FEDERAL MARITIME COMMISSION

ANNUAL PROGRAM PERFORMANCE REPORT

FOR FY 2005

October 2005
LIST OF ACRONYMS

1984 Act Shipping Act of 1984

ACE/ITDS Automated Commercial Environment/Int’l. Trade Data System

ADR Alternative Dispute Resolution

ALJ Administrative Law Judge

BOE Bureau of Enforcement

BTA Bureau of Trade Analysis

CADRS Office of Consumer Affairs and Dispute Resolution Services

CBP Customs and Border Protection

CFR Code of Federal Regulations

CIO Chief Information Officer

CPIC Capital Planning Investment Control

DHS Department of Homeland Security

DOT Department of Transportation

FMC/Commission Federal Maritime Commission

FMCSA Federal Motor Carrier Safety Association

FTE Full Time Equivalent Employee

FY Fiscal Year

GPRA Government Performance and Results Act

IT Information Technology

MOU Memorandum of Understanding
NIST National Institute of Standards and Technology

NVOCC Non-Vessel-Operating Common Carrier

OGC Office of General Counsel

OIT Office of Information Technology

OMB Office of Management and Budget

OPS Office of Operations

OS Office of the Secretary

OSRA Ocean Shipping Reform Act of 1998

OTI Ocean Transportation Intermediary

PVO Passenger Vessel Operator

RPI Regulated Persons Index

SC Service Contract

SERVCON Service Contract Filing System

SES Senior Executive Service

SQL Structured Query Language

STB Surface Transportation Board

U.S. United States

VOCC Vessel-Operating Common Carrier
INTRODUCTION

The Commission has prepared the following Annual Program Performance

Report for FY 2005, as required by GPRA, and in accordance with OMB Circular No. A11, Part 2. The Commission’s actual performance in FY 2005 is compared with the

projected levels of performance established in the agency’s FY 2005 Revised Final

Annual Performance Plan. 

This progress report covers the Commission’s efforts in FY 2005 to foster an

equitable, secure, and market driven ocean transportation industry. The Commission

focused on furthering its interactions with external parties to increase the value of its

services and oversight operations, and on strengthening relationships with government

agencies responsible for maritime security to facilitate mutual efforts to identify and

address potential security threats. This includes improving communication with the

media, industry representatives, and other stakeholders to increase public awareness of

Commission programs and policies, and to help address concerns before they become

problems. In addition, we broadened our efforts to implement the President’s

Management Initiative to expand electronic government. We improved the management

of information by utilizing technology to streamline and simplify the delivery of services

and information to regulated entities, other government agencies, and the public, and

we created more sophisticated databases to allow staff to more effectively identify

regulated activities, complaints, and potential abuses. Also, we implemented an IT

Capital Planning Investment Control Process for the agency’s major IT investments.
2

We achieved overall success in reaching our stated goals and objectives --

accomplishing most and exceeding several. We continue to find that the planning and

direction required by the GPRA process facilitates our efforts to attain results-driven

objectives.

We have forwarded this report to the President, with a copy to the Director, OMB,

and appropriate Congressional committees. Additionally, we have placed this document

on our Internet website to ensure that it is readily accessible to interested parties, and

have advised all Commission employees to take the time to review it.

We have sought to be direct and concise in the manner in which we are

presenting the relevant information. For organizational purposes, and to facilitate

review, this report reflects our revised mission statement, and briefly summarizes it. We

then list the Strategic Goals we have identified as crucial to accomplish our mission.

Our agency Performance Goals now are linked directly to our Strategic Goals instead of

our Budget Program Activities, as they were in past years. While our FY 2005 Revised

Final Annual Performance Plan contains specific Performance Goals, many of the

Commission’s resources were dedicated to its various day-to-day activities. These

steady state activities are not specifically addressed in this Report, as they are

discussed in full in other documents, such as the agency’s Annual Report and

President’s Budget. Instead, this Report focuses on the agency’s annual Performance

Goals and how they were achieved. Thus, we have organized this report by the five

Strategic Goals under which we operated in FY 2005. For each of these Goals, we

state the Performance Goals that are directly related to them. We then state the target
3

level of performance for each Performance Goal, and our actual level of performance

regarding that Goal. For any Performance Goal that was not met or not substantially

completed, we have provided a specific explanation why the Goal was not met, along

with the actions and schedule for meeting the Goal in the future. Additionally, the last

section of this report identifies the Performance Goals from our fiscal years 2003 and

2004 Program Performance Reports which we previously reported as not having been

accomplished or substantially completed, and explains the actions we subsequently

took regarding the requirements of each such Goal. 

