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 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”) brought about major change in the 

regulatory regime applicable to shipping companies operating in the U.S. 

foreign commerce. The subsequent passage of the Ocean Shipping 

Reform Act of 1998 (“OSRA”), with its deregulatory amendments and 

modifications to the Shipping Act, further signaled a significant shift in 

shipping regulation. 

B. FUNCTIONS

The principal statutes administered by the Commission are the 

Shipping 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. Most of these statutes were amended by OSRA and are now 

codified in Title 46 of the U.S. Code at sections 44103 through 40904. 
The Commission’s regulatory responsibilities include: 

■ Reviewing agreements among ocean common carriers 

and marine terminal operators (“MTOs”) relating to 

service in the U.S. foreign oceanborne trades, to ensure 

that they do not cause substantial increases in 

transportation costs or decreases in transportation 

services. 

■ Reviewing service contracts between ocean common 

carriers and shippers to guard against detrimental 

effects to shipping in the U.S. foreign trades. 

■ Ensuring that common carriers’ tariff rates and 

charges are accessible to the shipping public in private, 

electronically accessible systems. 

■ Regulating rates, charges, and rules of governmentowned or -controlled carriers to ensure that they are 

just and reasonable. 

■ Issuing passenger vessel certificates evidencing financial 

responsibility of vessel owners or charterers to pay 

judgments for personal injury or death, or to refund 

passenger fares for the nonperformance of a voyage or 

cruise. 

 

■ Licensing ocean transportation intermediaries (“OTIs”) 

in the U.S. to protect the public from unqualified, 

insolvent, or dishonest companies. 

■ Ensuring that OTIs maintain sufficient financial 

responsibility to protect the shipping public from 

financial loss. 

■ Ensuring against harm to the shipping public by 

investigating rates, charges, classifications, and 

2 
practices of common carriers, MTOs, and OTIs 

operating in the foreign commerce of the U.S. 

■ Taking action to address unfavorable conditions arising 

out of foreign government or business practices in the 

U.S. foreign shipping trades. 

 The Shipping Act is applicable to the operations of common 

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

agreements effective under the Shipping Act and the Commission’s 

jurisdiction 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 result in an unreasonable increase in transportation 

cost or unreasonable reduction in service or otherwise violate the Shipping 

Act. 

 In addition to evaluating and monitoring agreements among 

carriers and marine terminal operators, the Commission is also responsible 

for ensuring that individual carriers and marine terminal operators, as well 

as those permitted by agreement to act in concert, treat shippers and other 

members of the shipping public fairly by not engaging in prohibited acts 

set out in the Shipping Act. The Shipping Act also requires all common 

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

tariff systems that must be available electronically to the public. Ocean 

common carriers are permitted to enter into service contracts with their 

shipper customers. Such contracts are confidentially filed with the FMC 

in its internet-based system. The Commission has by regulation also 

allowed non-vessel-operating common carriers (“NVOCC”) to offer 

service to customers under the terms of confidentially-filed contracts 

called NVOCC Service Arrangements (“NSA”). The Commission does 

not approve or disapprove general rate increases (“GRIs”) or individual 

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

certain foreign government-owned or -controlled carriers. 

 The Commission is authorized to take action to ensure that the 

foreign commerce of the U.S. is not burdened by non-market barriers to 

ocean shipping. The Commission may take countervailing action to 

correct unfavorable shipping conditions in U.S. foreign commerce and 

may impose penalties. The Commission may address actions by carriers 

3
or foreign governments that either adversely affect shipping in the U.S. 

foreign oceanborne trades, including the intermodal operations of carriers 

or the operations of OTIs, or that impair access of U.S.-flag vessels to 

ocean trade between foreign ports. 

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

with 50 or more berths embarking 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 also ensures that all OTIs have established 

sufficient financial responsibility to protect shippers from financial loss. 

Additionally, the Commission licenses all U.S. OTIs. 

 The Commission carries out its regulatory responsibilities by 

conducting informal and formal investigations. It holds hearings, 

considers evidence, renders decisions, and issues appropriate orders and 

regulations. The Commission also adjudicates and mediates 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 by 

the President with the advice and consent of the Senate. Commissioners 

serve five-year, staggered terms, and no more than three members of the 

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 

General Counsel; Office of the Secretary (including the Library and the 

Office of Consumer Affairs and Dispute Resolution Services); Office of 

Administrative Law Judges; Office of Equal Employment Opportunity; 

Office of the Inspector General; Office of Administration (including the 

Offices of Financial Management, Human Resources, Information 

4 
Technology, and Management Services); and Office of Operations 

(including the Bureaus of Certification and Licensing, Enforcement, 

Trade Analysis and the Commission’s Area Representatives). 

 In fiscal year 2007, the Commission was authorized a total of 180 

full-time equivalent positions and had a total appropriation of 

$20,427,910. That appropriation supported the actual employment of 119 

full-time equivalent positions during the fiscal year. While the majority of 

its personnel are located in Washington, D.C., the Commission has Area 

Representatives in Houston, Los Angeles, New Orleans, New York, 

Seattle and South Florida. 

5
6 
II 

THE YEAR IN REVIEW 

 

Fiscal year 2007 was another year of growth in the U.S. liner 

trades. Total cargo volume of U.S. liner exports grew by 12 percent, in 

contrast to the slight decline in imports for the first time in years. Notably, 

cargo growth in imports from Asia slowed substantially this fiscal year, 

though China continued to be the leading trading partner in liner cargo 

with the U.S. 

 The Commission continued to monitor the international liner trade, 

focusing this fiscal year in large part on issues relating to ocean common 

carriers and marine terminal operators in filed agreements. The 

Commission kept close watch on agreements that had potential for the 

greatest impacts, namely the Transpacific Stabilization Agreement and the 

development of the Clean Truck Program (“CTP) in the Ports of Los 

Angeles and Long Beach under the Los Angeles and Long Beach Port 

Infrastructure and Environmental Programs Cooperative Working 

Agreement. The Commission saw a welcome decline in the number of 

household goods complaints received this year, possibly attributable to 

formal action and outreach undertaken in the previous year. 

 Continuing to focus on improving accessibility to the public, the 

Commission made available an electronic method for filing an application 

for an ocean transportation intermediary license. Use of the electronic 

application is voluntary at this time and is available at a reduced filing fee. 

The Commission undertook a number of compliance presentations and 

public service announcements in major port areas. The Commission’s 

website was continually updated to maintain current and useful 

information in a user friendly fashion. 

 This Annual Report highlights areas of particular interest and 

provides an office-by-office synopsis of activities and accomplishments 

during the past fiscal year. 

7
A. OUTREACH 

During the fiscal year, the Commission continued to update and 

improve access to information through its website. New and revised 

Frequently Asked Questions were posted, and links were updated 

throughout the Commission’s site on an ongoing basis. The Commission 

continually evaluated the overall usefulness of the site and coordinated 

efforts agencywide to improve the website’s content and user friendliness. 

 

The Commission also continued its ongoing effort to expand 

contact with all segments of the maritime community and the shipping 

public. Several initiatives were undertaken by Commission staff during 

the year to improve industry outreach, including updating educational and 

informational material. 

During fiscal year 2007, the Commission continued to make more 

information and filed documents available electronically and to improve 

responsiveness to requests for public information. Specifically, the 

Commission continued to make key documents filed in formal 

proceedings available to the public through its website and integrated the 

Commission’s internal complaints database with other internal databases 

to facilitate the agency’s ability to provide timely information regarding 

cargo and cruise complaints to the public.

 

The process of electronically scanning/imaging Commission 

records also continued during fiscal year 2007. Data migration from the 

old system to the new one was completed, and the new system became 

fully functional during the fiscal year. The new system has helped support 

the agency’s initiatives for continuity of operations by improving 

preservation of and Commission staff access to Commission documents, 

as well as improving Commission staff response time to public inquires 

and public access to electronic files. 

8 
B. TRADE DEVELOPMENTS 

 In fiscal year 2007, the total cargo volume of U.S. liner exports 

shipped worldwide grew by 12 percent due largely to the weak value of 

the U.S. dollar relative to foreign currencies, which made U.S. goods more 

affordable abroad. Total liner imports to the U.S. declined slightly by a 

little over one percent for the first time in many years. While import cargo 

still exceeded export cargo, the imbalance in cargo volume improved as a 

result of the strong export growth. For every loaded twenty-foot 

equivalent container unit (“TEU”) exported out of the U.S., 1.8 TEUs 

were imported. As in preceding years, China was the leading trading 

partner in liner cargo with the U.S., and over half of all U.S. liner cargo 

(imports and exports) was concentrated in trade with countries in 

Northeast Asia. Containership capacity on the world market continued to 

grow at a steady pace ahead of demand. Additional capacity growth is 

anticipated for the future because of the considerable number of 

containerships on order, particularly those with individual vessel 

capacities of 10,000 TEUs or more. Concentration in the liner shipping 

industry increased during the fiscal year, with the top ten ocean carriers in 

control of 60.5 percent of the world’s containership capacity, up from 53 

percent in the preceding fiscal year. 

 In the largest of the U.S. liner trades, cargo growth in imports from 

Asia slowed substantially to less than one percent, down from a growth 

rate of 15 percent in fiscal year 2006. The drop in import growth was 

attributed to the declining U.S. housing market, the rising cost of energy 

and fuel, and the product safety problems of goods made in China. 

Conversely, U.S. liner exports to Asia grew by 11 percent, up from a 6 

percent increase in the preceding fiscal year. A number of membership 

changes and modifications occurred in the carrier rate discussion 

agreements that operate in the trade. In the inbound direction from Asia, 

the market share of the Transpacific Stabilization Agreement (“TSA”) 

increased from 60 to 80 percent as three carriers joined the agreement. 

TSA further expanded its geographic scope to include the Indian 

Subcontinent, and reorganized its internal structure and committees. In the 

outbound direction, a carrier member withdrew from the Westbound 

9
Transpacific Stabilization Agreement (“WTSA”), and the market share of 

the agreement was about 68 percent. 

 In the transatlantic, U.S. liner exports to North Europe grew by 15 

percent. The continued depreciation of the U.S. dollar against European 

currencies stimulated U.S. export growth, particularly in the emerging 

East European market. Liner imports from North Europe, however, 

declined by 5 percent. The amount of cargo volume in each trade direction 

was more balanced, but vessel capacity utilization was low due to a 

substantial amount of excess capacity in the trade. Certain carriers in the 

trade endeavored to rationalize and cut their services and capacity. 

However, vessel upgrades to existing services tended to offset any 

capacity reductions, and the amount of vessel capacity deployed in the 

trade remained relatively stable throughout the fiscal year. Rate initiatives 

by carriers were largely ineffective. It was reported at the end of the fiscal 

year that base freight rates had fallen, but increases in surcharges assessed 

by carriers to recover fuel costs appeared to be holding to a greater extent. 

In this regard, members of the Trans-Atlantic Conference Agreement

(“TACA”) increased their tariff surcharge for fuel cost by 54 percent from 

the start to the end of fiscal year 2007. The market share of the conference 

was around 37 percent in each trade direction. On regulatory matters, the 

repeal of the block exemption for liner shipping conferences by the 

European Union (“EU”) is scheduled to take effect in October 2008. In 

preparation for the repeal, the European Commission (“EC”) is 

formulating guidelines on the application of EU competition rules to 

maritime transport services and reviewing its consortia regulations for 

ocean liner carriers. 

 Between the U.S. and the Mediterranean, U.S. liner exports rose 

substantially by 26 percent, while liner imports from the region decreased 

by 8 percent, which was attributed to a decline in the U.S. demand for 

home furnishings and building materials. Imports from Italy and Spain 

were especially hard hit by the slump in the U.S. housing market. Excess 

vessel capacity in the trade kept utilization levels low. Several major 

carriers in the trade terminated services to reduce excess capacity. By the 

end of the fiscal year, vessel capacity was down by 6 percent in the 

inbound direction and 3 percent in the outbound direction. The poor 

utilization levels generally suppressed any rate initiatives in the trade. 

10 
Mediterranean Shipping Co. (“MSC”) was the largest carrier in the trade, 

with a market share of around 20 percent in each trade direction. 

 In the trade between the U.S. and Australia/Oceania, liner cargo 

volume rose by over 7 percent in the outbound (export) trade direction and 

over 4 percent in the inbound (import) trade direction. During the fiscal 

year, most of the major carriers operating in the trade adjusted their 

services and operational arrangements. By the end of the fiscal year, there 

were six direct liner services operating in the trade, of which three call at 

U.S. Pacific ports, and three call at U.S. Atlantic ports. Significantly, 

almost a quarter of the liner cargo in the trade was moved indirectly via 

transshipment services. In the inbound direction from Australia to the 

U.S., the rate discussion agreement was modified to include New Zealand 

within its authority and geographic scope; the amended agreement was 

renamed the Australia-New Zealand/United States Discussion Agreement. 

In addition, ANL Singapore Pte. Ltd. joined the discussion agreement, 

which increased its membership to four carriers with a market share of 

about 80 percent. 

11
C. RESTRICTIVE TRADE PRACTICES

 The Commission is responsible for identifying and addressing 

protectionist practices of other countries that unreasonably 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 countermeasures in response to foreign laws 

or policies that adversely affect U.S. carriers. It also can initiate 

appropriate action in instances where a U.S.-flag vessel faces unfair 

barriers in entering a foreign-to-foreign trade. 

 The Commission continued to monitor regulations and port 

practices of the Government of Japan. In fiscal year 2001, the 

Commission revised its semiannual reporting requirement for U.S. and 

Japanese carriers. The Commission continued to require these semiannual 

reports in fiscal year 2007 and to review them for any developments in 

Japanese practices. 

 The Commission’s Permanent Task Force on International Affairs, 

established in 2000, is chaired by the Deputy General Counsel and made 

up of personnel from that office and the Bureaus of Enforcement, Trade 

Analysis, and Certification and Licensing. The Task Force identifies and 

evaluates foreign practices which might have adverse impacts on U.S. 

shipping interests. 

D. TRADE OVERSIGHT 

 As part of its statutory responsibilities, the Commission maintains 

systematic oversight of the commercial activities of ocean liner carriers 

and other regulated entities in the U.S. oceanborne trades. On a regular 

basis, the Commission also monitors relevant economic and trade 

conditions that affect the ocean shipping industry. The Commission’s 

oversight helps to ensure regulatory compliance by uncovering 

unreasonable or unfair industry behavior. These efforts also help identify 

potentially unfavorable trade practices that could affect U.S. oceanborne 

commerce. 

12 
 During the fiscal year, the Commission addressed a number of 

issues relating to the activities of ocean common carriers and marine 

terminal operators pursuant to agreements on file at the FMC. 

Commission staff met with representatives of the Transpacific 

Stabilization Agreement (“TSA”) on two separate occasions in accordance 

with the 2003 settlement agreement of the Commission’s fact-finding 

involving TSA members’ service contracting practices, FMC FactFinding Investigation No. 25 – Practices of Transpacific Stabilization 

Agreement Members Covering the 2002-2003 Service Contract Season. In 

addition, staff prepared economic analyses to examine the prevailing 

market conditions and the likely competitive impact of a number of TSA 

issues that went before the Commission. These included the addition of 

three new carrier members to TSA, and the reincorporation of the Indian 

Subcontinent into the geographic scope of TSA pursuant to an addendum 

to the 2003 settlement agreement and an amendment filing to the 

agreement. 

