Federal 

Maritime 

Commission

58th Annual Report

Fiscal Year 2019

Federal Maritime 

Commission

58th Annual 

Report

for

Fiscal Year 

2019

Table of Contents

Letter of Transmittal 1

Members of the Commission 3

FMC Mission, Strategic Goals, and Functions 5

Strategic Goal 1 5

Strategic Goal 2 6

Statutory Authority 6

Year in Review 7

Efficiency and Competition 9

Strategic Goal 1 9

Agreement Filings and Review 10

Competitive Impact and Monitoring 13

Carrier Alliance Agreements 14

Tariffs, Service Contracts, NSAs, & MTO Schedules 16

International Cooperation 18

Protecting the Public 23

Strategic Goal 2 23

Investigation into Demurrage, Detention, and Per Diem Charges 23

Licensing 24

Passenger Vessel Program 26

Consumer Affairs and Dispute Resolution 27

Industry Outreach and Education/Awareness 28

Enforcement, Audits and Penalties 29

Inter-Agency Cooperation 30

Competitive Impact of Ocean Carrier Alliance Joint Purchases of Certain 

Covered Services 33

Review of Agreements Under LoBiondo Act 33

DOJ/FTC Guidelines for Collaborations Among Competitiors 34
Developments in Major U.S. Foreign Trades 39

Worldwide 39

Asia 40

North Europe 41

Indian Subcontinent and Middle East 42

Central America and the Caribbean 42

South America 43

Mediterranean 44

Africa 44

Australia and Oceania 45

Top Twenty U.S. Liner Cargo Trading Partners 46

Top Twenty U.S. Liner Cargo Trading Partners (CY2018) 47

Foreign Shipping Practices Act 48

Controlled Carriers 49

Formal Investigations, Private Complaints and Litigation 51

Rulemakings 56

Leveraging Technology 59

APPENDICES 63

A – FMC Organization Chart 63

B – FMC Senior Officials – FY 2019 64

C – Statement of Appropriations, Obligations, and Receipts 65

D – Agreement Types 66

E – Civil Penalties Collected 68
58th Annual Report 1

Letter of Transmittal

FEDERAL MARITIME COMMISSION 

800 North Capitol Street, N.W. 

Washington, DC 20573-0001

March 31, 2020

To the United States Senate and House of Representatives:

On behalf of my fellow Commissioners, and pursuant to section 103(e) of Reorganization 

Plan No. 7 of 1961, and section 208 of the Merchant Marine Act, 1936, as amended, at 46 U.S.C. 

306(a), I welcome the opportunity to share with you the 58th Annual Report of the Federal 

Maritime Commission, Fiscal Year 2019.

This report highlights the key accomplishments, initiatives, and relevant events that occurred 

between October 1, 2018 and September 30, 2019. Included in the following pages are reports 

about:

• Significant agreements filed at the Commission

• Status of formal investigations, private complaints, and litigation before the Commission

• Investigation of detention, demurrage, and per diem practices of ocean carriers and 

marine terminal operators

• Trends in licensing of non-vessel operating common carriers and freight forwarders

• Developments in the key trade lanes serving the United States

Containerized ocean freight is an indispensable foundation of the Nation’s economy, providing American importers and exporters with a competitive advantage in the global marketplace. 

It is the mission of the Federal Maritime Commission to ensure competition and integrity for 

America’s ocean supply chain and we are proud of the work we do toward that goal.

Sincerely,

Michael A. Khouri

Chairman
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58th Annual Report 3

Members of the Commission

Fiscal Year 2019

Michael A. Khouri

Chairman

Appointed 2009

Term Expires 2021

Rebecca F. Dye

Commissioner

Appointed 2002

Term Expires 2020

Louis Sola

Commissioner

Appointed 2019

Term Expires 2023

Daniel B. Maffei

Commissioner

Appointed 2016

Term Expired 2022
4 58th Annual Report
58th Annual Report 5

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:

• Ensure a competitive and reliable international ocean transportation supply system that 

supports the U.S. economy and protects the public from unfair and deceptive practices.

The Commission achieves its mission by ensuring that the fundamental dynamics of a 

free, open and competitive ocean transportation market 

drive economic outcomes. To that end, the Commission 

is committed to faithfully administer the Shipping Act, 

employing a minimum of government intervention and 

regulatory costs and by placing a greater reliance on the 

marketplace.

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 

any joint or collective activities 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; and

Competition and Integrity 

for America’s Ocean Supply 

Chain
6 58th Annual Report

• Taking action to address unfavorable conditions caused by foreign government or 

business practices in U.S. foreign shipping trades.

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:

• Investigating and ruling on complaints regarding rates, charges, classifications, and 

practices of common carriers, MTOs, and Ocean Transportation Intermediaries (OTIs) 

that violate the Shipping Act;

• Licensing OTIs with appropriate character and adequate financial responsibility; 

• Helping resolve disputes involving shipments of cargo, personal or household goods, 

or disputes between cruise vessel operators and passengers;

• Identifying and holding regulated entities accountable for mislabeling cargo shipped 

to or from the United States; and

• 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 (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

• Section 834 of the Frank LoBiondo Coast Guard Authorization Act of 2018 (LoBiondo 

Act)
58th Annual Report 7

Year in Review

Last year container lines contended with 

shifting supply chains, slowing trade growth, 

and preparations to comply with a new global 

mandate on vessel engine exhaust emissions. 

Nevertheless, the industry remains stable in 

terms of the number of ocean carriers providing service, routes offered, availability of 

container capacity, and the freight rates being 

charged to shippers. 

While trade globally is slowing, container 

volumes transiting the United States grew 

at a positive level year over year, with 36.5 

million Twenty Foot Equivalent Units (TEUs) 

being imported and exported, compared to 35 

million TEUs in the previous year. Globally, 

volumes still grew, but at a slower pace year 

over year. 

Containerized ocean transportation is 

highly commoditized and typically provides 

very low profit margins. Ocean carriers are 

continually seeking ways to grow business, 

add value to their customers, and differentiate 

themselves to better compete. Toward those 

goals, some of the major lines are expanding 

their landside logistics capabilities to provide 

more point-to-point/end-to-end commercial 

offerings. Accordingly, there have been a 

number of acquisitions by ocean carriers of 

companies operating in the logistics sector 

and that trend is expected to continue into 

the new year. 

One industry development that will have 

an impact on operations and balance sheets 

is complying with a new global emissions 

requirement established by the International Maritime Organization and commonly 

referred to as “IMO 2020”. Under the new 

regulation, effective January 1, 2020, ships 

must either burn low sulfur fuel or use an 

equivalent compliance method such as 

exhaust scrubbers. Ocean carriers have indicated they intend to recoup compliance costs 

via surcharges levied on shippers. Additionally, vessels being retrofitted with scrubber 

units temporarily remove some cargo capacity 

from the marketplace during the conversion 

process. The Federal Maritime Commission 

will monitor IMO 2020 surcharges implemented by ocean carriers to assure compliance 

with requirements under the Shipping Act 

that any fees charged are reasonably related 

to the stated case for cost recovery.

Over the course of Fiscal Year 2019, the 

Federal Maritime Commission engaged in 

investigative, rulemaking, and agreement 

activities that served to ensure a competitive 

and reliable international ocean transportation 

supply system that supports the U.S. economy 

and protects the public from unfair and deceptive practices. 