FMC MISSION

The FMC’s Mission is to:

• Develop and administer policies and regulations that foster a fair, efficient and

secure maritime transportation system;

• Protect U.S. maritime commerce from unfair foreign trade practices and

market-distorting activities;

• Facilitate compliance with U.S. shipping statutes through outreach and

oversight;

• Assist in resolving disputes.

The Commission acknowledged in its 2003 Strategic Plan that the basic

principles of liner shipping were being modified, as the shipping industry continued to

restructure itself while shippers were placing an increasing importance on rates and

services. Given the significant issues the agency was facing, in 2003 it identified the
4

actions necessary to ensure that its oversight and legislative initiatives produced a

competitive and nondiscriminatory trading environment in the U.S. ocean commerce

that was in harmony with and responsive to international shipping practices. During

2004, the Commission built on that analysis and focused its energies and efforts on reevaluating its organizational structure to ensure that it was aligned and managed in a

manner best suited to accomplish its mission with a minimum of government

intervention and regulatory costs. In 2005, the Commission focused on staff and

program issues, and emphasized outreach for a more open dialogue with our industry

partners and stakeholders in light of the changing dynamics of the ocean shipping

industry. As part of this process, we launched a redesigned and restructured agency

website in order to meet the challenges of automation in a way which will facilitate the

industry’s ability to conduct business with the FMC. 

FMC STRATEGIC GOALS

In recognition of its stated mission, and in conformity with the Shipping Act, the

FMC established the following five strategic goals:

1. Efficient Regulatory Process: Provide a timely, efficient and decisive

regulatory process, including alternative dispute resolution, to enable all

segments of the industry to operate more effectively, with a minimum of

regulatory costs.

2. Compliance: Promote efficiency and fairness in U.S. foreign waterborne

commerce through various means, including outreach and monitoring, to

protect the public and assist stakeholders in achieving compliance with

ocean transportation statutes administered by the FMC. 

3. Balanced Enforcement: Foster economic efficiencies, reliance on

marketplace factors and maritime security by administering U.S. shipping
5

statutes in a balanced and equitable manner to redress anticompetitive

actions and other unlawful activities. 

4. Technological Efficiencies: Employ technological enhancements to

improve efficiency and to facilitate the exchange of information.

5. Management Capabilities: Ensure the FMC has the appropriate

organizational framework and management systems to carry out its

statutory mandates.

These strategic goals addressed all important FMC statutory, programmatic, and

management responsibilities. They were developed with a specific focus on

accomplishing the basic thrusts of our mission. The Commission determined that

achieving its mission-driven goals would enable it to address effectively the external

factors it faced, while assuring an equitable and efficient administration of the shipping

statutes under its jurisdiction. 

PROGRESS IN ACHIEVING PERFORMANCE GOALS

The Performance Goals of the Commission’s FY 2005 Revised Final Annual

Performance Plan were linked directly to the Commission’s Strategic Goals; they were

identified as the appropriate means for accomplishing our mission. This section of the

report assesses our actual performance in addressing these Goals. 

Strategic Goal: Efficient Regulatory Process

Provide a timely, efficient and decisive regulatory process, including alternative

dispute resolution, to enable all segments of the industry to operate more

effectively, with a minimum of regulatory costs.
6

Performance Goal 1:

Promote the use of ADR to potential users and provide conflict resolution training

to Commission managers.

Progress: During the fiscal year, the Commission’s Dispute Resolution Specialist

met with a number of industry representatives concerning the Commission’s ADR

program. For example, in March of 2005, he addressed members of the National

Customs Brokers & Forwarders Association of America at its national

conference. At that meeting, he described and stressed the benefits of the

Commission’s ADR services, including the Ombuds services, provided by the

agency’s responsible Office (CADRS). CADRS can assist the public and

regulated parties to resolve problems with carriers, cruise operators, OTIs, and

other industry participants in a more economical manner. CADRS staff also

provided training to agency personnel through an in-house seminar. This seminar

was in addition to the many discussions that took place during the fiscal year with

senior staff regarding the possible use of ADR, mediation, and ombudsman

services for specific issues or cases before the agency.

