Federal Maritime 

Commission

53rd Annual 

Report

for

Fiscal Year 

2014

Table of Contents

Letter of Transmittal 1

Members of the Commission 2

FMC Mission, Strategic Goals and Functions 3

Strategic Goal 1 3

Strategic Goal 2 4

Statutory Authority 4

Year in Review 5

Efficiency and Competition 7

Strategic Goal 1 7

Agreement Filings and Review 7

Types of Carrier Agreements 8

Competitive Impact and Monitoring 10

Tariffs, Service Contracts, NSAs, & MTO Schedules 11

Port Congestion 12

International Cooperation 13

Protecting the Public 15

Strategic Goal 2 15

Licensing 15

Proposed Revisions to Licensing Rules 17

Leveraging Technology 17

Passenger Vessel Program 18

Consumer Affairs and Education 19

Enforcement, Audits and Penalties 21

Inter-Agency Cooperation 22

Developments in Major U.S. Foreign Trades 25

Worldwide 25

Asia 26

Australia and Oceania 26

Indian Subcontinent and Middle East 27

North Europe 27

Mediterranean 28
Africa 29

Latin America 29

Top Twenty U.S. Liner Cargo Trading Partners 31

Top Twenty U.S. Liner Cargo Trading Partners (CY 2013) 32

Foreign Shipping Practices Act 33

Controlled Carriers 34

Formal Investigations, Private Complaints and Litigation 35

Formal Investigations 35

Private Complaints 37

Litigation 40

Procedural Rule Updates 41

APPENDICES 43

A - FMC Organization Chart 43

B - FMC Senior Officials 44

C - Statement of Appropriations, Obligations and Receipts 45

D - Civil Penalties Collected 46
53rd Annual Report 1

Letter of Transmittal

FEDERAL MARITIME COMMISSION

800 North Capitol Street, N.W.

Washington, DC 20573-0001

March 31, 2015

To the United States Senate and House of Representatives:

On behalf of the Commission, and pursuant to section 103(e) of Reorganization Plan No. 7 of 

1961, and section 208 of the Merchant Marine Act, 1936, 46 U.S.C § 306(a), I am pleased to submit 

the 53rd Annual Report covering activities of the Federal Maritime Commission for fiscal year 2014. 

The Commission is committed to maintaining an efficient and competitive international transportation system and enhancing trade efficiency. The FMC Annual Report highlights the Commission’s 

role in oversight of concerted activities by ocean common carriers and marine terminal operators 

in light of continued expansion in the world economy and a substantial shift in the way the shipping industry is organized. The Annual Report also details the ongoing entrance of new ocean 

transportation intermediaries into the business through licensing, the continuing volume of service 

contract and amendment filings, and the results of the FMC’s enforcement actions in which a total 

of $3,053,000 in civil penalties were collected. The Commission has made a goal of more effective 

use of IT systems through ongoing upgrades and this year progress was made toward what will 

become the sole repository for critical data collections adding great efficiency.

The Commission continued its focus to assist in supporting U.S. exports, the economic recovery, 

and job growth. Congestion at U.S. ports is a recurring problem that threatens that growth and 

will be a priority for the Commission in the future. The Commission provides regulatory relief 

where possible and commits resources to protect the public against potentially unlawful, unfair or 

deceptive ocean transportation practices related to the movement of goods and personal property 

in U.S. foreign oceanborne trades. 

These are just a few of the accomplishments which can be found in the Annual Report. The 

Commission stands ready to provide any further information you may require.

Sincerely,

Mario Cordero

Chairman
2 53rd Annual Report

Members of the Commission

 William P. Doyle

Commissioner

Appointed 2013

Term Expired 2013

Mario Cordero

Chairman

Appointed 2011

Term Expired 2014

 Michael A. Khouri

Commissioner

Appointed 2009

Term Expires 2016

 Richard A. Lidinsky, Jr.

Commissioner

Appointed 2009

Term Expired 2012

 Rebecca F. Dye

Commissioner

Appointed 2002

Term Expires 2015
53rd Annual Report 3

FMC Mission, Strategic 

Goals and Functions

The Federal Maritime Commission (FMC 

or Commission) is an independent agency 

responsible for the regulation of oceanborne 

transportation in the foreign commerce of the 

United States for the benefit of U.S. exporters, 

importers, and the U.S. consumer. 

The FMC’s Mission is:

• To foster a fair, efficient and reliable 

international ocean transportation 

system and to protect the public from 

unfair and deceptive practices.

The FMC’s Vision is:

• Fairness and Efficiency in the U.S. Maritime Commerce.

Strategic Goal 1 

Maintain an efficient and competitive 

international ocean transportation 

system. 

The FMC ensures competitive and efficient 

ocean transportation services for the shipping 

public by:

• Reviewing and monitoring agreements 

among ocean common carriers and 

marine terminal operators (MTOs) serving the U.S. foreign oceanborne trades to 

ensure that they do not cause substantial increases in transportation costs or 

decreases in transportation services

• Maintaining and reviewing confidentially filed service contracts and 

Non-Vessel-Operating Common Carrier (NVOCC) Service Arrangements 

to guard against detrimental effects to 

shipping

• Providing a forum for exporters, importers, and other members of the shipping 

public to obtain relief from ocean shipping practices or disputes that impede 

the flow of commerce

• Ensuring common carriers’ tariff rates 

and charges are published in private, 

automated tariff systems and electronically available

• Monitoring rates, charges, and rules of 

government-owned or controlled carriers 

to ensure they are just and reasonable

• Taking action to address unfavorable 

conditions caused by foreign government 

or business practices in U.S. foreign shipping trades

 FMC Mission

To foster a fair, efficient and 

reliable international ocean 

transportation system and to 

protect the public from unfair 

and deceptive practices.
4 53rd Annual Report

Strategic Goal 2 

Protect the shipping public from 

unlawful, unfair and deceptive ocean 

transportation practices and resolve 

shipping disputes.

The FMC protects the public from financial 

harm, and contributes to the integrity and security of the U.S. supply chain and transportation 

system by:

• Helping resolve disputes involving shipment of cargo, personal or household 

goods, or disputes between cruise vessel 

operators and passengers

• Investigating and adjudicating complaints regarding rates, charges, 

classifications, and practices of common 

carriers, MTOs, and ocean transportation intermediaries (OTIs), that violate 

the Shipping Act

• Licensing shipping companies with 

appropriate character and adequate 

financial responsibility

• Identifying and holding regulated entities accountable for mislabeling cargo 

shipped to or from the United States

• Ensuring that cruise lines maintain 

financial responsibility to pay claims for 

personal injury or death, and to reimburse passengers when their cruise fails 

to sail

Statutory Authority 

The principal statutes administered by the 

Commission, now codified in Title 46 of the U.S. 

Code at sections 40101 through 44106, are:

• The Shipping Act of 1984, as amended 

by the Ocean Shipping Reform Act of 

1998 (Shipping Act)

• The Foreign Shipping Practices Act of 

1988 (FSPA)

• Section 19 of the Merchant Marine Act, 

1920 (1920 Act)

• Sections 2 and 3 of Pub. L. No. 89-777, 

80 Stat.1350
53rd Annual Report 5

Year in Review

In fiscal year 2014, world economic output 

continued to expand, producing a 5 percent 

growth in worldwide container trade. U.S. container trade reached a record volume of 30.9 

million loaded TEUs, with import growth again 

outpacing export growth. 

As the expert regulatory agency for liner shipping in U.S. trades, the Commission facilitates 

growth in ocean commerce by helping to ensure 

fair, efficient and reliable maritime transportation services while minimizing regulatory burden. 

Trade growth gives businesses engaged in international ocean commerce the confidence to hire 

more American workers. The Commission supports these efforts by actively seeking ways to 

facilitate the competitiveness of our Nation’s 

ports and its liner shipping system, and by providing maritime businesses regulatory relief. 

As a result of increasing container cargo volumes, greater operational collaboration among 

shipping lines, the use of much larger and more 

fuel-efficient vessels, and other contributing factors, container terminals at our nation’s ports 

began to present significant congestion problems 

late in FY 2014. 

At the end of the fiscal year, the Commission 

announced it would hold a series of regional 

public forums at several ports to help crystallize 

the problems and facilitate solutions. Congestionrelated issues are expected to continue into FY 

2015, and the Commission will remain vigilant 

in using its authorities and expertise to support 

affected industry stakeholders and promote the 

smooth flow of ocean commerce. 

During FY 2014, liner shipping underwent a 

substantial change in the way the industry is 

organized through the formation of several new 

large-scale operational partnerships and alliances. 

In light of significant industry re-structuring, 

the Chairman convened an international regulatory summit in Washington, DC, with the FMC’s 

counterparts in the People’s Republic of China 

(PRC) and the European Union in December 

2013. 

The purpose of the summit was to assess 

rapidly emerging international maritime developments, and to discuss the potential ramifications 

of widespread cooperation among the largest 

shipping companies. The summit provided an 

opportunity to compare regulatory approaches, 

share views on global regulatory challenges, 

and to begin a dialogue on major liner shipping 

issues affecting the U.S. economy and those of 

our major trading partners.

The world’s top three liner shipping companies, 

A.P. Moller-Maersk (Maersk), Mediterranean 

Shipping Company (MSC), and CMA CGM, 

accounted for 37 percent of global containership fleet capacity in 2014. Those three lines 

proposed an operational agreement that would 

have allowed them to share vessels in a highly 

coordinated network involving the large-volume 

East/West trades. Consequently, the FMC undertook an extensive review of likely effects of the 

proposed operational agreement, known as the 

“P3 Agreement,” on rates and services in the U.S. 

Trans-Pacific and Trans-Atlantic trades. 

That review, completed in March 2014, led the 

Commission to conclude that the P3 Agreement 

was unlikely to reduce competition substantially 

in the relevant U.S. liner markets and produce 

an unreasonable increase in transportation costs 

or an unreasonable reduction in transportation 

services. 
6 53rd Annual Report

However, the P3 Agreement, which authorized the parties to share vessels and engage in 

related cooperative operating activities in the 

trades between the U.S. and Asia, North Europe, 

and the Mediterranean, failed to achieve regulatory clearance in China and was withdrawn by 

the parties before any P3 services were implemented. Two of the parties to the Agreement 

subsequently proposed a more limited operational agreement, the Maersk/MSC Vessel Sharing 

Agreement, also known as the “2M Agreement.”

This fiscal year, the Commission also undertook a comprehensive review of another major 

proposed expansion in operational cooperation 

among liner companies. A proposed amendment 

to the G6 Alliance Agreement was subject to 

an extensive competition analysis. That review 

included consideration of extensive data and documentation received from the parties in response 

to a Commission request for additional information, as well as comments provided by shipper 

organizations and other industry stakeholders. 

The amended agreement between the six parties, American President Lines, Hapag Lloyd AG/

USA, Hyundai Merchant Marine, Mitsui OSK 

Lines, Nippon Yusen Kaisha, and Orient Overseas Container Line, expanded their geographic 

scope to allow G6 operational cooperation in the 

trades between Asia and the U.S. West Coast, 

and between North Europe and all U.S. coasts. 