While the Commission also conducted other specific monitoring 

and research projects in fiscal year 2007, detailed later in this Annual 

Report, one major development was the Clean Truck Program (“CTP”) 

being proposed and discussed as part of the Clean Air Action Plan under 

the Los Angeles and Long Beach Port Infrastructure and Environmental 

Programs Cooperative Working Agreement. Under the CTP, the Ports of 

Los Angeles/Long Beach (“Ports”) are considering proposals that could, 

among other things: (1) set diesel emissions requirements for trucks used 

for drayage service at the Ports’ marine terminals; (2) implement a 

drayage truck replacement (or retrofit) program enforcing the Ports’ 

emissions requirements; and (3) finance the truck replacement program (in 

part) through the assessment of a fee on container cargo drayed by truck 

through the Ports’ marine terminals. In addition, the Ports are considering 

options that could provide that trucking companies only be allowed to 

operate drayage service through licensed concessions administered by the 

Ports, which might be conditional on the companies owning a fleet of 

trucks and hiring a staff of drivers as full-time employees. 

 Numerous groups and organizations representing parties that could 

be affected by the CTP, including shippers and motor carriers, expressed 

concerns before the Commission that the Ports’ actions under the 

agreement pose potential violations of the Shipping Act in multiple 

13
respects. Primary among these concerns is the likely impact of the CTP on 

the levels of drayage service and cargo throughput at the Ports’ marine 

terminals. The Commission has closely monitored these developments to 

assess the reasonableness of the Ports’ activities, and the concerns of 

affected parties, under the Shipping Act. In this regard, the Commission’s 

staff has met with a wide range of interested parties to hear their views on 

the CTP and its likely impact. On two occasions over the fiscal year, 

Commission staff traveled to the area to meet directly with officials of the 

Ports to gather information on the CTP and discuss its development and 

the concerns expressed about its proposals. On another occasion, the 

Ports’ staff visited the Commission to provide updates on the CTP. The 

Ports are in the process of phasing in various components of the CTP, and 

the Commission will continue to review these developments closely in 

accordance with its statutory authority. 

E. ALTERNATIVE DISPUTE RESOLUTION 

During fiscal year 2007, the Commission continued to emphasize 

the role of alternative dispute resolution (“ADR”) in resolving shipping 

industry disputes, and encouraged parties to disputes to utilize the program 

in lieu of litigation. Through the Office of Consumer Affairs and Dispute 

Resolution Service (“CADRS”), the Commission provides services to 

assist parties in resolving disputes and shipping problems in the U.S. 

maritime industry that affect international ocean shipping. These include a 

broad range of services designed to avoid the expense and delays inherent 

in litigation, and to facilitate the flow of U.S. ocean commerce. 

 Another function of CADRS includes the adjudication of small 

claims through informal proceedings under 46 CFR Part 502, Subpart S. 

Office personnel serve as settlement officers in such cases, which involve 

complaints seeking reparations up to $50,000 for violations of the 

shipping statutes. Those claims generally involve alleged prohibited acts 

in connection with the international transportation of goods, or the failure 

to establish, observe, and enforce just and reasonable regulations and 

practices. Seven of these complaints were filed in fiscal year 2007. 

CADRS staff also evaluate and adjudicate applications for permission to 

apply non-tariff rates, and to waive or refund freight charges arising from 

14 
various errors in tariff publications, an inadvertent failure to publish an 

intended rate, or a misquotation of a rate.

F. ENFORCEMENT 

 The Commission maintains a presence in Houston, Los Angeles, 

South Florida, New Orleans, New York and Seattle through Area 

Representatives. These representatives serve as liaisons between the 

Commission and various maritime interests in their respective areas and 

also investigate activity that may violate the Shipping Act. 

 

 During fiscal year 2007, the Bureau of Enforcement investigated 

and prosecuted illegal practices in many trade lanes, including the 

Transpacific, North Atlantic, Central and South American, North and 

West Africa, Oceana, and Caribbean trades. These included marketdistorting activities 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 investigations were resolved informally, some 

with compromise settlements of civil penalties. 

 Several matters also arose with respect to activities pursuant to 

filed and unfiled agreements between and among ocean common carriers 

and marine terminal operators. A major enforcement effort also 

continued with respect to a number of unlicensed and unbonded NVOCCs 

specializing in the carriage of used household goods, and was expanded to 

include the VOCCs and licensed NVOCCs providing service to such 

unlicensed and unbonded operators. 

 The Commission collected $1,372,000 in civil penalties this past 

fiscal year (see Appendix E). These collections represent a wide range of 

violations in all of our major trade lanes. 

15
16 
III 

DEVELOPMENTS IN MAJOR 

U.S. FOREIGN TRADES 

A. NORTH EUROPE

In fiscal year 2007, the low value of the U.S. dollar against 

European currencies and the slump in the U.S. housing market affected 

growth in the liner trade between the U.S. and North Europe. In 

comparison to the preceding fiscal year, U.S. liner exports grew by 15 

percent. Much of this growth was concentrated in the emerging East 

European market. By contrast, liner imports from North Europe declined 

by 5 percent. The imbalance in cargo volume, however, improved as a 

result of the strong export growth. For every twenty-foot equivalent unit 

(TEU) that moved outbound, 1.2 TEUs moved inbound from North 

Europe. The utilization of vessel capacity in the trade remained weak due 

to the large amount of capacity that was added in the preceding fiscal year. 

On average, the quarterly utilization of vessel capacity was 62 percent 

outbound and 74 percent inbound. 

 After the major restructuring of services that occurred in the 

preceding fiscal year, service levels in the trade appeared to stabilize 

during fiscal year 2007. No new services were added, and certain carriers 

took measures to rationalize and cut their existing services and vessel 

capacity. Maersk Line terminated the transatlantic leg of its US/Australia 

pendulum service, and restructured a loop service into a US/North 

Europe/Asia pendulum service. Similarly, Hapag-Lloyd AG (“HapagLloyd”) terminated its participation in the US/North Europe/Australia 

pendulum service that it operated with CMA-CGM, S.A. (“CMA-CGM”) 

and Compagnie Maritime Marfret (“Marfret”). Norasia Container Lines, 

Ltd. and Gold Star Line, Ltd. ended the round-the-world service they 

operated in the trade. Vessel upgrades to existing services, however, offset 

some of these capacity reductions. By the end of the fiscal year, capacity 

in the outbound direction was unchanged, while inbound capacity declined 

by only two percent. 

17
 Initiatives to increase freight rates in the trade were largely 

ineffective possibly due to the weak levels of vessel capacity utilization. 

Members of the Trans-Atlantic Conference Agreement (“TACA”) 

abandoned their plans for a general rate increase (“GRI”) on tariffs at the 

start of the fiscal year. Later, in April 2007, TACA implemented a GRI in 

each direction of the trade. TACA further announced plans for another 

outbound GRI for October 2007. Industry analysts, however, estimated 

that base freight rates had fallen by 20 to 30 percent toward the end of the 

fiscal year, but the assessment of surcharges by carriers for fuel costs 

seemed to be holding to a greater extent in the trade. Notably, the steep 

increase in oil prices prompted TACA to raise its Bunker Adjustment 

Factor (BAF) surcharge for fuel costs by 54 percent over the fiscal year. 

TACA’s market share for the fiscal year was around 37 percent in each 

trade direction. Hapag-Lloyd, which left the conference in 2006, was the 

largest carrier in the trade, with a market share of 16 percent inbound and 

22 percent outbound. 

 The repeal of the block exemption for liner shipping conferences 

(Council Regulation 4056/86) by the European Union (“EU”) is scheduled 

to take effect in October 2008. Thereafter, liner carriers in the EU trades 

will be subject to the general competition rules of the EU. In September 

2007, the European Commission (“EC”) issued, for public comment, draft 

guidelines on the application of the competition rules to maritime transport 

services. The final guidelines will be issued prior to October 2008. In 

July 2007, the EC also issued a survey to carriers in the EU trades 

requesting information on their consortia arrangements in connection with 

a review of its consortia regulations for liner carriers (Commission 

Regulation 611/2005). It was reported that this review is intended to 

update the consortia regulations to account for the repeal of Council 

Regulation 4056/86. 

B. MEDITERRANEAN

 During fiscal year 2007, liner cargo growth between the U.S. and 

the Mediterranean was seriously affected by conditions in the U.S. 

economy. U.S. liner exports to the region rose by 26 percent in response 

to currency exchange rates that favored foreign consumers. Liner imports 

18 
from the Mediterranean, however, declined by 8 percent as the U.S. 

demand for home furnishings and building materials fell. Imports from 

Italy and Spain were especially hard hit by the slump in the U.S. housing 

market. While liner imports still exceeded exports in the trade, the 

substantial rate of export growth for the fiscal year improved the cargo 

imbalance. For every export TEU moving outbound from the U.S., 1.6 

TEUs of import cargo moved inbound. 

 Excess vessel capacity in the trade kept utilization levels low. On 

average for the fiscal year, vessel utilization was 41 percent outbound and 

69 percent inbound. As a transit route between trade lanes, the 

Mediterranean tends to attract services that have excess capacity. Of the 

major services operating between the U.S. and the Mediterranean, 7 out of 

17 are pendulum services that transit the Suez Canal en route to other 

trades such as the Middle East, the Indian Subcontinent, and Asia. 

 Toward the end of the fiscal year, carriers in the trade began to 

reduce their services. Maersk Line terminated its East Mediterranean loop 

service. Similarly, COSCO Container Lines Co. Ltd. (“COSCO”), 

Yangming Marine Transport Corp. (“Yangming”), and Kawasaki Kisen 

Kaisha (“K Line”) terminated their jointly operated loop service; instead, 

each carrier entered into a separate vessel-sharing agreement with 

Mediterranean Shipping Company (“MSC”) to cover the trade. China 

Shipping Container Lines (“CSCL”) restructured its round-the-world 

service by shifting greater capacity to the Mediterranean/Asia trade and 

eliminating direct calls in the U.S./Mediterranean trade. Hapag-Lloyd also 

removed vessels from its loop services in the trade. Overall, by the end of 

the fiscal year, vessel capacity was reduced by 6 percent in the inbound 

direction and 3 percent in the outbound direction. 

 With the demise of the U.S. South Europe Conference in 2006, 

carriers in the trade are independently setting rates and surcharges; 

however, poor levels of vessel capacity utilization generally suppressed 

any rate initiatives. Industry analysts estimated that by the end of the 

fiscal year base freight rates in the inbound trade direction fell by 15 

percent, but in the outbound trade sector from the U.S. Gulf Coast to the 

Mediterranean, some increase in rates was occurring. MSC was the 

largest carrier in the trade with a market share of 20 percent in each trade 

direction for fiscal year 2007. 

19
C. INDIAN SUBCONTINENT AND

THE MIDDLE EAST

 U.S. container exports in fiscal year 2007 grew 27 percent to the 

Indian Subcontinent and 22 percent to the Middle East. Such strong 

growth can be attributed mainly to the weak U.S. dollar and the military 

operations in Iraq and Afghanistan. During the fiscal year, the U.S. 

exported 276,000 TEUs to the Indian Subcontinent and 338,000 TEUs to 

the Middle East. Approximately 80 percent of all U.S. container exports 

to the Middle East and the Indian Subcontinent move through U.S. 

Atlantic and Gulf coast ports. The Middle East Indian Subcontinent 

Discussion Agreement (“MIDA”) and the Westbound Transpacific 

Stabilization Agreement (“WTSA”) are the two major rate discussion 

agreements that cover all or part of the U.S. outbound container trade to 

the Indian Subcontinent and the Middle East. 

 MIDA’s geographic scope covers U.S. exports to the Middle East 

and the Indian Subcontinent. Over the whole geographic scope, MIDA 

had a 60 percent market share, up 10 percentage points from the previous 

fiscal year. This increase is due, in part, to the addition of the Shipping 

Corporation of India, Ltd., Zim Integrated Shipping Services, Ltd. 

(“Zim”), and Emirates Shipping Line FZE, which joined MIDA in 

September 2006, as well as by gains made by Maersk Line, whose market 

share increased by around 4 percentage points. The ten members of 

MIDA had a strong market presence along the U.S. Atlantic and Gulf 

Coasts with a market share of approximately 68 percent. There are no rate 

discussion agreements covering U.S. imports from the Middle East. 

 In this trade region, WTSA’s geographical scope covers U.S. 

exports to the Indian Subcontinent (but not the Middle East). For the 

fiscal year, WTSA’s market share of all U.S. container exports to the 

Indian Subcontinent was 43 percent. WTSA dominates U.S. container 

exports from the U.S. Pacific Coast to the Indian Subcontinent with a 

market share of 82 percent. In November 2006, CSCL resigned from 

WTSA, and ten carriers remained in the agreement. 

20 
 U.S. container imports from the Indian Subcontinent declined 

considerably. In fiscal year 2007, imports fell 7 percent, compared to a 16 

percent increase in the previous fiscal year. U.S. container imports from 

the Middle East also declined. In fiscal year 2007, imports from this 

region dropped 7 percent, compared to a 3 percent gain during the prior 

fiscal year. For the fiscal year, the U.S. imported approximately 612,000 

TEUs from the Indian Subcontinent and 147,000 TEUs from the Middle 

East. 

 The Transpacific Stabilization Agreement (“TSA”) replaced the 

Indian Subcontinent Discussion Agreement (“ISDA”) as the only rate 

discussion agreement covering U.S. inbound container imports from the 

Indian Subcontinent. During fiscal year 2007, TSA amended its basic 

agreement to include the Indian Subcontinent. Shortly afterwards, ISDA 

ceased operations, as many ISDA carriers were also members of TSA. 

For the fiscal year, the fourteen-member TSA handled approximately 57 

percent of all U.S. container imports from the Indian Subcontinent. 

 It was reported that Indian regulators, in light of changes in 

European regulations, will also be reviewing the immunity of liner 

conferences from their recently-enacted competition law. 

D. AUSTRALIA AND OCEANIA

 This region encompasses Australia, New Zealand, Papua New 

Guinea, Western Samoa and other South Pacific Islands. U.S. container 

imports from the region totaled 191,000 TEUs in fiscal year 2007, while 

the U.S. outbound liner trade totaled 226,000 TEUs. Australia is the 

largest U.S. trading partner in the region, accounting for almost two-thirds 

of the liner cargo in the trade. New Zealand accounted for another 

quarter. For every U.S. container imported from this region, nearly 1.2 

TEUs were exported. Compared to last fiscal year, U.S. liner exports to 

the region grew by over 7 percent, and liner imports from the region grew 

by over 4 percent. 

 Following last year's consolidations, no further mergers or 

acquisitions took place this year. However, several independent and 

21
jointly operated services were restructured. Hamburg Südamerikanische 

Dampfschifffahrts Gesellschaft KG (“Hamburg Süd”) upgraded its Trident 

service between the Europe, Australia/New Zealand, and U.S. Atlantic 

ports. Hapag-Lloyd obtained expanded space on the Oceania service of 

Maersk Line, and withdrew from the North American pendulum service it 

operated in concert with CMA-CGM/Marfret through a vessel-sharing 

agreement. In turn, CMA-CGM and Marfret expanded the scope of their 

vessel-sharing agreement to include the Caribbean and Central America. 

Maersk Line revised the geographic scope of its Oceania service and 

shuffled the ports of call. On the U.S. Pacific coast, Hamburg Süd, 

Hapag-Lloyd, and Maersk Line made extensive changes to the schedules 

and vessel allocations of their jointly operated services. 