Performance Goal 2:

Develop options for updating and modernizing the Commission’s Rules of

Practice and Procedure, including exploring the ability to utilize technology for

electronic filing. 

Progress: During the fiscal year, the agency’s OS solicited and collected

recommendations from the Commission’s legal offices (OGC, ALJs, and BOE)

for updating and modernizing the Commission’s Rules of Practice and Procedure

(46 CFR 502), and for accepting certain filings with the Commission in electronic

form. Preliminary discussions were held but further effort on this initiative was

shelved due to the need to use limited Commission resources on other, more

pressing initiatives such as re-designing the Commission’s website, participating

in the Commission’s OTI Task Force, development of strategies concerning

issues arising in the household goods market, etc. The Commission has been in

the process of reassessing its program focus and processes since its August

2004 re-alignment. Since realignment of Commission programs and processes

will likely affect how and what types of proceedings are conducted, no definite

target date or schedule for re-instituting this initiative has been established. It is

anticipated that once the Commission has completed its internal assessment of

programs and processes, this initiative will be re-instituted. In the meantime, the

Commission and ALJs have permitted the use of electronic filing in formal

proceedings on an ad-hoc basis.
7

Performance Goal 3

Develop an automated FMC-18 to permit electronic filing and explore feasibility

of electronic payment and e-signature capability.

Progress: While the Commission has not completed this goal, substantial

progress has been made in determining user needs and defining system

requirements. The Commission’s OIT has contracted for software development

services needed to update and incorporate existing paper-based procedures and

assumptions used in performing analysis of the Form FMC-18 licensing

applications into the requirements for an automated Form FMC-18 system that

permits electronic filing by the public. The automated Form FMC-18 system is

anticipated to be implemented in phases throughout FY 2006, with electronic

filing first authorized in the winter of 2006. Electronic payment options and esignatures will be added in subsequent releases upon identification of an

appropriate service partner for e-payments and review of legal issues relating to

use of e-signatures for certification purposes. It is anticipated these changes will

permit a more thorough review of applications, decrease costs and increase

productivity.

Strategic Goal: Compliance

Promote the development of U.S. exports and the efficiency of ocean shipping by

monitoring and assisting stakeholders in achieving compliance with shipping

statutes administered by the FMC.

Performance Goal 1:

Develop public relations strategies and programs.

Progress: In FY 2005, the Commission began what will be an ongoing effort to

enhance relations with the public. Early in the year, OPS and OS compiled a list

of ongoing and new public relations and outreach initiatives. These were linked

to agency strategic objectives and assigned to the appropriate offices for

oversight. One particular undertaking initiated in FY 2005 was the publishing of

public service announcements targeted at private citizen shippers, warning about

the use of unlicensed OTIs and the risk of cargo loss. This program will continue

in FY2006. For example, in March of 2005, the Commission’s Dispute

Resolution Specialist addressed members of the National Customs Brokers &

Forwarders Association of America at its national conference. At that meeting, he

described and stressed the benefits of the Commission’s ADR services, including

the Ombuds services, provided by the agency’s responsible Office (CADRS). As

well, Commission Area Representatives manned a booth at an industry
8

conference as a pilot effort toward building the Commission’s capacity for

participation in such events. Current educational and informational materials

were distributed to a receptive audience. Renewed emphasis has been placed on

Commission presence at industry events and conferences toward ensuring a

constant presence for the benefit of the shipping public. This goal is substantially

complete, but work will continue into FY 2006 to further formalize an efficient and

effective public relations strategy. 

Performance Goal 2:

Enhance industry outreach.

Progress: During the fiscal year, Commission staff researched companies that

develop and produce trade show materials and visited a local vender to explore

presentation tools to be used at conferences, in-house seminars, and other

forums. These materials will be used as a means to better communicate

Commission oversight responsibilities and available services, as well as how the

Commission can be of assistance to industry participants in meeting their

regulatory responsibilities. Commission staff also met with other government

agencies such as the Bureau of the Census, Department of Commerce, to

discuss options for partnering for mutual outreach initiatives and sharing

resources. In addition, the Commission initiated a series of seminars/briefings

for agency staff by representatives of the shipping industry and maritime

community, including shippers, carriers, marine terminal operators, OTIs, freight

forwarders, and cruise lines. The briefings are intended to foster a greater

awareness and understanding of the current issues and concerns affecting the

various interests involved in the U.S. foreign commerce. Further, senior

Commission staff met and conducted an analysis of the Commission’s outreach

strategies, and is in the process of developing and implementing a plan based on

that analysis. This Performance Goal is closely related to the Commission’s

performance goal to “Develop public relations strategies and programs” and

therefore, while it is substantially complete, work will continue into FY 2006 to

further formalize an efficient and effective outreach and public relations strategy.

