FEDERAL MARITIME

COMMISSION

 

39th

ANNUAL REPORT

for

 Fiscal Year

2000

[Seal]
-iTABLE OF CONTENTS

LETTER OF TRANSMITTAL ................................ iii

MEMBERS OF COMMISSION ............................. v

SENIOR COMMISSION OFFICIALS ......................... vii

I. THE COMMISSION

A. History ........................................ 1

B. Functions ...................................... 1

C. Organization .................................... 4

II. THE YEAR IN REVIEW .............................. 7

A. Developments in U.S. Trade ........................ 7

B. Restrictive Trade Practices ...................... 11

C. Trade Oversight ................................ 12

D. Consumer Complaints ........................... 13

E. Enforcement ................................... 15

 

III. MONITORING AND ENFORCEMENT

A. Monitoring .................................... 17

B. Enforcement .................................. 19

IV. DEVELOPMENTS IN MAJOR U.S. FOREIGN TRADES

A. Transatlantic ................................... 21

B. Mediterranean ................................ 24

C. Middle East ................................... 25

D. Africa ....................................... 26

E. Latin America and the Caribbean ................... 28

F. Transpacific .................................. 32

G. Worldwide .................................... 34

V. THE FOREIGN SHIPPING PRACTICES ACT OF 1988

A. General ....................................... 37

B. Top Twenty U.S. Liner Cargo 

 Trading Partners ............................. 38
-iiVI. SIGNIFICANT OPERATING ACTIVITIES BY

ORGANIZATIONAL UNIT

A. Office of the Secretary ............................ 43

B. Office of Administrative Law Judges ............... 45

C. Office of the General Counsel ...................... 49

D. Office of Equal Employment Opportunity ........... 65

E. Office of Inspector General ........................ 67

F. Office of the Executive Director ................... 71

G. Bureau of Consumer Complaints and Licensing ........ 83

H. Bureau of Enforcement .......................... 91

I. Bureau of Trade Analysis ......................... 95

 

APPENDIXES

A. Organization Chart ............................. 111

B. Commission Proceedings ........................ 112

C. Agreement Filings and Status ..................... 113

D. Form FMC-1 Tariff Location Addresses - 

 Electronic Service Contract Filings

 and Special Permission Applications ............ 114

E. Civil Penalties Collected ......................... 115

F. Investigations ................................. 116

G. Statement of Appropriations, Obligations

 and Receipts ................................. 117
FEDERAL MARITIME COMMISSION

WASHINGTON, D.C. 20573-0001

March 31, 2001 

To the United States Senate and House of Representatives:

Pursuant to section 103(e) of Reorganization Plan No. 7

of 1961, and section 208 of the Merchant Marine Act, 1936,

as amended, I am pleased to submit the 39th Annual Report

of the activities of the Federal Maritime Commission for

fiscal year 2000.

Sincerely,

Harold J. Creel, Jr.

Chairman
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-vMEMBERS OF COMMISSION 

Harold J. Creel, Jr.

Chairman

Appointed 1994

Term Expires 2004

 

Delmond J.H. Won John A. Moran

Commissioner Commissioner

Appointed 1994 Appointed 1998

Term Expires 2002 Term Expired 2000

 

 Joseph E. Brennan Antony M. Merck

Commissioner Commissioner

Appointed 1999 Appointed 2000

Term Expires 2003 Term Expires 2001

-viiSENIOR COMMISSION OFFICIALS

Counsel to the Chairman ............. David R. Miles

Secretary ..................... Bryant L. VanBrakle

Chief Administrative Law Judge ..... Norman D. Kline

General Counsel .............. Thomas Panebianco

Director, Office of 

 Equal Employment Opportunity . . Alice M. Blackmon

Inspector General ................ Tony P. Kominoth

Executive Director ............ Bruce A. Dombrowski

Deputy Executive Director .......... Florence A. Carr

Director, Bureau of Consumer

 Complaints and Licensing .... Sandra L. Kusumoto

Director, Bureau of Enforcement ........ Vern W. Hill

Director, Bureau of

 Trade Monitoring ............... Austin L. Schmitt

 
I

THE COMMISSION

A. HISTORY

The Federal Maritime Commission (“Commission” or “FMC”)

was established as an independent regulatory agency by

Reorganization Plan No. 7, effective August 12, 1961. Prior to that

time, the Federal Maritime Board was responsible for both the

regulation of ocean commerce and the promotion of the United States

Merchant Marine. Under the reorganization plan, the shipping laws

of the U.S. were separated into two categories -- regulatory and

promotional. The responsibilities associated with the promotion of an

adequate and efficient U.S. Merchant Marine were assigned to the

Maritime Administration, now located within the Department of

Transportation. The newly-created FMC was charged with the

administration of the regulatory provisions of the shipping laws. 

The Commission is now responsible for the regulation of

oceanborne transportation in the foreign commerce of the U.S. The

passage of the Shipping Act of 1984 (“Shipping Act” or “1984 Act”)

brought about a major change in the regulatory regime facing shipping

companies operating in the U.S. foreign commerce. The subsequent

passage of the Ocean Shipping Reform Act of 1998 (“OSRA”) as a

series of deregulatory amendments and modifications to the 1984 Act

further signaled a significant paradigm shift in shipping regulation. 

B. FUNCTIONS

The principal statutes or statutory provisions administered by

the Commission are the 1984 Act, the Foreign Shipping Practices Act

of 1988 (“FSPA”), section 19 of the Merchant Marine Act, 1920

(“1920 Act”), and Pub. L. No. 89-777. All of these statutes were

amended and modified by OSRA, which took effect on May 1, 1999.
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The Commission's regulatory responsibilities include:

# Protecting shippers and carriers engaged in the

foreign commerce of the U.S. from restrictive or

unfair foreign laws, regulations, or business

practices that harm U.S. shipping interests or

ocean trade. 

# Reviewing operational and pricing agreements

among ocean common carriers and marine

terminals, to ensure that they do not have

excessively anticompetitive effects.

# Reviewing and maintaining a database of service

contracts between ocean common carriers and

shippers, and using this database to guard against

anticompetitive practices and other unfair

prohibited acts.

# Ensuring that common carriers’ accurate rates

and charges are accessible to the shipping public in

private, electronically accessible systems. 

# Regulating rates, charges, and rules of

government-owned or -controlled carriers to

ensure that they are just and reasonable and are

not unfairly undercutting private competitors.

# Issuing passenger vessel certificates evidencing

financial responsibility of vessel owners or

charterers to pay judgments for personal injury or

death or to repay fares for the nonperformance of

a voyage or cruise.
-3-

# Licensing ocean transportation intermediaries

(“OTIs”) to protect the public from unqualified,

insolvent, or dishonest companies.

# Ensuring that OTIs maintain bonds that protect

the shipping public from financial loss.

# Investigating discriminatory rates, charges,

classifications, and practices of common carriers,

terminal operators, and OTIs operating in the

foreign commerce of the U.S.

The Commission is authorized by the FSPA, section 19 of the

1920 Act, and section 13(b)(6) of the 1984 Act, to take action to

ensure that the foreign commerce of the U.S. is not burdened by nonmarket barriers to ocean shipping. The Commission may take

countervailing action to correct unfavorable shipping conditions in

U.S. foreign commerce and may impose penalties to address actions

by carriers or foreign governments that adversely affect shipping in the

U.S. foreign oceanborne trades or that impair access of U.S.-flag

vessels to ocean trade between foreign ports.

The 1984 Act is applicable to the operations of common

carriers and other persons engaged in U.S. foreign commerce. It

exempts agreements that have become effective under the 1984 Act

from the U.S. antitrust laws, as contained in the Sherman and Clayton

Acts. The Commission reviews and evaluates agreements to ensure

that they do not exploit the grant of antitrust immunity, and to ensure

that agreements do not otherwise violate the 1984 Act or result in an

unreasonable increase in transportation cost or unreasonable reduction

in service.

In addition to monitoring relationships among carriers, the

Commission is also responsible for ensuring that individual carriers, as

well as those permitted by agreement to act in concert, fairly treat

shippers and other members of the shipping public. The 1984 Act
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prohibits carriers from unduly discriminating among shippers and

other members of the shipping public. The 1984 Act also requires

carriers to make their rates, charges and practices available in tariffs

that must be open to public inspection. Carriers may only assess the

published rates and charges. The Commission does not have the

authority to approve or disapprove general rate increases or individual

commodity rate levels in the U.S. foreign commerce, except with

regard to certain foreign government-owned or -controlled carriers.

Ocean common carriers also are required to file with the Commission

all service contracts negotiated with shippers. The Commission has

developed an Internet-based system for the electronic receipt of such

contracts. Pursuant to the 1984 Act, all such contracts are provided

confidential treatment by the Commission.

Pub. L. No. 89-777 requires the operators of passenger vessels

with 50 or more berths, who embark passengers at U.S. ports, to

establish financial coverage to indemnify passengers in cases of death,

injury, or nonperformance of transportation. The Commission

certifies such operators upon the submission of satisfactory evidence

of financial responsibility. The Commission ensures that all OTIs

operating in the foreign commerce of the U.S. are appropriately

bonded to protect shippers from financial loss. Additionally, the

Commission licenses all U.S. intermediaries. 

The Commission carries out its regulatory responsibilities by

conducting informal and formal investigations. It holds hearings,

considers evidence and renders decisions, and issues appropriate

orders and implementing regulations. The Commission also

adjudicates disputes involving the regulated community, the general

shipping public, and other affected individuals or interest groups.

C. ORGANIZATION

The Commission is composed of five Commissioners

appointed for five-year terms by the President with the advice and

consent of the Senate. Not more than three members of the
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Commission may belong to the same political party. The President

designates one of the Commissioners to serve as Chairman. The

Chairman is the chief executive and administrative officer of the

agency.

The Commission’s organizational units consist of: Office of

the Secretary; Office of the General Counsel; Office of the Inspector

General; Office of Administrative Law Judges; Office of Equal

Employment Opportunity; Office of the Executive Director; Bureau

of Consumer Complaints and Licensing; Bureau of Enforcement; and

Bureau of Trade Analysis. The Executive Director assists the

Chairman in providing executive and administrative direction to the

Commission’s bureaus. These offices and bureaus are responsible for

the Commission’s regulatory programs or provide administrative

support.

In fiscal year 2000, the Commission was authorized a total of

180 full-time equivalent positions and had a total appropriation of

$14,097,000. That appropriation supported the actual employment of

128 full-time equivalent positions during the fiscal year. The majority

of the Commission’s personnel are located in Washington, D.C., with

area representatives in New York, New Orleans, Los Angeles, Miami

and Seattle.
-6-
-7-

II

THE YEAR IN REVIEW

The Commission’s fiscal year once again was strongly

influenced by the recently enacted Ocean Shipping Reform Act of

1998 (“OSRA”), which became effective May 1, 1999. Despite its

limited resources, the Commission assisted the ocean transportation

industry as it adjusted to the new statute and the Commission’s

implementing regulations. In addition, the Commission completed a

major reorganization of its various offices, so that it could more

appropriately respond to the changes wrought by OSRA. The

Commission also initiated a two-year review of the impact of OSRA

on the ocean transportation industry. An interim status report was

issued on June 22, 2000, and the Commission continues to gather and

analyze data for the issuance of a final report during the summer of

2001. 

This Annual Report is structured on an office-by-office basis

and contains a synopsis of each unit's activities and accomplishments

during the past fiscal year. Special sections are devoted to areas of

particular interest. This section summarizes some of the Commission's

major accomplishments during the year. 

A. DEVELOPMENTS IN U.S. TRADE

In fiscal year 2000, conditions in the major trades improved for

ocean carriers operating liner services despite rising fuel prices. Rate

recovery programs and cost reduction measures purportedly

strengthened the financial position of many carriers. In addition, both

carriers and shippers received benefits from the new service contract

process under OSRA. Direct contract negotiations outside of the

conference structure reportedly resulted in more customized contracts

and closer partnerships between individual carriers and shippers. 
-8-

New developments in shipping services also were noticeable.

While some of the major liner operators had been developing valueadded logistics services for a number of years, several other carriers

announced that they were significantly increasing their investment in

this type of service. For example, American President Lines (“APL”)

announced that it planned to increase its value-added logistics

operations, and anticipated that eventually this facet of its business

would overshadow its traditional, core liner operations. In addition,

while carriers had been individually developing Internet-based service

functions for several years, a group of major carriers were finalizing

plans to develop a single Internet portal designed to allow shippers

and forwarders to transact a variety of business through a single web

site. 

In the transatlantic trade between the U.S. and North Europe,

notable events included the trade imbalance favoring U.S. liner

imports, as well as the high degree of carrier agreement activity. U.S.

liner imports exceeded U.S. liner exports by 47 percent. Carriers

endeavored to address problems such as uneven capacity utilization

levels, depressed freight rates, and container repositioning to meet

U.S. import demand. With import growth at 13 percent, members of

the Trans-Atlantic Conference Agreement (“TACA”) sought to raise

freight rates from the levels that had been established during the

preceding period. Over the fiscal year, TACA introduced general rate

increases (“GRIs”) in the westbound direction, and several modest

GRIs in the eastbound direction. The conference’s ability to

collectively raise rates, however, was limited by the fact that most of

the trade’s cargo moved under individual service contracts. TACA

also faced greater competition from independent carriers and lost its

majority share of the trade. In the area of agreements, several longstanding vessel-sharing agreements (“VSAs”) in the trade were

terminated. However, Maersk Sealand entered into a VSA with the

New World Alliance, while P&O Nedlloyd and OOCL, under the

Grand Alliance, entered into a VSA with Americana Ships. New

carriers also entered as Compania Sud Americana de Vapores,

Norasia, and Compagnie Maritime d’Affretement-Compagnie
-9-

Generale Maritime expanded into the transatlantic through separate

slot charter agreements with established carriers.

Liner import growth from the Mediterranean increased 13

percent, as the U.S. demand for home furnishings from that region

remained strong. U.S. liner exports saw some modest growth in

response to improved economic conditions among Mediterranean

nations. Intense competition among carriers in the trade kept rates

low despite an attempt by the United States South Europe Conference

to increase rates in the stronger westbound direction.

In the Middle East, benefits derived from escalating oil prices

stimulated the economies of Saudi Arabia and other oil-producing

nations of the Persian Gulf. While U.S. liner export growth slowed

during the fiscal year, future projections on the demand for U.S.

goods were favorable with the increase in money flowing to oil-rich

nations. Liner imports from the Middle East were strong with high

consumer demand in the U.S. for such goods as plastics, apparel and

furniture.

In Africa, economic and trade conditions remained depressed

despite the large influx of financial aid and assistance from

international organizations. Trade between African nations and the

rest of the world was hampered by significant trade barriers and lack

of regional integration and trade-promoting institutions. Liner cargo

volume between the U.S. and Africa was modest at approximately

one percent of total U.S. trade. Despite these conditions, liner

conferences operating in Africa introduced moderate rate increases,

while some carriers expanded their services and upgraded vessels on

existing services.

Overall, liner trading between the U.S. and Latin America and

the Caribbean was weak. Some noticeable improvement in cargo

growth, however, occurred in the U.S. trades with the East Coast of

South America and the Caribbean. New liner services and vessel

upgrades contributed to problems of overcapacity in the region.
-10-

Nonetheless, carriers endeavored to coordinate rate recovery

programs by implementing GRIs through discussion agreements in the

various trades. New surcharges also were imposed by carriers relating

to costs incurred from regional government regulation, security, and

theft problems. Carrier agreement activity included the formation of

a new discussion agreement in the trade between the U.S. Gulf Coast

and South America. Also, several existing discussion agreements filed

amendments to allow their parties to enter into joint service contracts.

In the transpacific, a trade imbalance continued to favor U.S.

liner imports in the eastbound direction from Asia, even though U.S.

liner exports in the westbound direction were recovering from the

recessionary declines of the preceding years. In response to strong

import growth, carrier members of the Transpacific Stabilization

Agreement (“TSA”) implemented a GRI and several surcharges in the

eastbound trade. TSA members further announced plans for future

GRIs and surcharges. However, a number of factors, including

competition from new carriers, have kept recent rate increases by TSA

members relatively low in contrast to preceding years. In the

westbound trade, capacity utilization and freight rates for members of

the Westbound Transpacific Stabilization Agreement reportedly rose

during the fiscal year after significantly declining in past years. In

particular, rate increases were implemented on U.S. refrigerated

produce to Asian nations. As for service matters, carriers increased

their all-water services through the Panama Canal for Asian cargo

moving to and from the U.S. East Coast. Fears of possible congestion

and delays at U.S. West Coast ports during the peak season may have

prompted this increase in all-water service.
-11-

B. RESTRICTIVE TRADE PRACTICES

One of the Commission’s primary missions is to identify and

eliminate protectionist practices of other countries that favor their

domestic companies or discriminate against U.S. trade interests in

ocean shipping. In this regard, the Commission may issue rules in

response to foreign practices that create conditions unfavorable to

U.S. shipping in general. It also may institute countervailing sanctions

in response to foreign laws or policies that adversely affect U.S.

carriers. And it can initiate appropriate action in instances where a

U.S.-flag vessel faces unfair barriers in entering a foreign-to-foreign

trade. 

In fiscal year 2000, the Commission continued its active

approach in this area. In particular, the Commission continued to

address situations in the People’s Republic of China (“PRC”) and

Japan.

The staff has prepared draft proposals for action to address

unfair practices in the PRC. The Commission is monitoring the

anticipated accession of the PRC to the World Trade Organization but

continues to assess the situation, and is weighing whether formal

proposals for action may yet be appropriate to address these

circumstances. Should the Commission determine that formal

proposals for remedial action are warranted, these proposals will be

noticed for public comment prior to their effectiveness.

The Commission continues to monitor regulations and port

practices in Japan through the semiannual reports filed pursuant to a

1999 order. There have been recent indications that Japanese efforts

at deregulation may have had mixed results. The Commission will

continue to watch closely the situation in Japan in the upcoming fiscal

year. 

Finally, an International Task Force, made up of key personnel

in the Office of the General Counsel and the Bureaus of Enforcement,
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Consumer Complaints and Licensing, and Trade Analysis, was

formally convened in fiscal year 2000. The Task Force meets on a

regular basis to identify, evaluate and anticipate foreign practices

which might have an impact on U.S. shipping interests. 