 At year end, six direct liner services operated between the U.S. and 

Australia and New Zealand: three served the U.S. Pacific coast and three 

served the U.S. Atlantic coast. On the U.S. Atlantic coast, Hamburg Süd 

and Maersk Line independently operated their Trident and Oceania 

services, respectively. Further, Hapag-Lloyd took space on Maersk Line's 

Oceania service. In addition, CMA-CGM and Marfret jointly operated 

their North American Pendulum service. On the U.S. Pacific coast, 

Hamburg Süd, Hapag-Lloyd, and Maersk Line jointly operated two 

service strings under their amended U.S. Pacific Coast-Oceania 

Agreement: one to the Pacific Southwest, and the other to the Pacific 

Northwest. ANL Singapore Pte, Ltd. a subsidiary of CMA-CGM, and 

U.S. Lines, Ltd. (“U.S. Lines”) also jointly operated a U.S.-Australia/New 

Zealand/China triangular service. Additionally, several transshipment 

services and specialized carriers operate in the Australia-New Zealand 

trade, e.g. Swire Shipping Ltd., and Wallenius Wilhelmsen Logistics. In 

fact, transshipment services accounted for almost a quarter of the liner 

cargo. 

 During the fiscal year, U.S. Lines joined the United 

States/Australasia Discussion Agreement (“USADA”), thereby expanding 

the number of members to nine. An enlarged Australia-New 

Zealand/United States Discussion Agreement (“ANZUSDA”) 

incorporated the authorities and geographic scope of the New 

Zealand/United States Discussion Agreement, which is still in effect but 

dormant, as no activity has been taken under it since the effectiveness of 

22 
ANZUSDA. Additionally, the ANZUSDA added ANL Singapore Pte Ltd. 

as a party to the agreement, expanding the number of members to four. 

E. CENTRAL AMERICA 

AND THE CARIBBEAN

 In fiscal year 2007, growth in cargo volume between the U.S. and 

Central America was minimal compared to the preceding fiscal year. The 

Dominican Republic-Central American Free Trade Agreement (“DRCAFTA”), expected to boost cargo growth through the reduction of trade 

restrictions, was signed in the previous fiscal year. The anticipated cargo 

growth has not yet materialized, possibly due to the fact that DR-CAFTA 

has not been fully implemented as yet. 

 In the trade between the U.S. and the Caribbean, the volume of 

cargo increased in both trade directions compared to the preceding fiscal 

year. U.S. exports, mainly of food, consumer, and manufactured products, 

increased by 7 percent to 547,583 TEUs, while imports to the U.S. 

increased 6 percent to 161,237 TEUs. 

 Carriers in the U.S./Central American trade participate in the 

Central America Discussion Agreement. Carriers in the U.S./Caribbean 

trade participate in four rate discussion agreements covering discrete 

trades: (1) the Hispaniola Discussion Agreement, (2) the Caribbean 

Shipowners’ Association, (3) the Florida-Bahamas Shipowners’ and 

Operators Association, and (4) the Aruba Bonaire and Curacao 

Discussion Agreement. There were no significant changes in the 

provisions or memberships of these agreements during fiscal year 2007. 

Two additional vessel-sharing agreements were implemented in the 

Caribbean trade during this period. 

F. ASIA

 In terms of containerized cargo, Asia is the largest trading partner 

of the United States. In fiscal year 2007, Asia accounted for 62 percent of 

all U.S. inbound and outbound containerized cargo. Seventy-one percent 

23
of all U.S. container imports originated from Asia, and the region took 47 

percent of all U.S. container exports. 

 The major agreement in the Transpacific trade, TSA, is a rate 

discussion and policy-setting agreement with voluntary pricing authority 

covering the U.S. inbound container trade from Northeast and Southeast 

Asia, and most recently the Indian Subcontinent was added. At the 

beginning of 2007, TSA eliminated the position of executive director and 

replaced it with a four-carrier executive committee. The reorganization 

enabled carriers to be more directly involved in managing TSA activities. 

With greater carrier involvement, the members believe TSA will be more 

attuned and responsive to the needs of shippers. 

 During fiscal year 2007, several carriers joined TSA. In early 

2007, CMA-CGM rejoined TSA after the French carrier resigned from the 

agreement a year earlier. Later in the year, MSC and Zim also joined 

TSA. As a result, TSA’s market share of the U.S. inbound Asian trade 

increased by about 19 percentage points with TSA carriers moving almost 

80 percent of all Asian imports, compared to about 60 percent in fiscal 

year 2006. 

 The growth in Asian imports slowed dramatically in fiscal year 

2007, increasing by less than one percent. In the previous fiscal year, 

imports from this region grew 15 percent. Compared to fiscal year 2006, 

container imports from Northeast Asia grew by less than one percent and 

declined by 3 percent from Southeast Asia. Northeast Asia accounted for 

88 percent of all transpacific container imports, with the most cargo 

volume originating from China. For the fiscal year, the U.S. imported 

13.6 million TEUs of Asian goods. 

 Reportedly, the sluggish growth in Asian imports can be attributed 

to the collapse of the U.S. housing market, the rising cost of energy and 

fuel, and the product safety concerns of goods made in China. Most Asian 

imports are consumer goods and, given the rise in energy costs and the 

loss of the “wealth effect” from escalating house prices, U.S. consumers 

have less disposable income. Consumer concerns over the safety of 

Chinese products sold in the U.S., especially toys (80 percent of which are 

manufactured in China), further dampened the demand for Asian imports. 

24 
 For the annual service contract season that began on May 1, 2007, 

TSA announced that its members had agreed to raise freight rates, on a 

voluntary, non-binding basis, by $300 per forty-foot equivalent units 

(“FEU”) for cargo discharged at U.S. Pacific Coast ports and $500 per 

FEU for cargo discharged at U.S. Atlantic Coast ports. Reports in the trade 

press indicated that TSA members generally were not successful in 

obtaining the full amount of these planned rate increases during their 

service contract negotiations with individual shippers, repeating the same 

pattern as in past years. 

 The major agreement in the outbound Transpacific trade is WTSA. 

Like TSA, WTSA operates as a forum for the exchange of information 

between its members that enables them to discuss and agree upon rate 

levels for cargo exported from the U.S. to Asia. WTSA’s geographic 

scope covers all U.S. outbound shipments to Northeast and Southeast Asia 

as well as the Indian Subcontinent. In fiscal year 2007, WTSA maintained 

a market share of approximately 68 percent. During the fiscal year, CSCL 

resigned from WTSA. 

 In contrast to U.S. imports, U.S. exports to the region expanded by 

a robust 11 percent to reach almost 5 million TEUs. The declining value 

of the dollar generally made U.S. products cheaper abroad. While U.S. 

container exports to Northeast Asia grew by 9 percent, they grew by a 

hefty 27 percent to Southeast Asia. Eighty-five percent of all U.S. 

container exports to Asia are destined for Northeast Asia. 

 WTSA does not have a distinct start to the annual service contact 

season like that of the TSA. Instead, WTSA members agree to voluntary 

service contract rate guidelines for different types or groups of 

commodities throughout the year. This practice is dictated primarily by 

the seasonality of the major U.S. agricultural export commodities which 

have different growing seasons and peak times when they are shipped. 

 Finally, China adopted an Anti-Monopoly law in the fiscal year. It 

is yet to be seen whether Chinese regulators will immunize liner 

conferences from the application of this new law. 

25
G. SOUTH AMERICA

 Between the U.S. and South America, U.S. export cargo reached 

741,890 TEUs, an impressive increase of 17 percent. However, import 

cargo from South America to the U.S. fell by 6.5 percent to 998,177 

TEUs. These trends clearly reflect the falling value of the U.S. dollar. The 

South America region is generally divided into two trade areas - - one to 

the East Coast of South America, and the other to the West Coast of South 

America. 

 Just over 40 percent of all of the U.S./South America cargo moved 

between the U.S. and the West Coast of South America. About 680,000 

TEUs of annualized vessel capacity were deployed in this trade in each 

direction at the end of the fiscal year. Most of the carriers that provide 

direct service in the trade are also members of the West Coast of South 

America Discussion Agreement (“WCSADA”). The combined market 

share of WCSADA members was about 70 percent in the outbound 

direction and 60 percent in the inbound direction. Some carriers also 

served the trade indirectly via transshipment services based at ports in 

Mexico, Panama, and the Caribbean. 

 During the year, no substantial changes were made to WCSADA. 

Several new agreements covering the East and West Coasts of South 

America became effective in the trade. Most were vessel sharing or space 

charter agreements, the largest was the USATLAN/MARUBA Space 

Charter Agreement between four major carriers in the trade. 

 

 Liner cargo in the trade between the U.S. and the East Coast of 

South America accounted for almost 60 percent of U.S./South America 

liner cargo. By the end of fiscal year 2007, annualized vessel capacity in 

this trade was about one million TEUs in each trade direction. Unlike the 

West Coast of South America trade, carriers serving the East Coast of 

South America do not actively participate in a broad-based rate discussion 

agreement spanning the entire geographic scope of the trade. However, 

seven new vessel sharing agreements covering the trade were filed during 

the year. 

26 
H. AFRICA

 This region encompasses all of Africa, including ports in West 

Africa and South Africa. U.S. container imports from Africa totaled 

96,000 TEUs in fiscal year 2007, while U.S. container exports totaled 

almost 196,000 TEUs. For every U.S. container imported, about two were 

exported. Compared to the past fiscal year, U.S. container exports grew 

30 percent, whereas U.S. container imports fell 7 percent. South Africa 

accounted for about 40 percent of the liner cargo in this U.S. trade region 

in fiscal year 2007, making it by far the continent’s largest U.S. liner 

trading partner. However, this is a slight decrease from last year. In a 

distant second place, oil-rich Nigeria contributed an additional ten percent 

or so. South Africa's port of Durban is the biggest container port on the 

continent, handling nearly a quarter of this trade's liner cargo. Almost half 

of the liner cargo in the U.S.-Africa trade is transshipped. 

 Although no significant mergers or acquisitions occurred during 

the fiscal year, several shipping lines implemented changes to their liner 

services. For instance, Maersk Line, Safmarine Container Lines N.V. 

(“Safmarine,” a wholly-owned subsidiary of Maersk Line), and MSC 

upgraded their jointly provided America Express (AMEX) service by 

adding an eighth vessel. Furthermore, the carriers revised the service 

schedule to incorporate fixed day weekly calls at: Newark, Baltimore, 

Norfolk, Charleston, Freeport, Cape Town, Port Elizabeth, and Durban. In 

addition, Galborg Pte Ltd. added two vessels to its weekly liner service 

between the U.S. Gulf Coast and South Africa. 

 Maersk Line, Safmarine, and MSC jointly operate the AMEX 

service under the authorities of the Southern Africa/Oceania Agreement, 

which was amended to incorporate the abovementioned changes. Apart 

from this change, no other significant agreement activities occurred. 

Further, Maersk Line, MSC, and Maersk Line’s subsidiary, Safmarine, 

remain the top carriers in the Africa trade. 

27
I. WORLDWIDE

 The world’s container trades continued to expand strongly in fiscal 

year 2007. World container traffic was expected to reach around 142 

million TEUs, more than 13 percent greater than the level reached at the 

end of fiscal year 2006. Growth was exceptionally strong in the Asia to 

Europe head haul trades, but expansion in the U.S. container trades was 

much weaker. During the year, the total number of containers imported 

into or exported from the U.S. was just under 30 million TEUs, an 

increase of 3.1 percent over fiscal year 2006. The U.S. share of the 

world’s container trades declined this year to about 21 percent, compared 

to 23 percent last year. Although U.S. container imports declined by just 

over 1 percent to 19.2 million TEUs in fiscal year 2007, there was a robust 

performance in U.S. container exports, which expanded by 12.2 percent to 

reach 10.5 million TEUs. For every loaded container exported from the 

U.S., just under two were imported. 

 Container imports through Pacific Northwest ports, such as Seattle, 

Tacoma and Portland, remained about the same as last year at about 2.4 

million TEUs. This coastal region’s share of U.S. container imports rose 

slightly to 12.8 percent, compared to 12.4 percent last year. The Pacific 

Southwest region, which includes the ports of Los Angeles, Long Beach 

and Oakland, saw its share of U.S. container imports remain at just under 

46 percent. Ports along the U.S. Atlantic and Gulf Coasts handled around 

40.7 percent of all U.S. container imports, compared to 41.5 percent last 

year. 

 During this fiscal year, each coastal region’s relative share of U.S. 

export containers remained more or less the same. About 60 percent of all 

export containers were handled by U.S. Atlantic and Gulf Coast ports, 30 

percent by Pacific Southwest ports, and just under 10 percent by ports in 

the Pacific Northwest. 

 The U.S.’s top five liner cargo trading partners remained 

unchanged, viz. China, Japan, Taiwan, South Korea and Hong Kong. 

Hong Kong fell from third to fifth in the ranking, while Taiwan rose to 

third from fifth. Notably, each top five trading partner is located in 

Northeast Asia. Collectively they accounted for 54.5 percent of the total 

28 
U.S. container trade in fiscal year 2007. This year, trade with China 

accounted for 37 percent of the total U.S. container trade, the same as in 

fiscal year 2006. 

 On a worldwide basis, containership capacity continued to grow 

faster than container demand by a few percentage points. By the end of the 

year, the containership fleet’s nominal capacity had grown by over 15 

percent. Several industry analysts anticipate capacity also will expand by a 

similar amount next year because the level of ordering, particularly of 

exceptionally large ships with capacity of 10,000 TEUs or more, 

accelerated in the second half of the fiscal year. At the end of the year, 

about 4,150 containerships with a fleet capacity of over 10 million TEUs 

were deployed in the world’s container trades, representing a net annual 

addition of about 350 ships. At the end of July 2007 there were orders 

worldwide for 1,309 new containerships with an aggregate capacity of 4.3 

million TEUs. The ship capacity on order amounted to almost 53 percent 

of the existing fleet capacity. 

 Concentration in the container shipping industry increased during 

fiscal year 2007, although the top-5 container operators were still Maersk 

Line, MSC, CMA-CGM, Evergreen and Hapag Lloyd, respectively. Two 

Chinese carriers, CSCL and COSCO occupied sixth and seventh places. 

Among the top-100 container operators at the end of fiscal year 2007, the 

top-5 operators reportedly controlled 43.6 percent of the world’s 

containership fleet capacity, the top-10 controlled 60.5 percent, and the 

top-20 controlled 82.3 percent. 

29
30 
IV 

THE FOREIGN SHIPPING 

PRACTICES ACT OF 1988 

A. IN GENERAL

 The Foreign Shipping Practices Act of 1988 (“FSPA”) became 

effective on August 23, 1988. The FSPA directs the Commission to 

investigate and address adverse conditions affecting U.S. carriers in U.S. 

oceanborne trades, when such conditions do not exist for foreign carriers 

in the U.S. 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 2007, the Commission monitored potentially 

unfavorable or discriminatory shipping practices by a number of foreign 

governments. No FSPA action was taken in 2007. 

 

31
B. TOP TWENTY U.S. LINER CARGO

TRADING PARTNERS

 Pursuant to the FSPA, the FMC must include in its annual report to 

Congress “a list of the twenty foreign countries which generated the 

largest volume of oceanborne liner cargo for the most recent calendar year 

in bilateral trade with the United States.” 46 U.S.C. § 306 (b)(1). 

 The Journal of Commerce’s Port Import Export Reporting Service 

(“PIERS”) database was used to derive the Commission’s list of top 

twenty trading partners. PIERS obtains data on U.S. import and export 

shipments from tapes of bill of lading manifests filed electronically with 

U.S. Customs and Border Protection (“CBP)” via the Automated Manifest 

System (“AMS”). PIERS also stations personnel at individual ports to 

collect manually shipment data that is incomplete or not filed through 

AMS. The company edits the raw shipment data and distinguishes liner 

shipments from non-liner shipments, and also employs additional 

procedures to increase data accuracy. 

 The most recent complete calendar year for which data are 

available is 2006. The table on the next page lists the twenty foreign 

countries that generated the largest volume of oceanborne liner cargo in 

bilateral trade with the U.S. in 2006. The figures in the table represent 

each country’s total U.S. liner imports and exports in thousands of TEUs. 