The Agreement became effective as scheduled 

on April 4, 2014.

Throughout FY 2014, the Commission continued to monitor equipment sharing agreements, 

such as the Consolidated Chassis Management 

Pool Agreement (CCM), which aim to enhance 

intermodal transportation efficiency. Similarly, 

the Commission took note of the increasing 

importance of innovative technologies and systems affecting our ocean container transportation 

system and the logistics supply chains it supports 

– such as PierPass, an agreement among terminal 

operators in the ports of Los Angeles and Long 

Beach that addresses multi-terminal issues such 

as congestion, security, and air quality. 

Under PierPass, international container terminals in America’s largest port complex, Los 

Angeles/Long Beach, established expanded gate 

hours in conjunction with a traffic mitigation 

fee on peak hour gate movements that is meant 

to incentivize shippers and truckers to make 

greater use of off-peak hours at marine terminals. 

The Commission continues to monitor PierPass 

to ensure it does not contravene Shipping Act 

requirements.

The following presents a detailed summary 

of the Commission’s activities during fiscal year 

2014.
53rd Annual Report 7

Efficiency and Competition

Strategic Goal 1

Maintaining an efficient and competitive international ocean transportation system and enhancing 

trade efficiency through the review of various types of agreement authority is a primary function of 

the Commission. An efficient and competitive transportation system facilitates commerce, economic 

growth, and job creation. Competition among participants in U.S. liner trades fosters competitive 

rates and encourages a variety of service offerings for the benefit of U.S. exporters and importers, 

and ultimately consumers. 

The Shipping Act allows competitors to meet and discuss (and in some cases agree on) certain 

business issues, but first they must file a written agreement with the Commission. The Commission reviews these agreements using traditional competition principles and economic models before 

they may go into effect. The initial review and analysis of a proposed agreement and subsequent 

monitoring of the members’ activities under the agreement, should it become effective, are designed 

to identify and guard against possible abuse of the filed authority, avoid unreasonable increases in 

transportation costs or decreases in transportation services, and address other activities prohibited 

by the Shipping Act. 

The Shipping Act is itself a federal competition law applicable to the industry of international 

liner shipping. It contains provisions similar to those found in the Sherman Act of 1890, the 1914 

Clayton Act, and the Robinson-Patman Act of 1936 concerning various prohibitions of discriminatory or unfair business practices and standards regarding business combinations. The Act creates 

a separate regulatory regime from antitrust law under which collective carrier or MTO activity is 

both evaluated when the agreement is initially filed and closely monitored thereafter for any adverse 

impact on competition in the trade. 

Provided the regulated entity complies with the statutory and regulatory proscriptions of the 

Act, the other federal antitrust statutes generally do not apply. Conversely, if a regulated entity 

violates the Shipping Act, it would be subject to penalties set forth in the Act, and may under 

certain circumstances be subject to investigation and prosecution under the full array of federal 

antitrust statutes.

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 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 marine 

terminal operators and among one or more MTOs 

and one or more ocean common carriers also are 
8 53rd Annual Report

required to be filed with the Commission. Generally, an agreement becomes effective 45 days 

after filing, unless the Commission has requested 

additional information to evaluate the competitive impact of the agreement. These agreements 

are reviewed pursuant to the standard set forth 

in section 6(g) of the Shipping Act, 46 U.S.C. 

§41307(b)(1). Effective agreements are exempt 

from U.S. antitrust laws, and instead subject 

to Shipping Act restrictions and Commission 

oversight.

In fiscal year 2014, the Commission received 

186 agreement filings, an increase of 46 percent 

from the previous year. The Bureau of Trade 

Analysis (BTA) analyzed and processed 193 

agreement filings during the fiscal year, which 

included some pending from FY 2013.

Types of Carrier Agreements

Conference agreements are distinguished from all other types 

of agreements because they allow 

members to collectively discuss, 

agree, and fix freight rates and 

practices.

Rate discussion agreements 

(RDAs) also focus on rate matters, 

but unlike conferences, any consensus on rates is non-binding on the 

members.

Operational agreements do not 

contain authority to discuss or fix 

rates. They include vessel-sharing 

Conference or 

price fixing agreements have become 

largely irrelevant to 

U.S. liner shipping.
53rd Annual Report 9

agreements (VSAs), joint service agreements 

(JSAs), cooperative working agreements (CWAs), 

and discussion agreements.

• VSAs typically authorize some level 

of service cooperation with the goal of 

reducing an individual line’s operating 

costs.

• Under JSAs, two or more carriers operate a combined service under a single 

name in a specified geographic scope.

• Many CWAs deal with unique operational considerations relating to 

acquisitions, sharing of administrative 

services, or internet portal management. 

Other CWAs include agency, sailing, 

trans-shipment, and equipment interchange (including chassis pooling) 

agreements.

• Discussion agreements allow members to 

discuss matters of mutual interest other 

than rates. Typically, these agreements 

focus on macro-economic, regulatory, 

safety or security issues.

MTO agreements are agreements between 

MTOs (operated by both public and private entities) that 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.

Conference or price fixing agreements have 

become largely irrelevant to U.S. liner shipping. 

No new carrier conference agreement has been 

filed with the Commission since fiscal year 2000. 

The remaining three conferences cover only government cargoes. 

Today, RDAs are the primary pricing forum 

in U.S. trade lanes. Since fiscal year 2000, the 

number of RDAs on file have declined from 36 

to 23 agreements. During the fiscal year, RDA 

filings involved, for the most part, membership 

changes. One existing RDA was terminated last 

year.
10 53rd Annual Report

At the end of the fiscal year, operational agreements accounted for 92 percent of all carrier 

agreements on file. VSAs account for the vast 

majority in this category - 82 percent at the end 

of the fiscal year, and 76 percent of all carrier 

agreement filings during FY 2014. No new JSAs 

were filed last year. At the end of the year, there 

were 13 CWAs on file; a net decrease of 3 CWAs 

compared to the preceding fiscal year.

As the fiscal year came to a close, the Commission anticipated receiving filings for two more 

operational discussion agreements that reportedly would have as members some of the largest 

carriers, involve extensive operational cooperation, and cover multiple geographic regions. One 

would add Evergreen to the CKYH alliance, and 

the other (termed the “Ocean Three Alliance” by 

the trade press) would involve a new cooperative 

arrangement among CMA-CGM, China Shipping 

Container Line, and 

the United Arab 

Shipping Company.

A major focus 

of many MTOs at 

present is on reducing the effects of 

congestion at terminals, particularly 

with regard to chassis availability and 

truck turn-times. The Commission analyzed a 

proposed amendment to the Consolidated Chassis 

Management Pool Agreement that would allow 

CCM to provide software and management services to third-party chassis pools. The Oakland 

MTO Agreement filed an amendment that would 

allow the parties to discuss a possible extended 

gate-hours program to help ease congestion. 

Competitive Impact and Monitoring

During FY 2014, while systematically monitoring common carrier activities and commercial 

conditions in the U.S. foreign trade, the Commission took the following specific measures to assess 

the competitive impact of certain agreements.

P3 Network Vessel Sharing Agreement: Issued 

Request for Additional Information (RFAI), 

conducted a competitive impact analysis, and 

developed specific monitoring report requirements for the major operational shipping alliance 

formed under the P3 Agreement. Note that while 

the Commission cleared the P3 agreement after 

an extensive competitive analysis, as a result of 

not getting regulatory clearance in China, the 

P3 agreement was withdrawn before any services were implemented and was replaced by the 

Maersk/MSC Vessel Sharing Agreement.

G6 Alliance Agreement: Issued RFAI, conducted a competitive impact analysis, and 

established reporting requirements for the 

amendment expanding the geographic scope 

and cooperative services under the G6 Alliance 

Agreement. 

Seattle Marine Terminal Operators/Port of 

Seattle Discussion Agreement: Conducted a 

competitive impact analysis, and established 

reporting requirements for the discussion 

agreement between MTOs formed under the 

agreement. 

United States/Australasia Discussion Agreement: Conducted a competitive impact analysis 

on the amendment adding Pacific International 

Lines (PIL) as a member to the agreement. 

VSAs account for the 

vast majority in this 

category - 82% at the 

end of the fiscal year, 

and 76% of all carrier 

agreement filings.
53rd Annual Report 11

Port of Seattle and Port of Tacoma Discussion 

Agreement: Conducted a competitive impact 

analysis of this agreement which allows the 

two ports to engage in formal collaborations to 

help improve the competitiveness of the Puget 

Sound gateway.

OVSA/PIL Space Charter and Cooperative 

Working Agreement: Issued RFAI, and conducted 

a competitive impact analysis on capacity in the 

trade lane from the U.S. Pacific to Australia/

New Zealand as a result of cooperation under 

the agreement.

Consolidated Chassis Management Pool 

Agreement: Monitored developments and the 

availability of chassis equipment under the 

agreement as carriers divest their chassis fleets 

and discontinue providing chassis service. 

West Coast MTO Agreement: Monitored the 

PierPass program under the agreement to ensure 

its operational features are in conformity with 

the U.S. shipping statutes. 

Transpacific Stabilization Agreement: Conducted biannual meetings with representatives 

of the TSA agreement to review major developments in the ocean liner trade between the U.S. 

and Asia. 

BTA also continued its multi-year review of 

regulations in 46 CFR parts 530, 531, and 535 as 

part of the Commission’s Plan for Retrospective 

Review of Existing Rules. This project involves 

reviewing and making recommendations to 

update these regulations, including recommendations to update the Commission’s agreement 

monitoring program to improve oversight of 

major rate discussion and alliance agreements.

Tariffs, Service Contracts, NSAs, & MTO Schedules

Tariffs

The Shipping Act requires common carriers 

and conferences to publish their tariffs containing 

rates, charges, rules, and practices, electronically 

in private systems. For ease of public access, the 

Commission publishes the web addresses of those 

tariffs on its website. At fiscal year end, 5,355 

tariff location addresses were posted. Of that 

number, 5,029 tariff addresses were for NVOCCs. 

The Commission provides regulatory relief, 

allowing licensed and foreign registered NVOCCs 

to “opt out” of the requirement to file rate tariffs providing they use NVOCC Negotiated Rate 

Arrangements (NRAs) exclusively. By the end of 

fiscal year 2014, it is estimated that more than 

900 NVOCCs had filed prominent notices or a 

rule in their respective tariff indicating that they 

have invoked the exemption – up 70 percent from 

525 in FY 2013. It is anticipated that NVOCCs 

will continue to take advantage of this opportunity, thereby significantly reducing the number 

of rate tariffs that the Commission must review 

to ensure compliance with applicable regulations. 

Service Contracts and 

NSAs filed in 2014

• Newly filed service contracts: 44,208

• Amendments to service contracts: 

573,208

• Newly filed NSAs: 1,538

• Amendments to NSAs: 1,864
12 53rd Annual Report

Service Contracts

Service contracts are an alternative to transportation of cargo under tariff rates. Between 

90 and 95 percent of the total cargo moving in 

the U.S. liner trades moves under service contracts, not tariffs. Service contracts enable the 

parties to tailor transportation services and rates 

to their commercial and operational needs and 

to keep these arrangements confidential. During 

fiscal year 2014, the Commission received 44,208 

new service contracts, compared to 48,802 in 

fiscal year 2013, and 573,208 contract amendments, compared to 556,285 in fiscal year 2013. 