C. TRADE OVERSIGHT

During the fiscal year, the Commission completed an interim

impact study of the newly enacted U.S. shipping legislation, entitled

The Ocean Shipping Reform Act: An Interim Status Report. The

interim report gave an overview of OSRA’s legislative reforms and

provided a preliminary review of how the industry and the

Commission adjusted to the new legislation within the first year of its

enactment. As part of the study, the Commission reviewed a sample

of service contracts filed via its new Internet filing system to discern

significant trends relating to OSRA’s reforms. OSRA’s initial impact

also was evaluated in terms of carrier agreement activity and the

voluntary service contract guidelines adopted by major carrier

agreements. The Commission also conducted audits to determine the

accessibility of freight tariffs electronically published by carriers.

Upon completion of the interim report, the Commission began

collecting data and information to conduct a more comprehensive

analysis of OSRA’s impact for a two-year study. As part of the twoyear study, the Commission also will issue a formal Notice of Inquiry

during the upcoming fiscal year to solicit industry input on relevant

OSRA issues. The two-year OSRA Impact Study is scheduled for

completion late in the summer of 2001.

Other specific monitoring and research projects undertaken for

fiscal year 2000 included: data compilation and analyses for agency

testimony and responses to inquiries before various Congressional

committees; an examination of voluntary service contract guidelines

filed by major agreements; an evaluation of regulations on the content

and filing of minutes of agreement meetings; an assessment of

agreement reporting requirements; review of a cargo-sharing

arrangement in the U.S. to Australia and New Zealand trade, which
-13-

resulted in the Commission imposing specific quarterly reporting

requirements to facilitate monitoring of the agreement; and responses

to informal complaints and requests from shippers on rate and service

matters. 

D. CONSUMER COMPLAINTS

Fiscal year 2000 saw the failure of several non-vesseloperating common carriers (“NVOCCs”), some of whom had been

long-time carriers with fairly sizeable operations. As a result, the

Commission received numerous complaints from shippers and freight

forwarders that had experienced problems with these NVOCCs.

Some of the problems affected commercial shippers, while others

concerned individual shippers of household goods and automobiles.

Some of the failed NVOCCs had been licensed and bonded, while

others were not. 

In addition, a number of unlicensed NVOCCs were operating

in violation of the bonding requirements. Individual shippers of

household goods, often unsophisticated in matters of international

transportation, represent a steady and significant market for these

firms. As a general rule, such operators offer extremely low rates and,

perhaps predictably, provide little or no service to those who use

them. Frequently, such NVOCCs have failed to fulfill the

transportation commitment, and the individual shipper learns that he

has little recourse for recovery of his household goods, much less

monies advanced for their transportation. 

The Commission’s efforts have resolved a number of these

matters for both shippers and forwarders. The informal assistance

offered through our consumer complaints efforts, as well as formal

actions taken against some operators with a history of egregious

practices, have greatly increased public awareness of both the

opportunities and dangers that exist today in international ocean

shipping. 
-14-

Also, the year saw a great increase in customer relations

complaints against cruise operators. There was an increasing

awareness of our presence among both consumer officials and the

cruising public. A growing number of state and Federal consumer

agencies referred their constituents to the Commission as the primary

agency for the processing of cruise complaints. As a result, we

received a record number of such complaints. Many of them,

however, involved matters beyond the Commission’s statutory

jurisdiction. We nonetheless endeavored to resolve these matters on

an informal basis, often with success. 

Two types of recurring complaints seemed to generate a

particular degree of frustration among consumers. The first involved

air/sea cruise packages arranged by and purchased through a cruise

line. Cruise lines would book air passage for the customer, but refuse

to take responsibility for its execution. Thus, if the passenger missed

the sailing due to a flight cancellation or delay, no refund or

compensation would be made to the individual, even though the flight

had been purchased through the cruise line. The second type

concerned port cancellations and other cruise curtailments that

occurred after the commencement of a cruise. Again, cruise line

ticket contracts typically provide that no right exists to a refund or

compensation in such circumstances. In practice, cruise operators

frequently provide some cash or credit compensation. However,

cruise lines view these offerings as a free gift, while customers often

consider them inadequate.

Late in the year, Premier Cruise Lines permanently ceased

operations -- its vessels were seized by creditors and the line filed

bankruptcy to liquidate its assets. This event caused hundreds of

would-be passengers to approach the Commission for assistance in

obtaining refunds of their prepaid travel. Commission staff

coordinated closely with the line’s surety to encourage the

establishment of a procedure for claims filing, even though the

Commission has no direct role or authority in this process. Many

Commission resources were devoted to disseminating information and
-15-

educating the public about the steps to file a claim against Premier’s

performance bond, including information on our homepage.

E. ENFORCEMENT

The Commission maintains a presence in Los Angeles, Miami,

New Orleans, New York and Seattle through area representatives.

These representatives serve as a liaison between the Commission and

various maritime interests in respective areas and also investigate

activity that may violate the Shipping Act of 1984 (“1984 Act”). 

Following-up on matters arising from a 1998 investigation into

alleged ocean carrier malpractices during the peak season in the

transpacific trades, the Commission determined that the Asia North

America Eastbound Rate Agreement (“ANERA”) and its members

had violated certain provisions of the 1984 Act and the Commission’s

regulations by entering into service contracts containing so-called

“opt-out” clauses. Under these clauses, various members of ANERA

would sign on as participating carriers in conference service contracts,

but “opt out” of the lower rates made available to the shipper under

the contract. The Commission found that this device rendered the

rates uncertain as to shipments tendered to carriers “opting out” of

such contracts. In a separate but related action, the Commission

entered into a compromise agreement with ANERA and its members,

under which a sum of $110,000 was paid for alleged violations of the

Commission’s regulations in failing to file the “opt- out” provisions of

some 105 service contracts in ANERA’s essential terms publication.

The Commission collected $3,232,481 in civil penalties this

past fiscal year. These collections represent a wide range of violations

in all of our major trade lanes. Although the Commission continues

to undertake enforcement activity, as required by its statutory

mandate, its primary objective is to encourage voluntary compliance

by the regulated ocean transportation industry. 
-16-

III

MONITORING AND

ENFORCEMENT

A. MONITORING

The systematic monitoring of carrier activities and commercial

conditions in the U.S. liner trades is an integral part of the

Commission's responsibilities under the 1984 Act, as amended by

OSRA. Such monitoring helps ensure that carriers operating in the

U.S. trades comply with the statutory standards of the 1984 Act and

the requirements of relevant Commission regulations. To that end, the

Commission administers a variety of monitoring programs and other

research activities designed to keep it informed of current trade

conditions, emerging commercial trends, and carrier pricing and

service activities.

The importance the Commission attaches to its ongoing

monitoring activities is a direct consequence of the removal, under the

1984 Act, of the Commission's previous broad discretion to

disapprove agreements. The 1984 Act provides that, unless rejected

under relevant statutory authority, agreements filed with the

Commission shall become effective on the 45th day after filing or the

30th day after notice in the Federal Register, whichever is later.

Agreements can be rejected for technical reasons or for failure to

include statutory provisions in the agreement language. Also, the

Commission may extend the original 45-day period when additional

information from filing parties is deemed necessary and is requested.

Finally, if the Commission determines that an agreement, by virtue of

a reduction in competition, is likely to unreasonably increase

transportation costs or decrease transportation service, it may seek

injunctive relief in the U.S. District Court for the District of Columbia.
-17-

As a consequence of the Commission's limited authority to

block agreements from taking effect, the need for adequate and timely

evaluation of post-implementation agreement activity has increased

considerably. The Commission's monitoring program provides such

an evaluation through its examination of carrier competition including

market share, concentration, entry conditions, general rate and service

conditions, as well as pricing trends, vessel utilization, service

contracting activity, and shipper complaints.

In fiscal year 2000, the Bureau of Trade Analysis prepared a

variety of economic analyses and reports on the activities and

practices of carriers operating in the U.S. international trades.

Projects included: (1) preparation of sections on service contracts,

carrier agreements, and tariff accessibility for the Commission’s

interim status report on OSRA; (2) economic analyses of newly filed

major carrier agreements under the competition standards of section

6(g) of the 1984 Act; (3) compilation and analysis of trade and

industry data for agency testimony before various Congressional

committees, along with responses to Congressional inquiries; (4) an

informational memorandum to the Commission examining the

voluntary service contract guidelines filed by major agreements; (5) an

analysis and outline of major issues concerning the regulations on the

content and filing of minutes of agreement meetings; (6) a review of

carrier alliance agreements, focusing on developing and implementing

specific reporting requirements relating to their operations; (7)

responses to various informal complaints and requests from shippers

on matters relating to the imposition of rate increases and/or

surcharges by certain major agreements; and (8) review of quarterly

monitoring report data submitted in accordance with the

Commission’s regulations. 
-18-

B. ENFORCEMENT

The 1984 Act establishes an integrated system for the

regulation of the shipping and related industries in furtherance of the

statutory declaration of policy to ensure a nondiscriminatory, efficient,

and economic ocean transportation system for the benefit of

international trade of the U.S. The enforcement program represents

a major area of Commission activity. A principal goal of the program

is to achieve compliance with the provisions of the 1984 Act.

Compliance, in turn, provides the pathway to the statutory objectives

of the 1984 Act. Enforcement is a traditional means to achieve

compliance through deterrence.

The Commission maintains a presence in Los Angeles, Miami,

New Orleans, New York and Seattle, through an area representative

based in each of those cities. These representatives also serve the

other major port cities and transportation centers within their

respective areas. Local presence in major port areas greatly enhances

the Commission’s ability to perform its various functions and

improves communications with the regulated industry and its

customers.

Cooperation between the Commission's area representatives

and the U.S. Customs Service (“Customs”), with respect to the

exchange of investigative information, continues to be beneficial. All

area representatives are now co-located with Customs in their

respective port districts and have established symbiotic working

relationships which contribute to the productivity and efficiency of

both agencies.

During 2000, the Commission continued its investigations of

malpractices, particularly unlawful rebating in the South American

trades. Other trades were also the subject of malpractice

investigations, including the transpacific and Caribbean trades. These

investigations included improper rating practices, such as various

forms of secret discounts and absorptions, and unlawful equipment
-19-

substitution, as well as carriage of cargo by and for untariffed and

unbonded NVOCCs. Unlawful activities of certain ocean freight

forwarders were also addressed. These included operating without a

license, allowing use of a license by others, collection of compensation

for services not performed or performed for a related entity, and

entering into service contracts with ocean carriers.

Following up on matters arising from a 1998 investigation into

alleged ocean carrier malpractices during peak season in the

transpacific trades, the Commission determined that the Asia North

America Eastbound Rate Agreement (“ANERA”) and its members

had violated certain provisions of the 1984 Act and the Commission’s

regulations by entering into service contracts containing so-called

“opt-out” clauses. Under these clauses, various members of ANERA

would sign on as participating carriers in conference service contracts,

but “opt out” of the lower rates made available to the shipper under

the contract. The Commission found that this device rendered the

rates uncertain as to shipments tendered to carriers “opting out” of

such contracts. In a separate but related action, the Commission

entered into a compromise agreement with ANERA and its members

under which a sum of $110,000 was paid for alleged violations of the

Commission’s regulations in failing to file the “opt-out” provisions of

some 105 service contracts in ANERA’s essential terms publication.

During fiscal year 2000, the Commission collected $3,232,481

in civil penalties. Settlements were reached with many different

segments of the industry (e.g., carriers, shippers, forwarders, and

NVOCCs) operating in the U.S. foreign trades (see Appendix E).
-20-

IV

DEVELOPMENTS IN MAJOR

U.S. FOREIGN TRADES

A. TRANSATLANTIC

Over the course of fiscal year 2000, the trade between the U.S.

and North Europe witnessed a widening of the imbalance between

liner imports and exports. The strong value of the U.S. dollar against

European currencies and the robust U.S. economy stimulated the

demand for European imports among U.S. consumers. Relative to the

preceding fiscal year, liner imports from North Europe grew by 13

percent in fiscal year 2000. Liner import growth was most prominent

in such goods as auto parts, paperboard, glassware, furniture, veneers

and wood products from European nations. The trend in U.S. export

growth to North Europe, however, remained modest at 3 percent in

comparison to the preceding fiscal year. European demand for such

major U.S. liner exports as auto parts, chemicals and resins improved,

while such goods as U.S. tobacco and cigarettes declined. The

projected outlook for U.S. exports appears more favorable as

productivity, economic growth, and unemployment in European

nations shows improvement for the upcoming fiscal year.

The disparate trade growth created problems for carriers as the

trade imbalance between the directional cargo flows grew more

pronounced. In fiscal year 2000, U.S. liner imports in the westbound

direction exceeded U.S. liner exports in the eastbound direction by

nearly 470,000 TEUs, or 47 percent. Consequently, carriers

endeavored to address such problems as uneven capacity utilization

levels, depressed freight rates, and container repositioning to meet the

westbound demand. While capacity utilization by operator varied, the

latest trade reports for the second quarter of 2000 placed the overall
-21-

capacity utilization of vessels in the westbound direction at 77

percent, while slack demand in the eastbound direction produced an

overall low utilization of 56 percent. 

With the strong westbound demand, carriers serving the

transatlantic endeavored to restore freight rates from the low rate

levels of the preceding period. Several months prior to the effective

date of OSRA, carriers reduced rates to levels unseen since the

recessionary period in the early 1990s. 

As conditions stabilized under OSRA, members of the TransAtlantic Conference Agreement (“TACA”) (No. 202-011375)

introduced a series of GRIs primarily aimed at the strong westbound

trade growth. Starting in fiscal year 2000, TACA implemented a

westbound GRI of $120 per 20-foot container and $150 per 40-foot

container. Shortly thereafter on January 1, 2000, TACA introduced

a GRI of $600 per 20-foot container and $750 per 40-foot container

in the westbound direction, and $160 per 20-foot container and $200

per 40-foot container in the eastbound direction. The westbound GRI

included a $250 per-container surcharge for repositioning empty

containers. Industry estimates placed the rate increases at 50 percent

westbound and 15 percent eastbound. TACA members, however,

stressed that the effects of the GRI were minimal given that many

shippers had renegotiated their contracts when OSRA became

effective and were not up for renewal until April 2000. Before the

close of the fiscal year, TACA introduced additional GRIs affecting

the westbound direction in both April and September. The conference

also implemented a series of GRIs in the eastbound direction from the

U.S. Pacific Coast to North Europe. TACA further announced that

its business year in the westbound direction was redefined to start on

April 1, 2001, rather than coinciding with the calendar year as in the

past.

While some level of rate increases reportedly held in the

westbound direction, the full impact of TACA’s GRIs was mitigated

by the fact that most of the trade’s cargo moved under individual
-22-

service contracts with independently negotiated rates outside the

conference. Estimates placed the amount of cargo moved under

individual service contracts at 80 percent for the TACA carriers. In

addition, the conference’s market power was further diminished, as it

no longer commanded a majority share of the trade. The latest trade

reports for the second quarter of 2000 put TACA’s collective market

share at 48 percent in the westbound direction, and 46 percent in the

eastbound direction. This was down from the second quarter of 1999

when TACA still held a slight majority share of the trade at 52 percent

westbound and eastbound. TACA’s largest independent competitors

in the transatlantic included China Ocean Shipping Company

(“COSCO”), Evergreen, K Line, and Lykes Lines.

There was considerable agreement activity in the transatlantic

trade, including a major reconfiguration of VSAs. With the purchase

of Sea-Land’s international services by Maersk, thereafter renamed

Maersk Sealand, the long-standing VSAs between Sea-Land, Maersk,

P&O Nedlloyd, and Orient Overseas Container Line (“OOCL”) were

terminated. In their place, Maersk Sealand entered into a space

charter and sailing agreement with the New World Alliance (No. 232-

011722), which includes APL Ltd., Mitsui O.S.K. Lines, and Hyundai

Merchant Marine. Together the parties share vessel space on three

service strings operating between the U.S. and North Europe with a

total weekly capacity of 12,000 TEUs. P&O Nedlloyd and OOCL,

under the Grand Alliance (No. 208-011602) in conjunction with NYK

Line and Hapag-Lloyd, entered into a space charter and sailing

agreement with Americana Ships (No. 232-011705). Americana

Ships is a subsidiary of CP Ships that includes Lykes Lines and

Transportacion Maritima Mexicana. The Grand Alliance/Americana

parties offer a combined capacity of 15,000 TEUs a week with five

weekly sailings between the U.S. and North Europe. 

In addition, Compania Sud Americana de Vapores (“CSAV”)

and its subsidiary Norasia entered the transatlantic trade through a slot

charter agreement with Senator Lines (No. 217-011700). Compagnie

Maritime d’Affretement - Compagnie Generale Maritime (“CMA
-23-

CGM”) also entered the trade through a slot charter agreement with

Maersk Sealand and the New World Alliance (No. 217-011726).

Also, TACA amended its agreement to provide for a temporary slot

chartering arrangement in an effort to manage overcapacity during the

period of historically low demand between the months of December

and February. The arrangement will permit TACA members to

coordinate the temporary withdrawal of underutilized vessels from

service for routine maintenance and/or repairs and to space charter

among each other in order to maintain sufficient vessel capacity to

meet cargo demand during the program period.

B. MEDITERRANEAN 

The Mediterranean countries saw growth continue in fiscal

year 2000, though at a relatively modest rate. Economic growth

during fiscal year 2001 of 2 to 3 percent is forecast throughout the

region. The growth of Italy’s gross domestic product (“GDP”),

though increasing from 1 to 2 percent, remains one of the lowest in

the European Union. The Spanish economy continues its strong

growth, with real GDP growth remaining above 3 percent. Imports

from the region to the U.S. have continued their strong growth due to

the strength of the domestic U.S. economy.

The larger economies of the Mediterranean countries, Italy and

Spain, saw exports from the U.S. grow 2 and 4 percent respectively,

continuing a slowdown which began two years ago. The primary

commodities moving into the region remained unchanged, with

imports of the region’s top six commodities accounting for over half

the TEU growth. Increased demand for U.S. lumber, woodpulp, and

paperboard in the recovering economy of Italy accounted for much

of the increase in cargo volume for the Mediterranean trade.

Imports from the Mediterranean grew by 13 percent. A strong

U.S. housing market continued to pull in increasing imports of

furniture, tiles, and other home furnishings. Italian furniture, up 32

percent in volume, topped the list in terms of new growth. While
-24-

demand in the U.S. housing sector slowed during the fiscal year,

continued weakness in the euro may minimize any slide in trade from

the Mediterranean.

The United States South Europe Conference (No. 202-

011587) has been unable to increase its membership beyond the

carriers that originally formed the conference in 1997, P&O Nedlloyd

and Maersk Sealand. The intensely competitive economic environment

in the trade has kept rates low, though the conference has attempted

to implement rate increases in the inbound trade during the fiscal year.

