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Comments Of Federal Maritime

Commissioner Rebecca F. Dye at the

American Metal Market Moving Metals 

Conference

December 5, 2011

• Thank you for inviting me to participate in your 

scrap metal panel. 

• My remarks reflect my own individual views and 

are not offered as the official position of the 

Federal Maritime Commission.

• As I discussed last year, the Shipping Act of 1984 

exempts common carriers from the tariff 

publication requirements and the service contract 

filing requirements of the Act when they carry 

“recycled metal scrap.” 

• However, scrap metal shippers are protected by

the Shipping Act’s prohibitions contained in 

chapter 411 of title 46, United States Code.
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• Of course, all U.S. exporters and importers benefit 

from general international supply chain efficiency 

improvements that are incorporated into the 

ocean shipping system.

Economic Downturn

• During the economic downturn that began in 

2009, U.S. importers, exporters, and ocean 

carriers, like every other sector of the global 

economy, faced the most significant economic 

challenges of at least a generation. 

• During 2009, U.S. liner exports fell by 8 percent 

and imports fell by 14 percent. Freight rates 

plummeted as carriers laid up over 575 vessels 

worldwide. 
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Fact-Finding Number 26

• Early in 2010, the Federal Maritime Commission 

received reports that importers and exporters had 

difficulty obtaining vessel space, particularly in 

the U.S.-Asia trades. 

• We also received reports that U.S. exporters were 

losing sizable overseas sales due to the 

distribution and availability of shipping 

containers.

• Due to our concerns about the causes of these 

vessel capacity and equipment constraints, as well 

as concerns about whether those constraints 

could hinder the U.S. economic recovery, the 

Commission ordered the Fact-Finding 

Investigation on Vessel Capacity and Equipment 

Availability in the United States Export and Import 

Liner Trades. 

• I was named the Fact-Finding officer.
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• The Commission authorized a full and fair “nonadjudicatory” investigation to explore ways to 

address the current vessel capacity situation, in 

light of our limited statutory authority in this 

area.

• The first phase of my investigation involved an 

intensive series of confidential interviews with 

American exporters and importers, including 

some of the country’s largest companies. We also 

interviewed executives of 14 ocean carriers 

operating in the U.S. transpacific trade. 

• Both shippers and carriers identified the 

fundamental problem as a lack of additional 

capacity to handle the sudden increase in cargo as 

international trade began to recover from the 

economic crisis of 2008 and 2009

• The Commission adopted my final confidential 

Fact-Finding report last November 30th.
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• The report concluded that the most effective 

long-term solutions to the commercial problems 

experienced by U.S. exporters and importers 

during the capacity shortage would be developed 

by ocean carriers working closely with their 

customers.

Rapid Response Teams

• One of the most well-received developments 

from Fact-Finding 26 are the “Rapid Response 

Teams” established by the Commission within our

Office of Consumer Affairs and Dispute Resolution 

Services to provide solutions for disputes among

shippers, ocean transportation intermediaries,

and carriers.

• If you are involved in a dispute with an ocean 

carrier, intermediary, or shipper, go to our 

website at www.fmc.gov and click on Rapid 

Response Teams on the right hand column. 

• Identify your problem as urgent, and our staff will 

handle these complaints as quickly as possible. 
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We want to provide practical, “real time” 

solutions to make your problems “go away!”

• The staff has formal mediation training to address 

your problems with a more formal approach, if 

necessary. 

• All public contact with our Office of Consumer 

Affairs and Dispute Resolution Services is handled 

on a confidential basis, and we only contact the 

ocean carrier with the shipper’s permission. The 

best and fastest outcomes usually result from a 

shipper with the most specific and detailed 

information about the problem.

• Even if you decide that you do not want the 

Commission to take action on your problem, 

please give us a call.

• Although we cannot give legal opinions about 

service contractual obligations, we are available 

to discuss other options with you.
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• For the first time, ocean carriers have each named 

representatives to work directly with our Rapid 

Response Teams to quickly address capacity and 

other urgent problems that arise between 

shippers and carriers. 

• The carrier representatives have guaranteed that

they will respond to a specific complaint brought 

to their attention by the Commission within 24 

hours. 

• We believe this approach will promote better 

business relationships and avoid costly legal 

processes. 

Contract Enhancements

• Since we originally discussed the basic problem of 

a lack of mutual understanding between the 

parties to service contracts, I am extremely 

pleased that the discussions between carriers and 

shippers on ways to improve service contracts 
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have taken off.

• This is a successful use of collaborative 

techniques: after an initial development of an 

issue and focus on a problem, the parties 

continue the discussions and develop their own 

solutions to their problems.

• Since last year, ocean carriers, shipper trade 

associations, trade publications and commercial 

symposiums have been focused on ways to 

improve the mutuality of understanding between 

the parties to ocean service contracts.