One such undertaking of the Commission was complying with a mandate of the 

Frank LoBiondo Coast Guard Authorization Act 

of 2018 that restricts ocean carriers’ ability to 

engage in joint procurement of certain covered marine services provided by U.S.-based 

companies. By the end of Fiscal Year 2019, the 

Commission had conducted a review of all 

carrier agreements on file and ensured that 

agreements that are not in compliance with 

the new law were advised of the updated 

statutory requirements addressing joint procurement authorities. For Agreements that 

contain authorities that might raise concerns 
8 58th Annual Report

under the new law, the Commission has put 

in place information requirements so that it 

is equipped to conduct additional analysis 

on the impact of those agreements and take 

action where appropriate.

More broadly, agreements remain an 

invaluable tool for carriers and marine terminal operators to achieve efficiencies that 

benefit shippers and consumers. At the end 

of the fiscal year, the Commission had 398 

agreements on file of which almost one-quarter were marine terminal operator agreements. 

The Commission had concerns about two 

agreements filed during the past year, the 

West Coast MTO Agreement (WCMTOA) and 

the Puerto Nuevo Terminals LLC Cooperative 

Working Agreement (PNT). In both cases, the 

Commission issued Requests for Additional 

Information and while both agreements ultimately went into effect, they did so under 

intensified monitoring requirements. 

The Commission made or initiated several 

changes to its rules that should improve the 

efficiency of regulatory compliance while 

maintaining sufficient safeguards to protect 

the integrity of the marketplace. In December 

2018, a final rule went into effect that restored 

the standard of what constitutes a “practice” 

to its legal and proper definition under Section 41102(c) of the Shipping Act of 1984. In 

May 2019, the Commission issued a final rule 

updating licensing rules for Ocean Transportation Intermediaries and in September 2019, 

the Commission voted to exempt ocean carriers from publishing essential terms of service 

contracts. 

The work of Commissioner Rebecca Dye 

in her Fact Finding 28 investigation of detention and demurrage practices of ocean carriers 

and marine terminal operators moved into its 

final stage with the publication of a proposed 

interpretive rule. If adopted, the rule would 

provide the public with guidance about how 

the Commission assesses the reasonableness 

of demurrage and detention practices and 

regulations under the Shipping Act. 

The great majority of the Commission’s 

activities take place under the authority of 

the Shipping Act of 1984. The Foreign Shipping Practices Act of 1988 and Section 19 of 

the Merchant Marine Act, 1920 give the FMC 

additional jurisdiction to investigate and sanction discriminatory conditions caused by rules, 

regulations, or laws of a foreign government. 

During Fiscal Year 2019, the Federal Maritime 

Commission continued to monitor developments related to proposed Canadian ballast 

water regulations that, if enacted, might 

adversely impact U.S. flag Great Lakes ship 

operators.

Finally, the Commission added two new 

members. On January 23, 2019 Messrs. Daniel 

B. Maffei of New York and Louis E. Sola of 

Florida were sworn-in as Commissioners serving terms that will expire in 2022 and 2023 

respectively. Mr. Carl W. Bentzel of Maryland 

was nominated by President Trump on June 

12, 2019 for a term that will expire in 2024. Mr. 

Bentzel was confirmed by the United States 

Senate on November 21, 2019 and sworn-in 

as a Commissioner on December 9, 2019.
58th Annual Report 9

Efficiency and Competition

Strategic Goal 1

Maintaining a competitive and reliable 

international ocean transportation system 

and regularly scheduled liner trade by evaluating and monitoring the use of various 

types of agreement authority for anticompetitive effects 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 ocean carrier and 

marine terminal competitors to meet, discuss, 

and in some cases, cooperate on certain business issues, but first they must file a written 

agreement with the Commission. The Commission reviews agreements using traditional 

antitrust law and economic models to evaluate 

the potential competitive impact of a proposed 

agreement before it 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 anticompetitive 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 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 Shipping Act creates a regulatory 

regime separate from Department of Justice 

antitrust law under which collective carrier or 

MTO activity is evaluated when an agreement 

is initially filed and closely monitored thereafter for any adverse impact on competition 

in the trade. 

So long as the regulated entities comply 

with the statutory and regulatory proscriptions of the Act, then the other federal antitrust 

statutes generally do not apply. Conversely, 

if a regulated entity violates the Shipping 

Act, they 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.
10 58th Annual Report

Agreement Filings and Review

Under Sections 4 and 5 of the Shipping Act, 

46 U.S.C. §§ 40301–40303, all agreements by or 

among ocean common carriers to undertake 

any of the following are required to be filed 

with the Commission: 

•  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. 

Except for certain exempted categories, 

agreements among marine terminal operators 

(MTOs), and those among one or more MTOs 

and one or more ocean common carriers, also 

must be filed with the Commission. 

The Commission reviews all agreements 

filed under the Shipping Act as well as evolving commercial conditions in the U.S. foreign 

trades to determine whether cooperation contemplated between or among ports, ocean 

common carriers, and/or MTOs is likely to 

or has resulted in an unreasonable reduction 

in service or increase in rates. 

When the Commission is unable to determine the likely competitive impact of a 

proposed agreement within the 45-day statutory review period, the Commission may issue 

a request for additional information (RFAI) 

to the agreement parties to obtain additional 

data and/or clarification on unclear or indefinite proposed agreement authority.

In FY 2019, the Commission received 170 

agreement filings, including new agreements and amendments to, or terminations of, 

Agreement Review Process

• Agreements become effective 

45 days after filing, unless the 

Commission has requested 

additional information to evaluate 

the competitive impact of the 

agreement. All agreements are 

reviewed according to the standard 

set in section 6(g) of the Shipping 

Act.

• The Commission has the authority 

to reject a pending agreement 

filing if it determines the filing 

fails to meet the Shipping Act and 

Commission regulations requiring 

filed agreements to be clear and 

definite, or if the filing is outside 

the Commission’s jurisdiction. 

• The Commission may seek to enjoin 

the operations of an agreement if 

it determines that the agreement 

could reduce competition to the 

point of unreasonably impacting 

the market or substantially lessen 

competition in the purchasing of 

certain covered services as defined 

in the LoBiondo Act.

• Effective agreements are exempt 

from U.S. antitrust laws, and 

instead, are subject to Shipping 

Act restrictions and Commission 

oversight.
58th Annual Report 11

existing agreements. This activity represents a 

slight decrease in filings from FY 2018, though 

not one that appears directly attributable to 

any notable changes in the ocean transportation industry. Among these filings were a 

substantial number of terminations of outdated VOCC agreements. Commission staff 

continues to review and audit agreements on 

file to identify those that may be no longer 

actively in use or that have lapsed in terms 

of membership. When such an agreement is 

identified, the FMC seeks termination of the 

agreement, if appropriate, or an update of its 

provisions.

FY 2019 was the third full year of availability 

of the eAgreements electronic filing system, 

and over 98 percent of all agreements and 

amendments were filed electronically. The 

eAgreements system has streamlined FMC 

business processes by reducing initial agreement intake time, resulting in faster public 

access to pending filed agreements and significantly reducing administrative costs for both 

the industry and the Commission. In FY 2019, 

the Commission completed the migration of 

all agreements into the eAgreements system, 

allowing the public to access all FMC-filed 

agreements in a single location. 