C. MIDDLE EAST

After 5 years of slowing growth rates in the Israeli economy,

GDP growth began to pick up during fiscal year 2000. Improving

domestic demand and growing export revenues are credited for the

turnaround. Foreign investment also has been strong. Saudi Arabia

and the other Gulf countries have benefitted from a doubling of oil

prices. This has provided a powerful stimulus to the economy. In

addition, the Saudi government has asserted that it is committed to

economic reforms which should further improve the economy.

Growth in U.S. exports to the Middle East countries slowed

again during the fiscal year. However, growth is expected to pick up

in 2001, due to recent improvements in the regional economies. The

sharp increase in oil prices has increased the amount of money

available to spend on U.S. goods. Additionally, increased foreign

investment in Israel should change the type of U.S. exports to Israel

from lower-valued cargo towards higher-valued products during fiscal

year 2001.

During fiscal year 2000, imports from the Middle East were

strong, with Israel being the biggest contributor to the growth. Israeli

furniture cargo volume continued to be strong, although its growth

rate declined further during the fiscal year. Shipments from the rest
-25-

of the region also were strong, led by plastic products, apparel and

furniture.

D. AFRICA

Africa contains some of the poorest countries in the world.

Many have experienced no change in per capita income since the

1960s. In addition, according to the African Development Bank, in

fiscal year 2000 the region had the highest average population growth

rate of 2.7 percent and one of the lowest average GDP rates of 3

percent.

During calendar year 2000, the World Bank (“the Bank”) and

its affiliated agencies invested more than $13 billion in various projects.

These resources went into the further development of Africa’s

transportation infrastructure, natural resources and public sector

management. The Multilateral Investment Guarantee Agency,

responsible for guaranteeing direct investment to member countries of

the Bank, issued 67 contract guarantees amounting to $3.8 billion for

projects in 17 countries. 

During the fiscal year, African trade with the U. S. and the rest

of the world was restricted by high trade barriers and a lack of regional

integration and trade-promoting institutions. The U.S. Congress

passed the African Growth and Opportunity Act in 1999, placing a

greater emphasis on trade with Africa. The U.S. approach to help

Africa with its trade problems is focused on developing more open

economies, promoting regional integration, encouraging participation

in the World Trade Organization, facilitating access to new technology

(including telecommunications, Internet access and electronic

commerce) and removing trade barriers. 

 In fiscal year 1999, the volume of trade between the U.S. and

Africa was estimated at 114,323 TEUs of U.S. exports and 81,087

TEUs of U.S. imports. Fiscal year 2000 year-end projections

anticipate both U.S. imports and exports to increase by slightly more
-26-

than 8 percent over fiscal year1999 trade volumes. Main U.S.

exports consisted of machinery, transport equipment, aircraft and

parts, civil engineering equipment, data processing machines and

parts, and wheat. U.S. imports included crude oil, minerals (mainly

platinum and diamonds), cocoa beans and petroleum oil. U.S. trade

with Africa (in terms of liner cargo volume) was approximately

1 percent of the total U.S. trade during the fiscal year.

Freight rates, which had begun to stabilize and increase

moderately during calendar year 1999, improved further during the

fiscal year. The U.S. Southern Africa Conference (“USSAC”) (No.

202-011259) implemented a GRI of $150 per 20-foot container and

$250 per 40-foot container. It increased refrigerated cargo rates by

$300 per 20-foot container and $500 per 40-foot container, and

breakbulk by 10 percent. In the northbound subtrade, USSAC

exempted the U.S. West Coast from the increases. Meanwhile, the

West African Discussion Agreement (No. 205-011510) increased

terminal handling charges and its freight-all-kinds rates to all West

African ports. 

 Some African ports made little progress toward

modernization and improvement of services. Many lacked basic

equipment, such as cranes for loading and unloading. These

conditions, in addition to uncollected empty containers, especially at

the ports of Mombasa in Kenya and Dar es Salaam in Tanzania, led

to congestion and delays. The ports of Cape Town in South Africa

and Walvis Bay in Namibia made some improvements by upgrading

equipment during the year.

Shipping services to Africa were expanded mainly by the

upgrading and addition of vessels to existing services. Mitsui O.S.K

Lines launched a dedicated intra-West Africa service to enhance its

operations; Lykes Lines expanded its North America/Africa multipurpose service by adding ports of call in West Africa on inducement;

and P&O Nedlloyd added vessels to its existing service to South
-27-

Africa allowing it to establish fixed-day weekly calls at Port Elizabeth

and Durban. 

No new agreements nor any major amendments to existing

agreements were filed in the African trade area. 

E. LATIN AMERICA AND THE CARIBBEAN

In South America, Ecuador’s and Colombia’s weak

currencies forced a reduction in interest rates in order to avoid runs

on their respective currencies. In addition, the value of Brazil’s

currency dropped sharply after it was floated during calendar year

1999. It became necessary to devalue Brazil’s real, which led to

economic stagnation. Brazil nevertheless managed to implement its

economic objectives, and with the help of the Economic Commission

for Latin America and the Caribbean, the economy improved.

U.S. imports from the East Coast of South America declined

slightly during the first half of fiscal year 2000 before rebounding to

the levels achieved in the third quarter of 1999. U.S. exports to the

East Coast of South America continued to improve. The trade

experienced strong demand for industrial and raw materials, forest

products, fabrics, tires, tubes, tobacco, consumer goods, chemicals

and photographic film. Carriers serving the trade noted that capacity

utilization levels increased to 62 percent for U.S. imports and 61

percent for U.S. exports during the fiscal year. 

On the other hand, U.S. exports to the West Coast of South

America were less vibrant than U.S. exports to the East Coast of

South America. Colombia, Peru and Chile experienced slow export

growth mainly due to political unrest and a weak currency in

Colombia. U.S. imports from the West Coast of South America

remained flat, with no significant growth. The heavy rains and floods

in Chile, Colombia, and Peru contributed to a decline in U.S. imports

of fruits, vegetables and fish. In the U.S./West Coast South America
-28-

trade, carrier capacity utilization levels reportedly were 56 percent

for U.S. exports and 65 percent for U.S. imports.

Overcapacity and instability in the region’s largest economies

inevitably led to rate reductions. Rates reportedly fell by up to 30

percent for some commodities and undoubtedly contributed to the

demise of some shipping agreements. Toward the end of the fiscal

year, as trade conditions improved, some carriers initiated rate

recovery programs. The East Coast of South America Discussion

Agreement (“ECSADA”) (No. 205-011421) filed a GRI of $500 per

20-foot container and $1,000 per 40-foot container, effective April 1,

2000. Bunker surcharges also increased on April 15, 2000, by $25

per 20-foot container and $50 per 40-foot container. ECSADA

planned two more GRIs effective October 1, 2000, and April 1,

2001. The West Coast of South America Discussion Agreement

(No. 205-011426) implemented a similar rate recovery program.

However, because of economic instability (i.e., political unrest and

weak currencies), the GRI did not hold up as well as carriers

expected. Future GRIs are anticipated -- reportedly, they will be

implemented on a country- and commodity-specific basis. 

The Commission received shipper complaints concerning the

imposition of an equipment imbalance surcharge in the northbound

trade from the East Coast of South America to the U.S. East and

Gulf Coasts. After postponing the surcharge for a brief period, the

carriers rolled the surcharge into their base tariff rates. Subsequently,

base tariff rates were lowered in response to competitive conditions

in the trade. Informal inquiries by Commission staff indicated that

the net effect was a slight increase in rates for some cargo

movements. 

During the fiscal year, Colombian customs authorities

imposed regulations that subjected carriers to severe fines for

inconsistencies and/or errors in cargo manifests or other shipping

documents, including those associated with consolidated NVOCC

shipments. In response, carriers adopted a Colombian surcharge of
-29-

$100 per 20-foot container or $5 per ton. Colombian customs

authorities have promised to rescind the regulations, and the carriers

canceled the surcharge. 

U.S. trade with Central America and the Caribbean was not

unlike that of the trade with South America. The same products are

traded in both, and market conditions are similar. During fiscal year

2000, U.S. exports to the Caribbean increased by an estimated 4.8

percent over fiscal year 1999, and included such commodities as

manufactured goods, grocery items, general cargo, automobiles,

household goods, and medical supplies and equipment. U.S. imports

from the Caribbean increased by 5.8 percent during fiscal year 2000.

The main imports were bananas, coffee, cocoa beans and cocoa

products, textiles, and synthetic resins. 

Rate increases were initiated by The Central American

Discussion Agreement (“CADA”) (No. 205-011075) in the melon

trade, increasing the tariff rate to $2,800 per container from Central

America to South Florida. Also, some members of CADA increased

their tariff rates on coffee shipments by $100 per 20-foot container,

and 40 cents per bag on bulk shipments. Given current trade

conditions, it is not yet known if these rates will hold. 

In response to serious problems with theft, CADA continued

to levy a surcharge on all goods originating from or bound for

Guatemala to cover this risk. CADA reported that its carriers

experienced greater theft in the Guatemalan trade than elsewhere.

Many shippers opposed the surcharge and actively pursued ways of

having it removed. However, toward the end of fiscal year 2000,

CADA approved two additional theft risk surcharges for cargo

moving in the U.S./Honduras and Nicaraguan trades.

During the fiscal year, several new shipping services were

added to the Latin American and Caribbean trades, while many

existing services were upgraded. This led to continued overcapacity

in this region. However, as the fiscal year came to an end, more
-30-

carriers were participating in space-chartering and equipment-sharing

agreements in an attempt to address market instability caused by

container imbalances and overcapacity. Agreements filed and

amended during fiscal year 2000 continue to reflect the general trend

since OSRA, i.e., less focus on conferences and more reliance on

discussion and operational agreements. A few examples are

highlighted below:

# The Gulf/South America Discussion Agreement (No.

205-011707) permits its members to discuss and

voluntarily agree on rates and related matters in the

trade between the U.S. Gulf and Colombia, Ecuador,

Peru, Chile, Argentina, Brazil, Venezuela and

Trinidad.

# The IMC/Colombia Express Space Charter and

Sailing Agreement (No. 232-011715) between

Industrial Maritime and Colombia Express, L.L.C.

applies to the trade between the U.S. Gulf and

Colombia, Trinidad, and Venezuela. 

# The Colombia Discussion Agreement (No. 205-

011367) and the Venezuelan Discussion Agreement

(No. 205-011383) amended their respective

agreements to allow their members to enter into not

only individual service contracts, but also joint

service contracts. Prior to OSRA, only conferences

were permitted to execute service contracts involving

multiple ocean carriers. 

F. TRANSPACIFIC

On October 15, 1999, the member lines of the Transpacific

Stabilization Agreement (“TSA”) (No. 205-011223), a discussion

forum and policy-setting group of 14 carriers operating in the
-31-

eastbound trades from the Far East and the Indian Subcontinent,

announced a proposed GRI of $400 on service contract and tariff

rates, to take effect on May 1, 2000. In addition, TSA announced

that a peak season surcharge (“PSS”) of $300 per 40-foot container

would be levied between July 1, 2000, and October 31, 2000.

However, due to a number of factors, including new entries in the

trade, contract confidentiality measures, and early discounting during

service contract negotiations, TSA lines reportedly produced less

than half of the revenue sought in the announced GRI. Some larger

shippers reportedly avoided paying any GRI, while many shippers are

said to have held the increase to between $100 and $200 per 40-foot

container. 

This slippage contrasted sharply with the reported success of

TSA lines’ implementation of their $900 to $1,000 GRI during the

previous (February through May 1999) contracting season.

Competition from the new lines that entered the inbound trade

appears to have kept rate increases relatively low for port-to-port

carriage, while somewhat larger increases appear to have stuck for

intermodal service. The existence of a number of active independent

lines, such as Mediterranean Shipping Co. (“Med-Shipping”), Zim,

Senator Lines, Cho Yang Shipping Co., China Shipping Container

Line, Norasia, Trans-Pacific Line, Great Western Steamship, and

Fesco Straits Pacific Line, has reduced TSA’s overall market share

to about 80 percent, while providing enough additional vessel

capacity to mitigate fears of a serious shortage of space during the

Christmas season.

Another feature of the Asia import trade this year was the

increase in Asia-to-U.S. East Coast all-water services through the

Panama Canal. The all-water services provided included a number

of new VSAs, and the expansion of existing services by major lines,

supporting the growing cargo volumes going to U.S. East Coast

destinations where several major importers have established new

distribution centers. Fear of possible congestion problems and

railroad delays at U.S. West Coast ports during the August through
-32-

October peak season may also have made the all-water option

attractive to some shippers.

TSA members introduced a number of somewhat

controversial surcharges -- presented as cost recovery measures --

in the eastbound trade this year, including a bunker adjustment

surcharge, various terminal handling charges and other fees, and a

carrier-provided chassis charge (to become effective January 1, 2001)

of $60 per chassis. 

Looking ahead to next spring’s contracting season (for the

May 2001 through April 2002 contract year), TSA lines have

announced a $525 per 40-foot container GRI for Asia cargo going

to West Coast ports, $600 per 40-foot container for shipments

moving through U.S. West Coast ports to inland points in California,

Oregon and Washington, a $600 per 40-foot container increase for

cargo moving to U.S. East Coast ports via all-water or minilandbridge service, and $750 per 40-foot container GRI for

intermodal movements to other inland points via either U.S. West

Coast or U.S. East Coast ports. In addition, a $300 PSS was also

announced. However, despite the fact that Asia’s export trade

volumes continue to grow, the effect of confidential contracting on

TSA’s pricing solidarity, and expected increases in new tonnage in

the trade in 2001 and beyond, suggest that final negotiated contract

rates may, once again, fall short of the proposed rate increases. 

 

During fiscal year 2000, freight rates in the U.S. export trade

to the Far East continued to recover as a result of Asia’s ongoing

economic revival, following the financial and economic crises in the

region that began in mid-1997. Liner exports to the Far East grew

by 10 percent in the first quarter of 2000 over the same period in

1999. South Korea and China have been the main export growth

markets in the region, but there have also been solid gains throughout

Southeast Asia and in Taiwan.
-33-

Although the U.S. export trade is again expanding as a result

of Asia’s ongoing recovery from the financial and economic crises of

the last two years, the transpacific trade remains seriously

imbalanced. 

For members of the Westbound Transpacific Stabilization

Agreement (No. 205-011325), a discussion agreement of the largest

carriers in the westbound Pacific trades, both capacity utilization and

freight rates reportedly rose in fiscal year 2000, after having declined

by roughly 50 percent between 1998 and 1999. In particular, there

have been rate increases for relatively high-value agricultural

commodities such as refrigerated produce. If westbound market

conditions continue to improve, certain lower-value commodities,

including scrap metal, wastepaper, and cotton, also could be subject

to rate recovery measures.

G. WORLDWIDE

Although rising oil prices resulted in significantly higher

bunker fuel costs this year, most lines reported improved financial

positions. An ongoing and substantial rate recovery in the Asia/U.S.

and Asia/Europe trades contributed importantly to many lines’

financial improvement, as did continuing U.S. trade growth that kept

pace with or exceeded the introduction of new tonnage into the

major East/West trade lanes. In addition, many lines benefitted from

continuing cost reduction measures and a gradual recovery from the

serious cargo imbalances that followed the Asian banking and

financial crisis that began in mid-1997.

Fiscal year 2000 saw the further development of confidential

contracting in the “post-conference” OSRA environment. Shippers

reported that contracting directly with their preferred carriers

resulted in a more flexible and efficient negotiating process. Reports

of expanded use of multi-trade contracts, and expanded inclusion of

space guarantees and service performance elements, suggest that
-34-

service contracts are gradually becoming more customized under

OSRA. 

Fiscal year 2000 witnessed several ocean carriers

independently announcing major commitments to expand their valueadded logistics services and improve their Internet service options.

Concertedly under the Common Ocean Carrier Platform Agreement

(No. 203-011733), Maersk Sealand, P&O Nedlloyd, Med-Shipping,

Hamburg Sud and CMA CGM jointly have financed the development

and operation of a multi-carrier Internet web site, “INTTRA,” on

which shippers and intermediaries will be able to book, track and

confirm their cargo movements. Other carriers are expected to join

together to establish Internet-based transportation web sites in the

near future. 

Throughout fiscal year 2000, an array of new e-commerce

companies have struggled to break into the liner cargo market. It

remains unclear just how successful these efforts will be. 
-35-
-36-

V

THE FOREIGN SHIPPING

PRACTICES ACT OF 1988

A. GENERAL

The Omnibus Trade and Competitiveness Act of 1988, enacted

by Congress and effective with the President's signing on August 23,

1988, contains at Title X, Subtitle A, the Foreign Shipping Practices

Act of 1988 (“FSPA”).

The FSPA directs the Commission to address adverse

conditions affecting U.S. carriers in U.S./foreign oceanborne trades,

which conditions do not exist for foreign carriers in the U.S., either

under U.S. law or as a result of acts of U.S. carriers or others

providing maritime or maritime-related services in the U.S.

In fiscal year 2000, the Commission monitored potentially

unfavorable or discriminatory shipping practices by a number of

foreign governments. Also, information demand orders were issued

to gather specific information regarding conditions in the People’s

Republic of China (“PRC”).

In fiscal year 2000, the Commission’s newly organized Task

Force on Restrictive Foreign Practices, chaired by the General

Counsel, began meeting. The Task Force is a network of

representatives from a number of Commission bureaus and offices,

and meets to exchange information regarding new or continuing areas

of concern relating to restrictive foreign shipping practices possibly

necessitating action under one of the Commission’s statutory

authorities in this area. The regular meetings of the Task Force will
-37-

also aid the Commission in developing efficient methods to address

conditions as they arise.

B. TOP TWENTY U.S. LINER CARGO 

TRADING PARTNERS

Section 10002(g)(1) of the Omnibus Trade and

Competitiveness Act of 1988 requires the FMC to include in its annual

report to Congress “a list of the twenty foreign countries that

generated the largest volume of oceanborne liner cargo for the most

recent calendar year in bilateral trade with the United States.”

The Journal of Commerce’s Port Import Export Reporting

Service (“PIERS”) database was used to derive the Commission's list

of top twenty partners. The PIERS data are aggregated so as to

exclude all non-liner shipments. PIERS import data are collected in

two ways: (1) tapes of import manifests filed electronically via the

Automated Manifest System (“AMS”) obtained from Customs, and

(2) data transcribed manually at individual ports from import manifests

not necessarily filed electronically with Customs. The raw data

obtained from AMS are edited to conform to PIERS. Export data are

manually transcribed at each port from bills of lading filed with

Customs by ship lines. PIERS uses standardized spellings of company

names, coding of ship lines, port names, and country code

assignments. The Journal of Commerce also employs proprietary

artificial intelligence software to increase the accuracy of its data.