During the fiscal year, 6,213 records filed into 

the Commission’s automated service contract 

filing system, SERVCON, were corrected by filing 

parties.

NVOCC Service Arrangements (NSAs)

Commission rules allow NVOCCs to offer 

transportation services pursuant to individually 

negotiated, confidential service arrangements 

with customers, rather than under a published 

tariff. During the fiscal year, 1,583 NSAs and 

1,864 amendments to NSAs were filed by 92 

NVOCCs. Of the 1,282 NVOCCs that are registered with the Commission to file NSAs, only 

224 (about 17 percent) have done so. Those 224 

NSA users represent approximately 4 percent of 

all registered NVOCCs.

Marine Terminal Schedules

A MTO may make available to the public 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. During the fiscal 

year, 252 MTOs filed Form FMC-1, which reports 

the electronic location of an MTO’s terminal 

schedule, with 145 MTOs electing to voluntarily 

publish their terminal schedules. The internet 

addresses of these MTO terminal schedules are 

posted on the Commission’s website. 

Port Congestion 

In May 2014, responding to numerous informal inquiries concerning certain congestion 

surcharges announced in tariff rules by ocean 

carriers, the Commission published an advisory 

notice reminding the industry that increased 

costs cannot be imposed earlier than 30 days 

after publication and that the rules applicable 

to a shipment are those in effect on the date 

the cargo is received by the common carrier or 

agent. Subsequently, in June 2014, representatives of the port trucking industry briefed the 

Commission on the growing challenge of congestion at ports and the impact on drivers, and 

consequently, the state of the trade. Reports in 

the press and comments by industry leaders over 

the summer expanded on the negative impact 

of the congestion. The Commission also heard 

concerns from shippers about demurrage charges 

and charges related to storage of containers at 

marine terminals beyond the allotted free time.

In September, the Commission announced a 

series of forums to be held at U.S. ports with 

a goal to promote dialogue on the causes and 

implications of congestion at U.S. ports. Industry stakeholders, regulators, and the general 

public were encouraged to take part. Commission 
53rd Annual Report 13

mediation services were on hand in the event that 

participants wished to discuss possible causes 

of congestion problems and work on solutions 

on the spot. Chairman Mario Cordero hosted 

the first forum at the Port of Los Angeles on 

September 15, 2014. Three more public forums 

were scheduled during the first quarter of FY 

2015 at the Ports of Maryland, Charleston and 

New Orleans. 

International Cooperation

Global Regulatory Summit

Maritime regulators from the United States, 

the People’s Republic of China and the European 

Commission met and conferred in Washington, D.C. on December 17, 2013 to consider 

the evolving international maritime landscape. 

The officials discussed their differing regulatory 

frameworks and the potential effects of carrier 

cooperation on international trade. The EU delegation was led by Mr. Hubert de Broca, Head of 

Unit, Directorate General for Competition, Antitrust-Transport, Post and Other Services; and Mr. 

Li Hongyin, Deputy Director-General, Bureau 

of Water Transport, Ministry of Transport 

headed up the Chinese delegation. FMC Chairman Cordero led the U.S. delegation, with the 

participation of each of the FMC Commissioners.

U.S.-China Bilateral Consultation

Commissioner Doyle participated as a member 

of the U.S. delegation to the Annual U.S. Bilateral Maritime Consultation with the People’s 

Republic of China held in Chicago, IL., on 

October 28, 2013. The Commissioner led meetings concerning tax matters and NVOCC issues. 

The consultation resulted in the issuance by the 

PRC of Circular 106 retroactively creating an 

Chairman Cordero at the 2014 West Coast Port Forum
14 53rd Annual Report

exemption for shipping transportation from the 

PRC’s Value Added Tax (VAT) law implemented 

in Circular 37.

Meeting with China’s Supreme People’s Court

The Commission’s Chief Administrative Law 

Judge Clay G. Guthridge and Administrative 

Law Judge Erin M. Wirth, along with a representative from the Commission’s Office of the 

General Counsel (OGC), met in November 2013 

with a delegation of maritime judges of China’s 

Supreme People’s Court at the FMC headquarters in Washington, DC, for a discussion on U.S. 

administrative law and practice as it pertains to 

Commission proceedings and comparison and 

contrast with jurisdiction of maritime judges 

in China.

U.S.-Japan Bilateral Maritime Meeting

On August 15, 2014, Chairman Cordero participated in a U.S.-Japan Bilateral Maritime 

Meeting, hosted by the U.S. Department of 

Transportation, Maritime Administration in 

Washington, DC. Maritime Administrator Paul 

Jaenichen, who headed the U.S. Delegation, welcomed maritime delegates from the United States 

and Japan who conferred throughout the day 

to consider the evolving international maritime 

landscape. The officials discussed such topics as 

the Panama Canal expansion, environmental 

issues, liquefied natural gas (LNG)-fueled vessels, 

port development, anti-piracy measures, and 

education efforts aimed at increasing visibility 

of the maritime industry. Participants agreed 

coordination on these maritime issues is valuable 

for promoting mutual interests in international 

ocean transportation and commerce.

Trade In Services Agreement Negotiations

The OGC, on behalf of the Commission, acted 

as a maritime technical advisor to two ongoing 

trade negotiations, Trade in Services Agreement 

(TiSA) and Transatlantic Trade and Investment 

Partnership (T-TIP).

Participants in the Meeting with China’s Supreme People’s Court
53rd Annual Report 15

Protecting the Public

Strategic Goal 2

The FMC engages in a variety of activities that protect the public from financial harm, including 

licensing of ocean transportation intermediaries; helping resolve disputes about the shipment of goods 

or the carriage of passengers; investigating and prosecuting unreasonable or unjust practices, and 

ruling on private party complaints alleging Shipping Act violations. These activities are paramount 

to the integrity and security of the nation’s import and export supply chains and ocean transportation system. In addition, the FMC ensures that passenger vessel operators maintain proper financial 

coverage to reimburse cruise passengers in the event their cruise is cancelled or to cover liability in 

the event of death or injury at sea. 

Licensing

OTIs are transportation middlemen for cargo 

moving in the U.S. foreign oceanborne trades. 

There are two types: Non-vessel-operating 

common carriers and ocean freight forwarders 

(OFFs). An NVOCC is a common carrier that 

holds itself out to the public to provide ocean 

transportation, issues its own house bill of lading 

or equivalent document, but does not operate the 

vessel by which ocean transportation is provided. 

An ocean freight forwarder domiciled in the U.S. 

arranges for the transportation of cargo with a 

common carrier on behalf of shippers and process documents related to those shipments. Both 

NVOCCs and OFFs must be licensed by the Commission if they are located in the U.S. and must 

establish financial responsibility. The licensing 

process is a primary activity of the Commission 

in protecting the public. Unlicensed activity is 

of concern both to shippers who risk cargo or 

financial loss and also to our nation’s security. 

NVOCCs doing business in the U.S. foreign trades 

but located outside the U.S. (foreign NVOCCs) 

may choose to become FMC-licensed, but are 

not required to do so. If not licensed under the 

FMC’s program, foreign-based NVOCCs must 

register with the Commission and establish financial responsibility. 

NVOCCs wishing to serve in the U.S.-China 

trade may file an Optional Rider for Additional 

NVOCC Financial Responsibility to meet the 

Chinese government’s financial responsibility 

requirements. This rider adds an additional 

$21,000 to the NVOCC bond. The rider amount 

Licensing Activity in FY 2014

• New OTI applications accepted: 367

• Amended applications accepted: 256

• New OTI licenses issued: 232

• Amended licenses issued: 107

• Licenses revoked: 270

• Licenses voluntarily surrendered: 87
16 53rd Annual Report
53rd Annual Report 17

is available to pay fines and penalties for activities in the U.S.-China trades imposed by the 

Chinese government. This rider is accepted as 

a convenience to U.S. NVOCCs. In FY 2014, 81 

China Bond Riders were received and 28 were 

terminated. Presently 415 U.S. NVOCCs hold 

China Bond Riders.

Proposed Revisions to Licensing Rules

During the fiscal year the Commission 

approved issuance of a Notice of Proposed 

Rulemaking (NPR) in Docket 13-05, proposing 

revisions to the Ocean Transportation Intermediary regulations at 46 CFR 515 after considering 

the extensive comments submitted to its earlier Advanced Notice of Proposed Rulemaking 

(ANPR). The proposed rule is designed to adapt 

to changing industry conditions, improve regulatory oversight, improve transparency, streamline 

FMC business processes, and reduce regulatory 

burdens on the industry. Among other revisions, 

most significantly the NPR proposes:

• a requirement to renew licenses and 

registrations every 3 years through an 

on-line and more user-friendly process;

• a requirement that common carriers 

verify OTI licenses and registrations, 

tariff publication and financial responsibility, provided such verifications can 

be made at a single location on the Commission’s website; and

• a new expedited hearing procedure that 

would streamline the current procedures 

for denial, revocation, or suspension of 

an OTI license.

Leveraging Technology

Reducing both agency and industry operating 

costs by automating and streamlining processes 

is an ongoing challenge for the FMC with its limited budget. However, as funds become available 

and savings are realized in other areas that can 

be applied to upgrading its IT systems, the 

agency continues to implement its long-range 

information technology plan. At the center of 

this plan is the development and phased implementation of an enterprise platform solution 

that will improve data collection, storage and 

retrieval to support all Commission programs 

and enhance both internal and external interface 

with its electronic systems and databases.

During the fiscal year, a major milestone was 

met on the first of several phases to upgrade 

the Commission’s IT systems. The enterprise 

solution’s foundation - the “enterprise store” - 

was completed during the fiscal year, which will 

become the sole repository for the Commission’s 

critical data collections. Full implementation of 

the enterprise store will eliminate duplicate data 

entry and reduce resources needed to support the 

multiple systems currently in use.

An example of the type of critical data that 

will reside within this new repository is the licensing information the Commission collects and 

maintains from OTIs. Currently, 92 percent of 

all incoming OTI license applications and supporting documents are received electronically. 

While the existing system is a vast improvement 

over the past paper filing system, this filing 

process still resembles its legacy paper process – 

not a fully automated filing system. Efforts are 
18 53rd Annual Report

ongoing to create a more robust and efficient OTI 

licensing system that will integrate a number 

of agency databases, increasing efficiency and 

reducing both industry and agency costs.

As a cost saving initiative, the Commission 

leveraged its existing website to notify the 

public about OTI licensing matters. Through a 

direct final rule, Docket No. 14-08, the Commission changed the method it historically used to 

provide public notice about OTI license applications, revocations and suspensions by publishing 

this information on the FMC’s official public website, rather than publishing the same information 

in the Federal Register. This change provides 

more timely public notification of official FMC 

action on OTI licensing matters, simplifies the 

Commission’s business processes, and reduces 

agency administrative and publication costs.