During the fiscal year, the Commission initiated an audit of VOCC agreements on file to 

determine which ones may require additional 

scrutiny in terms of joint negotiation or contracting for the purchase of certain covered 

services as set forth under the LoBiondo Act 

(Public Law No. 115-282) as further described 

below. This effort required the review of all 
12 58th Annual Report

agreements on file with the Commission, of 

which 171 were identified as containing joint 

procurement or negotiation authority. Each 

of these agreements were then informed that 

they would need to submit to the Commission any joint agreements reached under 

the authority, and that monitoring requirements would likely be imposed to allow the 

Commission to review any future activities 

concerning joint procurement or negotiating 

authority for certain covered services. This 

process continues into FY 2020.

At the end of the fiscal year, a total of 398 

agreements were in effect and on file with 

the Commission, categorized as follows. See 

Appendix D for description of all agreement 

types.

Chairman Michael Khouri (center), Director Henrik Morch of the European Commission’s 

Directorate General for Competition (left), and Deputy Director-General YI Jiyong from 

the Water Transport Bureau, Ministry of Transport, People’s Republic of China (right).
58th Annual Report 13

Competitive Impact and Monitoring

The following are examples of agreements 

filed with the Commission during the fiscal 

year, including specific Commission monitoring and actions taken to ensure compliance 

with the Shipping Act. 

West Coast MTO Agreement 

(WCMTOA):

Under this Agreement, marine terminal 

operators at the Ports of Los Angeles and 

Long Beach created an off-peak gate program, 

known as PierPass, to address cargo-related 

congestion and pollution in the port area. 

The PierPass program was originally developed to incentivize the use of terminal gates 

during night and weekend (off-peak) shifts 

as opposed to daytime (peak) shifts. This was 

accomplished through a traffic mitigation fee 

(TMF) assessed on cargo moving during daytime shifts. The program was successful in 

reducing traffic congestion and air pollution 

caused by idling trucks awaiting access to terminal gates during high-traffic hours. 

In response to increasingly vocal stakeholder dissatisfaction with aspects of the 

PierPass program, particularly related to the 

loss of productivity during the peak/off-peak 

shift changeover, WCMTOA amended its 

agreement to replace the existing structure 

with a new program, termed PierPass 2.0. 

Beginning in November 2018, the TMF was 

replaced with a flat container fee applied to all 

terminal gate users during all shifts (day, night 

and weekend) combined with a truck appointment system. All existing exemptions from the 

TMF still apply under the new version of the 

PierPass program. WCMTOA asserts that this 

new structure will be effective in managing 

truck flow and terminal workload.

The Commission implemented additional 

reporting requirements warranted by the 

Agreement’s change in revenue structure. 

Since the new program’s implementation, the 

WCMTOA terminals have faced challenges in 

reaching the same division of cargo between 

peak and off-peak shifts, as more traffic has 

shifted to peak hours than expected. The 

terminals have adjusted appointments in an 

attempt to optimize traffic flows through the 

ports. The Commission continues to monitor 

PierPass program performance for changes 

in terminal service resulting from the implementation of the new program structure that 

could impact cargo flows through the ports.

Digital Container Shipping Association Agreement:

In March 2019, five major carriers entered 

into an agreement to incorporate the Digital Container Shipping Association (DCSA) 

under which the parties sought to discuss and 

agree on the standardization of information 

technology (IT) relating to the movement 

of container cargo and those services. In 

July 2019, four additional carriers joined the 

agreement. Topics of discussion for setting IT 

standards include the exchange of container 

data in the “internet of things”, data security, 

software, blockchain, electronic communications (between and with ocean carriers, vessels, 

customs, terminals, customers, and other 

transport modes), electronic bills of lading and 

other related documents. On such matters, the 

parties seek to share and publish industry IT 
14 58th Annual Report

standards to encourage their common adoption and use by all industry participants and 

promote operational efficiencies. Decisions 

and duties are executed under the agreement 

by a General Assembly, Supervisory Board, 

and Management Board. The Commission 

monitors the activities and progress of the 

parties through the minutes of these meetings 

and through direct meetings with representatives of DCSA.

Puerto Nuevo Terminals LLC Cooperative Working Agreement:

The agreement was originally filed at the 

Commission in March 2019 between two 

marine terminal operators (MTOs) at the Port 

of San Juan, Puerto Rico. The MTO parties to 

the agreement are Luis A. Ayala Colon Sucrs., 

Inc. (LAC) and Puerto Rico Terminals LLC 

(PRT). Under the terms of the agreement, the 

parties plan to discontinue their separate and 

competing operations to form and operate 

a joint marine terminal, the Puerto Nuevo 

Terminals LLC (PNT). Each party will own 

50 percent of PNT. The joint MTO will set 

the rates for its services; publish rate schedules/tariffs; enter into marine terminal service, 

conference, and other agreements; purchase 

and lease cranes and other yard equipment; 

coordinate labor for dock stevedoring; and 

all other matters relating to standard marine 

terminal operations and practices at the port. 

Liner shipping service at Puerto Rico is divided 

into the U.S. domestic trade and international 

trade (i.e., cargo outside of the trade between 

the U.S. and Puerto Rico). The domestic trade 

is regulated under the Jones Act by the U.S. 

Surface Transportation Board, and the international trade is regulated under the Shipping 

Act by the FMC. The agreement reduces competition between the two primary MTOs that 

handle international container cargo for the 

island. Given this concern, the Commission 

issued an RFAI in May 2019. On review of the 

responses to the RFAI, the Commission did 

not find sufficient evidence to seek an injunction of the agreement, and it became effective 

in August 2019. In its review, however, the 

Commission imposed additional reporting 

requirements to oversee the implementation 

of the agreement and obtained concessions 

from the parties to maintain their current rate 

levels through 2020.

Carrier Alliance Agreements

At the end of FY 2019, the three global alliances, namely, THE Alliance, the OCEAN 

Alliance and the 2M Alliance, controlled close 

to 90 percent of the vessel capacity in the two 

largest U.S. trades, the transpacific and the 

transatlantic. The transpacific trade encompasses cargo moving between Asia and the 

U.S., while the transatlantic trade includes 

cargo moving between Europe and the United 

States. Collectively, the three alliances have 

market shares of 85 percent in the transpacific and 91 percent in the transatlantic. Given 

these considerable market shares, the FMC 

closely monitors alliance activities. As part 

of the Commission’s agreement monitoring 

program, alliances report idividual members’ 

average revenue data and statistical tests are 

performed using that data for indications of 

collaborative price setting within alliances, 

among alliances, and among all alliance 
58th Annual Report 15

carriers. If tests indicate that this is the case, 

the Commission can take appropriate action. 

Vessel capacity utilization continues to be 

higher in the headhaul trades (trade lanes generating the highest revenues, and generally 

those with the greater cargo volume) compared to the backhaul trades (the trade lane 

direction that carries both less cargo volume 

and generally cargo of lower value). More specifically, in the major east-west U.S. import 

and export trades (Asia-U.S. Pacific Coast and 

Europe-U.S. Atlantic Coast), the higher value 

cargo headhaul is Asia eastbound to the U.S. 

and Europe-westbound to the U.S. From a 

volume perspective, the trades are also imbalanced, with more loaded containers coming 

into the U.S. from Asia than U.S. export loads 

going to Asia. A similar imbalance exists in 

the transatlantic trade, with more loaded containers arriving at U.S. Atlantic and Gulf ports 

than U.S. exports going to Europe.

The largest ocean carriers operate in the 

three global alliances as discussed below.

Maersk/MSC Vessel Sharing Agreement (2M Alliance): 

The 2M Alliance consists of Maersk Line 

and MSC, the largest and second-largest ocean 

carriers by global TEU capacity. The Commission monitors the activities of the parties 

in the alliance, the parties’ average revenues, 

and their vessel capacity and utilization levels. 