 

The most recent complete calendar year for which data were

available is 1999. The table on the next page gives the twenty foreign

countries that generated the largest volume of oceanborne liner cargo

in bilateral trade with the U.S. in 1999. The figures in the table

represent each country's total U.S. liner imports and exports in

thousands of TEUs.
1 On July 1, 1997, Hong Kong reverted to Chinese control as a special

administrative region. However, PIERS continues to report data separately for

Hong Kong because of its status as a major transshipment center.

Source: All data are aggregated from the PIERS (Port Import Export Reporting

Service) database maintained by the Journal of Commerce. PIERS obtains its

information from ship manifests and bills of lading for all vessels calling at U.S.

ports.

-38-

Top Twenty U.S. Liner Cargo 

Trading Partners (1999)

Rank Country TEUs 

(000s)

 1 China (PRC) ........................ 2,623

 2 Japan .............................. 1,750

 3 Hong Kong1........................ 1,423

 4 Taiwan .............................. 974

 5 South Korea .......................... 813

 6 Germany ............................. 560

 7 United Kingdom (Incl. N. Ireland) .......... 492

 8 Italy ................................. 491

 9 Brazil ............................... 412

10 Thailand ............................. 409

11 The Netherlands ....................... 389

12 Belgium & Luxembourg ................. 386

13 Indonesia ............................. 352

14 France ............................... 279

15 Malaysia ............................. 273

16 Costa Rica ............................ 245

17 Philippines ............................ 241

18 Dominican Republic .................... 239

19 Spain ................................ 225

20 India ................................ 222
-39-

The only change to the Top Twenty list in 1999, in comparison

with the list of 1998, is the addition of Spain, which replaced

Venezuela, now in 24th place. 

In terms of ranking order, China (PRC) continued its lead,

with an increase in volume of almost 18 percent over 1998's volume,

which represented an 18 percent increase over 1997's. Hong Kong

likewise registered a significant increase of 14 percent in trade volume

over the previous year, as did South Korea (also 14 percent). Only

minor changes occurred among the rankings of the other top

countries.
VI

SIGNIFICANT

OPERATING

ACTIVITIES

BY

ORGANIZATIONAL UNIT
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A. OFFICE OF THE SECRETARY

1. General

The Office of the Secretary serves as the focal point for all

matters submitted to and emanating from the members of the

Commission. Accordingly, the Office is responsible for preparing and

submitting regular and notation agenda of matters for consideration

by the Commission and preparing and maintaining the minutes of

actions taken by the Commission on these items; receiving and

processing formal and informal complaints involving violations of the

shipping statutes and other applicable laws; receiving and processing

special docket applications and applications to correct clerical or

administrative errors in service contracts; issuing orders and notices

of actions of the Commission; maintaining official files and records of

all formal proceedings; receiving all communications, petitions,

notices, pleadings, briefs, or other legal instruments in regulatory and

quasi-judicial proceedings and subpenas served on the Commission or

members and employees thereof; administering the Freedom of

Information, Government in the Sunshine, and Privacy Acts;

responding to information requests from the Commission staff,

maritime industry, and the public; issuing publications and

authenticating instruments and documents of the Commission;

compiling and publishing bound volumes of Commission decisions;

and maintaining and promulgating official copies of the Commission's

regulations. 

The Secretary's Office also participates in the development of

rules designed to reduce the length and complexity of formal

proceedings, and participates in the implementation of legislative

changes to the shipping statutes. During fiscal year 2000:

# The Commission issued decisions concluding six

formal proceedings. Fifteen initial decisions of an

administrative law judge became administratively
-43-

final without Commission review. The

Commission also concluded 39 special docket

applications, and 5 informal dockets which

involved claims sought against carriers for up to

$10,000. During the same period, the Commission

issued final rules in 4 rulemaking proceedings.

# Special Docket Officers issued decisions in 39

proceedings during fiscal year 2000.

Seven rulemaking proceedings and three formal petitions were

pending before the Commission at the end of the year. Final decisions

in these matters are anticipated in fiscal year 2001.

2. Library

The Commission's Library was transferred from the Office of

General Counsel to the Office of the Secretary by an agency

reorganization in fiscal year 2000. The Library serves the

Commission's research and information needs. Its holdings consist of

specialized material primarily covering the various segments of the

shipping industry, as well as historical and current regulatory materials

covering all phases of shipping in the U.S. foreign trades. It also

contains material on several related fields such as engineering,

economics, political science and an extensive collection of legal

publications. The library includes such sources of information as law

encyclopedias, engineering textbooks, legal treatises, Comptroller

General Decisions, and editions of the various National Reporter

systems. The Library's holdings consist of approximately 4,000

volumes and numerous microfiches, CD-ROMs and on-line services.
-44-

B. OFFICE OF 

ADMINISTRATIVE LAW JUDGES

1. General

Administrative Law Judges (“ALJs”) manage the development

of an evidentiary record through rulings and conferences with counsel

for the litigating parties, rule upon dispositive motions, and preside at

hearings held after the receipt of a complaint or institution of a

proceeding on the Commission's own motion. 

ALJs have the authority to administer oaths and affirmations;

issue subpenas; rule upon offers of proof and receive relevant

evidence; take or cause depositions to be taken whenever the ends of

justice would be served thereby; regulate the course of the hearing;

hold conferences for the settlement or simplification of the issues by

consent of the parties; dispose of procedural requests or similar

matters; make decisions or recommend decisions; and take any other

action authorized by agency rule consistent with the Administrative

Procedure Act. 

At the beginning of fiscal year 2000, 16 formal proceedings

were pending before the ALJs. During the year, 17 cases were added.

The ALJs formally settled four formal proceedings, one informal

proceeding, and one special docket proceeding, dismissed or

discontinued three formal proceedings, and issued six initial decisions

in formal proceedings.

2. Commission Action

The Commission adopted two formal initial decisions, one

initial decision in part, four orders of approval of settlement,

two dismissals of complaints of the ALJs, and settled one formal

proceeding. One order of dismissal of the ALJs was reversed.
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Three initial decisions of the ALJs were pending consideration by the

Commission at the end of the fiscal year.

3. Decisions of Administrative Law Judges (in

proceedings not yet decided by the Commission)

William J. Brewer v. Saeid B. Maralan [Docket

No. 99-19].

In this case complainant shipper alleged that respondent

NVOCC misled complainant and mishandled a shipment of personal

goods and household effects that complainant wanted shipped from

Detroit, Michigan, to Egypt. It was found that respondent had quoted

a lower rate to the shipper which respondent later did not charge,

failed to release the shipment in Egypt, and failed to answer

complainant’s inquiries about the status of the shipment. Such

conduct was found to have violated section 10(d)(1) of the 1984 Act,

and respondent was ordered to pay complainant the value of the

goods, namely $75,000, or alternatively, to return the goods to the

shipper and refund freight money.

James J. Flanagan Shipping Corporation v. Lake Charles

Harbor and Terminal District and Lake Charles

Stevedores, Inc. [Docket No. 94-32].

In this proceeding a stevedoring company doing business in

Lake Charles, Louisiana, had alleged that the respondent port and its

contractor had violated section 10(d)(1) of the 1984 Act by assessing

a supplemental rail-switching charge and sought money damages.

After the Commission found the charge to be unlawful, the case was

remanded to the ALJ, who found that the alleged damages suffered by

complainant could not be traced to the unlawful charge. The

complaint, therefore, was dismissed with no award of damages.
-46-

Safmarine Container Lines N.V. and Safmarine and

CMBT Lines N.V. (SCL) v. Garden State Spices, Inc.

[Docket No. 00-08].

In this proceeding two common carriers by water alleged that

respondent shipper had violated section 10(a)(1) of the 1984 Act by

inducing the carriers to release the cargo to the shipper, who

thereafter gave the carriers bad checks and later, after apparently

settling with the carriers, again tendered bad checks. The carriers

were awarded $10,625 in money damages, plus interest and

reasonable attorney’s fees.

4. Pending Proceedings

At the close of fiscal year 2000, there were eighteen pending

proceedings before the ALJs, of which four were investigations

initiated by the Commission. The remaining proceedings were

instituted by the filing of complaints by common carriers by water,

shippers, conferences, port authorities or districts, terminal operators,

trade associations, and stevedores. 
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C. OFFICE OF

THE GENERAL COUNSEL

The General Counsel provides legal counsel to the

Commission. This includes reviewing for legal sufficiency staff

recommendations for Commission action, drafting proposed rules to

implement Commission policies, and preparing final decisions, orders,

and regulations for Commission ratification. In addition, the Office of

the General Counsel provides written or oral legal opinions to the

Commission, its staff, and the general public in appropriate cases. As

described in more detail below, the General Counsel also represents

the Commission before the courts and Congress and administers the

Commission's international affairs program.

1. Rulemakings and Decisions

The following are rulemakings and adjudications

representative of matters prepared by the General Counsel's Office:

(a) Rulemakings

Interpretations and Statements of Final Policy Regarding

Ocean Transportation Intermediaries [Docket No. 00-06],

(May 8, 2000).

The Commission issued an Interpretive Rule to clarify 46

C.F.R. § 515.23(b), which sets forth the claim settlement procedure

for claimants seeking to pursue a claim against an OTI. This

proceeding was implemented as a result of a settlement reached in

American Surety Association v. Federal Maritime Commission, D.C.

Cir. No. 99-1418. The rule explains that a claimant should provide all

documentation and information supporting its claim to the financial

responsibility provider, and that the financial responsibility provider
-49-

and claimant may mutually settle a claim either before or after

claimant has obtained a final judgment from an appropriate court.

However, the rule also states that if the financial responsibility

provider believes that the court judgment was obtained fraudulently,

it may challenge that judgment if permitted in the jurisdiction where

it was obtained.

In the Matter of a Single Individual Contemporaneously

Acting as a Qualifying Individual for both an Ocean

Freight Forwarder and a Non-Vessel-Operating Common

Carrier [Docket No. 99-23], (March 15, 2000).

The National Customs Brokers and Forwarders Association

of America (“NCBFAA”) filed a petition with the Commission seeking

issuance of a declaratory order confirming, pursuant to 46 C.F.R.

§ 515.22(c)(1999), that a single individual can act contemporaneously

as the qualifying individual for both an ocean freight forwarder and an

NVOCC. The Commission denied the request to address the issue

through a declaratory order and instead issued a notice of proposed

rulemaking. The proposed rule sought to effect NCBFAA’s change,

albeit using a slight modification of the proposed language, believing

that it was more encompassing. After notice and comment, the

Commission adopted the rule as proposed, thus reducing the

regulatory burden and increasing flexibility for licensed OTIs. Two

other minor changes were adopted at the same time. First, the

definition of branch office at 46 C.F.R. § 515.2 was amended to

better reflect the treatment of branch offices elsewhere in the

Commission’s rules. Also, the Commission republished a drug

certification process required by 21 U.S.C. § 862, which was

inadvertently omitted during the rulemaking process to implement

OSRA.

The Content of Ocean Common Carrier and Marine

Terminal Operator Agreements Subject to the Shipping

Act of 1984 [Docket No. 99-13], (August 3, 1999).
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The Commission issued a Notice of Inquiry to seek comments

from interested parties regarding possible changes to the

Commission’s rules governing the content of ocean common carrier

and marine terminal operator (“MTO”) agreements which are filed

with the Commission in accordance with the 1984 Act. The

proceeding was initiated in response to comments received in the

rulemaking proceeding in Docket No. 98-26, which amended the

Commission’s agreement regulations to implement changes made by

OSRA. Those comments requested that the Commission’s rules on

content standards for agreement filing be updated or refined.

Interested parties were given 60 days to comment in response to the

Notice of Inquiry, which was published in the Federal Register on

August 3, 1999. Comments were received from carriers, shippers,

and other interested parties and were under review at the end of fiscal

year 2000.

 

Ocean Common Carriers Subject to the Shipping Act of

1984 [Docket No. 99-10], (June 18, 1999).

As a result of comments received in a rulemaking proceeding

to implement OSRA, the Commission initiated this proceeding to

amend various regulations to clarify the definition of “ocean common

carrier” contained therein. The proposed definition reflects the

Commission’s current interpretation of the term. Accordingly, only

ocean common carriers that operate vessels in at least one U.S. trade

would be subject to these rules. Interested parties were given 60 days

to comment on the proposed rule. 

The Commission received eight comments on the proposed

rule from various segments of the ocean transportation industry.

After full consideration of these comments, the Commission adopted

the proposed rule as a final rule. This rule was served on May 2,

2000, and published in the Federal Register on May 8, 2000.

 

(b) Decisions
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South Carolina Maritime Services, Inc. v. South Carolina

State Ports Authority [Docket 99-21], 28 S.R.R. 1385

(March 23, 2000). 

The Commission, on its own motion, determined to review an

ALJ’s decision to dismiss a private complaint. The ALJ had ruled that

a port authority operating as an arm of the State of South Carolina is

immune from FMC jurisdiction under the Eleventh Amendment to the

Constitution and the doctrine of state sovereign immunity. The

Commission overruled the ALJ’s decision, and held that the Eleventh

Amendment and state sovereign immunity do not extend to

administrative proceedings like those conducted by the Commission,

but instead only apply to judicial proceedings before courts. For this

reason, the Commission found that the South Carolina State Ports

Authority is subject to FMC jurisdiction. The Commission remanded

the case to the ALJ for further proceedings. 

ANERA And Its Members - Opting Out of Service

Contracts [Docket No. 99-05], 28 S.R.R. 747

(December 29, 1999).

The Commission instituted this proceeding by issuing an Order

to Show Cause to the Asia North America Eastbound Rate

Agreement (“ANERA”) and its members why the practice of “opting

out” of service contract rates does not violate sections 8(c) and

10(d)(1) of the 1984 Act, 46 U.S.C. app. §§ 1707(c) and 1709(d)(1),

and section 514.17(c)(2) of the Commission’s service contract

regulations. The practice, initiated by ANERA for the 1998 service

contract year, permitted individual carrier members to be a signatory

of a service contract but to charge for shipments at the tariff rates in

effect at time of shipment rather than the rates specified in the

contract. The practice came to the Commission’s attention during

Fact Finding Investigation No. 23, Ocean Common Carrier Practices

In the Trans-Pacific Trades, in which the Commission’s designated
-52-

Fact Finding Officer investigated shipper allegations that carriers had

allocated vessel space during the 1998 peak holiday shipping season

on the basis of carrier profit and had refused to provide space for

cargo unless shippers made significant rate concessions, in violation

of the 1984 Act. The Commission found that the opt-out practice

violated section 8(c) and the Commission’s regulations because it

resulted in service contracts which were ambiguous with respect to an

essential term of the contract, the line-haul rate. 

Pacific Champion Express Co., Ltd. - Possible Violations

of Section 10(b)(1) of the Shipping Act of 1984 [Docket

No. 99-02], (April 21, 2000).

This proceeding was initiated by the Commission as an

investigation into the activities of an NVOCC, Pacific Champion

Express Co., Ltd. (“Pacific Champion”). The ALJ found that

respondent knowingly and willfully violated section 10(b)(1) of the

1984 Act, 46 U.S. C. app. § 1709(b)(1), on 35 shipments, and that a

civil penalty should be assessed and a cease and desist order issued;

however, he further found that due to mitigating factors, a penalty of

only $200,000 should be assessed, with the amount above $75,000

being suspended if and until respondent violated the 1984 Act in the

future. The Commission upheld the ALJ’s decision except that it

vacated the portions of the Initial Decision conditionally suspending

$125,000 of the $200,000 penalty based upon Pacific Champion’s

future conduct and obligating Pacific Champion to pay $25,000 and

Pacific Champion’s surety bond company to pay $50,000, and rather

imposed a $75,000 penalty on Pacific Champion.

Saeid B. Maralan (aka Sam Bustani), World Line

Shipping, Inc., et al. - Possible Violations of Sections

8(a)(1), 10(b)(1), 19(a) and 23(a) of the Shipping Act of

1984 [Docket 98-19], 28 S.R.R. 1244 (December 16,

1999). 
-53-

In this Commission-initiated investigation, the ALJ had held

that respondents violated several sections of the 1984 Act, imposed

a fine of $100,000, and issued cease and desist orders. The ALJ also

had placed respondents on “probation,” suspended fines above

$100,000, and suspended any action on his Initial Decision pending a

Commission staff examination into a purportedly fraudulent document

submitted by respondents. The Commission’s Bureau of Enforcement

filed Exceptions to these latter findings, and respondents filed

Exceptions to the findings of violations. The Commission determined

to uphold the findings of violations, as well as the civil penalty of

$100,000 and the cease and desist orders. The Commission vacated

those portions of the ALJ’s decision placing respondents on

probation, suspending fines above $100,000, and suspending action

on the decision pending an examination into the purportedly

fraudulent document. 

Compania Sud Americana de Vapores S.A. v. InterAmerican Freight Conference, et al. [Docket No. 96-14],

28 S.R.R. 12 (March 19, 1998).

This proceeding was initiated by a complaint filed by

Compania Sud Americana de Vapores S.A. (“CSAV”) against

respondents Inter-American Freight Conference (“IAFC”), and

Section C of the IAFC. CSAV alleged that the respondents violated

sections 10(a)(2) and 10(a)(3) of the 1984 Act, 46 U.S.C. app.

§1709(a)(2) and (3), by charging CSAV for expenses allegedly not

authorized by the IAFC Agreement. CSAV claimed to have been

damaged by the IAFC’s action in drawing on a CSAV-supplied letter

of credit to pay for a portion of the winding-up expenses of a juridical

entity known as the Sociedade Brasileira de Administracao de

Conferencias de Frete (“Sobracon”). In response to the complaint,

respondents submitted a Motion to Dismiss and/or for Summary

Judgment. CSAV then filed a Cross-Motion for Partial Summary

Judgment. The presiding ALJ issued a decision in which he granted
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the respondents’ Motion for Summary Judgment and dismissed the

complaint. 

The complainant had argued that the respondents violated

section 10(a)(2) by failing to file with the Commission an agreement

to dissolve Sobracon, a Brazilian corporation employed to administer

the respondents’ conference activities in Brazil. The ALJ found that,

as a matter of law, the respondents had provided sufficient language

in their filed FMC Agreement to satisfy the agency’s filing

requirements. Disagreeing with this conclusion, the Commission

issued an order in which it determined that the respondents had not

filed the agreement to dissolve the corporation, and that this failure to

file produced a violation of section 10(a)(2) of the 1984 Act. After

the Commission issued its Order, the respondents filed a Petition for

Reconsideration, and several outside parties filed an amicus curiae

brief in support of the Petition for Reconsideration. That Petition was

being reviewed by the Commission at fiscal year’s end.