Passenger Vessel Program

The Commission administers the passenger 

vessel operator (PVO) program as described 

under 46 U.S.C. §§ 44102-44103, which requires 

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. Certificates of performance cover financial responsibility used to 

reimburse passengers in the event their cruise is 

cancelled. Certificates of casualty are required to 

cover liability that may occur for death or injury 

to passengers or other persons on voyages to or 

from U.S. ports.

During last fiscal year, the Commission 

updated its rules to incrementally increase the 

maximum financial coverage requirement from 

$15 to $30 million per cruise line over a 2-year 

period. This increase reflected the effects of inflation and the growth of the cruise industry since 

the cap was set nearly 25 years ago.

At the close of fiscal year 2014, 213 vessels 

owned by 45 passenger vessel operators were 

certified under the Commission’s program. The 

combined evidence of financial responsibility for nonperformance of transportation for 

all cruise vessels in the program is $446 million. Approximately $774 million in aggregate 

financial responsibility for casualty coverage is 

evidenced under the Commission’s program. In 

FY 2014, 9 new performance certificates and 11 

casualty certificates were issued. No cruise operator stopped operation with unperformed cruises 

during this fiscal year.

PVO Program Participants

• 45 PVOs are certified under the 

Commission’s program

• 213 vessels are certified

• 11 new Casualty Certificates issued in 

FY 2014

• 9 new Performance Certificates issued 

in FY 2014

PVO Program Coverage

• $446 million aggregate evidence 

of financial responsibility for 

nonperformance

• $744 million aggregate evidence of 

financial responsibility for casualty
53rd Annual Report 19

The current nonperformance coverage required 

under the Commission’s program is not to exceed 

$22 million per cruise line. On April 2, 2015 the 

maximum coverage requirement will increase to 

$30 million per cruise line over a two-year period, 

with an adjustment to the cap thereafter every 

two years based on the Consumer Price Index 

for All Urban Consumers (CPI-U).

The Commission offers information and guidance to the cruising public on passenger rights 

and obligations regarding monies paid to cruise 

lines that fail to perform voyages, as well as 

other cruise difficulties, such as itinerary changes. 

During the fiscal year, a new cruise brochure was 

designed and published that provides information 

and resources to help passengers avoid problems 

that may commonly arise during a cruise vacation. The brochure will be widely distributed in 

FY 2015 to travel agents and associations, and 

other federal agencies working in partnership 

with the Commission to educate and protect the 

cruising public.

In April, Chairman Cordero issued his 

Earth Day Award to Richard D. Fain, Chairman and CEO of Royal Caribbean Cruises Ltd, 

acknowledging his efforts to increase environmental stewardship through innovations in vessel 

technology, onboard practices and an ongoing 

partnership with the University of Miami Rosenstiel School of Marine and Atmospheric Science.

Consumer Affairs and Education

Dispute Resolution

The Commission, through its Office of Consumer Affairs and Dispute Resolution Services 

(CADRS), provides ombuds and mediation services to assist parties in resolving international 

ocean shipping disputes, including a Rapid 

Response Team especially focused on addressing problems exporters may encounter. Such 

services are available to the shipping public at 

any stage of a dispute regardless of whether 

litigation has been filed at the FMC or another 

jurisdictional forum. The Commission’s mediation services help parties avoid the expense and 

delay inherent in litigation, and facilitate the 

flow of U.S. foreign commerce. 

During this fiscal year the FMC: 

• Closed 1,664 ombuds matters: 1,449 

household goods matters; 136 commercial cargo matters; 77 cruise matters; and 

2 other Shipping Act related matters.
20 53rd Annual Report

• Provided mediation services in 9 matters.

• Developed and led a coalition comprised 

of federal, state, and local agencies, the 

Columbian consulate in Miami, a nonprofit organization, and an NVOCC that 

resulted in the return of approximately 

104 abandoned household goods shipments to consumers. 

• Issued 14 Informal Docket Decisions 

pursuant to 46 CFR Part 502, Subpart S 

which provides a small claims procedure 

for allegation of Shipping Act violations 

under $50,000.

• Issued 3 Special Docket Decisions pursuant to 46 CFR Part 502, Subpart Q 

in which filers seek to waive or refund 

a portion of ocean freight as a result of 

clerical processing errors.

Area Representatives

In support of the Commission’s ongoing outreach and education efforts, the Commission’s 

Area Representatives (ARs) who operate in certain port regions nationwide reached out to the 

public, consumer groups, trade associations, and 

other government agencies to achieve regulatory 

compliance and protection for the shippers of 

household goods and personal effects. The ARs 

were instrumental in the publication of public 

service announcements for each major port area, 

warning consumers against the use of unlawful transportation providers and intermediaries. 

The ARs also made a number of presentations to 

interested industry audiences in their geographic 

areas, explaining OTI licensing requirements, the 

Commission’s Advance Notice of Proposed Rulemaking with respect to bonding and licensing of 

OTIs (Docket No. 13-05) and OTI compliance 

with the recent tariff rate exemption applicable 

to Negotiated Rate Arrangements (NRAs). 

FMC Website

One of the Commission’s major cost-effective 

outreach tools is its public website. Based on 

user feedback, the website content and organization was significantly improved to render a more 

citizen-centered experience. During FY 2014, for 

example, a free, downloadable list of licensed 

and bonded OTIs was made available which now 

includes location information, bonding information and DBAs. Shippers or the general public, 

looking for a licensed and bonded OTI to help 

ship their cargo or personal household goods now 

have direct and free access to this enhanced information in a searchable, downloadable list. 

Payment for Commission services can now 

be made online using the Commission’s website. 

This system upgrade reduces the transaction 

costs for both the Commission and the public.

The Commission leveraged its website to 

warn consumers about complaints against certain household goods movers. In addition, the 

Commission provided timely updates on the operational status of certain international cruises 

that had run into operational issues either prior 

to or during the course of the cruise. For example, the Commission published a comprehensive 

notice to passengers when an oil spill impaired 

access to the Houston Ship Channel and several 

cruises were impacted.
53rd Annual Report 21

Enforcement, Audits and Penalties

During the fiscal year, the Commission, 

through its Bureau of Enforcement (BOE) and 

Area Representatives, investigated and prosecuted possible illegal practices in many trade 

lanes, including the Transpacific, North Atlantic, West Africa, Central and South American 

and Caribbean trades. These market-distorting 

activities included various forms of unfiled agreements, rebates and absorptions, misdescription 

of commodities and misdeclaration of measurements, and unlawful use of service contracts, as 

well as carriage of cargo by and for untariffed 

and unbonded NVOCCs. 

During the fiscal year, 15 new cases were 

referred by Area Representatives for enforcement action or informal compromise; 18 were 

compromised and settled, administratively 

closed, or referred for formal proceedings; and 

10 enforcement cases were pending resolution 

at fiscal year’s end.

Major investigations undertaken or completed 

during fiscal year 2014 addressed VOCCs seeking 

to operate pursuant to agreements that were 

not filed with the Commission, as well as deceptive or fraudulent practices of certain OTIs 

operating in the highly competitive ChinaU.S. inbound trades. Of note, BOE’s efforts 

in pursuing inquiries regarding the major car 

carriers in the Japan-U.S. trades (and in other 

U.S. trades inbound as well as outbound), culminated in two separate settlements related to 

unfiled carrier agreements. Penalties against 

the three carriers involved netted $1.9 million. 

In addition, the Commission collected nearly 

$300,000 in penalties against two smaller carriers for operating under an unfiled space charter 
22 53rd Annual Report

agreement affecting their container and breakbulk services. Civil penalties were also pursued 

in several noteworthy formal proceedings before 

the Commission’s Administrative Law Judges 

which are summarized in the Formal Investigations section below.

Cumulatively, in FY 2014 the Commission 

collected more than $3 million in penalties for 

Shipping Act violations, closely matching the 

penalty collections in FY 2013. A list of parties 

and the penalties paid can be found in Appendix 

D. Most of these investigations were resolved 

informally, some with compromise settlements 

and civil penalties. 

The compliance audit program continued 

during the fiscal year. This program, conducted 

by BOE staff 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, but where there is no 

indication of current vessel operations. During 

the fiscal year, 124 audits were commenced, 122 

audits were completed (including audits carried 

over from fiscal year 2013), and 14 remained 

pending on September 30, 2014.

Inter-Agency Cooperation

The Commission works regularly with a 

number of other federal, state and local transportation and law enforcement agencies, either 

through established memoranda of understanding (MOU) or collaborations to address specific 

transportation related issues or incidents in both 

the U.S. domestic shipping arena and international liner shipping.

CADRS advanced interagency cooperation 

between the FMC and the Federal Motor Carrier 

Safety Administration (FMCSA) under an MOU 

through continued participation in the FMCSA’s 

Moving Fraud Task Force and Moving Fraud 

Partnership initiatives. CADRS also provided 

a presentation at the FMCSA’s Moving Fraud 

FMC works with Federal 

and State Law Enforcement to Protect the Public:

• Helping victims of domestic moving 

fraud

• Assisting state and Federal criminal 

investigation of stolen vehicles

• Commencing investigations of FMClicensed or regulated entities

• Stopping unlawful imports and 

exports

• Joint consultation on problematic 

carrier practices, procedures, or 

documentation

• Using shared confidential U.S. export 

data for FMC law enforcement 

purposes

• Coordinating law enforcement efforts 

with the National Intellectual 

Property Rights Coordination Center
53rd Annual Report 23

Conference, and negotiation and mediation training to FMCSA field staff to support their efforts 

to assist victims of domestic moving fraud.

The ARs continue to work closely with a 

number of law enforcement agencies, including 

local jurisdictions such as the New York City 

Police Department, New Jersey State Police, and 

Houston Police Department, in matters relating 

to international shipping, such as the export of 

stolen motor vehicles. The ARs also participated 

in various enforcement initiatives sponsored 

by Federal law enforcement agencies: the U.S. 

Department of Justice; Alcohol, Tobacco and 

Firearms; Federal Bureau of Investigation; the 

Department of Homeland Security including 

Customs and Border Patrol and Immigration 

and Customs Enforcement; Department of Commerce; and the FMCSA. These include criminal 

FMC Joins the Homeland Security Investigations-led National Intellectual Property Rights 

Coordination Center (IPR Center)
24 53rd Annual Report

and civil investigations of entities licensed or 

regulated by the Commission, interdiction of 

illicit imports and exports, consultation on carrier practices, procedures and documentation 

relating to shipping and international trade, and 

coordinated action seeking to protect the shipping public from deceptive and unfair practices.

The Commission also serves as a charter 

member of the International Trade Data 

System, a task force of 47 Federal agencies 

coordinating development of the Automated 

Commercial Environment (ACE), the “Single 

Window” through which the trade community 

will report imports and exports. 