The parties also provide the Commission with 

advance notice of any planned capacity reductions in the U.S. liner trades. As world trade 

began to slow, however, 2M adjusted capacity downward to more closely meet its cargo 

demand in the transpacific, while increasing 

capacity to meet demand in the transatlantic. 

At the end of the fiscal year, the 2M Alliance 

accounted for approximately 34 percent of 

global container capacity. During FY 2019, 

2M expanded its slot exchange and purchasing agreement with Zim to include the liner 

trades between Asia and U.S. Pacific Northwest, as well as between Asia and the U.S. 

Gulf Coast. The three carriers also collaborate 

on the liner trade between Asia and the U.S. 

Atlantic Coast. In August 2019, the 2M Alliance 

and Zim launched a second service connecting Asia with the U.S. Gulf Coast, increasing 

their weekly capacity by approximately 4,000 

TEUs in this trade lane. The 2M carriers’ slot 

exchange and purchasing agreement with 

Hyundai Merchant Marine covering the liner 

trade between Asia and the U.S Pacific and 

Atlantic Coasts will expire in early 2020 when 

Hyundai Merchant Marine plans to join THE 

Alliance.

OCEAN Alliance Agreement: 

The OCEAN Alliance consists of APL, 

COSCO, CMA CGM, Evergreen Line, and 

OOCL. The Commission monitors the activities of the parties in the OCEAN Alliance, the 

parties’ average revenues, and their vessel 

capacity and utilization levels. The parties 

also provide the FMC with advance notice of 

any planned capacity reductions in the U.S. 

liner trades. The OCEAN Alliance left capacity largely unchanged during the year across 

its transpacific services, while decreasing it 

in the transatlantic. At the fiscal year’s end, 

the OCEAN Alliance accounted for approximately 29 percent of global container capacity. 

Of note, CMA CGM is the owner of APL, and 

COSCO holds a majority stake in OOCL. The 

OCEAN Alliance added Tampa, Florida, to 

its transpacific network in December 2018, 

and now calls the port on two of its services 
16 58th Annual Report

connecting Asia to the United States.

THE Alliance Agreement: 

THE Alliance, comprised of members 

Hapag-Lloyd, ONE, and Yang Ming, continued in its third year of operations. THE 

Alliance accounted for 17 percent of the 

global container capacity in FY 2019. In July 

2019, THE Alliance announced that a fourth 

member, Hyundai Merchant Marine (HMM) 

would be joining the alliance in April 2020. 

THE Alliance is expected to file an amendment 

to its agreement to add HMM as a member 

in late CY 2019. THE Alliance adjusted several service strings to accommodate demand 

during the fiscal year. As with the other global 

carrier alliances, the Commission monitors 

THE Alliance parties’ activities under the 

Agreement, along with their vessel capacity and utilization, average revenue and any 

planned capacity reductions in the U.S. liner 

trades.

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 the close of FY 2019, 5,867 tariff location 

addresses were posted. Of that number, 5,716 

tariff addresses were for NVOCCs.

Tariff Exemptions – NRAs and 

NSAs

The Commission provides regulatory relief 

from its NVOCC rate tariff requirements by 

exempting licensed and foreign-registered 

NVOCCs when using NVOCC Negotiated 

Rate Arrangements (NRAs). NVOCCs have 

indicated that NRAs, which are not required 

to be published or filed with the Commission, 

are a less burdensome commercial pricing 

option than rate tariffs, which must be published. Consequently, NVOCCs advise that 

NRAs save them both time and money. In 

August 2018, the Commission provided further 

regulatory relief to NVOCCs by significantly 

expanding the commercial flexibilities available to NVOCCs and their shippers under 

NRAs (see Docket No. 17-10). At the end of 

the fiscal year, nearly 2,057 active NVOCCs 

or approximately 36 percent of all 5,716 

NVOCCs, had filed a prominent notice or rule 

in their respective tariff indicating that they 

had invoked the NRA exemption as an alternative to rate tariff publication. The majority 

of NVOCCs which have implemented NRAs 

continue to use a combination of NRAs and 

tariff rate filings. 

Commission rules also granted regulatory 

relief from rate tariff requirements by allowing 

NVOCCs to offer transportation services pursuant to individually negotiated, confidential 

service arrangements with customers, termed 

NVOCC Service Arrangements (NSAs), rather 

than under a published tariff. The Commission 

expanded this regulatory relief to NVOCCs by 

eliminating the requirement to file NSAs and 

their amendments with the Commission as of 

August 22, 2018 (also see Docket No. 17-10). 
58th Annual Report 17

When NSA filing was discontinued, the Commission had received a total of 1,140 original 

NSAs and 1,609 NSA amendments filed by 

94 NVOs during the year. As a pricing option, 

NSAs are more commonly offered by larger 

volume NVOCCs. Smaller volume NVOCCs 

tend to use NRAs and tariff rates as pricing 

options for their shipper customers.

Service Contracts

Service contracts enable carriers and shippers to tailor transportation services and rates 

to their commercial and operational needs 

and to keep these arrangements confidential. 

While the majority of cargo volumes transported in the major U.S. liner trades move 

under service contracts, as an alternative to 

tariffs, VOCC use of tariffs vs. service contracts varies by carrier and trade lane. Of the 

140 active VOCCs in the U.S. trades, 82 filed 

service contracts with the Commission in FY 

2019, employing a blend of service contracts 

and tariffs. The remaining 68 VOCCs solely 

used tariffs in rating their cargo. During the 

fiscal year, the Commission received 47,214 

new service contracts, compared to 47,972 in 

FY 2018, and 752,090 contract amendments, 

compared to 773,014 in FY 2018.

Marine Terminal Operator 

Schedules

An MTO may voluntarily 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. An MTO schedule made 

available to the public is enforceable by an 

appropriate court as an implied contract without proof of actual knowledge of its provisions. 

During the fiscal year, 9 new MTOs registered 

with the Commission, increasing the total to 

281 MTOs actively registered through Form 

FMC-1. MTOs report the electronic location 

of their MTO terminal schedules through the 

filing of Form FMC-1, with 175 MTOs electing 

to voluntarily publish their terminal schedules. 

The internet address of these MTO terminal 

schedules are posted on the Commission’s 

website.
18 58th Annual Report

International Cooperation

Global Maritime Forum Annual 

Summit in Hong Kong

In October 2018, Chairman Khouri visited 

Hong Kong to attend the Global Maritime 

Forum’s 2018 Annual Summit. The Chairman also met with representatives of the 

Hong Kong Competition Commission, the 

American Chamber of Commerce in Hong 

Kong, and representatives from the Ministry 

of Transport.

International Bar Association 

Meeting in Rome, Italy, & Maritime Law Organization Annual 

Conference in London, England

In October 2018, Commissioner Dye traveled to Rome, Italy, to attend the International 

Bar Association Meeting and discuss the Commission’s approach to enforcing competition 

in the U.S. liner trades. Later that month, Commissioner Dye traveled to London, England, 

to present the keynote speech at the European 

Maritime Law Organization’s 24th Annual 

Conference. During her speech, Commissioner 

Dye discussed U.S. liner shipping statutes and 

how the Commission reviews agreements, as 

well as the fact-finding investigation on detention and demurrage practices.

Consultative Shipping Group 

Meeting at the Canadian Embassy

In October 2018, General Counsel Tyler 

Wood attended the U.S.-Consultative Shipping Group (CSG) industry dialogue meeting 

at the Embassy of Canada in Washington, DC. 