2. Litigation

The General Counsel represents the Commission in litigation

before courts and other administrative agencies. Although the

litigation work largely consists of representing the Commission upon

petitions for review of its orders filed with the U.S. Courts of

Appeals, the General Counsel also participates in actions for

injunctions, enforcement of Commission orders, actions to collect civil

penalties, and other cases where the Commission's interest may be

affected by litigation.

The following are representative of matters litigated by the

Office:

American Surety Association v. Federal Maritime

Commission, et al. D.C. Cir. No. 99-1418.
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This proceeding sought review of the Commission’s decision

in Docket No. 98-28, Licensing, Financial Responsibility

Requirements, and General Duties for Ocean Transportation

Intermediaries - Petitions of the American Surety Association and

Kemper National Insurance Companies for Reconsideration of the

Final Rule, 28 S.R.R. 1028 (1999). The Petition for Reconsideration

was denied in part relating to the procedures for collecting on a court

judgment obtained against an OTI, the “consents to be sued” language

in Bond Form FMC-48, and the definitions of “freight forwarding

services,” “NVOCC services,” and “transportation-related activities,”

and granted in part to correct an administrative oversight to include

the word “final” before the term “judgments” in 46 CFR

§ 515.23(b)(2).

In its petition for review filed in the D.C. Circuit, the American

Surety Association alleged that the Commission erred in promulgating

§ 515.23(b) by not requiring a claimant to promptly notify a financial

responsibility provider of any litigation filed against its principal OTI

so that the financial responsibility provider could timely intervene in

any such action and assert defenses, and by not allowing financial

responsibility providers the ability to review the validity of a claim

underlying a default judgment; and the Commission erred by imposing

upon surety companies, in Bond Form FMC-48, the requirement that

they “consent to be sued,” without any factual or statutory

justification for such a requirement. The Commission settled the case

with petitioner, and the case was dismissed with prejudice on May 23,

2000. As a result of settlement, the Commission issued a rule,

Interpretations and Statements of Policy Regarding Ocean

Transportation Intermediaries [Docket No. 00-06], (May 8, 2000).

South Carolina State Ports Authority v. Federal Maritime

Commission et al., 4th Cir. No. 00-1481.

This case was initiated in the U.S. Court of Appeals for the

Fourth Circuit by the South Carolina State Ports Authority, as a

Petition for Review of the Commission’s decision in South Carolina
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Maritime Services, Inc. v. South Carolina State Ports Authority,

Docket No. 99-21. That decision held that the Eleventh Amendment

and state sovereign immunity do not extend to administrative

proceedings like those conducted by the Commission, but instead only

apply to judicial proceedings before courts. The practical result of the

FMC’s determination was that the South Carolina State Ports

Authority was found not to be immune from private complaint

proceedings before the Commission. The Ports Authority appealed

this decision. The case was docketed on April 24, 2000. South

Carolina State Ports Authority’s brief was filed on July 20, 2000.

Twenty-one states filed an amicus curiae brief on July 31, 2000, in

support of the Ports Authority. The National Association of

Waterfront Employers filed an amicus curiae brief in support of the

FMC’s decision on September 11, 2000. The FMC filed its brief on

September 20, 2000, and the U.S. filed a separate brief, supporting the

FMC’s decision, on the same day. Oral argument was scheduled for

January 22, 2001.

Federal Maritime Commission v. World Line Shipping,

Inc. and Saeid B. Maralan (a/k/a Sam Bustani), C.D. Ca.

No. 00-CV-423. 

The Commission filed a Complaint for Injunctive Relief against

World Line Shipping, Inc. and Saeid B. Maralan in the U.S. District

Court for the Central District of California, seeking to enjoin the

defendants from violating the Shipping Act during the pendency of

FMC Docket No. 00-05, World Line Shipping, Inc. and Saeid B.

Maralan (a/k/a Sam Bustani) - Order to Show Cause. Docket No.

00-05 will determine whether World Line Shipping, Inc. and Saeid B.

Maralan have violated and continue to violate sections 8(a), 19(a), and

19(b) of the Shipping Act by acting as an NVOCC without a public

tariff, license, or bond. The Complaint for Injunctive Relief sought to

enjoin such conduct through the issuance of a temporary restraining

order or preliminary injunction until the Commission issues a final
-57-

decision in Docket No. 00-05. The Court granted the preliminary

injunction on June 12, 2000. 

Worldlink Logistics, Inc. v. Federal Maritime

Commission, et al., D.C. Cir. No. 98-1622.

This case was initiated in the U.S. Court of Appeals for the

District of Columbia Circuit by Worldlink Logistics, Inc., as a Petition

for Review of the Commission’s decision in Total Fitness Equipment,

Inc. d/b/a Professional Gym v. Worldlink Logistics, Inc., Informal

Docket No. 1831(F); Application of Total Fitness Equipment, Inc.

d/b/a Professional Gym for the Benefit of Itself, Special Docket

Application No. 3110. Worldlink filed a brief on March 29, 1999,

arguing that the Commission’s decision should be vacated. The

Commission and the U.S. jointly filed a brief on April 28, 1999,

arguing that the Court should uphold the Commission’s decision.

Intervenor Total Fitness filed a Notice of Concurrence on May 5,

1999, indicating that it agrees with the positions taken in the

Commission’s brief. On October 28, 1999, the Court issued a

judgment upholding the Commission’s decision and denying

Worldlink’s Petition for Review. Worldlink filed a Petition for

Rehearing and Request for Rehearing en banc. The Court denied the

petition on January 14, 2000, and the case then became final. 
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Maryland Port Administration v. Federal Maritime

Commission, 4th Cir. No. 97-2418. 

This proceeding sought review of the Commission’s decision

in Docket No. 94-01, Ceres Marine Terminals, Inc. v. Maryland Port

Administration (“MPA”). Ceres, an MTO alleging violations of

sections 10(b)(11), (b)(12), (d)(1) and (d)(3) of the 1984 Act, and

sections 16 and 17 of the Shipping Act, 1916, claimed that MPA

engaged in unjust preference and prejudice and unreasonable

discrimination by failing to grant it equivalent lease terms and terminal

facilities that it provided to an ocean common carrier in its lease with

the Port. MPA argued that ocean common carriers and MTOs are not

similarly situated and thus, any disparate treatment was not unjust or

unreasonable.

On October 10, 1997, the Commission found that the ALJ had

failed to consider or address the evidence or to reflect the applicable

standards for his decision. Therefore, the Commission vacated the

Initial Decision and decided the case de novo. The Commission found

that respondent MPA had violated sections 10(b)(11) and (12) of the

1984 Act by relying on a vessel call guarantee to justify granting more

favorable lease terms to an ocean common carrier and refusing those

same, or substantially similar, terms to an MTO solely because of its

status, where the vessel call guarantee did not provide to the port any

more security or assurances than the MTO could have provided, and

further violated section 10(d)(1) by imposing on the MTO rates and

charges that were excessive in relation to the benefit received,

particularly where the degree of disparity in the rates so greatly

disfavored the party committed to moving substantially more cargo.

The Commission also found that respondent violated sections

10(b)(11) and (12) by refusing to grant the MTO rates for its barge

service that were comparable to those offered to another barge

operator unless the MTO dropped its existing state court lawsuit and

paid amounts allegedly due, and further violated section 10(d)(1) by

imposing on the MTO rates for its barge service that were excessive

in comparison to the rates provided to the operator of another barge
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service for the same service and that was not reasonably related to any

legitimate goal of the port.

Respondent appealed the Commission’s decision to the U.S.

Court of Appeals for the Fourth Circuit in Richmond, Virginia, and

Ceres intervened in the proceeding. Briefing was completed on

February 19, 1998, and argument was heard on April 8, 1998. On

October 13, 1998, the Court issued an unpublished decision in which

it affirmed in part, reversed in part and remanded the case to the

Commission. The Court affirmed the Commission’s decision that

Ceres’ barge traffic counts towards the container guarantee in its lease

with MPA. However, the Court further found that the Commission

failed to consider fully MPA’s claim that Ceres was estopped from

challenging the terms of its lease with MPA. The Commission’s

decision rejected MPA’s claim but did not elucidate that rejection to

the Court’s satisfaction; therefore, the Court remanded the issue to the

Commission for its consideration. The Court also noted that should

the Commission determine that MPA’s estoppel challenge is without

merit, the Commission is encouraged to revisit its determination with

respect to the measure of damages due Ceres.

On October 23, 1998, MPA filed with the Commission a

“Petition to Establish a ‘Chinese Wall,’ or in the alternative, to permit

discovery regarding communications between Ceres and the Federal

Maritime Commission staff,” to which Ceres replied on November 10,

1998. On April 16, 1999, the Commission issued a Report and Order

denying MPA’s petition, finding that the participation of agency staff

in a remanded proceeding presented no conflicts with the

Administrative Procedure Act or due process considerations. On May

26, 1999, the Commission issued an Order establishing a procedural

schedule for disposition of the remanded issue. Opening briefs were

filed on June 25, 1999, and reply briefs on July 20, 1999. In its reply,

MPA contended that in view of recent Supreme Court decisions, it is

immune from Ceres’ damages claim under the Eleventh Amendment

to the Constitution. On August 16, 1999, MPA filed a response in

which it did not object to Ceres’ motion, but also filed a motion for
-60-

leave to amend its answer and a request for a briefing schedule on the

sovereign immunity issues. On September 10, 1999, the parties filed

a Joint Motion to Approve Stipulation, in which they sought to

preserve the sovereign immunity issues for resolution in a future

Federal court proceeding. The Commission granted the Motion on

September 17, 1999.

3. Legislative Activities

The General Counsel represents the Commission's interests in

all matters before Congress. This includes commenting on proposed

legislation, proposing legislation, preparing testimony for Commission

officials, responding to Congressional requests for assistance, and

preparing agency responses to requests from the Office of

Management and Budget (“OMB”) on proposed bills and testimony.

During fiscal year 2000, 117 bills, proposals and Congressional

inquiries were referred to General Counsel for comments. The Office

prepared and coordinated testimony for three Congressional hearings.

The Office also worked closely with Congressional staffs on proposed

legislation that affected the Commission. 

4. Foreign Shipping Restrictions and International

Affairs

The General Counsel is responsible for the administration of

the Commission's international affairs program. The General Counsel

monitors potentially restrictive foreign shipping laws and practices,

and makes recommendations to the Commission for investigating and

addressing such practices. The Commission has the authority to

address restrictive foreign shipping practices under section 19 of the

1920 Act and the FSPA. Section 19 empowers the Commission to

make rules and regulations governing shipping in the foreign trade to

adjust or meet conditions unfavorable to shipping. The FSPA directs

the Commission to address adverse conditions affecting U.S. carriers
-61-

in foreign trade, which conditions do not exist for foreign carriers in

the U.S.

In fiscal year 2000, the Commission monitored potentially

unfavorable or discriminatory shipping practices by a number of

foreign governments, and issued information demand orders to gather

specific information regarding conditions in the PRC. Additionally,

the Commission received periodic reports which detailed the progress

being made in reforming restrictive practices concerning Japan’s port

facilities. The Commission also continued to monitor developments

in Brazil to ensure that commitments that country made to remove

certain problematic conditions are fully implemented.

In fiscal year 2000, the Commission’s newly organized Task

Force on Restrictive Foreign Practices, chaired by the General

Counsel, began meeting. The Task Force is a network of

representatives from a number of Commission bureaus and offices,

and meets to exchange information regarding new or continuing areas

of concern relating to restrictive foreign shipping practices possibly

necessitating action under one of the Commission’s statutory

authorities in this area. The regular meetings of the Task Force will

also aid the Commission in developing efficient methods to address

conditions as they arise.

On August 12, 1998, the Commission initiated Docket No. 98-

14, Shipping Restrictions, Requirements and Practices of the

People’s Republic of China, with the issuance of Information Demand

Orders to vessel-operating carriers of the U.S. and the PRC for

information on Chinese policies and practices regarding port access,

the licensing of multimodal transport operations, and the establishment

of representative and branch offices there. 

The Commission met in January and June 1999 to review

information collected in this docket. In a press release dated June 24,

1999, the Commission stated that the responses to the FMC inquiries

indicated that Chinese laws and regulations discriminate against and
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disadvantage U.S. carriers and other non-Chinese shipping lines with

regard to a variety of maritime-related services. For example, U.S.

carriers are barred from opening wholly-owned companies or branch

offices in the PRC in locations where carriers’ vessels do not make

monthly calls; thus, U.S. carriers must rely on Chinese agents

(affiliates of the state-owned Chinese shipping lines) to solicit

business, book space, accept goods, and perform other functions in

many port cities and inland locales. U.S. carriers also are subject to

high minimum capital requirements, and are barred by Chinese law

from performing a number of integral vessel agency services for

themselves, such as arranging for entry departure, customs clearance,

consignment, transshipment and multimodal transport. The

Commission also expressed concerns about: Chinese restrictions on

U.S. carriers’ freight forwarding operations; existing requirements that

ocean carriers obtain governmental permission before beginning or

changing international vessel services; and proposed rules that could

require the disclosure of confidential service contract rates or terms,

and further restrict non-Chinese carriers’ ability to offer multimodal

transport services in China. To address these restrictions, the

Commission directed its staff to prepare a formal proposal for action

under section 19 of the 1920 Act. The Commission may take actions

including limitations on sailings, suspension of tariffs, suspension of

regulated agreements, fees not to exceed $1,100,000 per voyage, or

any other measure necessary and appropriate to address the

unfavorable conditions. Such proposed measures would, upon

Commission approval, be noticed to the public for comment by

interested parties prior to becoming effective.

Later in 1999, there were a number of further developments.

A new Chinese controlled carrier, China Shipping Container Lines

(“CSCL”) announced plans to enter the U.S. trades, and bilateral

maritime talks resumed between the U.S. and China. Also, the U.S.-

flag Sea-Land Service, Inc., announced that it was to be acquired by

the parent of Maersk Line. In light of these developments, the

Commission in November determined to further review these matters

and supplement the record before taking up the issue of whether to
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initiate a section 19 rulemaking proceeding targeting Chinese carriers.

Accordingly, the Commission issued an information demand order to

CSCL inquiring about the scope of its operations in China and the

U.S.; CSCL’s response was received February 29, 2000. Also, after

the closing of Maersk’s acquisition of Sea-Land’s services, the

Commission issued an order demanding information about the extent

of that company’s services in China, and the effect of Chinese

restrictions on its operations in U.S. commerce. Maersk Sea-Land’s

responses were received March 24, 2000. The Commission had the

matter under review at fiscal year’s end.

The Office of the General Counsel also participated in

interagency groups and international maritime discussions, and

coordinated and participated in briefings of foreign visitors.

Another responsibility of the Office is the identification and

verification of controlled carriers under section 9 of the 1984 Act.

Common carriers that are owned and controlled by foreign

governments are required to adhere to certain tariff-filing

requirements under the 1984 Act. The Office investigates and makes

appropriate recommendations to the Commission regarding the status

of potential controlled carriers. The Office, in conjunction with other

Commission components, also monitors the activities of controlled

carriers. OSRA expands the definition of “controlled carrier” as

currently defined under the 1984 Act. In fiscal year 2000, the Office

reviewed documents and information relating to the controlled carrier

status of a number of carriers, and classified CSCL and China National

Foreign Trade Transportation (Group) Corp. as controlled carriers. 

D. OFFICE OF 

EQUAL EMPLOYMENT

OPPORTUNITY
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The Office of Equal Employment Opportunity (“EEO”)

applies knowledge of Federal EEO and personnel management

concepts, procedures and regulations to develop and manage a

comprehensive program of equal employment opportunity. The

Office works independently under the direction of the Chairman to

provide advice to the Commission's management in improving and

carrying out its policies and program of non-discrimination and

affirmative program planning.

The Office is responsible for affirmative program planning,

special emphasis programing, and complaints processing and

adjudication, with the assistance of collaterally-assigned EEO

counselors and a Special Emphasis Program Coordinator. 

The Office works closely with the Commission's Office of

Human Resources, managers and supervisors to:

# Improve recruitment and representation of

women, minorities and persons with handicapping

conditions in the workforce.

# Provide adequate career counseling.

# Facilitate early resolution of employment-related

problems.

# Develop program plans and progress reports.

The Director, Office of EEO, arranges for counseling of

employees who raise allegations of discrimination; provides for the

investigation, hearing, fact-finding, adjustment, or early resolution of

such complaints of discrimination; accepts or rejects formal

complaints of discrimination; prepares and issues decisions for

resolution of formal complaints; and monitors and evaluates the

program's impact and effectiveness.
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Significant accomplishments in fiscal year 2000 include the

following: 

1. Provided briefings to senior staff.

2. Provided workshops on equal employment opportunity.

3. Provided counseling assistance to managers, supervisors

and employees.

4. Reviewed and assessed management and personnel human

resource activity and actions.

5. Developed information and materials for training senior

executives, area representatives, and staff and EEO Counselors.

6. Planned and developed special emphasis programs for

FMC employee participation. 

7. Continued to improve FMC's image and identity among

Federal agencies and the community by developing cooperative

programs in the special emphasis areas.

8. Continued non-discrimination policy and programs in

response to Pub. L. No. 103-123.

During fiscal year 2001, the Office will continue all existing

programs and initiate additional activities designed to increase an

understanding of EEO concepts and principles.
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 E. OFFICE OF

INSPECTOR GENERAL

The Office of Inspector General (“OIG”) at the Commission

was established pursuant to the Inspector General Act of 1978, which

was amended in 1988 to provide for additional statutory inspectors

general at designated Federal entities, including the Commission.

It is the duty and responsibility of the OIG to:

# Provide policy direction for and conduct,

supervise, and coordinate audits and investigations

relating to, the Commission's programs and

operations.

# Review existing and proposed legislation and

regulations relating to the Commission's programs

and operations and to make recommendations

concerning the impact of such legislation or

regulations on the economy and efficiency in, and

the prevention and detection of fraud and abuse

in, the administration of the Commission's

programs and operations.

# Recommend policies for, and conduct, supervise,

or coordinate other activities carried out or

financed by the Commission for the purpose of,

promoting economy and efficiency in the

administration of, or preventing and detecting

fraud and abuse in, the Commission's programs

and operations.

# Recommend policies for, and conduct, supervise,

or coordinate relationships between the
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Commission and other Federal agencies, state and

local governmental agencies, and nongovernmental

agencies with respect to all matters relating to: the

promotion of economy and efficiency in the

administration of, or the prevention and detection

of fraud and abuse in, programs and operations

administered or financed by the Commission; and

the identification and prosecution of participants

in any fraud or abuse.