32 
Top Twenty U.S. Liner Cargo

Trading Partners (2006)

Rank Country TEUs 

 (000s)

1 China (PRC) ...............................................................10,958 

2 Japan ............................................................................1,701 

3 Hong Kong1 .................................................................1,125 

4 Taiwan ..........................................................................1,118 

5 South Korea .................................................................1,099 

6 Germany ..........................................................................789 

7 Brazil ...............................................................................656 

8 Italy .................................................................................602 

9 Thailand ..........................................................................580 

10 India ................................................................................549 

11 Belgium & Luxembourg..................................................502 

12 Indonesia .........................................................................486 

13 Netherlands .....................................................................469 

14 United Kingdom (incl. N. Ireland) ..................................438 

15 Malaysia ..........................................................................384 

16 Vietnam ...........................................................................361 

17 Honduras .........................................................................306 

18 Costa Rica .......................................................................281 

19 Chile ................................................................................280 

20 Spain ......... ....................................................................271 

 

 

 

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.

33
With only a few exceptions, the 2006 top twenty trading partners closely 

mirror those for 2005. Almost across the board, the top twenty trading 

partners saw gains in volume. Vietnam saw gains of 24 percent, the 

largest of the group. Growing by 17 percent, China has further widened 

the gap between itself and Japan, the number two trading partner. Taiwan, 

Costa Rica, and Chile experienced 12, 15, and 14 percent increases in 

volume, respectively. Again this year, Hong Kong’s volume declined, this 

time by 6 percent. Costa Rica and Chile, surpassing Spain, appear on the 

list for the first time. Consequently, Guatemala and France have dropped 

off the list. 

34 
V 

SIGNIFICANT ACTIVITIES 

BY 

ORGANIZATIONAL UNIT 

35
36 
A. OFFICE OF THE SECRETARY

1. In General

As the focal point for matters submitted to and emanating from the 

members of the Commission, the Office of the Secretary is the main 

public contact point with the FMC. The Office receives and processes a 

variety of documents filed by the public, including: complaints initiating 

adjudicatory proceedings for alleged violations of the Shipping Act and 

other applicable laws; special docket applications and applications to 

correct clerical or administrative errors in service contracts or NVOCC 

service arrangements; all communications, petitions, notices, pleadings, 

briefs, or other legal instruments in administrative proceedings; and 

subpoenas served on the FMC, its members or employees. 

 The Office is responsible for preparing and submitting regular and 

notation agenda matters for consideration by the Commission and 

preparing and maintaining the minutes of actions taken by the 

Commission on these matters; issuing orders and notices of actions of the 

Commission; maintaining official files and records of all formal 

proceedings and Commission regulations; issuing publications; and 

authenticating instruments and documents of the Commission. During 

fiscal year 2007, the Commission issued orders finalizing eighteen formal 

proceedings and five informal dockets. In addition, two rulemaking 

proceedings were finalized in fiscal year 2007 and two remained pending 

at the end of the fiscal year. 

The Office also responds to information requests from 

Commission staff, the maritime industry, press, and the public; 

administers the Freedom of Information, Government in the Sunshine, and 

Privacy Acts; compiles historical Commission decisions; maintains a 

public reference/law library and a Docket Activity Library; manages the 

Commission’s Internet website; and participates in the development and 

coordination of agency-wide public relation/outreach strategies and 

initiatives. The Office of the Secretary also oversees the Office of 

Consumer Affairs and Dispute Resolution Services. 

37
As the Commission’s public information/press office, the Office of 

the Secretary prepares or coordinates the preparation of Commission news 

releases; responds to public and press inquiries or directs inquiries to the 

appropriate Commission bureau/office; and monitors the trade press for 

matters of agency interest for referral to the chairman, commissioners, and 

Commission staff. 

The Office remained involved in the Commission’s ongoing effort 

to expand contact with all segments of the maritime community and the 

public. Several initiatives were undertaken by Commission staff to 

improve industry outreach, including updating educational and 

informational material. 

The Office of the Secretary also manages the Commission=s 

website. During the fiscal year, the Office continued to make 

improvements to increase user-friendliness and information availability. 

For example, the Office posted new and revised Frequently Asked 

Questions and updated links throughout the Commission’s site. In 

December 2007, the Office introduced enhanced website search 

capabilities to enable Commission staff and the public to perform more 

refined or comprehensive searches of docket proceedings. The Office will 

continue to evaluate the overall usefulness of the site and work closely 

with other offices and Bureaus to improve its content and functionality. 

The process of electronically scanning/imaging Commission 

records also continued during fiscal year 2007. Data migration from the 

old system to the new one was completed, and the new system became 

fully functional during the fiscal year. The new system has helped support 

the agency’s initiatives for continuity of operations by improving 

preservation of and Commission staff access to Commission documents, 

as well as improving Commission staff response time to public inquires 

and public access to electronic files. In addition to continuing to scan its 

own office files, during fiscal year 2007, the Office commenced scanning 

documents from the Office of the General Counsel and the Bureau of 

Enforcement. It also began planning for the scanning process for the 

Bureau of Trade Analysis, the Bureau of Certification and Licensing and 

the Commissioners’ offices. 

38 
During fiscal year 2007, the Office continued to take the lead in 

accomplishing the agency’s performance goals related to making more 

Commission information and filed documents available electronically and 

to improving responsiveness to requests for public information. 

Specifically, the Office continued to make key documents filed in formal 

proceedings available through its website; integrated the Commission’s

internal complaints database with other internal databases; and began the s

process for redesigning the agency’s Intranet. 

2. Office of Consumer Affairs and Dispute Resolution 

Services

The Office of Consumer Affairs and Dispute Resolution 

(“CADRS”) is responsible for developing and implementing the 

Commission=s Alternative Dispute Resolution (AADR@) program. Through 

this program, the Commission provides services to assist parties in 

resolving disputes and shipping problems in the U.S. maritime industry 

that affect international ocean shipping. These include a broad range of 

services designed to avoid the expense and delays inherent in litigation, 

and to facilitate the flow of U.S. ocean commerce. 

With respect to matters already involved in litigation, or moving 

toward initiation of litigation, parties to a dispute are encouraged to avail 

themselves of mediation or other ADR processes such as conciliation, 

facilitation, fact finding, mini-trials, or arbitration, as a means to resolve 

disputes. The Commission makes trained neutrals available to facilitate 

the resolution of shipping disputes at all stages. Outside neutrals also may 

be contracted for as needed. 

During fiscal year 2007, Commission mediators provided 

mediation services in several dispute resolution proceedings, thus assisting 

parties in avoiding significant litigation costs and risks. CADRS also 

provides ombudsman services to participants in ocean shipping 

transactions. Typical complaints include situations where an NVOCC or 

VOCC has placed a lien on cargo in its possession, often for sums owed 

under a different contract of carriage, and cases in which an NVOCC has 

received cargo from its customer and taken payment for the transportation 

39
of the cargo, but failed to deliver the cargo. Tracking the whereabouts of a 

shipment can be difficult, and often additional charges have accrued, 

necessitating payment of additional funds to obtain release of the 

shipment. 

During fiscal year 2007, 509 complaints were received that 

necessitated the opening of a case to provide dispute resolution services. 

These included 220 complaints about cruise issues, 144 about household 

goods matters, and 145 about cargo shipment matters. During 2007, cargo 

shipment complaints involved more complex legal issues than had been 

typical in previous years. Increasingly, complaints involve demurrage and 

detention issues, the failure to present accurate original bills of lading, and 

failure to release one party’s shipments as a result of prior debts of 

unrelated co-loading partners. In addition to complaints, approximately 

1,000 information requests were processed. The revised complaints 

database designed by CADRS proved useful in responding to complaints 

and inquiries. Its integration with other Commission databases also 

proved useful to other Commission activities. 

For the first time in several years, fewer household goods 

complaints were received than for other cargo matters. This may have 

been attributable to improved outreach and the previous year’s institution 

of a formal Commission investigation of several problem movers. In 

addition to opening that proceeding, injunctions were obtained against 

several companies and individuals to prohibit their continued operation. 

As a result, several entities ceased operations, thereby reducing the 

number of complaints against those entities. In addition, the Commission 

issued consumer advisories, and the Commission’s website has been 

expanded to provide consumer advice and to caution consumers to deal 

only with properly licensed OTIs. 

With respect to passenger matters, a cruise line that had ceased 

operations during fiscal year 2004 approached Commission staff for the 

purpose of closing out an existing escrow account. CADRS and the BCL 

staff worked closely with the new CEO and escrow agent in order to 

resolve 29 complaints remaining from passengers affected by the 2004 

cancellation of voyages, enabling the escrow account to be terminated. In 

FY 2007, seven informal proceeding of small claim matters were filed for 

adjudication in CADRS. 

40 
3. Library

The FMC public reference/law library is an information source for 

Commission staff, government agencies, private organizations and the 

public. The library contains a variety of books, directories, encyclopedias, 

journals, magazines, reports, microforms, and videos. Its holdings consist 

of specialized material, primarily covering the various segments of the 

international 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 a collection of legal publications. The Library 

collection includes law encyclopedias, engineering textbooks, legal 

treatises, Comptroller General Decisions, and selected titles of the 

National Reporter system. The Library=s holdings consist of 

approximately 8,700 volumes and numerous microfiches, CD-ROMs, and 

on-line services. 

41
42 
B. OFFICE OF THE

ADMINISTRATIVE LAW JUDGES 

1. In 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. 

 The Office of ALJs has the authority to administer oaths and 

affirmations; issue subpoenas; rule upon offers of proof and receive 

relevant evidence; take or cause depositions to be taken; 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 2007, ten formal proceedings were 

pending before the Office of ALJs. During the year, 12 formal 

proceedings and one informal proceeding were added (the informal 

proceeding subsequently was converted to a formal proceeding). The 

Office of ALJs issued orders completely resolving four proceedings. 

43
2. Final action by the Office of Administrative Law 

Judges and subsequent Commission Action.

 In fiscal year 2007, the Office of Administrative Law Judges 

issued initial decisions partially or completely resolving seven 

proceedings, and the Commission issued orders on nine proceedings that 

had been decided by administrative law judges. 

Carolina Marine Handling, Inc. v. South Carolina State Ports 

Authority, et al. [Docket No. 99-16] 

 On November 28, 2006, the Commission issued an order denying 

reconsideration of its June 30, 2006, decision remanding the proceeding to 

the Office of Administrative Law Judges. On January 30, 2007, the ALJ 

granted the complainant’s motion to dismiss the complaint with prejudice. 

On March 2, 2007, the Commission issued a notice that the time to review 

the decision had expired and the decision had become administratively 

final. 

Anchor Shipping Co. v. Alianca Navegacao e Logistica Ltda., 

Crowley American Transport Inc., Columbus Line, Inc., and 

Hamburg Südamerikanische Dampfschifffahrts. [Docket No. 

02-04] 

 This case is on remand from the Commission. Anchor Shipping 

Co. v. Aliança Navegação e Logística Ltda., 30 S.R.R. 991 (2006). On 

April 19, 2007, the ALJ referred Complainant’s motion for the Bureau of 

Enforcement to intervene to the Commission as being beyond the ALJ’s 

authority. On September 27, 2007, the ALJ granted Respondents’ motion 

to dismiss the claims of violation of sections 6 and 7 of the Act as these 

sections impose no duties on Respondents, and the claims of violation of 

section 9 of the Act Respondents are not controlled carriers within the 

meaning of the Act. In the same order, the ALJ dismissed the claim for a 

civil penalty because the statutory scheme does not contemplate the 

imposition of civil penalties in a private party complaint proceeding. 

44 
Odyssea Stevedoring of Puerto Rico, Inc. v. Puerto Rico Ports 

Authority [Docket No. 02-08] 

International Shipping Agency, Inc. v. Puerto Rico Ports 

Authority [Docket No. 04-01] 

San Antonio Maritime Corp. and Antilles Cement Corp. v. 

Puerto Rico Ports Authority [Docket No. 04-06] 

 On November 30, 2006, the Commission remanded these cases to 

the ALJ for further proceedings. On February 22, 2007, the D.C. Circuit 

granted Respondent’s motion to stay the proceedings pending review by 

that court. 

Qin’s Inc. v. Superior Lake International [Docket No. 04-08] 

 On January 9, 2007, the ALJ issued an order granting 

Complainant’s motion for attorney’s fees. On February 16, 2007, the 

Commission issued a notice that the time to review the decision had 

expired and the decision had become administratively final. 

Worldwide Relocations, Inc., et al. -- Possible Violations of 

Sections 8, 10, and 19 of the Shipping Act of 1984 and the 

Commission’s Regulations at 46 C.F.R. §§ 515.3, 515.21, and 

520.3 [Docket No. 06-01]

 On November 29, 2006, the Commission vacated the ALJ’s 

approval of settlement agreements with four respondents and remanded 

for further inquiry. Worldwide Relocations, 30 S.R.R. 1208 (2006). On 

March 15, 2007, the ALJ approved the settlements with those four 

Respondents. On April 26, 2007, the Commission issued a notice that the 

time to review the decision had expired and the decision had become 

administratively final. On June 20, 2007, the ALJ granted BOE’s motion 

to dismiss five respondents. On July 24, 2007, the Commission issued a 

notice that the time to review the decision had expired and the decision 

had become administratively final. On September 27, 2007, the ALJ 

granted BOE’s motion to dismiss an additional respondent. 

45
The Lake Charles Harbor and Terminal District v. West 

Cameron Port, Harbor and Terminal District [Docket No. 06-

02] 

 On August 2, 2007, the Commission issued an order denying the 

appeal and discontinuing the proceeding. 

Ritco Int’l v. Air 7 Seas Transport; Air 7 Seas Transport v. 

Shipping Corp. of India, Ltd. [Docket No. 06-07]

 On January 16, 2007, the ALJ dismissed the complaint without 

prejudice when Complainant failed to respond to a show cause order. On 

March 22, 2007, the Commission granted the parties’ joint motion to 

dismiss the complaint with prejudice. 

Transport Express, Inc. and the Intermodal Motor Carriers 

Conference, American Trucking Associations v. Sinotrans 

Container Lines Co, Ltd., and Sinotrans Shipping Agency 

(NA), Inc. [Docket No. 06-10] 

 On January 12, 2007, the ALJ issued an Initial Decision approving 

settlement. On February 16, 2007, the Commission issued a notice that 

the time to review the decision had expired and the decision had become 

administratively final. 

R.O. White & Co. & Ceres Marine Terminals Inc. v. Port of 

Miami Terminal Operating Company, Continental 

Stevedoring & Terminals, Inc., et al. [Docket No. 06-11] 

 On July 2, 2007, the ALJ dismissed the claims against one of the 

named respondents on the ground that the complaint failed to state a claim 

against it. On August 7, 2007, the Commission issued a notice that the 

time to review the decision had expired and the decision had become 

administratively final. 

46 
3. Pending Proceedings

 At the close of fiscal year 2007 there were 19 formal proceedings 

pending before the Office of ALJs. During fiscal years 2008 and 2009, 

the Office will conduct hearings and render decisions on adjudicatory 

proceedings and on such rulemaking proceedings as may be referred to the 

Office. 

47
48 
C. OFFICE OF 

THE GENERAL COUNSEL 

 The General Counsel provides legal counsel to the Commission. 