Representatives from the U.S. Government 

and CSG discussed the state of play for global 

shipping, ongoing trade issues, current policy 

initiatives, sanctions, environmental issues, 

ballast water management, and digitalization 

in the industry, among other topics.

U.S.-Korea Maritime Bilateral 

Meetings in Washington, DC and 

Busan, South Korea

In October 2018, staff from the Office of 

the General Counsel attended the 2018 U.S.-

Republic of Korea Maritime Bilateral Meeting 

at the U.S. Maritime Administration in Washington, DC. Representatives from the U.S. and 

Korean government discussed topics including maritime strategies and mariner training, 

the effects of the Panama Canal expansion, 

and the Arctic Ocean route.

In July 2019, Commissioner Sola represented 

the Commission at the 2019 U.S.-Republic of 

Korea Bilateral Maritime Meeting in Busan, 

South Korea. Commissioner Sola addressed 

the current competitive outlook of the ocean 

shipping industry and the reduction of global 

carriers since 2016. He also provided an overview of the Commission’s agreement review 

process. Other topics of discussion included 

IMO 2020 compliance strategies, LNG carrier 

issues, mariner training, and U.S.-flag car carrier operations.
58th Annual Report 19

U.S.-Vietnam Maritime Bilateral 

Meeting in Washington, DC

In July 2019, staff from the Office of the General Counsel attended the 2019 U.S.-Vietnam 

Maritime Bilateral Meeting, hosted by the U.S. 

Maritime Administration in Washington, DC. 

U.S. and Vietnam government representatives 

provided updates on their respective maritime 

policies, LNG shipping, and cooperation on 

safety and security and mariner training.

Global Regulatory Summit at the 

Federal Maritime Commission

In July 2019, the Commission hosted senior 

government officials from the European 

Union and People’s Republic of China to 

participate in the Fourth Global Regulatory 

Summit. Topics covered during the consultations included market conditions and industry 

trends, operational and business practices 

of carriers, and updates by each delegation 

on changes to regulations and laws governing shipping. The parties announced their 

intention to hold the Fifth Global Regulatory 

Summit in Europe in 2021.

Commissioners Rebecca Dye (left) and Louis Sola (center) with ZENG Hui (right), Deputy 

Director-General of the Maritime Safety Administration, People’s Republic of China at 

the Global Regulatory Summit.
20 58th Annual Report

U.S.-Japan Maritime Bilateral 

Meeting

In August 2019, Commissioner Dye represented the Commission at the U.S.-Japan 

Maritime Bilateral Meeting, hosted by the U.S. 

Maritime Administration in Washington, DC. 

Commissioner Dye provided an update on 

the competitive outlook of the industry and 

discussed the impact of overcapacity and the 

IMO 2020 sulfur limit.

London International Shipping 

Week 2019

In September 2019, Chairman Khouri traveled to London, England, to attend the 2019 

London International Shipping Week. Chairman Khouri also met with U.K. government 

officials involved in regulating and promoting 

the maritime industry.

Chairman Michael Khouri attended London International Shipping Week 

where he gave remarks aboard the lighthouse tender NLV Pharos pictured left. 

(Photo courtesy of London International Shipping Week)
58th Annual Report 21
22 58th Annual Report
58th Annual Report 23

Protecting the Public

Strategic Goal 2

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

including licensing and registering 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 contribute to competitiveness, integrity, fairness, and 

efficiency 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.

Investigation into Demurrage, Detention, 

and Per Diem Charges

On December 3, 2018, Commissioner 

Rebecca F. Dye delivered her final report in 

Fact Finding Investigation No. 28, a non-adjudicatory investigation, into the practices of 

vessel operating common carriers and marine 

terminal operators relating to U.S. demurrage, 

detention, and per diem charges. Demurrage is the charge per container for the use of 

ground space at the marine terminal. Detention is the charge by the ocean carrier for use 

of the container equipment. Per Diem relates 

to assessorial charges beyond demurrage and 

detention. All charges are subject to an agreed 

number of free days.

Commissioner Dye’s final report found that 

demurrage and detention charges can incentivize cargo to move expeditiously and that 

standardizing practices for when these fees 

are levied would improve velocity at ports. 

Commissioner Dye also found that significant 

benefits to the U.S. international ocean freight 

delivery system and the American economy 

as a whole would result from:

•  Transparent, standardized language 

for demurrage and detention practices;

•  Clear, simplified, and accessible 

demurrage and detention billing practices and dispute resolution processes;

•  Explicit guidance regarding the types 

of evidence relevant to resolving 

demurrage and detention disputes; 

and

•  Consistent notice to cargo interests of 

container availability.

In August of 2019, Commissioner Dye submitted three proposals to the FMC. First, she 

recommended the Commission publish an 

interpretive rule that clarifies how the agency 

will assess the reasonableness of detention 

and demurrage practices. She also recommended establishing a Shipper Advisory 

Board and continued support for the Supply 

Chain Innovation Team working to address 

chassis availability issues in Memphis, TN. 
24 58th Annual Report

An interpretive rule was published for public 

comment on September 13, 2019. The comment period closed October 31, 2019 and the 

Commission anticipates publication of a final 

rule in FY 2020.

Licensing

There are two types of ocean transportation 

intermediaries (OTIs) that serve as transportation middlemen for cargo moving in the 

U.S.-foreign oceanborne trades: NVOCCs and 

ocean freight forwarders (OFFs). All NVOCCs 

and OFFs located in the U.S. must be licensed 

by the Commission and must establish financial responsibility. In order to be issued a 

license, an OTI must provide the Commission evidence of experience in OTI activities 

in the U.S., the necessary character to render 

services, and proof of financial responsibility.

An NVOCC is a common carrier that holds 

itself out to the public to provide ocean transportation and issues its own house bill of 

lading or equivalent document, but does not 

operate the vessel by which ocean transportation is provided.

 A U.S.-based ocean freight forwarder 

arranges for transportation of cargo with a 

common carrier (NVOCC or VOCC) on behalf 

of shippers and processes documents related 

to U.S. export shipments. However, an ocean 

freight forwarder does not hold itself out to 

the public to provide ocean transportation 

and does not issue a house bill of lading or 

equivalent document. 

In FY 2019, licensed NVOCCs and OFFs had 

financial responsibility in the form of surety 

bonds on file with the FMC, collectively in 

excess of $458 million. These funds are held 

to pay any damages arising out of a licensee’s 

ocean transportation-related activities.

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. Foreign-based NVOCCs must register 

with the Commission and establish financial 

Licensing Activity in FY 2019

• New OTI applications accepted: 

333

• Amended applications accepted: 

349

• New OTI licenses issued: 285

• Amended licenses issued: 114

• Licenses revoked or surrendered: 

314

• New registrations accepted: 209

• Licenses renewed: 1797

• Registrations renewed: 650

• 4,000 of over 4,800 FMC licenses 

renewed since May 2017.

o 78% of OTIs recorded new 

ownership

o 9% updated contact 

information

o 13% reported a physical address 

change
58th Annual Report 25

responsibility if not licensed under the FMC’s 

program. Foreign NVOCCs (registered and 

licensed) had approximately $262 million in 

surety bonds on file with the FMC in FY 2019.