BOE completed its second year under a formal 

MOU with the Census Bureau, U.S. Department 

of Commerce, providing FMC with access to 

the Census’ Automated Export System (AES) 

database. The completed MOU accommodates 

Census’ ongoing concerns for data security by 

limiting such use of confidential U.S. export 

shipment data only for FMC law enforcement 

purposes. BOE also commenced an initiative 

to gain membership in the Homeland Security 

Investigations-led National Intellectual Property Rights Coordination Center (IPR Center), 

a partnership of 21 Federal and international 

agencies targeting intellectual property- and 

trade-related crimes. 
53rd Annual Report 25

Developments in Major 

U.S. Foreign Trades

Worldwide

The world’s container trade expanded by 

nearly 5 percent in fiscal year 2014 compared 

to only 2 percent growth in 2013. As the fiscal 

year came to a close, 131 containerships lay idle, 

representing 1.1 percent of the total fleet capacity measured in TEUs (twenty-foot equivalent 

container units). In contrast, 185 ships representing 2.4 percent of the containership fleet capacity 

lay idle at the end of fiscal year 2013.

The world’s container shipping industry 

remained as concentrated during fiscal year 2014 

as it had been in prior years. At the close of 

the fiscal year, the top three container operators 

controlled 37 percent of the world’s containership capacity; the top five container operators 

controlled 47 percent; and the top ten controlled 

almost 64 percent. The world’s top three operators are: A.P. Moller-Maersk A/S (15.1 percent), 

Mediterranean Shipping Company SA (13.5 percent) and CMA CGM S.A. (8.7 percent).

Container volumes in the U.S. liner trades in 

fiscal year 2014 expanded 3.1 percent to roughly 

31 million TEUs, compared to 29.9 million last 

year. The U.S. share of the world’s container 

trades was 17 percent. U.S. container imports 

continued to grow, expanding 4.7 percent to 

18.4 million TEUs, compared to 17.9 million in 

2013. This was still below the record of 18.6 million reached in fiscal year 2007. U.S. container 

exports also rose, albeit by less than 1 percent 

to 12.1 million TEUs. As a result, the U.S. container imbalance worsened slightly; for every 

100 loaded containers exported from the U.S., 

156 were imported, compared to 150 imported 

in fiscal year 2013.

The world’s containership fleet continued to 

expand in FY 2014. The fleet’s nominal capacity grew by approximately 5 percent. At the end 

of the fiscal year, 5,017 containerships, with a 

total fleet capacity of 18.1 million TEUs, were 

Worldwide

• For the fifth consecutive year, 

worldwide container trade grew – 

expanding by nearly 5%.

• For the second year in a row, fewer 

container ships lay idle at year’s end.

• The world’s top three operators 

controlled 37% of the worldwide 

vessel capacity: A.P. Moller-Maersk 

(15.1%); Mediterranean Shipping 

(13.5%); and CMA CGM (8.7%).

U.S. Liner Trades

• Container volumes in the U.S. liner 

trades (imports & exports combined) 

grew for the fifth consecutive year.

• While both U.S. imports and exports 

grew during the fiscal year, imported 

cargo continued to outpace exports.
26 53rd Annual Report

available to serve the world’s container trades. 

As of September 30, 2014, there were orders 

worldwide for 488 new containerships with an 

aggregate capacity of 3.6 million TEUs, which 

is equivalent to 19.7 percent of the existing 

fleet capacity. Vessels with nominal capacities 

exceeding 7,500 TEUs comprised 37 percent of 

the existing containership fleet capacity and 83 

percent of the orderbook’s fleet capacity at year 

end, reflecting the increasing size of containerships being ordered.

Asia

In terms of container cargo volume, Asia is 

our largest trading region. In fiscal year 2014, 

Asia was responsible for 62.3 percent of U.S. 

container trade volumes (exports and imports 

combined). Northeast Asia accounted for 53.3 

percent of all U.S. container cargo and Southeast Asia accounted for nine percent. 

Sixty-nine percent of all U.S. containers originated from Asia and 

the region received 52 percent 

of all U.S. container exports. 

Approximately 52 percent of all 

containers originating from or 

destined to Northeast and Southeast Asia are handled by the Ports 

of Los Angeles and Long Beach.

The U.S. imported 12.9 million TEUs of 

merchandise from Asia, which is a 4.6 percent 

increase over the previous fiscal year. Reciprocally, the U.S. exported 6.3 million TEUs of 

goods to the Far East, which is less than a one 

percent increase over the last fiscal year.

The Transpacific Stabilization Agreement (TSA) 

is the major agreement in the transpacific trade. 

It is a fifteen-member discussion 

agreement with voluntary pricing 

authority. TSA covers the inbound 

and outbound container transpacific trade lanes. TSA’s geographic 

scope also includes parts of the 

Indian Sub-continent (i.e., Bangladesh, Pakistan and Sri Lanka, 

but not India). During fiscal year 

2014, TSA’s share of the U.S. inbound and outbound Asia container trades was approximately 

91 and 93 percent, respectively. 

Australia and Oceania

The Oceania trade includes the nations and 

territories of Australia, New Zealand, Papua 

New Guinea, Western Samoa, and other South 

Pacific islands. Overall, growth in container 

cargo volume improved from the previous fiscal 

year. U.S. container export growth in fiscal year 

2014 was modest at 3 percent, compared to a 3 

percent decline in the preceding period. Container imports from the region to the U.S. grew 

by 10 percent, compared to 3 percent growth 

in the preceding period. Container imports 

of meat and wine, the top two commodities 

from the region, accounted for 37 percent of 

the total import cargo volume. U.S. exports, 

however, exceeded imports with 1.6 containers 

moving outbound for every one container moving 

inbound. Hamburg Sud was the largest carrier 

operating in the trade with a market share of 35 

percent in each trade direction.

TSA’s share of the U.S. 

inbound and outbound 

Asia container trades 

exceeded 90%. 
53rd Annual Report 27

The major service and agreement activity 

during the fiscal year centered around Pacific 

International Lines (PIL). Having entered the 

trade in June 2011, for nearly 3 years, PIL was 

the only direct service operator serving the trade. 

In March 2014, PIL joined the outbound discussion agreement, the United States/Australasia 

Discussion Agreement, increasing the collective 

market share of the agreement from 67 percent 

to 82 percent. Subsequently, in August 2014, 

PIL withdrew its vessels from the trade and 

entered into a slot charter agreement with the 

members of the U.S. Pacific Coast-Oceania Agreement, which operates two service strings between 

U.S. Pacific ports and 

ports in Australia 

and New Zealand. 

To date, all of the 

carriers that operate direct services in 

the trade cooperate 

in a few operational 

agreements. Given 

these market conditions, the Commission closely monitors the 

competitive conduct of the carriers to ensure 

that their activities under agreements remain 

in compliance with the Shipping Act.

Indian Subcontinent and Middle East

The growth rate of U.S. container trade with 

the Indian Subcontinent (exports and imports 

combined) was just over 4 percent during the 

fiscal year. However, the growth rate of the U.S. 

and the Middle East container market (exports 

and imports combined) declined by more than 3 

percent in fiscal year 2014. The region accounted 

for just over 6 percent of total U.S. container 

volumes.

The U.S. imported 728,000 TEUs from the 

Indian Subcontinent and 175,000 TEUs from 

the Middle East, which represented a 7 and 3 

percent increase respectively over the prior fiscal 

year. The U.S. exported 467,000 TEUs to the 

Indian Subcontinent and 584,000 TEUs to the 

Middle East, which was a decrease of less than 

1 percent and 5 percent, respectively, over the 

preceding fiscal year.

In this region, TSA is the rate discussion agreement covering part of the U.S. inbound and 

outbound container trade lanes. Its geographic 

scope covers the Indian Subcontinent countries 

of Bangladesh, Pakistan, and Sri Lanka, but not 

outbound to India or to the Middle East. For 

the fiscal year, TSA’s market share for imports 

from and exports to Bangladesh, Pakistan, and 

Sri Lanka were 94 and 90 percent, respectively. 

There are no major rate discussion agreements 

covering the trade lanes between the U.S. and 

India or the Middle East.

North Europe

During fiscal year 2014, growth in container 

cargo volume improved moderately from the previous fiscal year in the U.S. liner trade with North 

Europe. Both container exports and imports 

grew by 5 percent as compared to 2 percent in 

the preceding fiscal year. Over 50 percent of the 

containers were moved by the top four ocean carriers serving the trade, which in ranking order 

were Mediterranean Shipping Company, Hapag 

Lloyd, A.P. Moller-Maersk A/S, and APL Co. Pte 

The market share of 

the major outbound 

discussion agreement 

increased to 82% 

when PIL joined the 

agreement.
28 53rd Annual Report

Ltd. (APL). The deployment of vessel capacity 

expanded by 5 percent in each trade direction, 

and the average utilization of vessel capacity 

for the fiscal year was 94 percent in the inbound 

trade lane from North Europe and 83 percent 

outbound. It was reported that 

freight rates inbound remained 

stable at approximately $1,700 

per container, while outbound rates 

stayed low.

Carriers serving the trade 

rearranged their cooperative 

partnerships under agreements. 

Notably, in April 2014, members 

of the G6 Alliance Agreement

expanded their geographic scope 

to include North Europe and combined their 

operations to form three loop services and two 

pendulum services. The G6 carriers formerly 

competed under two separate alliance agreements, the New World Alliance Agreement and 

the Grand Alliance Agreement II. Hamburg Sud 

withdrew its vessel from the trade to charter 

space on two of the new G6 loop services under 

the G6/HSDG Atlantic Space Charter Agreement. Also, in April 2014, Hapag Lloyd began 

its acquisition of the container service operations 

of Compania Sud Americana de Vapores S.A. 

(CSAV). Consequently, CSAV withdrew from 

its vessel sharing arrangements with 

CMA CGM and MSC and began 

chartering space from Hapag 

Lloyd on the G6 services under 

the HLAG/CSAV Trans-Atlantic 

Space Charter Agreement. These 

developments caused a realignment 

of services among the other carriers serving the trade. CMA CGM 

and Maersk increased their space 

allocations under their slot exchange 

agreement, and CMA CGM also began chartering space from MSC. Significantly, Maersk and 

MSC entered into the Maersk/MSC Vessel Sharing Agreement to coordinate their services. Under 

this agreement, the two major carriers plan to 

replace their current services in the trade with 

three loop services starting in the next fiscal year.

Mediterranean

After years of weak cargo volume growth in 

the U.S. Mediterranean trade, cargo container 

volumes rebounded during the fiscal year. Both 

inbound and outbound trade volumes jumped 10 

percent over the preceding fiscal year. Wine, furniture, tiles and marble were some of the major 

commodities imported from the region, while 

paper, cotton, wood pulp and edible nuts were 

among the top U.S. export commodities. The 

trade remained highly concentrated with over 

50 percent of the total container cargo transported by MSC and Hapag Lloyd. There were 

some significant service and agreement changes 

during the fiscal year. Hapag Lloyd replaced its 

shared service that it operated with CMA CGM 

with a slot exchange arrangement with Zim 

Integrated Shipping Services, Ltd. (Zim). CMA 

CGM continued to 

operate the service independent 

of Hapag Lloyd 

using its own vessels. Under their 

new vessel sharing agreement, 

Maersk and MSC 

Both inbound and 

outbound trade volumes jumped 10% in 

FY 2014.