This includes reviewing staff recommendations for Commission action for 

legal sufficiency, drafting proposed rules to implement Commission 

policies, and preparing final decisions, orders, and regulations for 

Commission review. In addition, the Office of the General Counsel 

(“OGC”) provides written and 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 

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: 

Decisions 

Odyssea Stevedoring of Puerto Rico, Inc. v. Puerto Rico Ports Authority, 

[Docket No. 02-08]; International Shipping Agency, Inc. v. The Puerto 

Rico Ports Authority, [Docket No. 04-01]; and San Antonio Maritime 

Corp. and Antilles Cement Corp. v. Puerto Rico Ports Authority, [Docket 

No. 04-06], 30 S.R.R. 1339 (March 5, 2007) 

These cases came before the Commission for a determination of 

whether the Puerto Rico Ports Authority (“PRPA”) is an arm of the 

Commonwealth of Puerto Rico and therefore entitled to sovereign 

immunity. Odyssea Stevedoring of Puerto Rico, Inc., International 

Shipping Agency, Inc., San Antonio Maritime Corp. and Antilles Cement 

Corp. (collectively “complainants”) alleged that PRPA’s marine terminal 

leasing practices violated sections 10(b)(10), 10(d)(1), 10(d)(3), and 

10(d)(4) of the Shipping Act. Further, Intership alleged that PRPA 

violated section 10(a)(3) of the Shipping Act, by failing to act in 

49
accordance with the terms of an agreement filed with the Commission. 

PRPA filed motions for summary judgment or motions to dismiss in all 

three cases, arguing that the complaints were barred by PRPA’s sovereign 

immunity as an arm of the Commonwealth of Puerto Rico. In Odyssea and 

Intership, the ALJ ruled that PRPA was not entitled to sovereign 

immunity. The Commission, sua sponte, decided to review the ALJ’s 

decision. On November 30, 2006, the Commission, by a 3-2 vote, issued 

an order finding that PRPA is not an arm of the Commonwealth of Puerto 

Rico and is therefore not entitled to sovereign immunity. The 

Commission’s order was appealed to the U.S. Court of Appeals for the 

D.C. Circuit (Case No. 16-1407). Oral argument was held before that 

court on October 26, 2007. 

The Lake Charles Harbor and Terminal District v. West Cameron Port, 

Harbor and Terminal District [Docket No. 06-02], 30 S.R.R. 1043 (June 

7, 2007) 

This proceeding was initiated by complaint of Lake Charles 

Harbor and Terminal District (“Lake Charles Harbor”) alleging that West 

Cameron Port, Harbor and Terminal District (“West Cameron”) threatened 

to impose wharfage on the passage of vessels through the Calcasieu River 

Ship Channel on the way to, or from, Lake Charles, Louisiana, and that 

such wharfage does not bear a reasonable relationship to any services, 

facilities or benefits provided by West Cameron. Lake Charles Harbor 

alleged West Cameron violated sections 10(d)(1), 10(d)(4) and 5(a) of the 

1984 Act. 

By Order dated June 7, 2006 the ALJ granted the motion to 

dismiss filed by West Cameron, ruling that the Commission lacked subject 

matter jurisdiction because, among other things, West Cameron is not a 

marine terminal operator under the Shipping Act. Lake Charles Harbor 

appealed the dismissal to the full Commission for the purpose of 

determining whether the Commission has subject matter jurisdiction over 

the matters alleged in the Complaint. The appeal was denied and the 

proceeding was discontinued on August 2, 2007. 

50 
Premier Automotive Services, Inc. v. Robert L. Flanagan and F. Brooks 

Royster, III, [Docket No. 06-03] , 30 S.R.R. 970 (March 31, 2006) 

Premier Automotive Services, Inc. (“Premier”) filed a complaint 

against Robert L. Flanagan and F. Brooks Royster, III (collectively 

“Flanagan”) alleging that Flanagan’s marine terminal leasing practices 

violated sections 10(b)(10), 10(d)(1) and 10(d)(4) of the Shipping Act of 

1984 (“Shipping Act”), 46 U.S.C. §§ 41102, 41104 and 41106. Mr. 

Flanagan and Mr. Royster were the Maryland Secretary of Transportation 

and the Executive Director of the Maryland Port Administration (“MPA”), 

respectively, and were sued because MPA possesses sovereign immunity. 

Flanagan filed a Motion to Dismiss arguing that (1) the case is barred by 

constitutional principles of state sovereign immunity; (2) the Shipping Act 

does not authorize private complaints for injunctive relief, and (3) the 

respondents should not be held liable as individuals under provisions of 

the Shipping Act which are specifically applicable to common carriers, 

OTIs and MTOs. Premier responded to the motion arguing that the action 

is within the Ex parte Young, 209 U.S. 123 (1908), exception to state 

sovereign immunity and that the Shipping Act provides for prospective 

injunctive relief. The ALJ granted the motion to dismiss on March 31, 

2006, finding that the complaint was barred by sovereign immunity since 

Young did not apply. Premier appealed the ALJ’s decision to the 

Commission. Oral argument was heard on June 13, 2007. The case is 

currently pending before the Commission. 

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. 

51
The following is representative of matters litigated by the Office: 

Puerto Rico Ports Authority v. The Federal Maritime Commission and 

the United States of America, D.C. Circuit, Case No. 06-1407. 

This proceeding is an appeal of the Commission’s November 30, 

2006, order in Docket Nos. 02-08 (Odyssea Stevedoring of Puerto Rico, 

Inc. v. Puerto Rico Ports Authority); Docket No. 04-01 (International 

Shipping Agency, Inc. v. The Puerto Rico Ports Authority); and Docket 

No. 04-06 (San Antonio Maritime Corp. and Antilles Cement Corp. v. 

Puerto Rico Ports Authority). The Commission’s order, on a 3-2 vote, 

found that the PRPA is not an arm of the Commonwealth of Puerto Rico 

and is therefore not entitled to sovereign immunity. PRPA appealed the 

order arguing that it is entitled to sovereign immunity. The Commission 

proceedings before the ALJ have been stayed by the Court pending 

resolution of the appeal. Oral argument was held on October 26, 2007.

3. Legislative Activities

The OGC represents the Commission’s interests in all matters 

before Congress. This includes preparing testimony for Commission 

officials, responding to Congressional requests for information, 

commenting on proposed legislation, and responding to the Office of 

Management and Budget (“OMB”) requests for views on proposed bills 

and testimony. 

 During fiscal year 2007, 105 bills, proposals and Congressional 

inquiries were referred to the OGC for comment. The office prepared 

briefing materials for a confirmation hearing before the U.S. Senate 

Committee on Commerce, Science and Transportation. The OGC also 

assisted Congressional staff with the continuing efforts to revise, codify 

and enact certain maritime laws as part of Title 46, U.S. Code, Shipping, 

which was signed into law October 6, 2006. 

 In fiscal years 2008 and 2009, the OGC will continue to provide 

assistance and technical advice to Congress as needed. The Commission 

may recommend legislative amendments as necessary to ensure uniformity 

52 
with other federal initiatives, and to allow for the efficient and secure flow 

of ocean transportation. 

4. Other Significant Activity

The Port of Los Angeles and Port of Long Beach Proposed Clean 

Trucks Program, and FMC Agreement No. 201170, Los Angeles and 

Long Beach Port Infrastructure and Environmental Programs 

Cooperative Working Agreement 

 The Port of Los Angeles and the Port of Long Beach are members 

of an agreement, currently on file with the Federal Maritime Commission, 

that permits them to discuss, consult, and agree on the establishment and 

implementation of programs and strategies to improve port-related 

transportation infrastructure and to decrease port-related air pollution 

(FMC Agreement No. 201170, Los Angeles and Long Beach Port 

Infrastructure and Environmental Programs Cooperative Working 

Agreement). This agreement became effective on August 10, 2006. The 

Ports are currently in the process of developing a Clean Trucks Program as 

the first initiative under their joint Clean Air Action Plan. The Ports’ goal 

is to significantly reduce air pollution from port drayage trucks by 

replacing or retrofitting an estimated 16,000 trucks servicing the Ports 

over a five-year period. In early November 2007, each of the Ports 

adopted identical tariffs requiring a progressive ban on older and nonretrofitted drayage trucks, beginning October 1, 2008. The Ports are 

considering ways to finance and implement the Clean Trucks Program, 

including a possible cargo fee and a concessions system, which may 

require trucking companies to use only employee drivers, rather than 

independent contractors. The Federal Maritime Commission has received 

information and letters from various interest groups expressing support for 

or opposition to certain aspects of the proposed Clean Trucks Program. 

Certain groups have asserted that the proposed Clean Trucks Program may 

violate provisions of the Shipping Act, 46 U.S.C. §§ 40101-41309 (2006). 

The Commission held a closed meeting in November 2007, to review the 

proposed Clean Trucks Program and continues to monitor developments at 

the Ports. 

53
5. Foreign Shipping Restrictions and International 

Affairs

 The OGC is responsible for the administration of the Commission's 

international affairs program. The OGC 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 

that affect U.S. carriers in foreign trade and that do not exist for foreign 

carriers in the U.S. 

 In fiscal year 2007, the Commission continued to monitor 

potentially restrictive shipping practices of the Government of Japan, 

including the effects of amendments to the Port Transportation Business 

Law enacted in 2000 and 2005. The Commission continued to receive and 

evaluate semi-annual reports from its proceeding in Docket No. 96-20, 

Port Restrictions and Requirements in the United States/Japan Trade. The 

OGC also pursued informally several matters that involved potentially 

restrictive foreign practices including new legislation, new interpretations 

of existing legislation and new regulations of non-domestic carriers’ 

terminal handling charges. 

 OGC staff served as technical advisors to the U.S. delegation to the 

semi-annual US-Japan Regulatory Reform talks held in Washington, D.C. 

on March 26 and 27, 2007. 

 The Commission’s Permanent Task Force on International Affairs 

is a network of representatives from a number of Commission bureaus and 

offices. The Task Force 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. 

54 
 Another responsibility of the OGC is the identification and 

verification of controlled carriers subject to section 9 of the Shipping Act. 

Common carriers that are owned or controlled by foreign governments are 

required to adhere to certain requirements under the Act, and their rates 

are subject to Commission review. The OGC investigates and makes 

appropriate recommendations to the Commission regarding the status of 

potential controlled carriers. The OGC, in conjunction with other 

Commission components, also monitors the activities of controlled 

carriers. 

 In fiscal years 2008 and 2009, the OGC will continue to take the 

lead in accomplishing the agency's performance goals relating to 

eliminating restrictions that unjustly disadvantage U.S. interests. Through 

the Permanent Task Force on International Affairs, OGC will monitor 

foreign laws and practices to determine whether there are any unjust nonmarket barriers to trade. The OGC will recommend appropriate action to 

the Commission. 

6. Designated Agency Ethics Official

 The Ethics Official is administratively within the Office of the 

Chairman, but the position is performed as a collateral duty by an attorney 

in the OGC. 

 The Commission’s Ethics Official is responsible for administering 

public and confidential financial disclosure systems in order to prevent 

conflicts of interest from arising in the execution of the agency’s 

regulatory functions. The Ethics Official also conducts annual training 

and offers day-to-day advice and guidance to ensure compliance with the 

standards of ethical conduct that apply to Executive Branch officials. 

55
56 
D. OFFICE OF EQUAL 

EMPLOYMENT OPPORTUNITY 

 The Office of Equal Employment Opportunity (“OEEO”) follows 

federal equal employment opportunity (“EEO”) and personnel 

management laws, regulations and directives to develop, implement, and 

manage a comprehensive program of equal employment opportunity. The 

EEO program promotes equal employment opportunity, processes 

complaints of discrimination and identifies and eliminates any 

discriminatory practices and policies. 

 The Chairman of the Federal Maritime Commission (“FMC”) is 

responsible for ensuring equal opportunity in the Commission. The 

Chairman has delegated this authority to the Director of Equal 

Employment Opportunity (“DEEO”). Operational responsibility for 

compliance with EEO policies and programs lies with the Commission’s 

managers and supervisors. 

The Director of EEO works independently under the direction of 

the Chairman to provide advice to the Commission’s senior staff and 

management in improving and carrying out its policies and program of 

non-discrimination, workforce diversity and affirmative employment 

program planning. In accordance with regulations and guidance issued by 

the Equal Employment Opportunity Commission, the DEEO arranges for 

EEO counseling or alternative dispute resolution for employees who raise 

allegations of discrimination; provides for the investigation, hearing, factfinding, 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. 

Additionally, the DEEO represents the Commission on intergovernmental 

committees, directs programs of special emphasis, and coordinates the 

activities of the Selective Placement and Federal Equal Opportunity 

Recruitment Coordinators. The DEEO also supervises two collaterally 

assigned EEO counselors. 

57
The OEEO works with senior management and with the 

Commission’s Office of Human Resources (“OHR”) to: (1) promote 

equal employment opportunity; (2) monitor affirmative employment 

programs; (3) expand outreach and recruitment initiatives; (4) improve 

career development and retention of all employees without regard to race, 

color, sex, national origin, religion, disability, sexual orientation, political 

affiliation or familial status; (5) provide adequate career counseling; (6) 

facilitate early resolution of employment related problems; and (7) 

develop program plans and progress reports. 

Significant Accomplishments for fiscal year 2007

For the third year in a row, women and minorities continue to 

represent a majority of the workforce in fiscal year 2007. Significant 

accomplishments include the following: (1) provided EEO briefings to 

senior staff and new employees; (2) continued providing information to 

employees about Internet sites with diversity/EEO related information; 

(3) updated the Commission’s No FEAR Act statistics on the FMC 

website at http://www.fmc.gov/home/NoFEARAct.asp and coordinated 

the No FEAR Act refresher training for all employees; (4) provided 

counseling assistance to Commissioners, managers, supervisors, and 

employees; (5) continued providing support and assistance to managers 

and supervisors in maintaining and effectively managing a diverse 

workforce; (6) reviewed and assessed human resource activities and 

actions; (7) maintained an effective discrimination complaint process that 

resolved issues informally, expeditiously, and at the lowest possible level; 

(8) held special commemorative programs for all FMC employees for 

National Hispanic Heritage, National Disability Employment Awareness, 

National American Indian Heritage, African American History, Women’s 

History, Asian Pacific American, Gay and Lesbian Pride months, and Dr. 

Martin Luther King, Jr. Day; (9) participated in meetings of several interagency councils regarding special emphasis matters; (10) coordinated 

activities of the FMC’s Advisory Council on Women’s Issues; (11) 

participated in EEO-related training/conferences; (12) prepared all 

required affirmative employment program accomplishment reports and 

plans; and (13) managed the Commission’s Emerging Leaders Program. 

58 
 During fiscal years 2008 and 2009, the OEEO will continue all 

existing programs and initiate activities designed to increase an 

understanding of EEO concepts and principles, including monitoring 

workforce diversity, outreach, retention, and career-development 

initiatives.

59
60 
E. OFFICE OF THE 

INSPECTOR GENERAL 

The Inspector General Act of 1978 (“IG Act”), as amended, creates 

independent audit and investigative units called Offices of Inspector 

General (“OIGs”) at 61 federal agencies, including the Federal Maritime 

Commission. The mission of the OIGs, as spelled out in the IG Act, is to: 

■ Conduct and supervise independent and objective 

audits and investigations relating to agency programs 

and operations.

■ Promote economy, effectiveness, and efficiency within 

the agency.

■ Prevent and detect fraud and abuse in agency programs 

and operations.

■ Review and make recommendations regarding existing 

and proposed legislation and regulations relating to 

agency programs and operations.

■ Keep the agency head and Congress informed of 

problems in agency programs and operations.

To ensure objectivity, the IG Act empowers IGs with 

independence to determine what reviews to perform; access to all 

information for the reviews; and authority to publish findings and 

recommendations based on the reviews. 