The Commission’s triennial renewal program for FMC-licensed OTIs was instituted 

in 2017 to ensure accurate industry information. After two full years of license renewals, 

over 4,000 (83 percent) of approximately 4,800 

FMC-licensed OTIs have completed their initial renewal process. The online user-friendly 

renewal process prepopulates the OTI’s 

renewal form with information from the 

FMC’s files, providing a streamlined experience. In most cases the renewal process takes 

only five minutes. The online renewal process 

has improved the accuracy of OTI records, 

and timeliness of reporting material changes 

in ownership and operations, for the benefit 

of OTI sureties, carriers, and the shipping 

public. Foreign-registered NVOCCs must also 

renew their registrations every three years. 

In FY 2019, 650 foreign-registered NVOCCs 

successfully completed their renewals with 

the Commission. 

The Commission has received inquiries 

from industry regarding the Chinese government’s continued requirement for the Optional 

Rider for Additional NVOCC Financial 

Responsibility, to meet the Chinese government's financial responsibility requirements, 

and various articles have been published in 

the press indicating the Chinese government 

may be loosening the financial responsibility requirements for NVOCCs. The optional 

China bond rider originated from bilateral 

discussions between the United States and 

Chinese governments and a 2003 agreement, 

which the Commission implemented through 

regulations in 2004. It is not, and never has 

been, required by the Commission. From 

the Commission’s perspective, the bond is 

optional and at the discretion of individual 

NVOCCs. As of the end of the fiscal year, the 

Commission had on file 426 Optional Riders 

with an approximate aggregated value of 

$21.3 million. 
26 58th Annual Report

Passenger Vessel Program

The passenger vessel operator (PVO) program administered by the Commission (46 

U.S.C. §§ 44102-44103), 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. 

The maximum performance financial coverage requirement is currently $32 million per 

cruise line. The cap is adjusted every two 

years based on the Consumer Price Index 

for All Urban Consumers (CPI-U). The cap 

adjustment based on the CPI-U was completed in 2019. Based on the adjustment 

formula, the adjusted cap figure of $31.8 million was rounded to the nearest $1 million, 

and the maximum coverage requirement was 

increased to $32 million per cruise line. The 

next adjustment will occur in 2021.

At the close of FY 2019, 244 vessels owned 

by 51 passenger vessel operators were certified under the PVO program. The combined 

evidence of financial responsibility for nonperformance of transportation for all cruise 

vessels in the program is $684.7 million. Under 

the Commission’s program, there is $771.2 

million in aggregate financial responsibility 

for casualty coverage. During the fiscal year, 

19 new performance certificates and 19 casualty certificates were issued. 

Haimark Line, Ltd. filed for bankruptcy in 

2015. At the time of bankruptcy, unearned 

passenger revenue (UPR) remained in the 

Haimark escrow account for the purpose of 

reimbursing passengers for ocean transportation related payments under the Commission 

program. Due to Haimark’s bankruptcy’s 

status, during FY 2019, Commission staff conducted an in-house review to ensure there 

were no other passengers that were owed 

reimbursement from the escrow account. 

Commission staff verified all passengers had 

been refunded, and the Commission approved 

the termination of the escrow account and 

released the remaining funds to the estate of 

Haimark Line, Ltd.

PVO Financial Coverage

• Aggregate evidence of financial 

responsibility for nonperformance: 

$684.7 million

• Aggregate evidence of financial 

responsibility for casualty: $771.2 

million

• New Performance Certificates 

issued: 19 in FY 2019

• New Casualty Certificates issued : 19
58th Annual Report 27

Consumer Affairs and Dispute Resolution

The Commission, through its Office of 

Consumer Affairs and Dispute Resolution 

(CADRS), provides alternative dispute resolution (ADR), ombuds (informal conflict 

resolution), and mediation services, to assist 

parties in resolving international ocean shipping and cruise disputes. 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 ADR services help 

parties avoid the expense and delay inherent in litigation and facilitate the flow of U.S. 

foreign commerce. This fiscal year, the Commission closed a total of 296 ombuds matters: 

127 relating to commercial cargo; 84 involved 

household goods; and 82 cruise matters.3 

additional closed matters were unclassified. 

11 mediation matters were concluded. In the 

fiscal year, CADRS responded to 825 inquiries 

from the public. 

Highlights: 

•  CADRS assisted parties resolve a dispute in which an importer relied on an 

ocean carrier’s information as to the 

last free day at a marine terminal; the 

ocean carrier agreed to refund over 

$25,000 in demurrage charges.

•  In a formal docket before the Commission with multiple respondents, 

CADRS provided mediation and all 

the parties reached settlements. The 

matter was discontinued. 

•  Through the Office of the Chairman, 

CADRS assisted with 4 requests 

from the offices of U.S. Senators and 

Congressmen on behalf of their constituents relating to shipping and 

passenger disputes. 

•  In a dispute with just under $10,000 in 

controversy, one container in a 7-container import shipment from Turkey 

to Baltimore via Long Beach was lost. 

Through CADRS efforts, the container 

was located and released. 

•  In a dispute between a licensed OTI 

and an ocean carrier regarding demurrage on an export shipment, CADRS 

assisted the parties reach a compromise whereby the ocean carrier would 

refund half of the demurrage the OTI 

had paid.

•  In a dispute between foreign OTIs that 

caused a cargo hold at destination, rail 

demurrage and subsequent additional 

charges, CADRS assisted the shipper 

and the ocean carrier to reach an initial 

settlement by which the ocean carrier 

ordered the cargo off the rail to mitigate damages. The ocean carrier also 

discounted the charges; the shipper 

and OTIs ultimately agreed to share 

the payment of the reduced charges, 

and the shipment was released.

•  A passenger provided detailed complaints about the safety, security and 

customer service aboard a cruise ship. 

CADRS contacted the PVO, which 

advised that it would provide the 

passenger an onboard credit of $200. 

•  An importer who bought paper products from a manufacturer in China 

under CIF terms sought CADRS 
28 58th Annual Report

help. It was the responsibility of the 

manufacturer to ship the product to 

the US. When the importer received 

the arrival notice, it was advised that 

it had to pay unexpected charges. 

Although the importer objected, it was 

told that these charges needed to be 

paid before the shipment would be 

released. CADRS contacted the destination agent regarding these concerns 

and was advised shortly thereafter 

that the disputed charges (over $3,500) 

had been waived, and the cargo was 

released. 

•  In a dispute between an OTI and an 

ocean carrier, the OTI alleged that an 

ocean carrier had unfairly charged 

for demurrage on an import shipment. The container was charged for 

demurrage during an alleged customs 

examination; there were also charges 

for rail demurrage, although the 

OTI stated that free time had not yet 

expired at the rail ramp. CADRS contacted the ocean carrier, who reported 

that it would waive the charges (over 

$7,400). 

Industry Outreach and Education/Awareness

Area Representatives (ARs) represent the 

FMC and maintain a presence at six regional 

field offices located in Southern California, 

South Florida, New Orleans, New York/New 

Jersey, Houston and Seattle/Tacoma. They 

collect and analyze intelligence of regulatory significance, assess industry conditions, 

explain Commission programs and clarify OTI 

licensing and compliance requirements. ARs 

also provide advice and guidance to the shipping public and participate in local maritime 

industry groups. They investigate alleged violations of the shipping statutes of regulated 

entities, both VOCC and OTIs, to protect the 

shipping public from deceptive and unfair 

trade practices and serve as an ombudsman 

in an effort to assist or resolve complaints 

and disputes between parties involved in 

international oceanborne shipping (often 

coordinating with CADRS staff). 