Carriers’ cooperative 

partnerships through 

agreements were substantially rearranged 

in the North Europe/ 

U.S. liner trade.
53rd Annual Report 29

plan to replace their current services in the 

trade with two vessel strings separately serving 

U.S. Atlantic and Gulf ports and ports in the 

Mediterranean. By the end of the fiscal year, 

vessel capacity in the trade increased by around 

seven percent in each trade direction.

Africa

The results in the volume of container cargo 

between the U.S. and nations in Africa were 

mixed for the fiscal year. Compared to the preceding period, U.S. exports to Africa were down by 8 

percent, while imports from the continent grew 

by a similar amount. Nonetheless, U.S. container 

exports continued to exceed imports; for every 

container moving inbound, 1.6 containers moved 

outbound. Major container export commodities 

included automobiles (mostly used), poultry and 

grocery products, while cocoa beans and apparel 

were among the top import commodities. Over 

50 percent of the container cargo in the trade 

was carried by MSC and Maersk. The Republic 

of South Africa is the largest U.S. liner trading 

nation on the continent, accounting for 21 percent of the total container cargo.

Latin America

Central America and the Caribbean

In fiscal year 2014, U.S. export cargo volumes 

to Central America decreased by 2 percent to 

583,600 TEUs and U.S. import cargo volumes 

remained virtually constant at 780,200 TEUs. 

Waste paper accounted for the largest share of 

U.S. containerized exports. Other major export 

commodities included fabrics, yarns, and raw 

cotton. Grocery products, used automobiles and 

apparel were also significant exports. On the 

import side, fresh fruit made up a majority of all 

imports from the region. Roughly three quarters 

of fresh fruit imports consisted of bananas. The 

second largest commodity imported from this 

region was clothing and apparel.

Five of the largest regional carriers in the U.S./

Central America trade participated in the Central 

America Discussion Agreement: Seaboard Marine, 

Crowley Latin America Services, King Ocean 

Services, Dole Ocean Cargo Express, and Great 

White Fleet. 

In the liner trade between the U.S. and the 

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

increased almost 3 percent to 475,300 TEUs. 

Imports to the U.S. remained stable at approximately 170,000 TEUs.

Carriers in the U.S./Caribbean trade participated in three rate discussion agreements 

covering discrete trades: (1) the Aruba Bonaire 

and Curacao Discussion Agreement, (2) the 

Bermuda Discussion Agreement, and (3) the Caribbean Shipowners Association.

South America

U.S. containerized trade with South America 

(exports and imports combined) was 1.8 million TEUs during the fiscal year, a 3.4 percent 

decrease from the previous year. Roughly 54 

percent of that total volume was U.S. exports to 

the region, and 46 percent was U.S. imports. U.S. 

export cargo to South America included waste 

paper, synthetic resins, and general merchandise 
30 53rd Annual Report

cargo. On the U.S. import side, fresh fruit, wines, 

coffee, logs and lumber and fresh vegetables were 

major moving commodities.

Many of the carriers providing service to 

the West Coast of South America are members 

of the West Coast of South America Discussion 

Agreement (WCSADA). Membership consists of 

eight regional carriers: Compania Chilena De 

Navegacion Interoceania, Seaboard Marine, Trinity Shipping, Ecuadorian Line, Frontier Liner 

Services, King Ocean Services, Interocean Lines 

and SC Line; and four global carriers Hamburg 

Sud, MSC, CSAV, and CMA CGM.

 In addition to being served by members of 

WCSADA, a number of independent carriers 

serve the U.S. inbound trade, including Dole 

Ocean Cargo Express and Great White Fleet, 

that mainly transport proprietary cargo such 

as fresh fruits and vegetables. WCSADA also 

faces competition from Nippon Yusen Kaisha 

Line, Maersk, Evergreen, Mitsui O.S.K. Line, 

Hapag-Lloyd, Zim and several regional carriers. 

There were no active rate discussion agreements in the trade between the U.S. and the East 

Coast of South America during the fiscal year. 
53rd Annual Report 31

Top Twenty U.S. Liner 

Cargo Trading Partners

Pursuant to the Foreign Shipping Practices 

Act, 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. The most recent complete calendar year for which data are available 

is 2013. 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 United States in 2013. The figures 

in the table represent each country’s total U.S. 

liner imports and exports combined in thousands 

of loaded TEUs.

There was a 3 percent year-to-year increase 

in liner volumes in the United States’ bilateral 

trade with its top-twenty liner cargo partners. 

The top twenty U.S. liner cargo trading partners has remained the same since 2009. This year, 

for the first time since 2009, changes in ranking 

occurred among the top-eight countries. Hong 

Kong dropped from 5th to 8th, reflecting a loss in 

cargo volume of almost 10 percent. Germany 

rose in the ranking from 6th to 5th, and Vietnam 

rose from 8th to 6th on gains in volume of 3.5 and 

9.8 percent, respectively. Six trading partners 

in the top-twenty had negative growth – Hong 

Kong, Australia, Japan, South Korea, Malaysia, 

and Honduras but not enough to dislodge them 

from their respective rankings. (While Hong 

Kong reverted to Chinese control in July 1997, 

PIERS continues to report data separately as it 

is a major transshipment center.)
32 53rd Annual Report

Top Twenty U.S. Liner Cargo Trading Partners (CY 2013)

Rank Country TEUs 

(000)

1 China (PRC) 11,536

2 Japan 1,450

3 South Korea 1,317

4 Taiwan (ROC) 1,107

5 Germany 859

6 Vietnam 805

7 India 789

8 Hong Kong 759

9 Brazil 609

10 Belgium & 

Luzembourg

588

11 Indonesia 538

12 Italy 526

13 Thailand 485

14 Netherlands 467

15 United Kingdom 414

16 Guatemala 381

Rank Country TEUs 

(000)

17 Malaysia 346

18 Honduras 344

19 Chile 344

20 Australia 312
53rd Annual Report 33

Foreign Shipping Practices Act

The Commission has the authority to address 

restrictive foreign shipping practices under section 19 of the Merchant Marine Act of 1920 and 

the Foreign Shipping Practices Act of 1988. 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 United States. 

The Commission, through its Office of the General Counsel, pursued several matters informally 

involving potentially restrictive foreign practices.

This included interpretations of existing legislation, foreign legislation and administrative 

law, and regulations of non-domestic carriers’ 

terminal handling charges. However, no formal 

FSPA action by the Commission was necessary.
34 53rd Annual Report

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 foreign 

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 information sources 

to identify controlled carriers and any unjust 

or unreasonable controlled carrier activity that 

might require Commission action. In fiscal year 

2014, four controlled carriers operated in the U.S. 

trades:

(1) American President Lines, Ltd. and APL 

Co., Pte. – Republic of Singapore;

(2) COSCO Container Lines Company, Limited 

People’s Republic of China;

(3) China Shipping Container Lines Co., Ltd. 

and China Shipping Container Lines (Hong 

Kong) Company, Ltd. - People’s Republic of 

China; and

(4) Hainan P.O. Shipping Co., Ltd. – People’s 

Republic of China.
53rd Annual Report 35

Formal Investigations, Private 

Complaints and Litigation

Adjudicative proceedings before the Commission are commenced by the filing of a complaint, 

or by order of the Commission upon petition, or 

upon its own motion. Types of docketed proceedings include:

• Private complaints: Any person may file 

a formal complaint alleging violations 

of specific sections of the Shipping Act, 

found at 46 U.S.C. Chapter 411. Formal 

complaints are generally assigned to an 

FMC Administrative Law Judge (ALJ) 

who issues an initial decision which is 

then reviewed by the Commission.

• Small claims complaints: For claims of 

$50,000 or less, an informal complaint 

may be filed. The complaint is handled 

by a settlement officer for resolution 

using informal procedures that do not 

tend to include discovery or motions 

practice.

• Investigative proceedings: The Commission may investigate the activities of 

ocean common carriers, ocean transportation intermediaries, unlicensed 

entities operating as OTIs, marine terminal operators and other persons to 

ensure effective compliance with the 

statutes and regulations administered 

by the Commission. Formal orders of 

investigation and hearing are assigned 

to an ALJ for an initial decision which 

is then reviewed by the Commission.

In FY 2014, 4 new formal investigations were 

opened and 3 new formal private party complaints were filed. The Office of Administrative 

Law Judges (OALJ) issued 10 initial decisions, 

including 2 dismissals, during the fiscal year, 

leaving 6 formal proceedings pending for FY 

2015. The Commission issued 14 final orders in 

formal docket complaint proceedings, 9 orders in 

small claims complaints and 11 notices that they 

would not review the decision of the settlement 

officer or ALJ.

The following summarizes the results of docketed proceedings concluded during FY 2014 by 

the FMC Administrative Law Judges and the 

Commission. 

Formal Investigations

OC International Freight, Inc.; OMJ International Freight, 

Inc.; and Omar Collado [Docket No. 12-01] 

On April 2, 2012, the Commission issued an 

order directing the ALJ to consider Respondents’ 

appeal of the denial of an application for an OTI 

license. The Commission combined that order 

with an Order of Investigation and Hearing to 

determine whether Respondents knowingly and 

willfully obtained ocean transportation at less 

than the rates and charges that would otherwise 

be applicable by permitting unrelated entities 

to unlawfully access OMJ’s service contracts, or 

operated as an OTI without a license and bond. 

On March 26, 2013, the ALJ issued an Initial 

Decision affirming the denial of the OTI license. 

The judge also found violations of Section 19 but 
36 53rd Annual Report

did not find a violation of Section 10(a)(1) of the 

Shipping Act, 46 U.S.C. § 41102(a). On July 22, 

2013, the Commission issued an Order Remanding for Further Proceedings. The Commission 

affirmed the Section 19 violations, the issuance 

of a cease and desist order, and denial of the 

license application. The Commission vacated 

the determination that Respondents did not violate Section 10(a)(1) and the civil penalty and 

remanded the proceeding. On October 13, 2013, 

the ALJ issued an Initial Decision on Remand 

finding that Respondents violated section 10(a)

(1) and imposed a civil penalty of $226,000. On 

November 22, 2013, Respondents filed exceptions 

to the decision. On July 31, 2014, the Commission affirmed the Initial Decision on Remand 

and discontinued the preceding. 

United Logistics (LAX) Inc. – Possible Violations of Sections 

10(a)(1) and 10(b)(2)(A) of the Shipping Act of 1984 [Docket 

No. 13-01] 

On January 25, 2013, the Commission issued 

an Order of Investigation and Hearing to determine whether respondent, United Logistics, 

knowingly and willfully obtained ocean transportation at less than the rates and charges that 

would otherwise be applicable by the device or 

means of unlawfully accessing service contracts 

to which it was neither a signatory nor an affiliate, and by providing transportation in the liner 

trade that was not in accordance with the rates, 

charges, classifications, rules, and practices 

contained in its published tariff. After United 

Logistics failed to respond to a notice of default 

and order to show cause, on November 26, 2013, 

the ALJ entered an Initial Decision finding that 

United Logistics knowingly and willfully violated sections 10(a)(1) and 10(b)(2)(A) of the 

Shipping Act, 46 U.S.C. §§ 41102(a) and 41104(2)

(A). The judge imposed a civil penalty of $2.7 

million, revoked United Logistics’ OTI license, 

and ordered it to cease and desist from operating 

as an OTI. On December 24, 2013, the Commission served a notice that it would review the 

decision. On February 6, 2014, the Commission 

affirmed with modifications and discontinued 

the preceding.