61
During Fiscal Year 2007, the OIG issued the following audit 

reports and evaluations: 

Audit Report Number Subject of Audit

A07-01 Audit of the Federal Maritime 

Commission’s Financial Statements for 

the Fiscal Year Ending September 30, 

2006 

A07-01A Management Letter to the FY 2006 

Audited Financial Statements 

A07-02 Audit of Contracts FMC-05-00021 and 

FMC-06-00007, Procurement of 

Consulting Services 

A07-03 Penetration Test of FMC’s OutwardFacing Network 

OR07-01 Review of FMC’s Information 

Technology Plan of Actions & Milestones 

OR07-02 Data Accuracy of FMC’s FY 2006 

Performance and Accountability Report 

OR07-03 The Federal Maritime Commission’s 

Implementation of the Federal 

Information Security Management Act 

(OMB Template) 

 An OIG audit report during the period questioned approximately 

$56,000 in agency expenditures and recommended that the agency collect 

these funds from the vendor. 

In addition to these completed audits and reviews, the OIG began 

its annual financial statement audit and information security evaluation, 

performed an investigation into allegations of wrongdoing by FMC staff, 

responded to two public requests to look into various maritime-related 

62 
issues and referred five “hotline” complaints to the appropriate FMC 

program offices for disposition. 

The OIG underwent a peer review of its audit quality control 

program, receiving an “unqualified” opinion by independent auditors from 

a sister OIG, and performed an identical review of another Federal 

agency’s OIG. OIG also prepared a narrative summary of “management 

challenges” facing the FMC for inclusion in the FY 2006 PAR. 

In addition to these audit and investigative outcomes, the OIG 

revised its strategic plan for fiscal years 2008-2013, developed a 

memorandum of understanding between the Office of Inspectors General at 

the FMC and the Federal Trade Commission to implement a quality 

assurance program for its audit function and worked with FMC senior 

management to implement an internal control questionnaire to assist 

management to comply with regulations issued by the Office of 

Management and Budget (OMB) in Circular A-123, Management’s 

Responsibility for Internal Control. 

In Fiscal Year 2008, the OIG will continue to place a high priority 

on audits and reviews with the objective of improving agency programs 

and operations. The OIG will complete statutorily-required reviews to 

include separate audits of the FMC’s Fiscal Year 2007 Financial 

Statements and its management of telephone services, an evaluation of the 

agency’s information security program and privacy assurance controls, as 

required by the Federal Information Security Management Act, and 

reviews of the agency’s filing fee-setting procedures (pursuant to OMB 

Circular A-25, User Charges) and agency controls over furnishing or 

redecorating offices of presidential appointees. 

63
64 
F. OFFICE OF ADMINISTRATION 

 The Office of Administration (“OA”) provides administrative 

support to the program operations of the Commission. OA interprets 

governmental policies and programs, and administers these in a manner 

consistent with Federal guidelines, including those involving procurement, 

information technology (“IT”), financial management, and human 

resources. OA initiates recommendations, collaborating with other 

elements of the Commission as warranted, for long-range plans, new or 

revised policies and standards, and rules and regulations, with respect to 

its program activities. The Director of OA is responsible for the direct 

administration and coordination of the: 

■ Office of Financial Management

■ Office of Human Resources 

■ Office of Information Technology

■ Office of Management Services

 The Director of OA provides administrative guidance to the: 

■ Office of Operations 

■ Office of the Secretary

■ Office of the General Counsel

■ Office of Administrative Law Judges

and administrative assistance to the: 

■ Offices of the Commissioners 

■ Office of the Inspector General

■ Office of Equal Employment Opportunity 

65
 The OA Director is the FMC’s Chief Acquisition Officer (“CAO”), 

Audit Follow-up and Management (Internal) Controls Official, Senior 

Agency Official for Privacy, and Forms Control Officer. The Director 

also represents the FMC as Principal Management Official to the Small 

Agency Council. As the Chief Financial Officer, the Director provides 

program oversight for the agency’s budget and financial management 

responsibilities, and ensures agency compliance with the Financial 

Integrity Act, the Antideficiency Act, and the Debt Collection 

Improvement Act of 1996. 

 The Deputy Director of Administration is the FMC’s Chief 

Information Officer (“CIO”). The CIO oversees the Office of Information 

Technology operations and activities administered under the ClingerCohen Act of 1996, as well as other applicable laws which prescribe 

responsibility for operating the program. As the FMC’s Competition 

Advocate, the Deputy Director challenges barriers to competition, reviews 

procurement practices, and reports to the CAO as required. The Deputy 

Director also serves as Records Management Officer. 

 The Office of the Director had significant program achievements 

in fiscal year 2007. The Office guided the agency’s continuing efforts to 

enhance its IT program; during the fiscal year the agency mitigated a 

significant deficiency identified during an Inspector General review of 

agency IT operations. The agency received an “unqualified” opinion in its 

fiscal year 2007 financial statement audit. The Office again directed 

preparation of the Annual Performance Plan and the Annual Program 

Performance Report, as required by the Government Performance and 

Results Act of 1993. The Office also prepared the Federal Activities 

Inventory Reform Act report and the Performance and Accountability 

Report (which included the Management’s Discussion and Analysis and 

the Federal Managers Financial Integrity Act report). Also during the 

fiscal year, the Office directed the update of the internal Commission 

issuances that specify procedures for a variety of programs and activities, 

including the creation of a comprehensive draft policy with respect to 

training and development, and guided Commission efforts to comply with 

the Government Paperwork Elimination Act and the Federal Information 

Security Management Act of 2002 (“FISMA”). Additionally, the Office 

guided the development of the fiscal year 2009 budget request to the 

Office of Management and Budget (“OMB”) and the fiscal year 2008 

66 
President’s Budget submission, and directed all efforts involving the audit 

of the Commission’s fiscal year 2007 financial statements. Additionally, 

the Office developed, in coordination with the OIG, several documents 

designed to improve the assessment of agency internal controls. Also 

during the year, the Office provided primary support for the OMB 

clearance and records management programs, guided the further 

development of the agency’s Continuity of Operations (“COOP”) Plan, 

and coordinated the initiation of the agency’s Individual Development 

Plan program. Further, the Office guided development of the agency’s 

breach notification policy, responsive to new OMB requirements. 

 OA’s key objectives for fiscal year 2008 are to: continue to 

implement policy directions aimed at refining and enhancing agency 

administrative programs and operations; monitor the accomplishment of 

agency performance goals, particularly those related to the implementation 

of Pay.gov; initiate further IT improvements, including the replacement, 

integration or update of agency database systems, the upgrading of 

network and desktop operating systems, and the implementation of Voice 

over Internet Protocol (“VoIP”); and work with senior managers to ensure 

effective strategic succession planning. The Office also will take the lead 

in assuring that the agency-wide computer security program is effective, 

that the agency’s financial management system receives an unqualified 

opinion in annual financial audits, and that the agency complies fully with 

the government-wide identity card (“HSPD-12”) initiative. 

67
1. Office of Financial Management

 (a) General Office Responsibilities

 The Office of Financial Management (“OFM”) administers the 

Commission’s financial management program and is responsible for 

offering guidance on optimal utilization of the Commission’s fiscal 

resources. OFM is charged with interpreting government budgetary and 

financial policies and programs, and developing annual budget 

justifications for submission to the Office of Management and Budget 

(“OMB”) and to Congress. The Office also administers internal control 

systems for agency funds, travel, and cash management. 

(b) Achievements 

During fiscal year 2007, OFM: 

■ Collected and deposited in the General Fund $1,964,837 

from fines and penalty collections, publications, 

reproductions, and user fees. 

■ Coordinated and prepared budget justifications and 

estimates for the fiscal year 2008 Congressional budget 

and fiscal year 2009 OMB budget. 

■ Prepared a variety of external reports, including: the 

Annual Leave Year Report and the Report on 

Workyears and Personnel Costs for 2006 (Office of 

Personnel Management – “OPM”); the Report on 

International Travel for FY 2006 (OMB); the Report on 

First-Class Airline Accommodations for fiscal year 2006 

(General Services Administration – “GSA”); and 

Monthly Report of Full-Time/Equivalent Work-year 

Civilian Employment (OPM). 

■ Prepared monthly status reports on workyears, 

funding, travel and receivables, and monthly allocation 

68 
reports to provide management with meaningful, timely 

expense data by program. 

■ Completed a process for the individual bureaus/offices 

to forecast annual goals in accordance with the 

Commission’s strategic goals. 

■ Worked with Bureau of Public Debt (“BPD”) staff and 

auditors regarding the audits of fiscal years’ 2006 and 

2007 financial statements. 

■ Pursued all delinquent receivables and referred 

applicable debts to the Department of Treasury for 

collection. 

■ Worked with the Director of Administration to finalize 

the Commission’s fiscal year 2006 Management’s 

Discussion and Analysis and prepare the Commission’s 

fiscal year 2006 Performance and Accountability 

Report, and to initiate fiscal year 2007 versions of those 

reports. 

■ Served on the Commission’s committee to review and 

update user fees assessed to the public for Government 

goods and services. 

 (c) Future Plans

 Goals in fiscal year 2008 include: facilitating implementation of 

Pay.gov for agency-wide and industry acceptance of electronic payments; 

continuing to pursue initiatives leading to economy and efficiency in 

budget and financial operations; and improving OFM’s Cash Management 

Program, including migrating to updated platforms for the Paperless 

Check Conversion through the Federal Reserve Bank in Cleveland. 

69
2. Office of Human Resources

 (a) General Office Responsibilities

 The Office of Human Resources (“OHR”) plans and administers a 

complete human resources 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, retirement, employee development 

and training, and personnel security. 

(b) Achievements

 During fiscal year 2007, OHR: 

■ Monitored the activities of the agency’s 

payroll/personnel service provider, National Finance 

Center (“NFC”), and worked with OA staff to ensure 

security, continuity and accuracy of payroll and 

personnel services. 

■ Coordinated with senior management in administering 

the Senior Executive Service (“SES”) Candidate 

Development Program and the Emerging Leaders 

Program to address executive succession.

■ Conducted a comprehensive training program, 

including drafting agency policy on training and 

employee development, providing executive training for 

SES candidates and training for participants of the 

Emerging Leaders Program, and continuing the college 

tuition reimbursement program. 

■ Planned, implemented, and promoted new programs for 

Personal Financial Literacy Education and 

Volunteer/Community Service Awareness. 

70 
■ Conducted a comprehensive personnel and information 

security program, including initiating and adjudicating 

security investigations for new and reinvestigated 

employees, completing work necessary for reporting 

and updating data in the Clearance Verification System 

pursuant to OPM’s e-clearance initiative, and 

collaborating with the U.S. Customs and Border 

Protection to gain access to the Automated Commercial 

Environment/International Trade Data System. 

■ Coordinated with OPM in administering a number of 

agency-wide surveys. 

■ Implemented provisions of the Federal Workforce 

Flexibility Act and related legislation and continued to 

work to establish a Human Capital Plan. 

■ Promoted the Preventive Health and Awareness 

Program and OPM’s Healthier Feds initiatives, and 

hosted wellness seminars sponsored by the Employee 

Assistance and Federal Occupational Health Programs. 

■ Conducted numerous employee benefit and charitable 

contributions programs and open seasons. 

■ Administered agency compliance with the Enterprise 

Human Resources Integration project and other e-Gov 

initiatives such as e-payroll, e-clearance, and e-learning, 

and worked with other entities on pre-implementation 

issues related to eOPF (Electronic Official Personnel 

Folder). 

■ Worked with agency staff and GSA to implement 

pertinent provisions of HSPD-12. 

■ Evaluated contractor performance in the areas of 

classification/position management and personnel 

suitability adjudication. 

71
■ Coordinated implementation of a new training 

reporting system required by OPM. 

 (c) Future Plans 

 In fiscal year 2008, OHR plans to: continue to advise agency 

management and staff on all human resources matters and ensure the 

maintenance of a sound and progressive human resources program; 

implement pertinent portions of the agency’s strategic, training and related 

performance plans, particularly performance goals related to the 

management of human resources; explore and implement simplification, 

flexibility, and accountability of human resources management programs, 

including investigating automated solutions to address program 

requirements; in conjunction with administrative components and the 

GSA, evaluate the implementation of eOPFs; continue to implement 

pertinent provisions of HSPD-12; monitor the processes and database 

modernization activities of the NFC in conjunction with the governmentwide e-payroll initiative and to ensure timely and accurate payroll and 

personnel services; and evaluate the agency’s Human Capital Plan and 

associated metrics to assess progress in meeting strategic and performance 

goals and to determine necessary modifications. 

3. Office of Information Technology 

 (a) General Office Responsibilities

 The Office of Information Technology (“OIT”) provides 

management support to the program and administrative operations of the 

Commission with respect to IT, and thus is responsible for ensuring that 

the Commission’s IT program is administered in a manner consistent with 

applicable rules, regulations, and guidelines. OIT receives programmatic 

guidance from the agency’s CIO. 

 The OIT Director serves as the Commission’s IT Officer, 

Telecommunications Manager, Help Desk and Database Administration 

Manager, and oversees the IT security program. The OIT Director plans, 

coordinates, and facilitates the use of automated information systems. 

72 
(b) Achievements

 During fiscal year 2007, OIT: 

■ Implemented the automated Form FMC-18 required 

for OTI licensing purposes; redeveloped and 

implemented the Regulated Persons Index and the 

Form FMC-1 system; and redesigned the FMC’s 

Service Contract Filing System (“SERVCON”) system 

to include a user ID and password system linked to 

Forms FMC-1 and FMC-18. 

■ Implemented new secure socket layer virtual private 

network (“VPN”) to provide staff with remote access 

needed under COOP Plan, and to accommodate 

teleworking. 

■ Tested hardware and software configurations in 

advance of implementing Internet Protocol Version 6 

(“IPv6”), a government-wide initiative mandated by 

OMB for effectiveness by June 2008. 

■ Initiated and administered contracts to provide IT 

support and other services to further the Commission’s 

mission. 

■ Continued to lead the Asset Management Committee, 

the Technical Users Group, and the IT Change Control 

Process. 

■ Assumed management of FMC’s telecommunications 

services. 

■ Prepared a test plan and successfully conducted a 

COOP test. 

■ Improved IT compliance with FISMA and the 

President’s Management Agenda by reviewing and 

completing security assessments for FMC systems, and 

73
conducting computer security awareness training for all 

employees. 

■ Continued the development and enhancement of FMC 

systems to automate processes consistent with the 

E-Government Act. 

■ Continued to update the policies and procedures 

associated with the technical assistance provided to 

FMC staff and changes in the IT infrastructure. 

 (c) Future Plans

 Major OIT initiatives for fiscal year 2008 include plans 

to: maintain compliance with FISMA requirements; conduct advance 

planning to implement VoIP; update the FMC Enterprise Architecture 

Plan; upgrade the existing desktop operating system, software 

applications, and equipment; improve the VPN security infrastructure; 

support the Pay.gov and HSPD-12 initiatives; and begin development of 

an Online Agreements system. 

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 procurement of 

administrative goods and services, property management, space 

management, printing and copying management, mail and record 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 

74 
use and provision of these support services in compliance with the 

applicable Federal guidelines. 

(b) Achievements

 During fiscal year 2007, OMS: 

■ Through the Office Director, served as the agency’s 

Technical Representative for oversight of the 

Headquarters (“HQ”) building security contract, and 

served as Chairman of the tenants’ Building Security 

Committee (“BSC”) for the HQ site. 

■ Worked through the BSC and the Department of 

Homeland Security’s Federal Protective Service 

(“FPS”) in resolving outstanding concerns surrounding 

the physical security services at FMC’s HQ building. 

■ Coordinated the expansion of the agency’s security card 

access program to provide additional security for 

physical access to office areas which control files 

containing personally identifiable information. 

■ Completed the office space renovation project required 

to accommodate the activities of the Offices of 

Administration and Operations at the agency’s HQ 

facility. 

■ Coordinated with GSA to acquire temporary office 

space, motor pool vehicle, and other necessities required 

for establishing an Area Representative office in 

Houston, Texas. 

■ Arranged for the upgrade of voice telecommunications 

equipment in the Los Angeles, California, and Florida 

Area Representatives’ offices. 

