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COMMENTS OF FEDERAL MARTIME COMMISSIONER 

REBECCA F. DYE

2010 MIDWEST SPECIALTY GRAINS CONFERENCE & 

TRADE SHOW

OCTOBER 5, 2010

Thank you for inviting me to speak to you today. I was 

very pleased when Bruce Abbe, Executive Director of 

the Midwest Shippers Association, asked me to 

appear here.

My remarks reflect my own individual views and are 

not offered as the official position of the Federal 

Maritime Commission.

ECONOMIC DOWNTURN

During the economic downturn, U.S. importers,

exporters, and ocean carriers, like every other sector 

of the global economy, faced the most significant 

economic challenges of at least a generation. 
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During 2009, U.S. liner exports fell by 14 percent and 

imports fell by 16 percent. Freight rates plummeted 

as carriers laid up over 575 vessels worldwide. 

FACT-FINDING NO. 26

Early this year, the Federal Maritime Commission 

received reports that importers and exporters had 

difficulty obtaining vessel space, particularly in the 

U.S.-Asia trades. 

We also received reports that U.S. exporters were 

losing sizable overseas sales due to the distribution 

and availability of shipping containers.

Due to our concerns about the causes of these vessel 

capacity and equipment constraints, as well as 

concerns about whether those constraints could 

hinder the U.S. economic recovery, the Commission 

ordered the Fact-Finding Investigation on Vessel 

Capacity and Equipment Availability in the United 

States Export and Import Liner Trades. 
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As you know, I was named the Fact-Finding officer.

The Commission authorized a full and fair “nonadjudicatory” investigation to explore ways to 

address the current vessel capacity situation, in light 

of our limited statutory authority in this area. 

Investigation Background

The first phase of my investigation involved an 

intensive series of confidential interviews with 

American exporters and importers, including some of 

the country’s largest companies. We also interviewed 

executives of 14 ocean carriers operating in the U.S. 

transpacific trade. 

In addition, we interviewed shippers’ associations, 

ocean transportation intermediaries, freight software 

providers, chassis pool experts, container lessors, 

transportation academics, and international ocean 

carrier investment consultants. 

We talked to port officials and railroad executives. 

We consulted with the American Association of 

Railroads and the Intermodal Association of America. 

Finally, we had an extremely valuable discussion with 
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the Surface Transportation Board.

I especially appreciate the willingness of the 

Burlington Northern Santa Fe Railway to participate 

in the investigation.

Investigation Findings

Both shippers and carriers identified the fundamental 

problem as a lack of additional capacity to handle the 

increase in cargo as international trade began to 

recover from the industry crisis of 2008 and 2009. 

Shippers expressed the opinion that the ocean 

carriers continued to withhold vessel capacity from 

the market in a collective effort to raise prices by 

leveraging access to scarce capacity and equipment.

They believed that carrier practices involving rolled 

cargo, cancelled bookings, and successive price 

increases were in conflict with protections in their 

existing service contracts. 

Shippers also reported that their service contracts did 

not protect them from numerous rate and surcharge 
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increases. Their service contracts also did not provide 

the volume forecasting specificity necessary to assure 

them of vessel space and equipment.

Carriers responded that they were reluctant to bring 

vessel capacity back into the U.S. trades quickly, given 

the precariousness of their financial positions and the 

lack of certainty that recent, unanticipated increases 

in import and export demand would be sustainable. 

They explained their capacity decisions as sound 

business decisions made by individual lines, and said 

they believed that problems with rolled cargo and 

cancelled bookings were exacerbated by multiple 

bookings by shippers

Westbound Pacific Trade

In the westbound Pacific trade, shippers and carriers 

agreed that U.S. exporters face additional problems 

obtaining vessel space and equipment. Although 

these problems were exacerbated by the economic 

turmoil, they are chronic and serious. 