Huntington International, Inc., JC Horizon Ltd., and Judy 

Lee – Possible Violations of Sections 10(a)(1) and 19 of the 

Shipping Act of 1984 [Docket No. 14-05] 

On June 4, 2014, the Commission issued an 

Order of Investigation and Hearing to determine: 

(1) Whether Huntington International, previously licensed as an ocean transportation 

intermediary (“OTI”):

(a) violated Section 19(a) and (b) of the 

Shipping Act, 46 U.S.C. §§ 40901, 40902, by continuing to operate as an OTI after its license had 

been revoked;

(b) violated section 19(e) of the Act, 46 U.S.C. 

§ 40904, and the Commission’s regulations, 46 

CFR Part 515, by collecting freight forwarder 

compensation on shipments in which Judy Lee, 

an officer and director of the company, had a 

beneficial interest; and

(c) violated section 10(a)(1) of the Act, 46 

U.S.C. § 41102(a) and the Commission’s regulations, by sharing compensation with JC Horizon 

and Judy Lee; and

(2) whether JC Horizon and Judy Lee violated section 10(a)(1) of the Shipping Act by 

knowingly and willfully obtaining ocean transportation at less than the rates and charges that 

would otherwise apply by directing Huntington International to pay to Respondents monies 

derived from freight forwarder compensation 

paid by ocean common carriers that transported 

Respondent JC Horizon’s shipments. 
53rd Annual Report 37

On July 7, 2014, Respondents Judy Lee and 

JC Horizon filed an Answer denying the allegations, asserting affirmative defenses, and filing a 

counterclaim under the Equal Access to Justice 

Act. Respondent Huntington International did 

not enter an appearance in this proceeding. On 

September 10, 2014, the ALJ issued an Initial 

Decision granting the Bureau of Enforcement’s 

motion to dismiss claims against Huntington 

International with prejudice and approving a 

settlement agreement with a $300,000 monetary 

payment from the remaining respondents. At 

the conclusion of the fiscal year, this proceeding 

was pending before the Commission. 

Private Complaints

Maher Terminals, Inc. v. The Port Authority of New York and 

New Jersey [Docket No. 08-03] 

Maher leases land and facilities at the Elizabeth Port Authority Marine Terminal from the 

Port Authority of New York and New Jersey 

(PANYNJ) for use as a marine terminal. On June 

3, 2008, Maher filed a complaint alleging that 

PANYNJ violated the Shipping Act, 46 U.S.C. 

§§ 41106(2) and (3) and 41102(c), because 

PANYNJ:

(a) gave and continues to give an undue or 

unreasonable prejudice or disadvantage with 

respect to Maher as compared to APM Terminals North America, Inc. (APM), another marine 

terminal operator;

(b) gave and continues to give an undue or 

unreasonable preference or advantage with 

respect to APM;

(c) continues unreasonably to refuse to deal or 

negotiate with Maher; and

(d) continues to fail to establish, observe, and 

enforce just and reasonable regulations and 

practices relating to or connected with receiving, 

handling, storing, or delivering property. 

In January 2013, the Commission granted partial summary judgment to the Port, finding that 

some of Maher’s requested relief was barred by 

the Commission’s statute of limitations. Maher 

appealed this decision to the United States Court 

of Appeals for the D.C. Circuit. The Commission’s 

Office of General Counsel filed a motion to dismiss, and the D.C. Circuit dismissed the appeal 

in June 2013. The Commission subsequently 

denied Maher’s motion for reconsideration of 

the summary judgment order, and again successfully defended its decision before the D.C. 

Circuit, which dismissed Maher’s second appeal 

for lack of jurisdiction in July 2014, by granting the Commission’s motion to dismiss. While 

the summary judgment issue was pending on 

appeal, the ALJ rejected Maher’s claims on the 

merits in an Initial Decision dated April 25, 2014 

determining that PANYNJ did not violate the 

Act and dismissed Maher’s claims. Exceptions to 

the ALJ’s decision were filed by Maher on July 

23, 2014. At the conclusion of the fiscal year, this 

proceeding was pending before the Commission. 

Yakov Kobel and Victor Berkovich v. Hapag-Lloyd A.G., HapagLloyd America, Inc., Limco Logistics, Inc., and International 

TLC, Inc. [Docket No. 10-06] 

This proceeding was initiated by a complaint 

filed with the Commission on July 6, 2010, alleging that Respondents violated various sections of 

the Shipping Act. After discovery, an evidentiary 

hearing, and briefing, on February 14, 2012, an 

Initial Decision was issued dismissing the complaint. On July 12, 2013, the Commission issued 

an Order Vacating Initial Decision In Part and 

Remanding for Further Proceedings. On July 
38 53rd Annual Report

30, 2014, the ALJ issued an Initial Decision on 

remand finding that the Respondents violated 

46 U.S.C. § 41102(c) of the Shipping Act, and 

ordering that the Respondents be jointly and 

severally liable to the Complainants for a reparation award of $126,072. On August 12, 2014, the 

Commission served a notice that it would review 

the decision. Exceptions to the ALJ’s decision 

were filed on September 22, 2014. The proceeding is currently pending before the Commission.

DNB Exports LLC, and AFI Elektromekanik Ve Elektronik San. 

Tic. Ltd. Sti. v. Barsan Global Lojistiks Ve Gumruk Musavirligi 

A.S., Barsan International, Inc., and Impexia Inc. [Docket 

No. 11-07] 

On April 14, 2011, Complainants -- DNB, a 

wholesale distributor of electrical goods in the 

Middle East, and AFI, its U.S. procurement 

agent -- filed a complaint alleging that Barsan 

Int’l, an NVOCC, Barsan Global (parent of 

Barsan Int’l), and Impexia, a competitor of 

DNB, violated section 10(b)(13) of the Shipping Act, 46 U.S.C. § 41103(a), by disclosing and 

using DNB’s confidential information learned by 

Barsan Int’l while acting as a common carrier 

transporting DNB’s cargo. On January 24, 2014, 

the ALJ issued an Initial Decision dismissing 

the claims against Barsan Global and Impexia 

because Complainants did not establish that they 

are common carriers governed by section 10(b)

(13). The claims against Barsan Int’l were dismissed on the ground that Complainants had 

not established that Barsan Int’l disclosed protected information in violation of section 10(b)

(13). On February 18, 2014, Complainants filed 

exceptions to the Initial Decision. On September 

4, 2014, the Commission issued an order finding 

that Barsan Int’l violated section 10(b)(13), but 

that Complainants had not proven actual injury 

resulting from the violation and were not entitled 

to a reparation award.

Kawasaki Kisen Kaisha, Ltd. v. The Port Authority of New 

York and New Jersey [Docket No. 11-12] 

On August 5, 2011, nine vessel-operating 

common carriers filed a complaint alleging 

that the Port Authority of New York and New 

Jersey (PANYNJ) violated the Shipping Act by 

imposing a cargo facility charge. Eight complainants withdrew from the proceeding, leaving 

only Kawasaki Kisen Kaisha, Ltd. (“K” Line). 

On February 5, 2014, the ALJ dismissed the 

Complaint because “K” Line willfully failed to 

provide discovery. On March 31, 2014, “K” Line 

filed exceptions to the dismissal. At the conclusion of the fiscal year, this proceeding was 

pending before the Commission.

SBI International, Inc. v. Mr. Howard Finkel c/o COSCO Container Lines Americas [Docket No. 12-10] 

On November 21, 2012, SBI, a shipper, filed a 

pro se complaint alleging that COSCO violated 

the Shipping Act when it failed to deliver chicken 

parts shipped to China. Because of lack of clarity of the Complaint, SBI was ordered to file an 

amended Complaint. The Amended Complaint 

alleging that COSCO violated several sections 

of section 10 of the Act was also insufficient, 

and SBI was ordered to file a second Amended 

Complaint. In its second Amended Complaint, 

SBI added a claim that COSCO violated the 

Act when it refused to enter into a new service 

contract with SBI. SBI then withdrew the first 

claim because COSCO delivered the chicken. SBI 

moved to dismiss the Complaint voluntarily. On 

December 5, 2013, the ALJ granted the motion 

to dismiss. On January 13, 2014, the Commission served a notice not to review.
53rd Annual Report 39

Streak Products, Inc., and SYX Distribution, Inc. v. UTi, United 

States, Inc. [Docket No. 13-04] 

On April 12, 2013, Streak, a shipper, filed 

a complaint alleging that UTi violated three 

sections of the Shipping Act: (1) 46 U.S.C. § 

41104(2) by charging Streak rates greater than 

those stated in its published tariff; (2) 46 U.S.C. 

§ 1104(4) by charging Streak rates greater than 

those it charged other shippers; and (3) 46 U.S.C. 

§ 40501 by failing to keep open to public inspection in its tariff system tariffs showing all its 

rates, charges, classifications, rules, and practices between all points or ports on its own route 

and any through transportation route that has 

been established. Leave was granted to amend 

the Complaint to include Streak’s affiliate SYX 

Distribution. On September 10, 2014, the ALJ 

entered an Initial Decision approving the parties’ 

Confidential Settlement Agreement and General 

Release. At the conclusion of the fiscal year, this 

proceeding was pending before the Commission.

Global Link Logistics, Inc. v. Hapag-Lloyd AG [Docket No. 

13-07] 

On September 10, 2013, Global Link, an 

NVOCC, filed a Complaint alleging that HapagLloyd, a VOCC, violated three sections of the 

Shipping Act: Section 41102(c) (failure to 

observe reasonable regulations and practices 

relating to or connected with receiving, handling, storing, or delivering property); section 

41104(3) (charging higher rates to Global Link 

than to other shippers); and section 41104(10) 

(unreasonable refusal to deal or negotiate) when 

it refused to renegotiate rates established by a 

service contract during the life of the contract. 

Hapag-Lloyd moved to dismiss the Complaint 

for failure to state a claim. On April 17, 2014, 

the ALJ issued an Initial Decision granting the 

motion to dismiss, holding that the Complaint 

failed to state a claim of violation of the Act. 

On May 27, 2014, Global Link filed exceptions 

to the Initial Decision. At the conclusion of the 

fiscal year, this proceeding was pending before 

the Commission.

Mitsui O.S.K. Lines Ltd. v. Global Link Logistics, Inc., [Docket 

No. 09-01] 

Mitsui O.S.K. Lines filed a complaint on May 5, 

2009, against Respondents Global Link Logistics, 

Inc. and related entities (Respondents), alleging that Respondents violated sections 10(a)

(1) and 10(d)(1) of the Shipping Act, 46 U.S.C. 

§§ 41102(a) and 41102(c) and the Commission’s 

regulations at 46 CFR § 515.31(e), by engaging in a practice referred to as “split routing.” 