Performance Goal 3:

Provide opportunity for VOCCs to establish a “best practices” program to limit

participation of unlawful entities in ocean transportation. 

Progress: The original goal of providing an opportunity for VOCCs to establish a

“best practices” program was revised and expanded in FY 2005. As one

component, all carriers, NVOCCs as well as VOCCs, are being encouraged to

develop and implement effective practices and procedures to deny carrier

services to noncompliant OTIs. The principle tenets of an effective carrier
9

program, together with model provisions, will be published on the Commission’s

web site and publicized through compliance and outreach efforts in FY 2006.

Strategic Goal: Balanced Enforcement

Foster economic efficiencies, reliance on marketplace factors and maritime

security by administering U.S. shipping statutes in a balanced and equitable

manner to redress anticompetitive actions and other unlawful activities.

Performance Goal 1:

Contact and educate consumer protection agencies on the state and local

government level regarding Commission programs and remedies to protect and

assist the public from the unlawful activities of transportation providers and

intermediaries.

Progress: During the fiscal year, CADRS staff met with representatives from

STB and the FMCSA to discuss issues concerning possible remedies to protect

and assist the public from the unlawful activities of transportation providers and

intermediaries involved in the international movement of personal household

goods. These discussions have been very productive and have resulted in

effective cooperation among the agencies. Also, the Commission has partnered

with the FMCSA with respect to outreach and providing information to the public

on protecting their household goods shipments. CADRS staff also has

cooperated with federal and state law enforcement authorities in their

investigations of malpractices in the household goods industry. Additionally,

CADRS staff held discussions with consumer protection representatives from

various states, specifically establishing an ongoing relationship with the State of

Florida, a state which has seen a significant number of household goods

shipment problems. 

Performance Goal 2:

By June 30, 2005, redesign internal agreement database to enable more efficient

oversight of agreement activities.

Progress: The redesign of the internal agreements database was completed

ahead of schedule, on March 21, 2005, and is consistent with this Performance

Goal. The project was initiated and completed to enable more efficient oversight

of agreement activities and competitive trade conditions. In completing this

redesign, the agency conducted an audit of all effective carrier agreements to

identify the various agreement authorities contained in each. The agreement

records in the database were updated to capture all relevant authorities. A new

report functionality and an expanded lookup table were developed to identify
10

agreements with specific authorities, particularly those affecting competitive

conditions and that may have potential to distort markets. As a result of the

redesign of this system, the agency can more efficiently and expeditiously

generate reports that identify those agreements that are most likely to have a

competitive impact on U.S. trade lanes. 

Performance Goal 3: 

Review results of major enforcement actions (e.g., those targeted at anticompetitive practices of ports and ocean common carriers) during the past three

years to assess effectiveness of remedies. 

Progress: This goal was achieved by reviewing and reporting on the six

enforcement actions which targeted anti-competitive practices of ports and ocean

common carriers during the three-year period 2002 through 2005. During the

course of this review, the agency’s BOE, along with its BTA, examined the

records pertaining to each enforcement action and analyzed the corresponding

reports, minutes, and activities of the entities involved with respect to

implementation of agreed provisions and continued compliance by affected

entities. The review also included a current survey of the markets affected by the

proceedings.

Performance Goal 4:

Develop additional relationships with other agencies with responsibilities related

to maritime security, including DHS, DOT and intelligence agencies.

Progress: We continue to reach out to other agencies, including DHS, DOT and

intelligence agencies, to discuss information sharing and other possible FMC

contributions with regard to identifying potential security threats related to the

maritime industry generally. In particular, the agency has an MOU with CBP.