During the fiscal year, ARs conducted outreach to the public, consumer groups, trade 

associations, investigations, and worked with 

other Federal, state and local government 

agencies to achieve and enhance regulatory 

compliance and protect the public from financial harm. 
58th Annual Report 29

Enforcement, Audits and Penalties

The Commission’s Bureau of Enforcement 

(BOE) staff and ARs in the field offices work 

to obtain industry compliance with the shipping statutes administered by the Commission 

to help protect the public from unlawful and 

deceptive practices in the foreign oceanborne 

commerce of the United States.

During the fiscal year, Commission staff 

investigated and prosecuted potential illegal practices in many trade lanes, including 

the Transpacific, North Atlantic, Middle East, 

South American and Caribbean trades. These 

illegal practices included:

•  market distorting unfiled agreement 

activities; 

•  misdescriptions of cargo; 

•  unlawful use of service contracts; 

•  rebates and absorptions; and 

•  carriage of cargo by and for untariffed 

and unbonded NVOCCs. 

At the outset of FY 2019, 14 enforcement 

cases were pending final resolution and there 

were 11 pending matters that BOE was monitoring or providing internal legal review. 

Inclusive of cases opened at headquarters, 

during the fiscal year, the ARs referred 24 new 

investigative matters for enforcement action 

or informal compromise; 32 matters were 

compromised and settled or administratively 

closed; and, 17 enforcement cases were pending resolution at fiscal year’s end. BOE was 

monitoring 11 matters that remained pending 

at the end of the fiscal year. The Formal Investigations section of this report includes more 

information on formal proceedings concluded 

during the fiscal year.

Under the Commission’s compliance audit 

program, analysts review the operations of 

licensed OTIs and assist them in complying with the statutory requirements and the 

Commission’s rules and regulations. The 

audit program also includes review of entities that hold themselves out to the public as 

Vessel Operating Common Carriers but where 

there are no signs of actual vessel operations. 

The absence of vessel operations, though the 

entities may issue bills of lading and other 

documents, might indicate, among other 

possible Shipping Act violations, that they 

operate as unlicensed OTIs. During the fiscal 

year, 121 audits were opened, 113 audits were 

completed (including audits carried over from 

fiscal year 2018), and 8 remained pending on 

September 30, 2019.

Cumulatively, the Commission collected 

over $600,000 in penalties which were deposited directly into the U.S. Treasury General 

Fund during FY 2019. Most of these investigations were resolved informally, some with 

compromise settlements and civil penalties. A 

list of parties and penalties collected can be 

found in Appendix D.
30 58th Annual Report

Inter-Agency Cooperation

The Commission regularly works with 

a number of other federal, state, and local 

transportation and law enforcement agencies, either through established memoranda 

of understanding (MOU), collaborations or 

partnerships to address specific transportation 

related policies, issues or incidents in both 

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

Interaction between the Commission and 

the U.S. Customs and Border Protection (CBP) 

on the exchange of investigative information 

continues to be beneficial to each agency. 

•  Cooperation with CBP included joint 

field operations to investigate entities 

suspected of violating the agencies’ 

respective statutes or regulations. 

Such cooperation has also included 

local police and Federal entities, 

including U.S. Attorney’s Offices, the 

Federal Bureau of Investigation, and 

Immigration and Customs Enforcement, as needed.

•  ARs participated with CBP, the U.S. 

Coast Guard and other federal agencies in annual Multi-Agency Strike 

Force Operations conducted at marine 

terminals at the ports of New York/

New Jersey, Oakland, CA and Seattle, 

WA.

The ARs further participated in a number 

of other criminal and civil investigations of 

entities licensed or regulated by the FMC, 

including violations of export and import statutes and regulations, sponsored by federal or 

state agencies:

•  Federal Motor Carrier Safety 

Administration; 

•  Department of Commerce (Bureau of 

Industry and Security); 

•  Department of Justice (DOJ) (including the Bureau of Alcohol, Tobacco, 

Firearms and Explosives, and the Federal Bureau of Investigation); 

•  interagency Joint Terrorism Task 

Forces operating regionally in the 

U.S.; and

•  local police jurisdictions in New 

York, New Jersey, South Florida, and 

Houston.

The ARs aided these investigations by providing expert knowledge on ocean carrier and 

OTI practices, procedures and documentation 

related to shipping transactions. 

The Commission’s CADRS staff consulted 

with the following entities regarding cruise, 

household goods, moving, and commercial 

cargo shipping complaints :

•  Surface Transportation Board, Rail 

Customer and Public Assistance 

Program;

•  New Jersey Office of the Attorney 

General; 

•  Miami-Dade Office of Consumer 

Affairs

•  Florida Attorney General’s Office; and 

•  Florida Department of Agriculture 

and Consumer Services Division of 

Consumer Services

The Commission also has MOUs with the 

following agencies and entities, under which 

it may share data: 
58th Annual Report 31

•  Census Bureau, U.S. Department of 

Commerce, which provides the FMC 

with access to the Census’ Automated 

Export System (AES) database - a database used to review confidential U.S. 

export shipment data for law enforcement purposes. 

•  National Intellectual Property Rights 

Coordination Center (IPR Center), a 

partnership of 21 Federal and international agencies targeting intellectual 

property and trade-related crimes.

•  U.S. Customs and Border Protection, 

to provide a more efficient utilization of existing systems and services, 

such as CBP’s Automated Commercial 

Environment (ACE).

Chairman Michael Khouri (right) joined witnesses from the Coast Guard and Maritime 

Administration to testify before the House Committee on Transportation and Infrastructure, 

Subcommittee on Coast Guard & Maritime Transport on Fiscal Year 2020 budget issues.
32 58th Annual Report
58th Annual Report 33

Competitive Impact of Ocean 

Carrier Alliance Joint Purchases 

of Certain Covered Services

On December 4, 2018, the LoBiondo Act was enacted as Public Law No. 115-282. Among 

other changes, the LoBiondo Act placed restrictions on cooperation between or among ocean 

carriers and marine terminal operators (MTOs), including removing antitrust immunity for 

certain activities, prohibiting certain joint procurement activities, restricting overlapping 

agreement participation, and modifying the legal standard for enjoining agreements to jointly 

procure certain covered services, including: 

• the berthing or bunkering of a vessel; 

• the loading or unloading of cargo to/from a vessel, or to/from a point on a wharf or 

terminal; 

• the positioning, removal, or replacement of buoys related to the movement of the vessel; or 

• towing vessel services provided to a vessel. 

Section 703 of the LoBiondo Act also requires that the Commission annually provide to 

Congress: (1) an analysis of the competitive impact of ocean carrier alliance joint purchases 

of the covered services mentioned above; and (2) a summary of actions, including corrective 

actions, taken by the Commission to promote competition. 

Additionally, the LoBiondo Act permits the Commission to seek an injunction if it determines that an agreement is likely, “to substantially lessen competition in the purchasing of 

certain covered services.” 46 U.S.C. § 41307(b)(1). This new legal standard may be applied to 

existing agreements as well as any agreements filed in the future. The LoBiondo amendments 

also stipulate that no group of two or more common carriers may negotiate for the purchase 

of certain covered services unless the negotiations and any resulting agreements are not in 

violation of the antitrust laws. 46 U.S.C. § 41105(6).

Review of Agreements Under LoBiondo Act

To determine the extent to which existing 

agreements contained language that could 

potentially represent a reduction in competition in the purchasing of certain covered 

services, the Commission initiated a review 

of all ocean carrier agreements in FY 2019. 