Respondent Global Link is a licensed NVOCC, 

and Mitsui alleged that between 2004 and 2006, 

Global Link engaged in split routing on Mitsui 

shipments in violation of the Shipping Act. Split 

routing occurs when an NVOCC books cargo with 

a vessel-operating common carrier for shipment 

to one inland destination in the United States, 

while intending to deliver the cargo to a different inland destination. Mitsui alleged that it was 

injured as a result of Respondents’ split routing 

practice and was entitled to reparations. The 

ALJ issued an Initial Decision on July 9, 2013, 

concluding that Mitsui knew of and encouraged 

the practice of split routing by Global Link; any 

monetary losses suffered by Mitsui were proximately caused by its own actions; and Mitsui did 

not carry its burden of proof as to bad faith or 

deceit by the Respondents. In an Order issued 

January 30, 2014, the Commission adopted the 

Initial Decision and discontinued the proceeding. 
40 53rd Annual Report

Lisa Anne Cornell and G. Ware Cornell, Jr. v. Princess Cruise 

Lines, Ltd. (Corp), Carnival plc, and Carnival Corporation, 

[Docket No. 13-02] 

On January 30, 2013, complainants filed a 

complaint alleging that Respondent cruise ship 

lines refused to permit them to sail on their cruise 

ships in violation of section 10(b)(10) of the Act, 

46 U.S.C. § 41104(10). The controversy stemmed 

from a dispute over a refund of money paid to a 

fine arts auction company that operates on the 

cruise ships after Lisa Cornell cancelled a purchase of works of art. Complainants had been 

involved in litigation for several years in Florida 

courts with the auction company, an affiliate of 

the cruise lines. Respondents filed a motion to 

dismiss or alternatively for summary judgment. 

On July 23, 2013, the ALJ issued a summary 

initial decision dismissing most claims, but found 

that respondent Princess violated section 10(b)

(10) and entered a cease and desist order. The 

ALJ found that Complainants did not meet their 

burden of offering evidence that they had suffered actual injury as a result of the violation. 

On August 14, 2013, both parties filed exceptions 

to the decision.

On August 28, 2014, the Commission issued an 

Order reversing in part, affirming in part, and 

vacating in part the Initial Decision and dismissing the complaint with prejudice on the ground 

that Princess Cruise Lines and other respondents 

did not violate the Shipping Act. The Commission determined that section 10(b)(10) of 

the Shipping Act, 46 U.S.C. § 41101(10) may be 

applicable only to common carriers of cargo, not 

to common carriers of passengers. The Commission further determined that even if section 10(b)

(10) is applicable to Respondents, Respondents 

did not violate that section because they did not 

act unreasonably.

Litigation

The following docket matters were litigated 

during the fiscal year in United States Courts 

of Appeals by the Office of General Counsel on 

behalf of the Commission. At the conclusion of 

the fiscal year, these cases were pending before 

the U.S. Courts of Appeals.

The Auction Block Co. v. City of Homer, [Docket No. 12-03], 

United States Court of Appeals for Ninth Circuit. 

On April 2, 2012, Complainants, the Auction 

Block Company (Auction Block) and Harbor 

Leasing, LLC (Harbor Leasing) filed a complaint 

with the Commission against Respondents, The 

City of Homer (City) and the Port of Homer 

(Port), alleging violations of the Shipping Act, 46 

U.S.C. § 40101 et seq. Complainants alleged that 

the City and Port were marine terminal operators 

that violated the Shipping Act through unreasonable prejudice or preference, refusal to deal, 

and unfair practices, 46 U.S.C. §§ 41106(2)-(3), 

41102(c). The dispute involves a lease between 

the City and Harbor Leasing, dated March 26, 

2008, for terminal facilities utilized by Auction 

Block. Complainants alleged that the dispute 

centers around the lower rates charged to Icicle 

Seafood, Inc., under its lease with the City, and 

those charged to Auction Block under the terms 

of the tariff. 

In the May 20, 2013 Initial Decision, the ALJ 

dismissed all of Complainants’ claims against 

Respondents with prejudice, finding that the 

Commission lacked jurisdiction. On June 21, 

2013, Complainants filed Exceptions to the 

ALJ’s conclusions of law and certain findings 
53rd Annual Report 41

of fact and requested oral argument before the 

Commission on the Exceptions. On April 3, 2014 

Oral Argument was held before the Commission 

and was limited to whether the Port is an MTO in 

connection with all dock/terminal areas including Fish Dock (the facility at issue), despite the 

fact that the terminal services in dispute do not 

involve common carriers. 

On August 12, 2014, the Commission upheld 

the Initial Decision of the Administrative Law 

Judge dismissing Auction Block’s complaint for 

lack of jurisdiction. On August 22, 2014 the Auction Block Company filed a Petition for Review 

of the Commission Order with the United States 

Court of Appeals for the Ninth Circuit. The Commission and the Department of Justice entered 

appearances in the case. The Court of Appeals 

granted leave for the City of Homer and the Port 

to intervene in the appeal. 

Chief Cargo Services, Inc. v. Federal Maritime Commission, 

[Docket No. 10-08], United States Court of Appeals for the 

Second Circuit. 

On November 1, 2013, Chief Cargo Services, 

Inc., filed a petition for review of the Commission’s 

Order in FMC Docket 10-08, Bimsha International v. Chief Cargo Services, Inc. & Kaiser 

Apparel, Inc., upholding the ALJ’s initial decision holding that by the release of three shipping 

containers, without requiring presentation of 

the original bills of lading, Chief Cargo failed 

to fulfill its obligations as a non-vessel-operating 

common carrier, thereby violating section 10(d)

(1) of the Shipping Act. The ALJ also ordered 

Chief Cargo to “cease and desist releasing cargo 

without requiring presentation of an original bill 

of lading.” On April 24, 2014, Chief Cargo filed 

its Joint Appendix, Brief, and Special Appendix. 

Chief Cargo questioned the jurisdiction of the 

Commission to hear and adjudicate Bimsha’s 

claim of violations of the Shipping Act; argued 

that the Commission improperly found violations of the Shipping Act; and argued that the 

Commission improperly issued a cease and desist 

order. On June 20, 2014, the Commission and 

the United States filed a joint brief. Oral Argument was held on September 30, 2014.

Procedural Rule Updates

The Commission updated several of its procedural rules this year concerning proceeding and 

information requests filed with the Commission.

Informal Procedure for Adjudication of Small Claims, Direct 

Final Rule, Docket No. 14-09, (79 FR 46714)

The Commission amended Subpart S of 46 

CFR Part 502, which sets forth its rules for the 

adjudication of small claims filed with the Commission seeking reparations in the amount of 

$50,000 or less for violation of the Shipping Act 

of 1984. The new rules provide that claims less 

than $50,000 will be decided by a Small Claims 

Officer appointed by the Commission’s Chief 

Administrative Law Judge. 

Amendments to Regulations Governing the Rules of Practice 

and Procedure for Dismissals of Action, Notice of Proposed 

Rulemaking, Docket No. 14-12 (79 FR 56546)

The Commission proposed to amend its rules 

governing dismissals of actions by complainants, 

by order of the presiding officer, and by respondents when complainant fails to prosecute. This 

modification reflects the Commission’s intent 
42 53rd Annual Report

to adhere to its long-standing policy of reviewing settlements by adding language to clarify 

that when a voluntary dismissal is based on a 

settlement agreement, the agreement must be 

submitted for approval by the Commission.

Requests for Testimony by Employees Relating to Official 

Information and Production of Official Records in Litigation, 

Direct Final Rule, Docket No. 14-03, (79 FR 243501) 

The Commission promulgated regulations 

under Part 501 and 503 of the Commission’s regulations, adding procedures for the production 

of testimony or documents in legal proceedings 

when the Commission is not a party. The regulations, commonly called “Touhy” regulations, 

are named after the Supreme Court’s decision 

United States on behalf of Touhy v. Ragen. The 

Touhy regulations create a predictable procedure 

for the Commission to determine what testimony 

and documents should or should not be released 

under subpoena. The regulations provide the procedure for dealing with information, and address 

how the Commission will procedurally respond 

to a subpoena or other request for testimony or 

documents that are served on a current or former 

employee. 
53rd Annual Report 43

APPENDICES

A - FMC Organization Chart
44 53rd Annual Report

B - FMC Senior Officials

Chief of Staff Mary T. Hoang

Counsel to Commissioner Dye Edward L. Lee, Jr.

Counsel to Commissioner Lidinsky Jewel Jennings-Wright*

Counsel to Commissioner Khouri John A. Moran

Counsel to Commissioner Doyle David J. Tubman, Jr.

General Counsel Vacant

Secretary Karen V. Gregory

Chief Administrative Law Judge Clay G. Guthridge

Director, Office of Consumer Affairs & Dispute Resolution Services Rebecca A. Fenneman**

Director, Office of Equal Employment Opportunity Keith I. Gilmore

Inspector General Jon Hatfield

Managing Director Vern W. Hill

Deputy Managing Director Vacant

Director, Bureau of Certification and Licensing Sandra L. Kusumoto**

Director, Bureau of Enforcement Peter J. King

Director, Bureau of Trade Analysis Florence A. Carr**

*Assumed position in August 2014

** Assumed position in November 2013
53rd Annual Report 45

C - Statement of Appropriations, Obligations and Receipts

Appropriations

For necessary expenses of the Federal Maritime Commission as authorized by section 201(d) of 

the Merchant Marine Act, 1936, as amended (46 U.S.C. 307), including services as authorized by 

5 U.S.C. 3109; hire of passenger motor vehicles as authorized by 31 U.S.C. 1343(b); and uniforms 

or allowances therefore, as authorized by 5 U.S.C. 5901–5902, $24,669,000: Provided, That not to 

exceed $2,000 shall be available for official reception and representation expenses.

Public Law 113-76 $24,669,000

Total Budgetary Resources $24,669,000

Obligations and Unobligated Balance: 

Net obligations for salaries and expenses for 

the fiscal year ended September 30, 2014.

$24,650,789

Statement of Receipts:

Deposited with the General Fund of the Treasury for the Fiscal Year 

Ended September 30, 2014:

Publications and reproductions, fees and 

vessel certification, and freight forwarder 

applications 

$220,549

Fines and penalties $2,968,000

Total general fund receipts $3,188,549
46 53rd Annual Report

D - Civil Penalties Collected

Mitsui O.S.K. Lines Ltd. and Nissan Motor Car Carrier Co. $1,275,000

Compania Sud Americana de Vapores S.A. $625,000

OBI Shipping Inc. $50,000

Benison Transport, Inc. and Shine International Transportation 

(Shenzhen) Ltd. 

$110,000

Rickmers-Linie GmbH. $190,000

Hayek Services Inc. $20,000

ABC Trucking and Logistics LLC $23,000

FCC Logistics Inc. dba GOF $70,000

Sea Central Shipping Corp. $85,000

China Container Line Ltd. and China Container Line (SHA) Ltd. $100,000

Orient Star Transport International Ltd. $100,000

Eastern Car Liner Ltd. $105,000

JC Horizon Ltd. and Judy Lee $300,000

Total: $3,053,000

Note: As of the end of fiscal year 2014, $3,053,000 in civil penalties were assessed or compromised 

by the Commission for violations of the Shipping Act. Of this amount, $85,000 was pending collection and deposit to the U.S. Treasury.
53rd Annual Report 47