The agency is also an active participant in the development of CBP’s ACE/ITDS,

which proposes to capture, and then integrate, the data needs and timing

requirements of all licenses, permits and certificates required by CBP and other

participating government agencies. Commission representatives participating in

the ACE/ITDS business process are working with CBP and its e-Customs

Partnership consultants to ascertain how the Trade Act requirements, and

equivalent 1984 Act mandates, can be integrated into the ACE system to assist

CBP in identifying compliant NVOCCs. 
11

Strategic Goal: Technological Efficiencies

Employ technological enhancements to improve efficiency and to

facilitate the exchange of information. 

Performance Goal 1: 

Enhance the reliability and efficiency of SERVCON by ensuring that filers use

proper electronic document file names to identify each SC submission. In

addition, implement other changes to flag contract documents transmitted into

the SERVCON system with problems, e.g., retroactive effective date. This

performance goal is being modified to accelerate the streamlining and usefulness

of the system for anticipated short- and long-term growth.

Progress: This Performance Goal has been achieved. Enhancements to

SERVCON, the Commission’s Internet-based service contract filing system, have

been made to ensure that contracts submitted are properly filed and that the data

filed is in a format that is useful for the Commission’s oversight purposes.

Enhancements were made to the validity checks feature contained in SERVCON

to flag service contract documents filed with errors, such as a retroactive

effective date and invalid organization number. A list of any such filings can be

obtained from reports generated from the SERVCON system. Further, any

contract document submitted without a proper electronic document file name or

amendment number is not accepted for filing in SERVCON. When this occurs,

the filer receives an error message and must correct the problem before

attempting to resubmit the contract. The SERVCON system has been brought

in-house and additional changes have been made to improve its search

capability and overall performance. For example, a new SQL Server search

engine is being used to increase the speed and reliability of search results. In

connection with this, historical contract documents filed in SERVCON between

April 1999 through December 31, 2001, have been archived and are available via

other electronic media. Numerous other enhancements are being developed

which will further accelerate the streamlining and usefulness of the system for the

anticipated short- and long-term growth of filings of both service contracts and

NVOCC Service Arrangements. For example, the menu selection screens are

being realigned in the system to be more user friendly allowing agency staff to

sort contract documents by organization and contract numbers, as well as

effective dates of original contracts and filer names. 

Performance Goal 2:

Assure that 95 percent of the security on agency systems is in conformance with

Administration and Congressional mandates.
12

Progress: The FMC has upgraded all network security tools over the last year

and most systems requiring security have been enhanced. Over 95 percent of

agency systems are in conformance with Administration and Congressional

mandates. During the fiscal year, the FMC incorporated security into the FMC

infrastructure. Personnel and technical controls were established to improve the

integrity, availability, and confidentiality of FMC information. The agency has put

in place processes and controls that complement the FMC’s business

operations. These same controls and processes have been developed and

implemented following OMB policies, NIST guidance, privacy policies, and other

policies and mandates. 

Performance Goal 3:

Analyze the current FMC Internet website and develop a plan to create a more

efficient and comprehensive design.

Progress: During the fiscal year, the Commission exceeded this goal. Not only

did the Commission analyze its old website and develop a plan to re-design the

site, a team of Commission staff were assembled and met throughout the fiscal

year and worked with an outside contractor to create a new, more efficient,

comprehensive and citizen-centered website. The Commission launched its new

website on August 18, 2005. The look and functionality of the new website is

significantly different from the Commission’s old site, and most of the information

from the old site was reorganized and updated to improve transparency and flow

of information. Content was organized by areas of interest and by regulated

entity, making it easier to find information.

Strategic Goal: Management Capabilities

Ensure the FMC has the appropriate organizational framework and

management systems to carry out its statutory mandates.

Performance Goal 1:

Implement an IT CPIC process for the Commission’s major IT investments.

Progress: The FMC has implemented an IT CPIC process. Serving as the CPIC

control board, the FMC’s SES officials are responsible for ensuring that all major

IT investments fall within the goals of the agency and will support the needs of

internal and external users. All major IT investments are presented to the

CPIC/SES by the CIO for review and approval of funding and staff resources,

with a final approving decision required from the Chairman before any IT projects

can be initiated.
13

Performance Goal 2:

Complete implementation of strategic linkage of agency planning, budgeting and

performance.

Progress: The agency was very successful in completing its objective of linking

planning, budgeting, and performance as part of its everyday business model.