Vessel Capacity

• Transpacific vessel capacity deployed in 

September, 2010, was 24 percent higher than in 

January, 2010, and 13 percent higher when 

compared to September of 2009. This mitigated

some of the most severe problems encountered 
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by shippers last year.

• Currently, transpacific vessel capacity is 

somewhat lower than 2010, but still much higher 

than the levels during 2009. Current average 

weekly capacity is still about 50,000 TEUs higher 

than it was in the early spring of 2010 when the 

full force of the capacity shortage was being felt.

• Carrier capacity always declines during the winter. 

However, 2010 and 2011 declines during the slow 

season have been much less than 2009.

• While there have been recent isolated reports of 

capacity shortages, generally capacity is holding 

and complaints from shippers have diminished.

• While the specific revenue information that the 

Commission receives from the Transpacific 

Stabilization Agreement and the Westbound 

Transpacific Stabilization Agreement is 

confidential, I understand that current WTSA and 

TSA average revenues per container remains well 
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above the levels in the middle of 2009. 

• The picture of future import trade volume is 

unclear. Spot rates from China to the U.S. West 

Coast are down 27 percent from a year earlier.

• Carriers have reported that importers are having 

a very difficult time forecasting the future volume 

of imports during the slack winter season. 

Carriers will be forced to further reduce vessel 

capacity if import volume falls more than is 

anticipated.

• The latest Journal of Commerce reports that the 

weak peak shipping season signals decreased 

American desire for Chinese imports, while at the 

same time, China’s demand for U.S. exports has 

increased. 

• PIERS data shows a 12.5 percent year-over-year 

jump in U.S. containerized exports to China in the 

third quarter, pushing total exports up 6.8 

percent from the same time last year. 
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• Exports to China rose 5.4 percent from the second 

quarter, as their demand for wastepaper, grains, 

and scrap metal grew.

Antitrust Immunity

• I know that many of you are also interested in the 

European Commission’s decision to repeal the 

exemption from the ban on restrictive business 

practices for liner conferences and how that 

affects the U.S. liner trades.

• The Commission’s staff has recently completed a 

report which analyses the impact of the European 

Union’s repeal of the liner conference block 

exemption on U.S. liner trades.

• Our staff did an excellent job of collecting data 

and stakeholder information for our study on the 

impact of the E.U.’s October, 2008, repeal of its 
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liner conference block exemption.

• The global economic downturn created

substantial challenges for our effort to isolate the 

effects of the E.U.’s elimination of the conference 

exemption from broader economic trends. 

• I believe that our Bureau of Trade Analysis staff 

has produced a thorough and professional study 

of this issue. 

• The Commission will vote later this week to 

release the report to the public.

Regulatory Relief

• If the Commission identifies regulatory relief that 

would not substantially reduce competition or be 

detrimental to commerce, I believe we may and, 

that we should, provide this relief. 

• Especially under today’s economic conditions, we 

should grant reasonable exemptions to simplify 
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the business processes of companies, put cash 

back into businesses, and generate additional 

American jobs.

• One April 18th the Commission’s final rule to

relieve certain ocean transportation 

intermediaries from the costs and burdens of 

publishing in tariffs the rates they charge for 

cargo shipments became effective.

• I strongly supported this rule which, according to 

comments filed with the Commission, could save 

many American businesses up to $200,000 per 

year. These savings could allow many businesses 

to hire additional American workers.

• While most of your industry is not required to 

publish tariffs, changes of this type in our 

regulations will make the entire international 

ocean transportation industry more competitive 

and efficient.
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Conclusion

• Finally, I would like to hear from you about your 

individual business situations involving vessel 

capacity, your satisfaction with your current 

ocean vessel service contracts, and any other 

interesting information about current business 

trends.

• Since the Fact-Finding investigation began, I have 

kept two goals in mind: 

(1) The United States must have a reliable 

international supply chain for U.S. importers 

and exporters; and 

(2) No American exporter should lose an 

international sale due to lack of ocean 

transportation. 

• I believe that to significantly improve the 

international ocean shipping system, the 

Commission should eliminate all unnecessary 

regulatory requirements, including tariff 
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publication, for all non-vessel-operating 

common carriers and ocean carriers, alike.

• The savings and efficiency enhancements from 

eliminating the unnecessary regulatory 

requirements such as tariff publication would 

make our international supply chain more 

flexible and reliable.

• Regardless of future developments concerning 

ocean carrier and ocean transportation 

intermediary capacity and rates, the 

international ocean transportation system will 

be improved by eliminating unnecessary 

requirements and allowing carriers to cut costs 

and become more competitive. 

• I look forward to continuing to work with you 

and other shippers, intermediaries, and ocean 

carriers to make the market-based reforms 

necessary to increase the resiliency of our 

international ocean transportation system.