# Keep the Chairman and the Congress fully and

currently informed by means of semiannual and

other reports concerning fraud and other serious

problems, abuses, and deficiencies relating to the

administration of programs and operations

administered or financed by the Commission,

recommend corrective action concerning such

problems, abuses, and deficiencies, and report on

the progress made in implementing such corrective

action.

During fiscal year 2000, the Office issued the following five

audits in final:

A99-04 Review of Commission’s Travel

Expenditures FY-1999

A99-05 Evaluation of Prior Years Obligation

Balances

A00-01 Review of Records Management Program

A00-02 Evaluation of the FMC’s FY-2001 Annual

Performance Plan

A00-03 Review of the Imprest Fund

Other significant actions taken by the Office included assisting

the Commission in the issuance of a Policy on Personal Use of

Government Office Equipment. The OIG also conducted a peer
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review of the Appalachian Regional Commission’s Office of Inspector

General. This required review was conducted in accordance with the

President’s Council on Integrity and Efficiency’s Guide for

Conducting Peer Reviews of the Audit Operations of the Office of

Inspectors General to determine compliance with applicable

Government Auditing Standards. A similar peer review of the FMC’s

OIG was completed, and based on this review, it was determined that

the Office is in full compliance with General Accounting Office

standards.

During the year, various Hotline complaints were received,

and investigations, both informal and formal, were opened and

pursued. Two formal investigations referred to the Department of

Justice have been closed based on action taken by that agency. 

In fiscal year 2001, the Office will continue its high-priority

program of conducting program evaluations in order to improve

agency operations. In addition, other audits and reviews also will be

handled as the Office carries out the OIG’s statutory mandate to

combat waste, fraud and abuse in agency programs. These audits and

reviews are tied to both the agency and the OIG strategic plans. The

Office will initiate investigations, both formal and informal, as

warranted. 

The Inspector General, as an active member of the Executive

Council on Integrity and Efficiency, will continue working with that

organization on joint projects which affect the Inspector General

community. 
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F. OFFICE OF THE 

EXECUTIVE DIRECTOR

The Executive Director, as senior staff official, is responsible

to the Chairman for the management and coordination of Commission

programs managed by the: 

# Bureau of Consumer Complaints and Licensing,

# Bureau of Enforcement, and

# Bureau of Trade Analysis,

and thereby implements the regulatory policies of the Commission and

the administrative policies and directives of the Chairman.

Also, the Executive Director provides administrative guidance

to the: 

# Office of the Secretary,

# Office of the General Counsel, and

# Office of Administrative Law Judges,

and administrative assistance to the:

# Office of the Inspector General. 

On February 27, 2000, the Chairman effected a reorganization

of the Commission. One result was the elimination of the Bureau of

Administration. The responsibilities of that former bureau now reside

within the Office of the Executive Director. The following offices

now report directly to the Office of the Executive Director:
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# Office of Budget and Financial Management,

# Office of Human Resources,

# Office of Information Resources Management, and

# Office of Management Services.

This management structure has been established to ensure the

timely and proper achievement of Commission goals and objectives.

In addition, the Executive Director is the Audit Follow-up and

Management (Internal) Controls Official for the Commission, and the

Office manages those programs. The Executive Director is the

agency's Senior Procurement Executive, its Designated Chief

Information Officer, and the Commission's Chief Operating Officer.

The Deputy Executive Director serves as the Commission’s

Competition Advocate, its Chief Financial Officer, and is its

representative, as Principal Management Official, to the Small Agency

Council. The Office also is responsible for directing and administering

the Commission’s Information Security Program.

A significant achievement of the Office during fiscal year 2000

was implementation of the Commission’s reorganization of February

27, 2000, which was designed to focus the agency’s resources and

programs to more effectively and efficiently implement OSRA. The

Office also guided the first phase of the OSRA impact study; an

Interim Report was issued in fiscal year 2000. Further, the Office

oversaw all activities regarding development of a refined Alternative

Dispute Resolution Program, as well as the expenditure of funds from

Congress’ Y2K Contingency Fund to ensure overall agency Y2K

compliance. The Office also directed staff efforts as participants in the

agency’s Permanent Task Force on Restrictive Foreign Practices.

Additionally, the Office coordinated the updating and revision of the

agency’s five-year Strategic Plan, and preparation of the agency’s

Annual Performance Plan and Program Performance Report as

required by the Government Performance and Results Act of 1993

(“GPRA”). 
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The Office's key objectives for fiscal year 2001 are directing

the preparation of a comprehensive study on the impact of OSRA on

the maritime community; guiding Commission efforts regarding

continued development or redesign of programs to support recent

modifications in the Commission’s statutory mandates; coordinating

the semiannual review of the user fee schedule for Commission

services; overseeing the Commission’s implementation of GPRA,

including preparation of the fiscal year 2002 Annual Performance Plan

and the fiscal year 2000 Program Performance Report; and managing

Commission efforts to comply with section 508 of the Rehabilitation

Act Amendments of 1998 and the Government Paperwork Elimination

Act of 1998 (“GPEA”).

1. Office of Budget and Financial Management

(a) General Office Responsibilities

The Office of Budget and Financial Management (“OBFM”)

administers the Commission's financial management program and is

responsible for optimal utilization of the Commission’s fiscal and

staffing resources. OBFM is charged with interpreting Government

budgetary and financial policies and programs, and developing annual

budget justifications for submission to the Congress and OMB. The

Office also administers internal control systems for agency funds,

travel, cash management, and the Commission’s Imprest Fund.

(b) Achievements

During fiscal year 2000, OBFM:

# Collected and deposited $3,727,997 from user fees,

fine and penalty collections, and ocean freight

forwarder and OTI application and passenger

vessel certification fees.
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 # Coordinated and prepared budget justifications

and estimates for the fiscal year 2001

Congressional budget and fiscal year 2002 budget

to OMB, and participated in the fiscal year 2001

OMB budget hearing.

# Prepared a variety of external reports, including:

the Annual Leave Year Report and the Report on

Workyears and Personnel Cost for 1999 (Office of

Personnel Management - “OPM”); the Report on

International Travel for FY 1999 (OMB); and

reports on first-class airline accommodations for

fiscal year 1999 (General Services Administration -

“GSA”).

# Prepared monthly status reports on workyears,

funding, travel and receivables. 

# Managed the Commission’s travel and cash

management programs.

# Continued to work with the Office of

Management Services and the Bank of America to

complete implementation of the new travel charge

card for FMC travelers.

(c) Future Plans

Financial management goals in fiscal year 2001 include

refinement of the agency’s accounts receivable system and

development of a fully integrated financial management system.

OBFM also will: (1) continue to implement electronic commerce to

automate the processing of purchase orders, obligations and

payments, in conjunction with the Office of Management Services and

the Office of Information Resources Management; (2) review

procedures and controls for cash management; and (3) continue to
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pursue initiatives leading to economy and efficiency in budget and

financial operations, including continued implementation of the Debt

Collection Improvement Act.

2. Office of Human Resources

(a) General Office Responsibilities

The Office of Human Resources (“OHR”) plans and

administers a complete personnel management program including:

recruitment and placement, position classification and pay

administration, occupational safety and health, employee assistance,

employee relations, workforce discipline, performance management

and incentive awards, employee benefits, career transition, training,

retirement, and personnel and information security.

(b) Achievements

During fiscal year 2000, OHR: 

# Met with senior executives and management

officials, supervisors and individual employees to

determine and conduct personnel-related work

necessary to effect a major agency reorganization.

Ensured legal and procedural accuracy of staffing

and classification activity and prepared a variety

of documents, reports and personnel actions to

document the organizational movement of

employees. 

# Assumed responsibility for the Commission’s

training program. 
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# Conducted an agency-wide voluntary early

retirement program to minimize potential

reductions-in-force. 

# Conducted both a comprehensive recruitment and

placement program to staff critical vacancies, and

a comprehensive employee relations program.

Coordinated and publicized family-friendly

initiatives.

# Managed a successful Voluntary Annual Leave

Transfer Program, Combined Federal Campaign,

and Employee Assistance Program; sponsored the

Federal Employees Health Benefits Fair and

conducted the Health Benefits and Thrift Savings

Plan Open Seasons; sponsored Blue Cross/Blue

Shield Days and issued employee notifications of

legislative and regulatory changes to benefits

programs. 

# Conducted a comprehensive position classification

program, including conducting cyclical position

management program review and preparation and

revision of position descriptions in connection with

agency reorganization. 

# Conducted a comprehensive performance

management program, including providing

guidance to managers and supervisors with respect

to aligning employee performance plans with

agency strategic and performance plans.

# Conducted a comprehensive personnel security

program, including implementing recommended

revisions to the program, initiating required
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investigations and preparing final reports to OPM

of actions taken. 

# Continued automation of human resources

programs and records including developing and

testing mechanisms for posting of information on

FMC’s Intranet and working with OPM

information technology (“IT”) officials to ensure

executive information system data integrity upon

migration to new system.

# Continued the planned revision of human

resources-related Commission Orders, updating

ten such Orders. 

(c) Future Plans

In fiscal year 2001, OHR plans to continue to: (1) advise

agency management and staff on all personnel matters and ensure the

maintenance of a sound and progressive personnel program;

(2) implement pertinent portions of the agency’s strategic and related

performance plans; (3) enhance employee development through the

agency training program; and (4) continue the process to explore and

implement simplification, flexibility, and accountability of human

resources management programs.

3. Office of Information Resources Management 

(a) General Office Responsibilities

The Office of Information Resources Management (“OIRM”)

provides administrative support with respect to information resources

management (“IRM”) to the program and administrative operations

of the Commission. As such, OIRM is responsible for ensuring that

the Commission's IRM program is administered in a manner consistent
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with applicable rules, regulations and guidelines. OIRM plans,

coordinates and directs management of automated information

systems.

The Director, OIRM, serves as the Commission's Senior IRM

Manager, FMC Computer Security Officer, Forms Control Officer,

and Records Management Officer. These IRM functions include:

conducting IRM management studies and surveys; managing data

telecommunications; developing and managing databases and

applications; coordinating records management activities;

administering IRM contracts; and developing Paperwork Reduction

Act clearances for submission to OMB. The Office is also responsible

for managing the computer security and forms programs.

(b) Achievements

During fiscal year 2000, OIRM:

# Coordinated and monitored all technical, logistical,

procedural and security issues related to database

systems created, owned and maintained by the

Commission.

# Administered the agency's IT technical support

and technical assistance contracts. 

# Maintained and enhanced the FMC homepage.

# Maintained liaison with the Government Printing

Office (“GPO”) regarding the agency's

Government Information Locator Systems records

maintained on the GPO Access System.

# Provided guidance, coordination and liaison

support to the Commission to obtain OMB
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approval and clearance of forms and new

rulemakings.

# Developed specifications for and supervised

contractor development of agency data systems. 

# Cooperated in the development of refinements to

the Commission's Internet-based service contract

filing system, a mission-critical system required by

OSRA.

# Coordinated the procurement/contracting for

Y2K-compatible hardware, software and systems

upgrades, including the PIERS Focus system and

the Commission's optical imaging system, and

upgraded server software to ensure Y2K

compatibility and to enhance computer security.

(c) Future Plans

In fiscal year 2001, OIRM will continue to emphasize ongoing

support for Commission and externally mandated programs. Major

initiatives include plans to: (1) develop and submit to the National

Archives and Records Administration schedules for electronic

program and administrative records and other records not currently

scheduled or covered by the General Records Schedule; (2) ensure

Commission compliance with major Government-wide initiatives such

as Section 508 of the Rehabilitation Act Amendments of 1998 and

GPEA; (3) develop in-house and Internet automated access systems

using the most current technology; (4) administer and work with the

agency contractor to refine the new Internet-based service contract

filing system; (5) assist Commission staff on issues related to assessing

the accuracy and accessibility of private tariff filing systems; (6)

provide continued technical and administrative support for end-user

equipment and software; (7) provide continued agency-wide advice

and coordination on records management, OMB clearances and
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information management issues; and (8) continue maintenance and

update of the Commission's homepage to provide information to the

public.

4. Office of Management Services

(a) General Office Responsibilities

The Office of Management Services (“OMS”) directs and

administers a variety of management services functions that principally

provide administrative support to the regulatory program operations

of the Commission. The Director of the Office serves as the

Commission's Contracting Officer.

The Office's support programs include telecommunications,

procurement of administrative goods and services, property

management, space management, printing and copying management,

mail and records services, facilities and equipment maintenance, and

transportation. The Office's major functions are to secure and furnish

all supplies, equipment and services required in support of the

Commission's mission, and to formulate regulations, policies,

procedures, and methods governing the use and provision of these

support services in compliance with the applicable Federal guidelines.

(b) Achievements

During fiscal year 2000, OMS:

# Provided procurement guidance and contract

administration services for several database

systems. 

# Provided procurement guidance and assistance for

the award of contracts to acquire an electronic

imaging system, an automated accounts receivable
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system, a redesigned FMC Form 1 filing system,

and a network security assessment.

# Coordinated with OIRM on procuring new

computer workstations and servers using funds

provided by OMB for the agency’s Y2K

compliance activities. 

# Renewed the Interagency Agreement with the

Office of Thrift Supervision for accounting services

and administrative support to the FMC.

# Established the Commission’s Transit Benefit

Program required by Executive Order 13150,

Federal Workforce Transportation. Developed an

inter-agency agreement with the Department of

Transportation’s TASC/TRANServe for ongoing

administration of the program.

# Completed logistical and other arrangements

related to the Commission’s reorganization in

February 2000.

# Developed an Occupancy Agreement with GSA for

the rental costs of the Commission’s headquarters

building. 

# Arranged for the printing and distribution of the

FMC's 38th Annual Report.
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(c) Future Plans

In fiscal year 2001, the Office's objectives include the

following: (1) implement an upgrade of the automated procurement

management system to its latest version; (2) continue efforts to

expand the Commission's electronic commerce program for paperless

office interaction; (3) continue to evaluate and refine the operations

of the automated property inventory management system;

(4) coordinate with GSA to develop a new lease agreement for

headquarters office space; and (5) continue to work with FMC

activities regarding innovative support service approaches.
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G. BUREAU OF CONSUMER 

COMPLAINTS AND LICENSING

1. General

The Bureau of Consumer Complaints and Licensing was

established effective February 28, 2000, through the Commission’s

general reorganization implemented to more closely align the

Commission’s organization with its responsibilities under OSRA. The

primary operating programs for which the Bureau has responsibility

are the Commission’s OTI licensing program, passenger vessel

certification program, ADR program, and consumer assistance

program. In administering these programs, the Bureau:

# Licenses and regulates OTIs, including ocean

freight forwarders and NVOCCs.

# Issues certificates to owners and operators of

passenger vessels that have evidenced financial

responsibility to satisfy liability incurred for

nonperformance of voyages or for death or injury

to passengers and other persons. 

# Manages programs assuring financial

responsibility of OTIs and passenger vessel

operators, by developing policies and guidelines,

and analyzing financial instruments and financial

statements. 

# Responds to consumer inquiries and complaints,

acting as an intermediary to resolve difficulties

encountered by consumers with respect to cruises

and shipments of cargo.
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# Develops and maintains an ADR program,

arranging for and providing mediation and other

dispute resolution services where appropriate. 

# Develops and maintains information systems that

support the Bureau’s programs and those of other

Commission entities.

In carrying out these functions, the Bureau provides

information and referrals in response to a wide array of informal

inquiries, provides guidance with respect to licensing and bonding, and

where appropriate, advises about various means available to resolve

complaints, both informally and formally. The Bureau also focuses on

facilitating conflict resolution through informal and non-binding

approaches in an effort to minimize litigation expenses.

The Bureau is organized into three offices. The Office of

Consumer Complaints (“OCC”) has responsibility for developing and

implementing an ADR program, and for responding to consumer

inquiries and complaints. The Office of Transportation Intermediaries

has responsibility for reviewing applications for OTI licenses, and

maintaining and updating records about licensees. The Office of

Passenger Vessels and Information Processing has responsibility for

reviewing applications for certificates of financial responsibility with

respect to passenger vessels, managing all activities with respect to

evidence of financial responsibility for OTIs and passenger vessel

owner/operators, and for developing and maintaining all Bureau

databases and records of OTI applicants and licensees. All offices

respond to a number of inquiries and concerns about programs for

which they are responsible. During fiscal year 2000, the Bureau

responded to more than 7,500 inquiries.
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2. Alternative Dispute Resolution

The Bureau has responsibility for developing and implementing

the Commission’s ADR program. Complaints against shipping entities

are at an all-time high, and in the long run, it is anticipated that an

enhanced ADR program will result in lower costs both to the agency

and to the shipping public by offering quicker and less expensive

means for dispute resolution. 

During fiscal year 2000, the OCC focused on program

development and program-specific training for its personnel.

Personnel received training to mediate a broad range of disputes --

from informal disputes to those involving already commenced

litigation. 

At the same time, the program also focused on the

Commission’s informal complaint-handling activities. In addition to

assisting the general public in obtaining various available informational

materials, the Bureau receives, records, and tracks complaints

received by the Commission, and attempts to resolve problems, such

as those involving delay or mishandling of shipments. The Bureau

helps secure the recovery of funds improperly collected by industry

entities, facilitates the international movement of household goods,

and communicates to cruise vessel operators the substance of

consumer complaints arising from their services. During fiscal year

2000, the OCC processed a total of 2,916 complaints and information

requests. Refunds to the general public of overcharges, refunds and

other savings attributable to complaint-handling activities amounted

to $215,800. Since 1991, the OCC and its predecessor office have

helped complainants recover more than $1,600,000.

The Bureau also adjudicates small claims, i.e., claims of

shippers seeking reparations up to $10,000 for violations of the

shipping statutes. By agreement of the parties, these small claims are

adjudicated by Settlement Officers, rather than ALJs, saving the

expense and encumbrances of more formal administrative proceedings.
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Although the vast majority of small claims received a few years ago

comprised freight overcharge actions against ocean common carriers,

the majority of cases now concern claims by individuals against

NVOCCs. Those complaints generally involve alleged prohibited acts

in connection with the international transportation of household

goods. Typical complaints include situations where an NVOCC has

received cargo from its customer and taken payment for the

transportation of the cargo, but failed to deliver the cargo. Tracking

down the whereabouts of a shipment can be difficult, and often

additional charges have accrued because of delay or because the

NVOCC has not made a necessary payment, thus necessitating

payment of additional funds to obtain release of the shipment. During

fiscal year 2000, two claims were filed, while four pending cases were

carried over from the previous year. There were three pending cases

at the close of the fiscal year.