Building on our recent past efforts, we appropriately aligned these activities in FY

2005. For the first time, we conducted an agencywide analysis of our strengths,

weaknesses, opportunities, and threats (SWOTs), so as to identify necessary

actions and desirable initiatives, along with budgeting needs to accomplish same.

All budget planning, decisionmaking, and actions then were predicated on

meeting our established agency priorities, as opposed to singular unit goals.

Resource allocations (FTEs, equipment, IT, etc.) were considered jointly by

senior management, who made recommendations to the Chairman for the most

effective deployment in line with our established performance goals. Planning

meetings were expanded to include Deputy Directors, to broaden our

perspectives and help cascade down all operational approaches and policy

changes. Finally, we undertook a wholesale review of our performance

management system so as to ensure that it was a useful tool for developing

employees, guiding careers, and assessing agency and employee progress in

achieving stated objectives. We plan to culminate this effort in FY 2006 with a

refined and simplified system that clearly conveys expectations, can be easily

administered, and further ties performance to our planning and budgeting. Our

success in aligning these activities has facilitated accomplishment of our

statutory mission, and established a business process that enables us continually

to enhance performance and produce positive, meaningful results. 

FY 2003 AND 2004 PERFORMANCE GOALS NOT ACHIEVED

Prior to FY 2005, Performance Goals were listed by Budget Program Activity

rather than by Strategic Goal. 

This section discusses the goals from our FY 2003 Annual Performance Plan

which we reflected in our FY 2003 Progress Report as not achieved or not substantially

completed. We explain in this section the actions we have taken to address these

goals.
14

Performance Goal 3 (Certification and Licensing Program Activity)

Enhance informal complaint database to include more specific details on type of

complaints against cruise operators.

Progress: After a number of attempts to modernize the existing informal

complaint database, it was determined that it would be more productive to design

a completely new database using more modern software. The initial design,

query, and reports capability was completed and a pilot begun in September

2005. The pilot database currently is being tested and evaluated. Initial results

from the testing phase have resulted in a number of system modifications

including adding additional query and reporting features for the users. It is

expected that the system will be fully operational (incorporating necessary

enhancements) in the near future. We plan to reevaluate the system after an

appropriate period, and modify programming as the system is being used.

Performance Goal 1 (Trade Analysis Program Activity)

By 12/31/02, further develop and apply updated ocean carrier constructive costs

benchmark to be taken into account in analyses of controlled carrier rate activity

under section 9 of the 1984 Act, as amended by OSRA.

Progress: This Performance Goal has been completed. As reported in the

Commission’s Annual Program Performance Report for FY 2004, the staff

prepared a proposed revised controlled carrier monitoring program that included

a suggested methodology for deriving and validating the constructive costs of a

controlled carrier. Over FY 2005, the staff re-examined its updated constructive

costs benchmark methodology and ensured that developments in FY 2004

relating to those carriers that are classified as controlled were accounted for in

the proposal. 

This section discusses the goals from our FY 2004 Annual Performance Plan

which we reflected in our FY 2004 Progress Report as not achieved or not substantially

completed. We explain in this section the actions we have taken to address these

goals.
15

Performance Goal 1 (Certification and Licensing Program Activity):

By 9/30/04, modernize the FMC’s RPI database.

Progress: While the Commission has not completed this goal, it has made

substantial progress towards implementing an updated RPI database system. A

beta version of the modernized RPI is now in testing. The modernized RPI

system will be completed and placed in operation during the first half of FY 2006.

Performance Goal 2 (Certification and Licensing Program Activity):

Complete a rulemaking by 9/30/04 that makes the changes necessary to ensure

that PVOs’ financial responsibility requirements for nonperformance are providing

appropriate protection for the public. 

Progress: Commission staff met on a number of occasions in FY 2005 to

discuss the status of the proposed rule and concerns raised by stakeholders in

the public comments received in response to the rulemaking. In an effort to

identify alternative options and approaches to assess the level of financial

coverage needed to protect cruise passengers, the staff has conducted

additional analysis of financial information related to certain cruise lines’

operations, as well as other benchmark financial indicators. Staff efforts will

remain ongoing as the Commission continues its pursuit of an updated Rule that

ensures appropriate PVO financial responsibility without undue financial costs

upon the cruise industry. 

.