■ Worked with OIT on a seamless transfer of the agency’s 

voice telecommunications program to OIT’s control. 

75
■ Implemented full-service procurement support through 

BPD’s Administrative Resources Center, which 

expanded the agency’s contracting and procurement 

program. 

■ Coordinated with BPD for award of a follow-on 

contract for ongoing IT assistance during critical 

application implementation while a new contract for 

continuing support was established. 

■ Implemented use of the Library of Congress Federal 

Library and Information Network (“FEDLINK”) 

program to acquire annual publications and on-line 

subscription services to ensure no disruption in service. 

c) Future Plans 

 In fiscal year 2008, the Office’s objectives include: continuing to 

work with GSA, FPS, and other tenant agencies at HQ facilities and field 

locations to upgrade and/or improve the buildings’ security measures and 

emergency preparedness; in conjunction with the agency’s other 

administrative offices, continuing the process for implementing HSPD-12; 

working with BPD on streamlining the FMC’s acquisition and 

procurement program for better efficiency; and continuing to provide 

advice and assistance to FMC activities regarding innovative support 

services. 

76 
G. OFFICE OF OPERATIONS

The Director of Operations, as a senior staff official, is responsible 

to the Chairman for the management and coordination of the following 

Commission bureaus, in addition to direct oversight of the Commission’s 

Area Representatives (“AR”): 

■ Bureau of Certification and Licensing 

■ Bureau of Enforcement 

■ Bureau of Trade Analysis 

The Office of Operations oversees the development and operation 

of various Commission programs and recommends new programs and 

necessary changes in staff objectives. 

The Commission maintains a presence in Los Angeles, South 

Florida, New Orleans, New York, and Seattle through ARs based in each 

of those cities, and in fiscal year 2007 placed an additional AR in 

Houston, TX, due to significant growth in container volumes transiting the 

port in that area. 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 

FMC within their jurisdictions, provide liaison between the FMC and the 

maritime industry and the shipping public, collect and analyze information 

of regulatory significance, and assess industry conditions. The Area 

Representatives support the functions of each Bureau under The Office of 

Operations. Liaison activities include: cooperation and coordination with 

other governmental agencies and departments; providing regulatory 

information and relaying FMC policy to the shipping industry and the 

public; and handling informal complaints. 

In fiscal year 2007, hundreds of informal complaints were handled 

by Area Representatives, over 50 investigations were opened and 

conducted with the support of BOE attorneys into potential violations of 

the Shipping Act. Five investigations were completed and sent to BOE for 

further action. Public service announcements were published in each 

major port area in fiscal year 2007 warning against the use of unlicensed 

OTIs. These led to numerous inquiries and reports to ARs regarding 

77
licensed and unlicensed OTI activity. In South Florida, ARs addressed the 

Dominican-American Chamber of Commerce, the Surfside Business 

Association, the Greater Miami Chamber of Commerce, and the Florida 

Customs Brokers and Freight Forwarders Association. In New York, 

Univision aired an interview with the New York AR resulting in receipt of 

over 50 complaints of unlicensed OTI activity. 

 The Office continued to support the operational bureaus through 

oversight and guidance towards the accomplishment of many 

programmatic achievements during fiscal year 2007. In particular, the 

Office worked extensively with the bureaus and other agency offices to 

review Commission rules and regulations with regard to business practices 

in the OTI sector. The Office worked with the Bureau of Certification and 

Licensing and the Bureau of Enforcement to report to the Commission 

with regard to emerging industry changes in the OTI sector. As well, Area 

Representatives made several presentations in the OTI sector to encourage 

compliance with licensing and other requirements. 

 The Office continues to lead the Bureau of Enforcement and the 

Bureau of Certification and Licensing in review and coordination of 

compliance and enforcement policy. The Office worked with staff 

members from all bureaus to make technological advances, including 

work on the automated form FMC-18. 

The Office’s key objectives for fiscal year 2008 are to continue to 

pursue refinement, enhancement and integration of agency programs and 

operations in line with the Commission’s policy directions, as well as 

monitor the development and accomplishment of agency strategic and 

performance goals. In particular, the Office will expand the agency’s 

outreach effort and raise public awareness of agency regulations and 

services. The Office also will review agency policies and regulations to 

ensure alignment between the FMC and the industry, and to automate 

certain processes. 

78 
H. BUREAU OF

 CERTIFICATION AND LICENSING

 

1. In General

 The Bureau of Certification and Licensing has responsibility for 

the Commission’s OTI licensing program and passenger vessel 

certification program. 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. 

■ 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 and provides 

guidance with respect to licensing and bonding. 

 The Bureau is organized into two offices: the Office of 

Transportation Intermediaries and the Office of Passenger Vessels and 

Information Processing. The former reviews and approves applications 

for OTI licenses, and maintains and updates records about licensees. The 

latter reviews applications for certificates of financial responsibility with 

respect to passenger vessels, manages all activities with respect to 

evidence of financial responsibility for OTIs and passenger vessel 

79
owner/operators, and develops and maintains all Bureau databases and 

records of OTI applicants and licensees. 

2. Licensing of Ocean Transportation Intermediaries

 OTIs are transportation middlemen for oceanborne cargo moving 

in the U.S.-foreign trades. There are two types: NVOCCs and ocean 

freight forwarders. Both NVOCCs and ocean freight forwarders must be 

licensed by the Commission if they are located in the U.S. NVOCCs 

doing business in the U.S. foreign trades but located outside the U.S. 

(“foreign NVOCCs”) may choose to become licensed, but are not required 

to do so. Whether licensed or not, foreign NVOCCs must establish 

financial responsibility. All NVOCCs must publish electronic tariffs. 

 To become licensed by the Commission, 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 

instrument. Licensed ocean freight forwarders must establish financial 

responsibility in the amount of $50,000, and licensed NVOCCs, $75,000. 

An additional $10,000 of coverage is required for each unincorporated 

U.S. branch office of a licensee. Furthermore, unlicensed foreign 

NVOCCs must maintain $150,000 in coverage. The financial instrument 

must be available to pay claims against the OTI arising from its 

transportation-related activities, any order of reparation assessed under the 

Shipping Act, and any judgments for damages against an OTI arising from 

its transportation-related activities under the Shipping Act. 

 During fiscal year 2007, the Commission received 484 new OTI 

applications and 267 amended applications, issued 506 OTI licenses, 

revoked 237 licenses, and reissued approximately 35 licenses. At the end 

of the fiscal year, 1,146 ocean freight forwarders, 1,662 U.S. NVOCCs, 

1,222 joint NVOCC/ocean freight forwarders, and 42 foreign NVOCCs 

held active OTI licenses. An additional 978 foreign NVOCCs maintained 

proof of financial responsibility on file with the Commission, but chose 

not to be licensed. U.S. NVOCCs may file riders to their existing 

NVOCC bonds to meet financial responsibility requirements imposed by 

the Chinese government. The Commission received 86 riders providing 

80 
optional proof of financial responsibility for NVOCCs serving in the 

U.S./China trade. 

During fiscal year 2007, the Bureau made significant progress in the 

development of an automated Form FMC-18, Application for an Ocean 

Transportation Intermediary License. The Bureau completed testing of the 

automated FMC-18 filing system, published a rulemaking to permit filing 

on a voluntary basis, and the new optional electronic method for filing 

Form FMC-18 became available. To encourage the use of the online 

electronic filing system, the Commission is assessing lesser filing fees of 

$250 for new applicants and $125 for existing licensees wishing to update 

their records or submit changes requiring Commission approval. 

Applicants who continue to submit the Form FMC-18 in paper format will 

be charged $825 and $525 for new and amended applications respectively. 

Electronic submission will facilitate completeness of the application and 

will contribute to a more user-friendly application process. 

3. Passenger Vessel Certification

 The Commission administers 46 U.S.C. §§ 44102-44103, 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 

200 vessels and 48 operators, which have evidence of financial 

responsibility coverage in excess of $354 million for nonperformance and 

over $690 million for casualty. The certificates issued pursuant to this 

program are necessary for U.S. Customs and Border Protection’s 

clearance of thousands of passenger vessel sailings annually. During 

fiscal year 2007, the Commission received applications for 73 certificates 

(casualty and performance), while 25 casualty and 35 performance 

certificates were approved and issued. 

 The cruise industry continues to be the fastest growing category in 

the leisure travel market. The volume of passengers reached an all-time 

high of 12.6 million passengers during 2007, which is an increase of 0.5 

million passengers exceeding 2006 bookings. New cruise lines have 

entered the business and existing cruise lines continue to build and 

purchase additional vessels to serve an increasing demand. The industry 

81
continues to develop new destinations, new ship designs, and new and 

diverse onboard amenities, facilities, and services. In fiscal year 2007, 12 

new vessels were added to the industry with an additional 29 new ships 

contracted or planned to be added to the North American fleet by 2010. 

 In conjunction with CADRS, the Bureau offers information and 

guidance to the cruising public throughout the year on passenger rights 

and obligations regarding monies paid to cruise lines that fail to perform 

voyages. Over the past few years, a number of cruise operators filed for 

bankruptcy or discontinued operations. When cruise lines become 

bankrupt, the Commission works closely with the cruise line and the 

financial responsibility provider to facilitate the refund process. The 

public is kept informed through press releases posted on the Commission’s 

website and advice given to passengers who contact the staff. During 

fiscal year 2007, no cruise operator under the Commission’s PVO 

program ceased operation or left the trade. However, staff continued its 

efforts to assist passenger vessel operators and financial responsibility 

providers to resolve passenger claims for several cancelled cruises. 

 One component of the Bureau’s PVO monitoring program is to 

perform on-site reviews to evaluate PVOs’ financial responsibility with 

respect to oversight of cruise lines participating in the Commission’s PVO 

program. During fiscal year 2007, staff issued two on-site review reports. 

The first on-site review was conducted of a cruise line which established 

its financial responsibility with an escrow account and the second one 

performed at the site of a PVO which established its financial 

responsibility with a bond. Also, the Bureau assessed the effectiveness of 

the PVO monitoring procedures previously implemented to ensure 

compliance with FMC rules and regulations, particularly with respect to 

unearned passenger revenue (“UPR”) calculation and submission of 

reports. 

4. Automated Database Systems

 During fiscal year 2007, BCL completed its modernization of the 

Regulated Persons Index (“RPI”). The RPI contains contact information of 

regulated entities as well as OTI licensing and bonding information. A 

primary function of the Bureau is to maintain up-to-date records of 

82 
licensed OTIs. The Bureau posts on the Commission’s website a list of 

OTIs which are licensed, bonded, and have provided their tariff location, if 

required, so that carriers and others can ascertain whether an OTI has met 

FMC requirements. The OTI list also indicates whether an NVOCC has 

filed an optional rider for additional proof of additional NVOCC financial 

responsibility. Furthermore, the Bureau successfully implemented an 

electronically filed Form FMC-18 and systems integration among 

Commission databases, and has taken the lead to ensure accomplishment 

of the agency’s performance goals related to improving the program for 

updating OTI data. 

5. Future Plans 

In fiscal year 2008, the Bureau will: continue its efforts to 

improve the electronic FMC-18 system to permit fully electronic 

processing of an OTI application and licensing; develop the functionality 

for electronic payments and E-signature capability; and implement a plan 

to support the electronic filing of OTI bonds. In addition, it will seek to 

improve compliance by VOCCs and OTIs with the Shipping Act and to 

reduce the number of transportation users currently impacted by actions of 

unlawful operators by expanding awareness of its education, training, and 

other outreach efforts. The Bureau will continue its efforts to accomplish 

the Commission’s goal related to assuring that the PVO program meets the 

contemporary needs of the cruising public by developing a plan to 

automate the Form FMC-131, Application for Certificate of Financial 

Responsibility, and conduct corresponding requirements analysis to 

facilitate the filing of PVO applications. Finally, it will continue work on 

a rulemaking with respect to the Commission’s statutory obligation to the 

passenger vessel operator financial responsibility program derived from 46 

U.S.C. 44102 and 46 U.S.C. 44103. 

83
84 
I. BUREAU OF ENFORCEMENT

The Bureau of Enforcement is the primary prosecutorial arm of the 

Commission. Attorneys of the Bureau serve as trial attorneys in formal 

proceedings instituted under section 11 of the Shipping Act, and in 

investigations instituted under the FSPA. Bureau attorneys serve as legal 

advisors to the Office of Operations and other Commission bureaus, and 

also may be designated investigative officers in nonadjudicatory factfinding proceedings. The Bureau monitors all other formal proceedings, 

including relevant court proceedings, in order to identify major regulatory 

issues and advise the Director of Operations and the other bureaus. The 

Bureau also participates in the development of Commission rules and 

regulations and serves on inter-bureau task forces and special committees. 

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, and most often as the result of 

information provided by the industry and other government entities, the 

Bureau monitors and investigates 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 and 

NVOCC service arrangement (“NSA”) reviews to determine compliance 

with applicable statutes and regulations; (2) reviews and audits of ocean 

common carrier, NVOCC and ocean freight forwarder operations, 

including compliance with licensing, tariff, and bonding requirements; 

(3) audits of passenger vessel operators to ensure the financial protection 

of cruise passengers; (4) monitoring of agreements among ocean carriers 

and MTOs; and (5) various studies and analyses to support Commission 

programs. Investigations involve alleged violations of the full range of 

statutes and regulations administered by the Commission, 

including: illegal or unfiled agreements; abuses of antitrust immunity; 

unlicensed OTI activity, including servicing of noncompliant OTIs by 

VOCCs and licensed NVOCCs; illegal rebating; misdescriptions or 

misdeclarations of cargo; untariffed cargo carriage; unbonded OTI and 

passenger vessel operations; and various types of consumer abuses, 

85
including failure of carriers or intermediaries to carry out transportation 

obligations, resulting in cargo delays or financial losses for shippers. The 

Bureau adheres to the agency’s objectives of obtaining statutory 

compliance and ensuring equitable trading conditions. 

 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. Other Bureau 

investigations may be resolved through compliance measures. 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 

Commission units, in special enforcement initiatives, fact-finding 

investigations and rulemaking efforts. 

 During fiscal year 2007, the Bureau of Enforcement investigated 

and prosecuted possible illegal practices in many trade lanes, including the 

transpacific, North Atlantic, North and West African, Central and South 

American and Caribbean trades. These market-distorting activities 

included various forms of secret rebates and absorptions, misdescription of 

commodities and misdeclaration of measurements, illegal equipment 

substitution, and unlawful use of service contracts, as well as carriage of 

cargo by and for untariffed and unbonded NVOCCs. Most of these 

investigations were resolved informally, some with compromise 

settlements and civil penalties. 

 In addition, several matters arose with respect to activities pursuant 

to filed and unfiled agreements between and among ocean common 

carriers. A major enforcement action was also continued into the 

operations of unlicensed and unbonded NVOCCs specializing in the 

carriage of used household goods, and was expanded to include licensed 

OTIs providing service to the unlicensed. 

 Interaction between the Bureau, the Commission’s Area 

Representatives, and the CBP with respect to the exchange of investigative 

information continues to be beneficial to all parties. Cooperation with 

CBP included staff interactions and joint field operations to investigate 

entities suspected of violating both agencies’ statutes or regulations. Such 

86 
cooperation also has included local police and other government entities, 

including the Federal Bureau of Investigation, when necessary. 

 In fiscal year 2007, the compliance audit program continued. This 

program, conducted from headquarters primarily by mail, reviews the 

operations of licensed OTIs to assist them in complying with the statutory 

requirements and the Commission’s rules and regulations. The audit 

program also includes review of entities holding themselves out as 

VOCCs with no indication of vessel operations. At the beginning of fiscal 

year 2007, 2 audits were pending. During the fiscal year, 106 audits were 

commenced, 102 audits were completed, and 6 were pending in the 

Bureau on September 30, 2007. 