Upon its establishment, the Bureau assumed responsibility for

the adjudication of special docket applications. These are applications

for permission to apply other than tariff rates and to waive or refund

freight charges arising from various errors in tariff publications, an

inadvertent failure to publish an intended rate, or a misquotation of a

rate. From the Bureau’s establishment through the remainder of fiscal

year 2000, sixteen special docket applications were processed. None

were pending at the close of the fiscal year.

In fiscal years 2001 and 2002, the Commission intends to

formalize and expand its ADR program, resulting in more ADR

involvement after the onset of litigation. The Bureau plans to

continue to expand its consumer outreach programs, and strengthen

its growing ties to Federal, state, local and private consumer

assistance agencies. Also, the Bureau will continue to take advantage

of new outreach possibilities made possible by electronic means of

communication. 
-86-

3. Licensing of Ocean Transportation Intermediaries

OTIs are transportation middlemen. There are two different

types of such transportation middlemen, NVOCCs and ocean freight

forwarders. Both NVOCCs and ocean freight forwarders must be

licensed if located in the U.S. Foreign NVOCCs may choose to

become licensed, but do not require a license. Whether licensed or

not, foreign NVOCCs must establish financial responsibility. In

addition, all NVOCCs must publish electronic tariffs. 

To be licensed, an OTI must establish that it is qualified in

terms of experience and character, as well as establish its financial

responsibility by means of a bond, insurance or other instruments.

Licensed ocean freight forwarders must establish financial

responsibility in the amount of $50,000, and licensed NVOCCs,

$75,000. An additional $10,000 coverage is required for each

unincorporated branch office of a licensee. In addition, unlicensed

foreign NVOCCs must maintain $150,000 in coverage. The financial

instrument must be available to pay any order of reparation assessed

under the 1984 Act, claims against the OTI arising from its

transportation-related activities, and any judgments for damages

against an OTI arising from its transportation-related activities under

the 1984 Act.

During fiscal year 2000, the Commission received 400 new

and amended OTI applications, issued more than 3,000 OTI licenses,

and revoked 270 licenses. At the end of the fiscal year, 1,396 freight

forwarders, 1,287 U.S. NVOCCs, 761 joint NVOCC/ocean freight

forwarders, and 35 foreign NVOCCs held active OTI licenses. An

additional 540 foreign NVOCCs maintained proof of financial

responsibility on file with the Commission but chose not to be

licensed. 

A review of Commission records in the spring of 2000 showed

that a number of OTIs that were in existence on May 1, 1999, still had

not met new OSRA-related requirements effective that date. More
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than 500 OTIs were sent warning letters explaining their deficiencies

and requiring their compliance. By the end of fiscal year 2000, all but

82 of those entities had corrected the deficiencies and become

licensed, or notified the Commission that they had become inactive.

During fiscal year 2001, the Bureau will initiate more formal action to

bring those entities into compliance.

4. Passenger Vessel Certification

The Commission administers sections 2 and 3 of Pub. L. No.

89-777 (46 U.S.C. app. §§ 817d and 817e), which require evidence

of financial responsibility for vessels which have berth or stateroom

accommodations for 50 or more passengers and embark passengers

at U.S. ports and territories. The program now encompasses 175

vessels and 45 operators, which have evidence of financial

responsibility coverage in excess of $350 million for nonperformance

and over $1 billion for casualty. The certificates issued pursuant to

this program are necessary for Customs’ clearance of thousands of

passenger vessel sailings annually. 

During fiscal year 2000, the Commission received 110

applications for passenger vessel certificates, and 41 casualty

certificates and 70 performance certificates were approved and issued

to passenger vessel applicants.

The Bureau offers information and guidance to the cruising

public throughout the year on their rights and obligations regarding

monies paid to cruise lines who experience financial difficulties and

nonperformance problems. This is in addition to those disputes

between cruise lines and the cruising public that are resolved by OCC

as part of its ADR responsibilities.

The cruise industry has grown tremendously over the past

decade. New cruise lines have entered the business, and existing

cruise lines continue to build and/or purchase additional vessels to

serve an increasing demand. In addition, applicants continue to
-88-

develop more sophisticated means of establishing their required

financial responsibility. In mid-September of fiscal year 2000, a

major cruise line, Premier Cruise Operations Ltd. dba Premier Cruises

and Premier Cruise Lines (“Premier”), suddenly ceased operations

upon the seizure of its vessels by creditors. At that time, Premier held

Commission certificates for five vessels, supported by a $15,000,000

performance surety bond. Bureau staff worked closely with the

surety, its representative, and Premier to provide information to the

public as quickly as possible. Premier’s surety was able to quickly

establish a place and method for filing claims, while we assisted in

disseminating claims-filing information to the public. By the end of

fiscal year 2000, more than 400 inquiries had been received with

regard to this single event.

5. Automated Database Systems

A significant function of the Bureau is to support all

Commission programs by providing information about all regulated

entities and those doing business with the Commission. In addition,

a database is maintained that provides information about financial

coverage for all OTIs, as well as the status of license applications. 

During fiscal year 2001, the Bureau intends to publish on the

Commission’s homepage a list of licensed and bonded OTIs, thus

assisting carriers in complying with their statutory mandate to do

business only with those licensed by the Commission. This is

especially helpful as carriers may incur liability for doing business with

an unlicensed OTI. An up-to-date list is a safeguard to the shipping

public, and also protects licensees from losing business because of an

inaccurate determination by a carrier that it may not be licensed. Also

during fiscal year 2001, the Bureau plans to expand, upgrade and

improve these databases into a more modern configuration that can

help achieve greater efficiencies.
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H. BUREAU OF ENFORCEMENT

The Bureau of Enforcement is the primary investigatory and

prosecutorial arm of the Commission. Attorneys of the Bureau serve

as trial attorneys in formal proceedings instituted under section 11 of

the 1984 Act, and in investigations instituted under the FSPA. Bureau

attorneys serve as legal advisors to the Executive Director and other

bureaus, and also may be designated Investigative Officers in

nonadjudicatory fact finding proceedings. The Bureau monitors all

other formal proceedings in order to identify major regulatory issues

and to advise the Executive Director and the other bureaus. The

Bureau also participates in the development of Commission rules and

regulations. On occasion, under the direction of the General Counsel,

attorneys from the Bureau may participate in matters of court or other

agency litigation to which the Commission is a party. 

Through investigative personnel, the Bureau monitors and

conducts investigations into the activities of ocean common carriers,

OTIs, shippers, ports and terminals, and other persons to ensure

compliance with the statutes and regulations administered by the

Commission. Monitoring activities include: (1) service contract

reviews to determine compliance with applicable statutes and

regulations; (2) reviews of OTI operations, including compliance with

licensing, tariff, and bonding requirements; (3) audits of passenger

vessel operators to ensure the financial protection of cruise

passengers; and (4) various studies and analyses to support

Commission programs. Investigations are conducted into alleged

violations of the full range of statutes and regulations administered by

the Commission, including: illegal or unfiled agreements; abuses of

antitrust immunity; unlicensed freight forwarding; illegal rebating;

misdescriptions or misdeclarations of cargo; untariffed cargo carriage;

unbonded OTI and passenger vessel operations; and various types of

consumer abuses, such as failure of carriers or intermediaries to carry

out transportation obligations, resulting in cargo delays or financial

losses for shippers.
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The Commission maintains a presence in Los Angeles, Miami,

New Orleans, New York and Seattle through an area representative

based in each of those cities. These representatives serve other major

port cities and transportation centers within their respective areas. In

addition to monitoring and investigative functions, area

representatives represent the Commission within their jurisdictions,

provide liaison between the Commission and the maritime industry

and the shipping public, collect and analyze intelligence of regulatory

significance, and assess industry conditions. Liaison activities involve

cooperation and coordination with other government agencies,

providing regulatory information and relaying Commission policy to

the shipping industry and the public, and handling informal complaints.

The Bureau prepares and serves notices of violations of the

shipping statutes and Commission regulations and may compromise

and settle civil penalty demands arising out of those violations. If

settlement is not reached, Bureau attorneys act as prosecutors in

formal Commission proceedings that may result in settlement or in the

assessment of civil penalties. The Bureau also participates, in

conjunction with other bureaus, in special enforcement initiatives.

During fiscal year 2000, the Bureau continued its investigation

and prosecution of malpractices, particularly fraudulent cargo

descriptions and measurements in the transpacific trades and secret

rebates in the South American trades. Other trades were also the

subject of malpractice investigations, including the North Atlantic,

Central American and Caribbean trades. These malpractices included

unlawful and discriminatory practices such as various forms of secret

rebates and absorptions, misdescription of commodities and

misdeclaration of measurements, illegal equipment substitution,

unlawful use of service contracts, as well as carriage of cargo by and

for untariffed and unbonded NVOCCs. Most of these malpractice

investigations have resulted in compromise settlements of civil

penalties. However, investigations of several NVOCCs and ocean

common carriers have required the institution of formal adjudicatory

proceedings in order to pursue remedies under the 1984 Act.
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Following up on matters arising from a 1998 investigation into

alleged ocean carrier malpractices during peak season in the

transpacific trades, the Commission determined that ANERA and its

members had violated certain provisions of the 1984 Act and the

Commission’s regulations by entering into service contracts containing

so-called “opt-out” clauses. Under these clauses, various members of

ANERA would sign on as participating carriers in conference service

contracts, but “opt out” of the lower rates made available to the

shipper under the contract. The Commission found that this device

rendered the rates uncertain as to shipments tendered to carriers

“opting out” of such contracts. In a separate but related action, the

Commission entered into a compromise agreement with ANERA and

its members under which a sum of $110,000 was paid for alleged

violations of the Commission’s regulations in failing to file the “optout” provisions of some 105 service contracts in ANERA’s essential

terms publication.

In the U.S./North Europe trades, cases of possible unfiled

agreements in Docket No. 97-07, Possible Unfiled Agreement

Between Hyundai Merchant Marine Company, Ltd. and

Mediterranean Shipping Co., S.A., and Docket No. 97-08, Possible

Unfiled Agreements Among A.P. Moller-Maersk Line, P&O Nedlloyd

Limited and Sea-Land Service, Inc., were concluded with the payment

of penalties pursuant to compromise agreements with the Commission

without the admission of any violations.

The cooperation between the Commission's area

representatives and Customs with respect to the exchange of

investigative information continues to be beneficial to both parties.

Cooperation with Customs has expanded into several joint field

operations to investigate entities suspected of violating both agencies’

statutes or regulations. Such cooperation also has included local

police and the U.S. Immigration and Naturalization Service, when

necessary.
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In fiscal year 2000, the Bureau continued its OTI audit

program. This program is conducted from headquarters, primarily by

mail, and reviews the operations of licensed OTIs to assist them in

complying with the statutory requirements and the Commission’s rules

and regulations, particularly as modified by OSRA. This program

identified several OTIs operating in violation of the 1984 Act and

Commission regulations. The audit program also includes review of

entities holding themselves out as vessel-operating common carriers

(“VOCCs”) with no indication of vessel operations.

When the fiscal year began, 40 enforcement cases were

pending final resolution by the Bureau. During the fiscal year, 30 new

enforcement actions were commenced. Thirty-four were compromised

and settled, administratively closed, or referred for formal

proceedings. Thirty-six enforcement cases were pending resolution

at fiscal year's end.

The Bureau entered the fiscal year as party to 16 formal

proceedings, and participated in 7 new formal proceedings during the

year. Fourteen of these proceedings were completed, with the

remaining 9 pending at the end of the fiscal year.

At the beginning of fiscal year 2000, there were 63 requests

for legal advice pending in the Bureau. Fifty-seven such requests

were received during the fiscal year, and 60 legal advice projects were

completed. Accordingly, 60 legal advice matters were pending in the

Bureau on September 30, 2000.

In fiscal year 2001, the Bureau will continue to pursue

fraudulent and market-distorting practices and activities and will

continue to monitor U.S. trades to encourage compliance with the

changes and regulations resulting from OSRA. 
-93-

I. BUREAU OF TRADE

ANALYSIS

1. General

The primary function of the Bureau is to plan, develop, and

administer programs related to the oversight of concerted activity of

common carriers by water under the standards of the 1984 Act as

amended by OSRA. Further, the Bureau is responsible for

administering the Commission’s agreements and service contract

programs, and monitoring the accessibility and accuracy of all tariffs

published by common carriers, conferences of such carriers, and

MTOs. The Bureau's major program activities include:

# Administering comprehensive trade monitoring

programs to identify and track relevant

competitive, commercial, and economic activity in

each major U.S. trade, and to advise the

Commission and its staff on current trade

conditions, emerging trends, and regulatory needs

affecting waterborne liner transportation.

# Conducting systematic surveillance of carrier

activity in areas relevant to the Commission's

administration of statutory standards.

# Developing economic studies and analyses in

support of the Commission's regulatory

responsibilities.

# Providing expert economic testimony and support

in formal proceedings, particularly regarding

unfair foreign shipping practices.
-94-

# Processing and analyzing ocean common carrier

and marine terminal agreements.

# Reviewing and processing service contracts and

service contract amendments filed by ocean

common carriers and conferences of such carriers,

including service contract statements of essential

terms published by such entities. 

# Reviewing tariff publications in private automated

systems of carriers and conferences and ensuring

that tariffs under OSRA are accessible and

accurate.

2. Monitoring

The goal of the Bureau’s monitoring activities is to ensure that

carriers operating in U.S. ocean trades comply fully with applicable

statutory standards and Commission regulations. To that end, the

Bureau administers a variety of monitoring programs and other

research efforts designed to apprise the Commission of current trade

conditions, emerging commercial trends, and carrier pricing and

service activities.

For a description of the Bureau's monitoring activities for

fiscal year 2000, see Section III. A, Monitoring.

3. General Economic Analysis

In addition to research and economic analysis pertaining to its

monitoring programs, the Bureau provides economic expertise for a

variety of Commission initiatives, including rulemaking proceedings.

Bureau economists prepare testimony in fact finding investigations and

cases of unfair shipping practices under section 19 of the 1920 Act
-95-

and FSPA. They also contribute to speeches and provide briefings for

senior agency officials.

Key projects the Bureau completed in fiscal year 2000

included: (1) preparation of the service contract, carrier agreement,

and tariff accessibility sections of the Commission’s interim status

report on OSRA; (2) industry interviews and data collection for the

Commission’s final two-year OSRA Impact Study; (3) economic

analyses of newly filed carrier agreements under the competition

standards of section 6(g) of the 1984 Act; (4) compilation and analysis

of trade and industry data for agency testimony before various

Congressional committees, along with responses to Congressional

inquiries; (5) an informational memorandum to the Commission

concerning the voluntary service contract guidelines filed by major

agreements; (6) an analysis and outline of the major issues concerning

the Commission’s regulations on the content and filing of minutes of

agreement meetings; (7) a review of carrier alliance agreements,

focusing on developing and implementing specific reporting

requirements relating to their operations; (8) an evaluation of the

regulations on agreement reporting requirements; (9) responses to

various informal complaints and requests for information from other

Government agencies or maritime entities on a variety of matters; (10)

classification of agreements to determine each agreement’s monitoring

report requirements for calendar year 2000; (11) updated audits on the

regulatory compliance of tariffs electronically published by carriers;

(12) analysis of requests by agreements, including TACA, for relief

from the monitoring report requirements; and (13) review of quarterly

monitoring report data submitted in accordance with the

Commission’s agreement reporting requirements.

4. Agreement Analysis

Under sections 4 and 5 of the 1984 Act, all agreements by or

among ocean common carriers to fix rates or conditions of service,

pool cargo or revenue, allot ports or regulate sailings, limit or regulate

the volume or character of cargo or passengers to be carried, control
-96-

or prevent competition, or engage in exclusive or preferential

arrangements are required to be filed with the Commission. Except

for certain exempted categories, agreements among MTOs and among

one or more MTO and one or more ocean common carrier are also

required to be filed with the Commission.

Generally, an agreement becomes effective 45 days after filing,

unless rejected by the Commission, made the subject of a formal

Commission request for additional information, or enjoined by a U.S.

district court under section 6(h) of the 1984 Act when it can be

demonstrated that it will unreasonably increase transportation costs or

unreasonably decrease service. An agreement already in effect also

can be enjoined on a similar showing by the Commission. Under the

Commission's regulations, certain routine or nonsubstantive

agreements are exempt from the 45-day waiting period and are

effective on filing with the Commission. Further, the 1984 Act

empowers the Commission to investigate and order the disapproval,

cancellation, or modification of any effective agreement it finds to be

in violation of the Act. In an investigation, the Commission may seek

to enjoin, in U.S. district court, conduct that violates the Act.

There are two broad categories of agreements filed with the

Commission. The first category is pricing agreements, where the main

focus is the discussion and fixing of rates. Types of pricing

agreements include conference and rate discussion agreements. The

other category is operational agreements that authorize operational

cooperation between the parties, such as sharing vessel space. There

are a number of other agreement types that fall under the operational

category. Brief descriptions follow of the various agreement types.

(a) Conference Agreements

Conference agreements provide for the collective discussion,

agreement, and establishment of ocean freight rates and practices by

groups of ocean common carriers. Although conference carriers are

allowed to act independently, the expectation is that they will adhere
-97-

to rates and terms and conditions of service adopted by the group.

These agreements publish a common rate tariff in which all the parties

participate. 

In fiscal year 2000, the Bureau received one new conference

agreement and 33 modifications to existing conference agreements.

The Bureau analyzed and processed 34 filings during the year. At the

end of the fiscal year, there were 21 active conferences. Activities

under two conferences in the inbound transpacific trades remained

suspended at the end of the fiscal year.

(b) Discussion Agreements

Discussion agreements fall under two types: rate and non-rate

agreements. Like conferences, rate discussion agreements focus on

the fixing of rates, but any consensus reached under these agreements

is non-binding on the parties. There is no common rate tariff; each

party publishes its own tariff.

Non-rate discussion agreements generally provide a forum for

discussing matters of mutual interest, and are not geared to rate

matters. In some instances, they operate much like a trade

association. Examples of this latter description are the cruise

association agreements and the Box Club, a group of containership

operators that meets once or twice a year to discuss policy and

legislative issues that affect their industry.

During the fiscal year, the Bureau received three new

discussion agreements and 83 modifications to currently effective

agreements. At the end of the fiscal year, there were 36 rate

discussion agreements and 11 non-rate discussion agreements on file.
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(c) Vessel-Sharing Agreements

VSAs are by far the largest group of agreements on file with

the Commission. There are several different kinds of these

agreements, ranging from those that involve a high degree of

operational cooperation with respect to space and services, to

agreements that merely provide for the swapping of container slots.