In the transpacific, average freight rates are higher 

eastbound than westbound. For this reason, ocean 
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carriers deploy vessel capacity based on demand for 

U.S. imports. When available capacity for U.S. 

imports is limited, U.S. exporters also experience 

higher levels of vessel capacity shortages. 

 

Another vessel capacity problem facing exporters 

concerns the issue of vessels “weighing out.” U.S. 

exports, such as forestry products and grain, can 

weigh, on average, twice as much as imports. This 

weight disparity limits the number of filled export 

containers that may be carried on an outbound 

vessel.

During the interviews, shippers and carriers agreed 

that ocean container shortages exist throughout the 

country for a number of reasons, including the fact 

that many containers carrying imports arrive at 

distribution centers far removed from many export 

locations. 

A shortage of containers worldwide was also 

exacerbated due to the virtual halt in container 

manufacturing from late 2008 though 2009. 

The practice of transloading imports into domestic 

containers near ports of entry may increase the 
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likelihood that empty ocean containers will be 

shipped back to Asia to be used for higher paying 

Asian exports.

FMC ACTION

At the FMC meeting held last June, the Commission 

adopted the recommendations of my interim report, 

and took action in several areas to provide positive 

changes in U.S. ocean transportation.

Increased Commission Oversight

The Commission voted to increase oversight of the 

Transpacific Stabilization Agreement (TSA) and the 

Westbound Transpacific Stabilization Agreement 

(WTSA) by requiring verbatim transcripts of certain 

Agreement meetings. 

The Commission further directed our staff to prepare 

recommendations for prompt Commission action on

ways to increase oversight of Global Vessel Alliances. 
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Rapid Response Teams

The Commission has established “Rapid Response 

Teams” within the Commission’s Office of Consumer 

Affairs and Dispute Resolution Services to provide 

solutions for disputes between shippers and carriers.

If you are involved in a dispute with an ocean carrier 

or intermediary, please go to our website at 

www.fmc.gov and click on Rapid Response Teams on 

the right hand column. 

Identify your problem as urgent, and our staff will 

handle these complaints as quickly as possible. We 

want to provide practical, “real time” solutions to 

make your problems “go away!”

The staff has formal mediation training to address 

your problems with a more formal approach, if 

necessary. 

All public contact with our Office of Consumer Affairs 

and Dispute Resolution Services is handled on a 

confidential basis, and we only contact the ocean 

carrier with the shipper’s permission. The best and 

fastest outcomes usually result from a shipper with 
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the most specific and detailed information about the 

problem.

Even if you decide that you do not want the 

Commission to take action on your problem, please 

give us a call.

Although we cannot give legal opinions about service 

contractual obligations, we are available to discuss 

other options with you.

For the first time, ocean carriers have each named 

representatives to work directly with our Rapid 

Response Teams to quickly address capacity and 

other urgent problems that arise between shippers 

and carriers. We currently have 16 carriers in the 

program. 

The carrier representatives have guaranteed that they 

will respond to a specific complaint brought to their 

attention by the Commission within 24 hours. 

Of course, this process is available for carriers who 

have disputes with their customers. 
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I am very excited about the possibilities for this new 

program. We believe this approach will promote 

business relationships and avoid costly legal 

processes. 

Best Practices

We have also held “best practices” discussions

between shippers and carriers to consider ways to 

resolve the most pressing problems with current 

carrier practices.

Six exporter and six carrier representatives travelled 

to Washington last month to engage in discussions on 

various carrier customer service topics. These oneon-one discussions were productive, and I believe the 

direct carrier-customer discussion format will be 

extremely useful for future discussions.

Export Capacity Working Group

The Commission has also held initial discussions of an 

Export Forecasting Working Group composed of 

shippers and ocean carriers who have met with the 

Commission to discuss the availability of future vessel 
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capacity for U.S. exports.

 

The Commission intends to organize future meetings 

of this type to assure that accurate export capacity

forecasting is available to ocean carriers.