 At the beginning of fiscal year 2007, 34 enforcement cases were 

pending final resolution by the Bureau, the Bureau was party to 5 formal 

proceedings, and there were 67 matters pending which the Bureau was 

monitoring or for which it was providing legal advice. During the fiscal 

year, 16 new enforcement actions were commenced; 32 were 

compromised and settled, administratively closed, or referred for formal 

proceedings; and 18 enforcement cases were pending resolution at fiscal 

year’s end. Also, 4 formal proceedings were initiated; 2 formal 

proceedings were completed, and 7 were pending at the end of the fiscal 

year. Additionally, 72 matters involving monitoring or legal advice were 

received during the fiscal year, 61 such matters were completed, and 78 

were pending in the Bureau on September 30, 2007.

 In fiscal year 2008, the Bureau will continue to investigate marketdistorting, fraudulent and anticompetitive practices not in compliance with 

the statutes and regulations administered by the Commission, including 

the operations of licensed and unlicensed OTIs and possible noncompliance by the parties with the regulatory requirements for service 

contracts and NSAs. 

87
88 
J. BUREAU OF TRADE 

ANALYSIS

1. In General

 The primary function of the Bureau is the oversight of concerted 

activity by ocean common carriers and marine terminal operators under 

the standards of the Shipping Act. Further, the Bureau administers the 

Commission’s agreements, service contract, and NSA programs, and 

monitors the accessibility and accuracy of all published tariffs. 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. 

foreign trade, and to advise the Commission and its 

staff on current trade conditions, trends, and regulatory 

concerns affecting oceanborne 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. 

■ Processing and analyzing ocean common carrier and 

MTO agreements.

■ Reviewing and processing service contracts, NSAs, and 

amendments filed by ocean common carriers, 

conferences of such carriers, and NVOCCs, including 

89
service contract and NSA statements of essential terms 

published by such entities. 

■ Reviewing tariff publications in automated systems of 

carriers and conferences and ensuring that tariffs under 

OSRA are accessible to the public and accurate.

2. Agreement Filings and Review

 Under sections 4 and 5 of the Shipping 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 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 MTOs and 

one or more VOCC also are required to be filed with the Commission. 

Generally, an agreement becomes effective 45 days after filing, unless the 

Commission has requested additional information. These agreements are 

reviewed pursuant to the standard set forth in section 6(g) of the Shipping 

Act. Effective agreements are exempt from the antitrust laws. 

 In fiscal year 2007, the Bureau received 191 agreement filings, a 

decrease of 93, or 33 percent from the previous year. The Bureau analyzed 

and processed 190 agreement filings during the year. Statistics on 

agreement filings for fiscal year 2007 are contained in Appendix C. 

(a) Ocean Common Carrier Agreements

 Two broad categories of ocean common carrier agreements are 

filed with the Commission: (1) pricing agreements, where the main focus 

is on rates, and (2) non-pricing agreements, where the focus can range 

from the sharing of vessel space to the management of an internet portal. 

Descriptions follow of the two categories of agreements. 

90 
(1) Pricing Agreements 

Conference agreements provide for the collective discussion, 

agreement, and establishment of ocean freight rates and practices by 

groups of ocean common carriers. Conferences publish a common rate 

tariff in which all the member lines participate. There are currently eight 

conference agreements on file with the Commission. No new conference 

agreements have been filed with the Commission since 2000. During 

fiscal year 2007, the Bureau received only one modification to an existing 

conference agreement, a non-substantive change in address. While no 

existing conference agreement was terminated in fiscal year 2007, we 

expect that the significance of conference agreements will continue to 

decline in coming years, especially given the upcoming elimination of 

immunity for pricing agreements in the European trades. 

 Rate discussion agreements (“RDAs”) also focus on rate matters, 

but unlike conferences, any consensus reached under RDAs is non-binding 

on the parties. RDAs do not have common rate tariffs; each party 

publishes its own tariff. These agreements have become the primary 

pricing forum in most U.S. trade lanes. During fiscal year 2007, there 

were no new RDAs filed. Forty-nine modifications to existing RDAs 

were filed and processed, the vast majority being adding or deleting 

members and name changes. 

 

 One rate discussion agreement was terminated during the fiscal 

year; the BBC Chartering and Logistics – Beluga Chartering Cooperative 

Working Agreement. 

(2) Non-pricing Agreements 

 Non-rate discussion agreements (“NRDAs”) provide ocean 

common carriers with a forum for discussing matters of mutual interest 

other than rates. During the fiscal year, the Bureau received and processed 

11 modifications to existing NRDAs. No new NRDA was filed last year. 

 Vessel-sharing agreements (“VSAs”) make up the largest type of 

agreements on file with the Commission. There are currently 159 VSAs 

on file with the Commission. Most VSAs authorize some level of service 

cooperation with the goal of reducing individual operating costs. VSAs 

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range from alliance agreements, which involve considerable operational 

cooperation, to slot charter agreements, which require only minimal 

cooperation. During fiscal year 2007, the Bureau received 37 new VSAs, 

representing 90 percent of all new carrier agreements filed during the year, 

and 51 modifications to existing VSAs. This continues a trend we have 

seen recently, with VSAs increasing from 61 percent of all filed carrier 

agreements to 69 percent over the past five years. Twenty-seven VSAs 

were either terminated or expired by their own terms last year. 

 Under joint service agreements (“JSAs”), two or more carriers 

operate a joint venture under a single name in a specified trading area. 

The JSA issues its own bills of lading, sets its own rates, and acts as an 

individual ocean common carrier. One new JSA, the Evergreen Line Joint 

Service Agreement, and two modifications to that same agreement were 

received and processed during the fiscal year. 

 Cooperative working agreements (“CWA”) are non-pricing 

agreements that tend to deal with unique operational considerations 

relating to acquisitions, joint service contracting, sharing of administrative 

services, or internet portal management. Other agreements filed with the 

Commission in small numbers include agency, sailing, transshipment, and 

equipment interchange (including chassis pooling) agreements. During 

fiscal year 2007, the Bureau received and processed one new CWA and 

one new chassis pool agreement. Nineteen modifications to existing 

CWAs or other agreements were also filed last year. 

(b) Marine Terminal Operator 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 and consignees. The Bureau is responsible 

for reviewing and processing agreements among MTOs. 

 During fiscal year 2007, the Bureau received ten MTO agreement 

filings, including four terminations/withdrawals. The one new lease that 

was filed was found not subject to the Commission’s jurisdiction and 

returned. A port authority decided to take advantage of the filing 

exemption for leases and withdrew the two agreements it had on file. 

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 A notable filing last year was an amendment to the West Coast 

MTO Agreement that added authority for parties to discuss matters related 

to air quality in a Southern California port area. We expect that 

environmental issues will become a significant focus of MTO agreements 

throughout the country in the coming years as air quality in and around 

port areas becomes a more pressing concern to the surrounding 

communities. 

3. Monitoring and Economic Analysis

 The systematic monitoring of common carrier activities and 

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

Commission’s responsibilities under the Shipping Act. The activities of 

certain agreements among marine terminal operators are monitored in a 

similar fashion. Such monitoring helps ensure that carriers and marine 

terminal operators comply with the statutory standards of the Shipping Act 

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

Bureau administers a variety of monitoring programs and other research 

activities designed to keep it informed of current trade conditions, 

contemporary issues adversely affecting the industry, emerging 

commercial trends, and carrier pricing and service activities. 

 The importance of the Commission’s monitoring activities is a 

direct consequence of the immunity for filed agreements from prosecution 

under the antitrust laws provided for by the Shipping Act. The 

Commission’s monitoring program examines carrier competition, 

including market share, concentration, barriers to market entry, 

coordination between carriers or groups of carriers, sources of services, as 

well as pricing trends, service offerings, vessel capacity utilization, 

capacity management programs, service contracting activity, and shipper 

complaints. 

 In addition to the Bureau’s monitoring and analysis projects arising 

in connection with the Los Angeles–Long Beach Infrastructure and 

Environmental Programs Cooperative Working Agreement and an 

evaluation of the competitive impact of an amendment to the Transpacific 

Stabilization Agreement (“TSA”) as discussed in detail earlier, major 

projects begun or completed by the Bureau in fiscal year 2007 included: 

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(1) an economic review of the PierPASS program under the West Coast 

MTO Agreement focusing on the impact of the program’s pricing 

mechanisms, cost allocation methods, and revenue redistribution system 

on the various stakeholders; (2) a report, in response to an informal 

complaint, on the formation and operation of cooperative chassis pools at 

U.S. rail and marine terminals implemented by the Ocean Carrier 

Equipment Management Association (OCEMA) and its related 

agreements; (3) an economic analysis of the amendment to include New 

Zealand in the geographic scope of the Australia/United States Discussion 

Agreement; (4) various other economic analyses and reports of filed 

agreements and agreement modifications; (5) an analysis of service 

contract data from random samples of SERVCON [the FMC’s electronic 

management system of service contract filings] evaluating the application 

of charges, terms, and other practices of carriers with agreement rate 

authority; (6) statistical time series forecasts of the growth in container 

volume in 48 separate U.S. shipping trades; (7) a report on the comments 

and statements of interested parties on the Shipping Act presented before 

the Antitrust Modernization Commission (AMC), along with a review of 

the AMC’s final report and an analysis of the relevant issues raised; (8) 

ongoing staff participation in the development of the Automated 

Commercial Environment/International Trade Data System (ACE/ITDS); 

(9) the development of a system to facilitate the electronic filing of 

agreements and related reports that agreement parties are required to file; 

(10) a series of interviews with industry stakeholders focusing on the 

future outlook of the industry; (11) responses to requests, inquiries, and 

informal complaints on carrier agreements and related matters; and (12) 

meetings with industry representatives on agreement and trade matters. 

 The Bureau also 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 and FSPA. 

They also contribute to speeches and provide briefings for senior agency 

officials. 

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4. Tariffs 

 The Shipping Act requires common carriers and conferences to 

publish their tariffs electronically. These electronic tariffs contain rates, 

charges, rules, and practices of common carriers operating in the U.S. 

foreign commerce. The Bureau monitors the public accessibility of these 

private tariff systems and reviews published tariff material for compliance 

with the requirements of the Shipping Act. The Bureau also determines 

whether to grant applications for special permission to deviate from tariff 

publishing rules and regulations. During fiscal year 2007, the Bureau 

received and processed three special permission applications. 

 The Bureau also collaborates with other Commission bureaus and 

offices to verify that NVOCCs comply with the Commission’s licensing, 

bonding and tariff publication requirements. Further, the Bureau is 

directly involved in processing the electronic Form FMC-1, Tariff 

Registration Form, required to be filed with the Commission by common 

carriers, conferences, and MTOs. The data on this form identifies the 

location of common carrier tariffs, including common carrier and 

conference service contract essential terms publications or any MTO 

schedules. At the end of fiscal year 2007, a total of 4,372 tariff location 

addresses were posted on the Commission’s website. Of that number, 

3,875 tariff addresses were for NVOCCs. 

5. Service Contracts 

 Service contracts are an alternative to transportation of cargo under 

tariff rates. Service contracting enables the contracting parties to tailor 

transportation services to their commercial and operational needs and to 

keep many terms of these arrangements confidential. 

 During fiscal, 2007, the Commission received 44,608 new service 

contracts, compared to 46,682 in fiscal year 2006, and 262,076 

amendments, compared to 252,566 in fiscal year. 2006. The number of 

new service contract filings decreased nearly four percent from fiscal year

2006, and amendment filings increased nearly three percent over fiscal 

year 2006. Over the last two fiscal years the number of original filings has 

decreased, while the filings of amendments to those original service 

contracts have increased. Original service contract or NSA filings that 

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contain errors due to clerical errors can be corrected within two business 

days by filing a “corrected transmission” copy into SERVCON. During 

the fiscal year, 2,053 records involving corrected transmission copies were 

filed into SERVCON. 

6. NVOCC Service Arrangements 

 Commission rules allow NVOCCs to offer transportation services 

pursuant to individually negotiated, confidential service arrangements 

rather than under a published tariff. The Commission’s rules 

implementing NSAs, 46 CFR Part 531, NVOCC Service Arrangements, 

became effective on January 19, 2005. 

 At the end of fiscal year 2007, there were 533 NVOCCs registered 

with the Commission to file NSAs, of which 518 designated a tariff 

publishing agent to file NSAs on their behalf and 15 named a person or 

persons within their company to file. During fiscal year 2007, 

approximately 741 NSAs and 886 amendments were filed by 65 

NVOCCs. Since January 2005, there have been 1,421 NSAs and 1,389 

amendments filed by 96 NVOCCs. 

7. Controlled Carriers

 A controlled carrier is an ocean common carrier that is, or whose 

operating assets are, owned or controlled directly or indirectly by a 

government. The Shipping 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. 

 The Commission’s staff monitors U.S. and foreign trade press and 

other data to identify controlled carriers and any unjust or unreasonable 

controlled carrier activity that might require Commission action. There 

are currently eight controlled carriers operating in the U.S. trades. 

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8. Marine Terminal Activities

 Pursuant to OSRA, an MTO may make available to the public, 

subject to section 10(d) of the Shipping 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 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. A total of 258 MTOs have 

filed Form FMC-1. At the close of fiscal year 2007, 153 of these MTOs 

had published their terminal schedules. The internet addresses for these 

MTO terminal schedules are posted on the Commission’s website. 

9. Automated Database Systems

 The Bureau currently maintains and uses the following automated 

databases and filing systems: (1) Form FMC-1 System; (2) SERVCON, 

the system for filing service contracts (as well as internal database systems 

related to SERVCON registration forms); and (3) the Agreement Profile 

Database. 

 At the end of fiscal year 2007, the Form FMC-1 System reflected 

the tariff location addresses of 336 VOCCs, 3,875 NVOCCs, eight 

conferences, and 153 MTOs. The FMC-1 System also allows the 

Commission to quickly track the status of any Form FMC-1 submitted. 

The FMC-1 System was upgraded in fiscal year 2007 to include major 

security features. 

 SERVCON contains service contract and NSA data, most of which 

is only available to the Commission’s staff due to confidentiality 

requirements. Carriers must register to file service contracts by submitting 

FMC Form FMC-83 and NVOCCs must submit Form FMC-78 to file 

NSAs. During fiscal year 2008, the Bureau intends to implement an 

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electronic registration procedure for carriers/OTIs filing service contracts 

and NSAs. 

 The Agreement Profile Database contains information about the 

status of carrier and terminal agreements, as well as related monitoring 

reports. 

 These databases and filing systems provide support for many of the 

Commission’s programs and the Bureau’s monitoring efforts. Through 

specially tailored reports, certain database information is available to the 

general public. 

 The Bureau also maintains an electronic library of effective carrier 

and MTO agreements. This library is accessible through the Commission’s 

website. 

10. Future Plans

 During fiscal year 2008, the Bureau will review and evaluate 

various MTO agreements, including proposals developed under the Los 

Angeles and Long Beach Port Infrastructure and Environmental 

Programs Cooperative Working Agreement; research competition policy 

and related issues in light of the proposed regulatory changes in the 

European Union, China and India; and assist in the evaluation of any 

industry petitions that may be filed with the Commission. The Bureau 

will also pursue enhanced automation of several of its data collection 

processes. 

 The Bureau will monitor the activities of common carrier and 

MTO agreements; assist other bureaus by providing relevant information 

and analysis; work to automate the filing, publishing and tracking of 

certain data; participate in agency planning activities; and implement a 

variety of industry research projects on issues likely to affect liner 

shipping, marine terminal operations, and inter-modal transportation 

affecting U.S. foreign trade. 

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APPENDICES