The high end of these agreements are broad alliances, while the low

end are routine space charters. Most VSAs authorize some level of

service rationalization. The objective of these agreements is to

provide a high-quality service, while reducing individual operating

costs.

During fiscal year 2000, the Bureau received 32 new VSA

agreements and 54 modifications to existing VSAs. The Bureau

processed 75 filings during the year. At the end of the fiscal year,

there were 148 VSAs on file.

(d) Joint Service Agreements

 Parties to joint service agreements operate a joint venture

under a single name in a specified trading area. The joint venture

issues its own bills of lading, sets its own rates, and acts as an

individual ocean common carrier.

One new joint service agreement and five agreement

modifications were filed during fiscal year 2000. The Bureau

processed all six filings during the year. Four joint services were

terminated last year, leaving only 14 joint service agreements on file

at the conclusion of the fiscal year.

(e) Cooperative Working & Other Agreements

Cooperative working agreements (“CWAs”) do not fit under

any of the foregoing agreement types. Generally, they deal with
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policing matters, unique management arrangements between carriers,

participation in joint service contracts, and the provision of

administrative services. Other agreements include agency,

transshipment, and equipment interchange agreements.

The Bureau received 39 filings under these categories of

agreements in fiscal year 2000. There were 19 CWAs and other

agreements on file at the end of the fiscal year.

(f) Marine Terminal Agreements

Marine terminals, operated by both public and private entities,

provide facilities, services, and labor for the interchange of cargo and

passengers between land and ocean carriers, and for the receipt and

delivery of cargo from shippers to consignees. The Bureau is

responsible for reviewing and processing agreements related to the

marine terminal industry.

During fiscal year 2000, the Bureau analyzed 45 terminal

agreements relating to port and marine terminal services and facilities.

Commission rules exempt certain classes of marine terminal

agreements from the waiting period requirements of the 1984 Act,

permitting them to become effective upon filing. Terminal agreements

not entitled to an exemption are processed under applicable statutory

requirements. At the end of the fiscal year, 434 terminal agreements

were on file with the Commission.

The number of marine terminal agreement filings has decreased

drastically since fiscal year 1992. That year, to lessen the regulatory

burden on the industry, the Commission exempted terminal lease

agreements from filing. Prior to that time the Commission was

receiving approximately 340 terminal agreements a year. In fiscal year

2000, the Commission received only 46 terminal agreements.

5. Overview of Agreement Filings
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In fiscal year 2000, the Bureau received 359 agreement filings.

This number was a slight decrease (1.1 percent) from the previous

fiscal year. The Bureau processed 348 agreement filings during the

year. Appendix C contains a breakdown of receipts and processing

categories for the fiscal year. 

At the end of fiscal year 2000, the Bureau had a total of 251

carrier agreements and 434 terminal agreements on file. Appendix C

also provides a breakdown by various agreement type.

6. Tariffs

Since May 1, 1999, section 8 of the 1984 Act requires

common carriers and conferences to publish tariffs in private

automated systems. These tariffs set forth the rates, charges, rules,

and practices of common carriers operating in the U.S. foreign

commerce. The Bureau reviews and monitors the accessibility and

accuracy of the private systems, as prescribed under the 1984 Act, and

reviews published tariff material for compliance with the Act’s

requirements. The Bureau acts on applications for special permission

to deviate from tariff publishing rules and regulations and recommends

Commission action on tariff publishing activities and regulations. The

Bureau also collaborates with other components of the Commission

to verify OTI/NVOCC financial responsibility as it relates to tariff

publication. 

The Bureau initiated two Circular Letters in fiscal year 2000,

No. 00-1, Public Access to Tariffs and Tariff Systems under the

Ocean Shipping Reform Act of 1998, and No. 00-2, Charges Assessed

for Access to Tariffs and Tariff Systems, that the Commission

addressed to all common carriers, conferences of common carriers and

publishers of carrier/conference automated tariff systems. The circular

letters were issued because the Commission found that the public’s

ability to access some tariff systems appeared to be limited. The

Commission stated that it would seek compliance by the conferences,
-101-

carriers and publishers through the cooperative efforts of its staff and

industry representatives before any other type of remedial action

required by OSRA or under the Commission’s regulations is taken.

The staff has been in regular contact with the carriers, conferences and

the tariff publishers to assist in the resolution of this issue. 

The Bureau is directly involved in the processing of the

Commission’s Form FMC-1, which is usually electronically submitted

from the Commission’s homepage and identifies the location of the

carrier’s tariffs or the MTO’s schedules, including carriers’ and

conferences’ service contract essential terms publications. A total of

2,456 Form FMC-1 tariff location addresses regarding OTI/NVOCCs

were posted on the Commission’s homepage during fiscal year 2000.

During fiscal year 2000, the Bureau also received and

processed 19 foreign commerce special permission applications to

deviate from the statutory provisions of the 1984 Act and/or the

Commission's tariff publishing regulations. The total number of

special permission applications received decreased drastically from the

previous fiscal year’s 238, when a number of NVOCCs needed to put

tariffs into effect by April 30, 1999, in order to be provisionally

licensed as OTI/NVOCCs on and after the May 1, 1999, effective date

of OSRA. 

7. Service Contracts

Service contracts offer an alternative to transportation under

tariff terms. Their flexibility enables contract parties to tailor

transportation services to accommodate specific commercial and

operational needs. 

Since OSRA’s effective date of May 1, 1999, all contracts are

required to be filed electronically. Initially two systems were

developed, one which was Internet-based and another which used a

dial-up approach. This latter system was predicated on the

Commission’s former Automated Tariff Filing and Information System
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(“ATFI”), and was provided as an option to facilitate contract filing

during the transition to OSRA requirements. The dial-up system

expired at the end of fiscal year 1999, and all service contracts now

are required to be filed in the Internet-based system. The Internetbased system is designed for flexibility. It does not require contract

terms to be filed in any prescribed order, and it allows carriers to

submit service contracts in WordStar, WordPerfect, Microsoft Word

and ASCII formats. Some are also filed in other electronic formats

such as Excel and HTML. Certain enhancements have been made to

the original system, e.g., the ability of a service contract filer to

retrieve service contracts filed into its individual directory at the

Commission. 

During fiscal year 2000, the Commission received thousands

of service contract filings. There were 35,190 new service contracts

(compared to 22,018 the last five months of fiscal year 1999 under

OSRA), and 110,780 amendments (compared to 32,256 amendments

the last five months of fiscal year 1999 under OSRA). 

8. Controlled Carriers

A controlled carrier is an ocean common carrier that is, or

whose operating assets are, directly or indirectly, owned or controlled

by a government. Section 9 of the 1984 Act, provides that no

controlled carrier may maintain rates or charges in its tariffs or service

contracts that are below a level that is just and reasonable, nor may

any such carrier establish, maintain, or enforce unjust or unreasonable

classifications, rules or regulations in those tariffs or service contracts.

In addition, tariff rates, charges, classifications, rules, or regulations

of a controlled carrier may not, without special permission of the

Commission, become effective sooner than the 30th day after the date

of publication. 

By Order on March 27, 1998, the Commission granted one

controlled carrier, COSCO, a limited exemption from the 30-day

notice period applicable to controlled carriers, to reduce rates to meet
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or exceed the filed rates of competing ocean common carriers.

(Petition No. P1-98, Petition of China Ocean Shipping (Group)

Company for a Limited Exemption from Section 9(c) of the Shipping

Act of 1984.) In fiscal year 2000, COSCO exercised the authority

granted by the Commission’s Order in 33 instances. In October 2000,

China National Foreign Trade Transportation (Group) Corp.

(Sinotrans) petitioned for a similar exemption to that granted COSCO.

Just before the end of fiscal year 2000, the Commission published in

the Federal Register the updated list of controlled carriers under the

1984 Act.

9. Non-Vessel-Operating Common Carriers

Ocean freight forwarders and NVOCCs in the U.S. have been

combined by OSRA into a new entity known as ocean transportation

intermediaries (“OTIs”). The Commission’s Bureau of Consumer

Complaints & Licensing now monitors and reviews compliance with

OTI/NVOCC financial responsibilities under OSRA, while the Bureau

of Trade Analysis reviews the accessibility and accuracy of NVOCC

tariff publications in the carriers’ private automated systems.

During fiscal year 2000, the Bureau posted 2,456 tariff location

addresses for OTI/NVOCCs that had been submitted to the

Commission on Form FMC-1. 

10. Marine Terminal Activities

Pursuant to OSRA, a marine terminal operator (“MTO”) may

make available to the public, subject to section 10(d) of the 1984 Act,

a schedule of rates, regulations, and practices, including limitations of

liability for cargo loss or damage, pertaining to receiving, delivering,

handling, or storing property at its marine terminal. Any such

schedule made available to the public shall be enforceable by an

appropriate court as an implied contract without proof of actual

knowledge of its provisions. Pursuant to the Commission’s

regulations governing MTO schedules, any terminal schedule that is
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made available to the public must be available during normal business

hours and in electronic form. Each MTO must notify the Bureau of

the electronic location of its terminal schedule by submitting Form

FMC-1 before commencing operations. During fiscal year 2000, the

Bureau posted 177 electronic location addresses for MTO terminal

schedules on the Commission’s homepage. 

11. Automated Database Systems

The Bureau currently maintains and uses the following

automated database systems: (1) Form FMC-1 System; (2) Tariff

Profile System; (3) Service Contract System for filing service

contracts and related Form FMC-83 for registration to file service

contracts; (4) Microfiche System; (5) historical ATFI tariff database;

(6) the tariff and service contract portions of the FMC Imaging

System; and (7) the Agreement Profile System. During fiscal year

2000, the Form FMC-1 System reflected the tariff location addresses

of 415 VOCCs, 2,456 OTI/NVOCCs, 177 MTOs and 20 conferences.

Information in the Tariff Profile System is used to review and analyze

carrier tariffs and service contract essential terms publications to

ensure compliance with Commission rules and regulations under

OSRA, particularly the accessibility and accuracy of carrier tariffs.

The Service Contract System contains certain key service contract

data, some of which is only available to the Commission’s staff

because of OSRA’s confidentiality requirements. Registration to file

service contracts into the system is authorized by Form FMC-83

submission. The historical ATFI database contains all tariff and

service contract essential term publication data filed electronically with

the Commission between February 22, 1993, and April 30, 1999. The

Microfiche System provides a means of locating canceled tariffs and

amendments which have been microfiched. The FMC Imaging

System, among other things, provides for document storage and

retrieval of canceled tariffs and service contracts. The Agreement

Profile System contains information about the status of carrier and

terminal agreements, as well as related monitoring reports. These
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databases provide support for many of the Commission's programs.

Certain information contained in the databases is also available to the

public. 

12. Future Plans and Proposed Activities

The Bureau's overall monitoring program will: focus on

systematic oversight of carrier and trade activity with emphasis on

upgrading monitoring systems to incorporate data and information

that will be provided by carriers pursuant to Docket No. 94-31,

Information Form and Post-Effective Reporting Requirements for

Agreements Among Ocean Common Carriers Subject to the Shipping

Act of 1984; analyze this and other trade data to track trends in the

various trades and anticipate areas requiring closer scrutiny; assess the

impact of key issues facing the industry in order to monitor

developments in major trades and analyze agreements in the foreign

trades under the standards of the 1984 Act; and continue to refine its

section 6(g) monitoring methodology in evaluating the degree of

anticompetitiveness generated by agreements within the context of

their commercial environments. The Bureau also will continue to

review tariffs and service contracts to ensure that they comply with

the 1984 Act and the Commission’s regulations. 

The Bureau also will continue to furnish support and prepare

economic testimony in formal Commission proceedings arising in the

areas of its expertise; provide analyses and recommendations on

petitions, information demand orders, and Commission-initiated

rulemakings; perform pre-effectiveness analyses of newly filed

agreements to determine whether they are likely to raise issues and

specific questions under sections 5, 6(g) and 10 of the 1984 Act, or

raise general policy questions; prepare recommendations to the

Commission on the more complex agreements and those agreements

that raise policy issues; and process other agreement matters internally

under authority delegated by the Commission.
APPENDIXES
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-108-

APPENDIX A 

FEDERAL MARITIME COMMISSION

ORGANIZATION CHART

Fiscal Year 2000

Commissioner

 

Commissioner

 

Chairman

 

Commissioner

 

Commissioner

 

Office of the

Secretary

Office of the

General

Counsel

Office of the

Inspector

General

Office of the

Executive

Director

Office of

Administrative

Law Judges

Office of Equal

Employment

Opportunity

Bureau of Consumer Complaints

and Licensing Bureau of Enforcement Bureau of Trade Analysis

Area Representatives

New York

Los Angeles

Miami

New Orleans

Seattle
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-110-

APPENDIX B 

COMMISSION PROCEEDINGS 

Fiscal Year 2000

Formal Proceedings

 Decisions .................................. 6

 Discontinuances & Dismissals .................. 0

 Initial Decisions Not Reviewed ................ 15

 Rulemakings - Final Rules ..................... 4

 Total .............................. 25

Special Dockets ............................. 39

Informal Dockets ............................. 5
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APPENDIX C

AGREEMENT FILINGS AND STATUS

Fiscal Year 2000

Agreements Filed in FY 2000

 (including modifications)

Carrier .................................................. 313

Terminal ................................................. 46

Total .................................................... 359

Agreements Processing Categories in FY 2000

Forty-Five Day Review ...................................... 80

Shortened Review ........................................... 22

Exempt-Effective Upon Filing ................................. 244

Rejection of Filing ............................................ 0

Formal Extension of Review Period ............................... 0

Not Subject ................................................. 0

Withdrawals ................................................ 2

Total .................................................... 348

Carrier Reports Submitted for Commission Review

Minutes of Meetings and Ad Hoc Reports ........................ 599

Monitoring Reports ......................................... 308

Total .................................................... 907

Agreements on File as of September 30, 2000

Conference ................................................ 23

Discussion ................................................. 47

Vessel-Sharing ............................................ 148

Joint Service ............................................... 14

Cooperative Working & Other ................................. 19

Terminal ................................................. 434

Total .................................................... 685
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APPENDIX D

FORM FMC-1 

TARIFF LOCATION ADDRESSES -ELECTRONIC

SERVICE CONTRACT FILINGS AND SPECIAL

PERMISSION APPLICATIONS

Fiscal Year 2000

Form FMC-1 Filings

VOCC ........................... 415

OTI/NVO ....................... 2,456

MTO ............................ 177

Conferences ........................ 20

Electronic Service Contract Documents

New Service Contracts ........... 35,190

Service Contract Amendments ...... 110,780

Special Permission Applications

Granted ........................... 18

Denied ............................ 1

Withdrawn .......................... 0
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APPENDIX E

CIVIL PENALTIES COLLECTED

Fiscal Year 2000

Ace Shipping Corp. ........................... $23,000.00

AMR Shipping Limited ......................... 140,000.00

AP Moller Maersk Line. ....................... 925,000.00

Asecomer International Corp. .................... 20,000.00

Asian Express Corp. .......................... 50,000.00

A.T.I. USA, Inc. . ............................. 25,000.00

Brian Min dba B & A Express .................. 20,000.00

Cargonauts, Inc. .............................. 60,000.00

Caribbean General Maritime, Ltd. ............... 80,000.00

Columbus Line ............................... 70,000.00

Compania Chilena de Nav. Int. (CCNI) ........... 150,000.00

DSR-Senator Lines GmbH. ...................... 120,000.00

EH Harms USA, Inc. .......................... 40,000.00

Empresa de Navegacao Alianca, SA ............... 290,000.00

Expeditors Int’l of Washington, Inc. .............. 112,694.04

Express Container Line, Inc. ..................... 20,000.00

FRT International, Inc. dba Frontier Logistics ...... 15,000.00

Gstaad, Inc. .................................. 150,794.30

Hyundai Mer. Mar. Co./Med Shipping Co. ........ 100,000.00

Imex Shipping, Inc. ............................ 55,000.00

Inter-Shipping Chartering Co. .................. 20,000.00

Jardine Logistics Services ....................... 115,000.00

JF Hillebrand USA, Inc. ....................... 50,000.00

Kin Bridge Express,Inc. ......................... 50,000.00

King Ocean Services, SA. ...................... 200,000.00

Maritime Trading Group, Inc. .................... 42,000.00

Ocean Bridge International, Inc. ................. 25,000.00

RCL Agencies, Inc. ............................ 30,000.00

Sea-Land Service/Maersk/ P&O Nedlloyd ......... 100,000.00

Speed Cargo Service, Inc. ....................... 30,000.00 

Suntrans International, Inc. ..................... 25,000.00

Total Marine System, Inc. ....................... 20,000.00

Venchi International Corp. ..................... 50,000.00

Waterman Steamship Lines ....................... 8,992.78
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Total Civil Penalties Collected ................ $3,232,481.12
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APPENDIX F

INVESTIGATIONS

Fiscal Year 2000 

Investigations/Special Inquiries Opened: 54

Audits/Compliance Checks Opened: 23

Total Openings: 77

Investigations/Special Inquiries Completed: 81

Audits/Compliance Checks Completed: 18

Total Completions: 99
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APPENDIX G

STATEMENT OF APPROPRIATIONS, 

OBLIGATIONS AND RECEIPTS FOR

THE FISCAL YEAR ENDED

SEPTEMBER 30, 2000

APPROPRIATIONS:

Public Law 106-113: For necessary expenses of the Federal Maritime Commission

as authorized by section 201(d) of the Merchant Marine Act of 1936, as amended

(46 App. U.S.C. 1111), including services as authorized by 5 U.S.C. 3109; hire of

passenger motor vehicles authorized by 31 U.S.C. 1343 (b); and uniforms or

allowances therefor, as authorized by 5 U.S.C. 5901-02; Provided, that not to

exceed $2,000 shall be available for official reception and representation

expenses.

$14,150,000

Omnibus Consolidated & Emergency Supplemental 

Appropriation Act (112 STAT 2681 572-573) and the

President’s letter dated November 24, 1999 516,000

Public Law 106-113, 106th Congress

Government-Wide Rescissions, 2000 - 53,000

Revised Appropriation $14,613,000

OBLIGATIONS AND UNOBLIGATED BALANCE:

Net obligations for salaries and expenses for the fiscal year 

ended September 30, 2000. $14,612,727

STATEMENT OF RECEIPTS: Deposited with the General 

Fund of the Treasury for the Fiscal Year Ended September 30, 2000:

Publications and reproductions, 

Fees and Vessel Certification,

 and Freight Forwarder Applications $ 495,516

Fines and penalties $3,232,481

Total general fund receipts $3,727,997