on these issues and such productive dialog will continue in the future. I think the container lines would agree that they have always had an open door and a respectful, cordial audience at the FMC – particularly on issues such as this. Furthermore – and most importantly – NO reason should or will inhibit such discussions when loss of mariners lives at sea is at stake.

Michael A. Khouri
Chairman
Federal Maritime Commission