Contract Enhancements

Based upon our discussions with shippers and carriers 

about the shortcomings of certain ocean service 

contracts, our Commission staff has developed 

suggestions for service contracts that will improve the 

mutuality of understanding that is necessary for 

successful business arrangements.

We will publish these suggestions on our website 

later this year.

Export Equipment Availability

The Commission is also organizing an intermodal 

working group to address the chronic unavailability of 

export containers for certain American exporters.

I was encouraged by the announcement in August 

about the new intermodal facility in Minot, North 
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Dakota. Facilities of this type will help alleviate the 

chronic equipment shortages in this part of the 

country.

VESSEL CAPACITY AND TRADE FORCASTS

Transpacific vessel capacity deployed in September, 

2010, is 27 percent higher than in January, 2010, and 

15 percent higher when compared to September of 

2009. This has mitigated some of the most severe 

problems encountered by shippers earlier this year.

Import volumes have remained relatively strong 

through early October. Following the Chinese 

National Day holidays in early October, the picture of 

import trade volume is unclear. Although there are 

reports of declining spot rates in certain China to 

West Coast trades, future import demand is difficult 

to predict. 

The peak season for many U.S. agricultural exports 

comes during the winter when the import trade 

decreases. Many agricultural exporters are 

concerned that the problems of vessel space and 

equipment shortages that plagued them earlier this 
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year will return later this fall and early winter. 

This problem may be exacerbated by a large grain and 

cotton crop in the Midwest, depending on how wet 

the weather remains until harvest. 

This comes at a time when there is a large increase in 

world demand for U.S. commodities due to the failure 

of crops in other countries and an increase in Chinese 

demand for a number of U.S. commodities, 

particularly U.S. cotton. 

Industry experts predict that approximately 1.5 

million containers will be manufactured during 2010. 

While this is a substantial increase over 2009, it is still 

only about half as many which were produced in 

2008. 

REGULATORY RELIEF

If the Commission identifies regulatory relief that 

would not substantially reduce competition or be 

detrimental to commerce, I believe we may and, that 

we should, provide this relief. 
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Especially under today’s economic conditions, we 

should grant reasonable exemptions to simplify the 

business processes of American companies, put cash 

back into businesses, and generate additional 

American jobs.

The Commission published a proposed rule to relieve 

certain ocean transportation intermediaries from the 

costs and burdens of publishing in tariffs the rates 

they charge for cargo shipments. 

I strongly supported this rule which, according to 

comments filed with the Commission, could save 

many American businesses up to $200,000 per year. 

These savings could allow many businesses to hire 

additional American workers.

ANTITRUST IMMUNITY

I know that many of you are also interested in the 

European Commission’s decision to repeal the 

exemption from the ban on restrictive business 

practices for liner conferences and how that affects 
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the U.S. liner trades.

Currently, the Commission is collecting data and 

stakeholder information for our study on the 

impact of the E.U.’s October, 2008, repeal of its 

liner conference block exemption.

Our study will cover five complete calendar years, 

from January 1, 2006, to December 31, 2010. 

The global economic downturn creates substantial 

challenges for our effort to isolate the effects of the 

E.U.’s elimination of the conference exemption 

from broader economic trends. Consequently, we 

are looking at ways to develop a comparative 

analysis addressing the issue.

In order to learn about stakeholder’s experiences 

before and following the E.U. block exemption 

repeal, we are having discussions with shippers, 

shipper councils, ocean transportation intermediary 

organizations, representatives of port authorities, 
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and ocean carriers.

CONCLUSION

My authority under Fact Finding 26 ends at the end of 

next month. As we move forward, I am keeping two 

goals in mind:

1)The United States must have a reliable 

international supply chain for U.S. importers and 

exporters, and 

2)No American exporter should lose an international 

sale due to the unavailability of ocean 

transportation.

I intend to pursue these goals with your continued 

assistance and support.

Thank you very much.