If an agreement was viewed as potentially 

authorizing the joint negotiation or purchase 

of covered services by two or more VOCCs, 

filing counsel for that agreement was sent 

a letter: (a) requesting that any agreements 

reached under this authority be provided to 

the Commission; (b) reminding the parties 

that any agreements reached with the third 

parties must be filed with the Commission 

unless those further agreements fall under 
34 58th Annual Report

one of the listed exemptions in 46 C.F.R. § 

535.408; (c) reminding parties that agreements 

should clearly and definitely reflect the intentions of the parties, and that any authorities 

that the parties have not and do not intend 

to use should be removed by amendment to 

the agreement; and (d) that any agreement 

no longer in use should be terminated with 

the Commission. As of October 1, 2019, the 

Commission sent letters to filing counsel for 

172 agreements identified under the preceding criteria. Responses have been received 

from the majority of these agreements, and 

staff is currently working with counsel for 

the remaining agreements. 

Twenty-nine of those agreements were identified as no longer active and were terminated; 

counsel for 112 agreements responded that 

these agreements had no jointly negotiated 

terminal services agreements to provide; and 

three agreements were amended to reduce or 

remove any joint negotiation authority. Three 

agreements with vessel sharing authority provided their jointly negotiated terminal service 

agreements for analysis under § 41307(b)(1). 

DOJ/FTC Guidelines for Collaborations Among 

Competitiors

The U.S. Department of Justice (DOJ) and the 

Federal Trade Commission (FTC) (collectively, 

the Agencies) have jointly issued guidance 

on the appropriate safeguards that should 

be implemented when market participants 

engage in joint purchasing. See Guidelines for 

Collaborations Among Competitors (2000) and 

Statements of Antitrust Enforcement Policy 

in Health Care (1996). Although the latter 

guidance initially was offered with respect 

to hospitals, the Agencies were mindful that 

this issue has broader, general applicability. 

Of note, DOJ Business Review Letters have 

since referenced the guidance in sanctioning 

joint purchasing arrangements outside of the 

health-care industry.

The Agencies determined that they would 

not challenge participation in purchasing 

groups provided certain conditions were satisfied. To give participants in joint purchasing 

arrangements guidance as to when antitrust 

issues could begin to surface, the Agencies 

established a “safety zone.” As long as joint 

purchases account for less than 35 percent of 

the total sales (or output) of the purchased 

services in the relevant upstream market, 

and the cost of the jointly purchased services 

account for less than 20 percent of the buying 

group’s sales revenue in each relevant downstream market, the DOJ/FTC generally would 

consider any such arrangement to fall with 

the safety zone. These two thresholds are 

not hard and fast boundaries beyond which 

a buying group should not venture, rather 

they are general boundaries that if crossed 

would likely subject the group to increased 

antitrust scrutiny.

In the case of agreements between ocean 

carriers and terminal operators and/or stevedoring companies, the relevant upstream 

market is the market in which terminal and 

stevedoring services are sold by providers 

and purchased by ocean carriers. The relevant downstream market consists of the 

ocean transportation services market in which 

those participating in the buying group are 
58th Annual Report 35

competing to sell those services to shippers.

When structured properly so as to produce efficiency-enhancing or pro-competitive 

outcomes, joint purchasing activities (i.e., 

agreements among buyers) are lawful under 

U.S. antitrust laws, but arrangements that 

aim to simply fix the price that each group 

member will pay for the services rendered 

are not legitimate under the antitrust laws. 

Additionally, an arrangement could run 

afoul of the antitrust laws if it includes other 

features that unduly restrict or distort competition. Other principles in the guidelines 

stress that group buying activity should not 

be used as a vehicle for exchanging commercially sensitive information between or among 

competitors, and that members should be free 

to make purchases outside the joint purchasing arrangement. 

The above referenced terminal and stevedoring services agreements jointly negotiated 

by the three agreements were reviewed to 

ensure conformity with the DOJ/FTC guidelines for joint purchasing arrangements. The 

following section outlines the findings of that 

review.

Parties to one of the three agreements that 

engaged in joint procurement had substantial 

common ownership and maintenance of permanent economic management. As a result, 

the two companies in the agreement operate 

as a single entity from a competition point of 

view. There is no marketplace competition 

between these two companies and, therefore, 

no reduction in competition as a result of them 

having joint contracting authority. Accordingly, no additional analysis was conducted 

on this agreement’s jointly negotiated terminal services agreements.

Applying the DOJ/FTC safety zone tests to 

assess the magnitude of combined purchases 

in the relevant market with respect to joint 

purchases of terminal and stevedoring services by members of the other two agreements 

with vessel sharing authority required (a) 

identifying each separate relevant port market 

in which the agreements purchased those services, (b) calculating the total output (or sales) 

in each such port market, and (c) calculating 

what percentage of the total output (or sales) 

in each such market was purchased by each 

agreement under jointly negotiated contracts.

At the time of the review using fiscal year 

2019 data, the two agreements’ services and 

ports of call in the United States were identified. The agreements had jointly negotiated 

terminal and stevedoring services agreements 

at a number of the ports served. In terms of 

applying the DOJ/FTC safety zone test for 

combined purchases in the relevant markets, 

generally each individual port in this analysis 

was considered as the relevant (local) market 

for terminal and stevedoring services. Applying this rule produces the most conservative 

(i.e., strictest) application of the test. A broader 

definition of the relevant geographic market 

would lower the results of the test in percentage terms, thereby making it more likely the 

agreements would fall into the safety zone. 

However, exceptions to this rule were made 

where the ports are contiguous. These ports 

were considered as being in the same geographical market.

Traditionally, there are two competition 

issues of primary concern with respect to 

joint purchasing arrangements. First, if the 

parties have a significant degree of market 

power because their joint purchases account 

for a large proportion of total purchases in 
36 58th Annual Report

the market, a risk exists that the parties may 

drive the price of the services being purchased 

below competitive levels. The second competition issue of concern is that, if access to service 

providers is limited, there exists a risk of competing purchasers being excluded from the 

purchasing market. This event is most likely to 

develop where there are barriers to entry that 

prevent new service providers from entering 

the purchasing market or that prevent expansion by existing providers. 

Application of the safety zone threshold test 

for combined purchases of covered services 

by the members of each agreement in each 

relevant upstream market for terminal and 

stevedoring services showed that none of the 

upstream markets breached the threshold.

Turning to the second threshold test, members within both agreements compete on 

price with their other agreement members in 

downstream ocean transportation markets; 

consequently, it is possible that equalization 

of costs for a substantial jointly purchased 

input such as terminal and stevedoring 

services could reduce price competition in 

those markets if the cost to buy terminal and 

stevedoring services account for a significant percentage of the ocean carriers’ selling 

prices in the downstream markets. In applying the DOJ/FTC safety zone test to this area 

of concern, each jointly purchased input is 

matched with the downstream product (i.e., 

ocean transportation services) the agreements’ members are selling in competition 

with each other. Whether the cost of the jointly 

purchased services (i.e., the input of jointly 

procured terminal and stevedoring services) is 

20 percent or more of each agreements’ members total sales revenue in each downstream 

market is then determined.

Both agreements’ members were (and still 

are) competing with each other on prices in all 

of the downstream markets. The input value 

of joint purchases of terminal and stevedoring services as a percent of total sales in each 

downstream market was below the threshold of 20 percent, the range of one agreement 

being from 12.3 to 15.2 percent and the other 

agreement being 12.7 percent. Under the 

Agencies’ guidelines, no further antitrust 

scrutiny was warranted.

In summary, it appears that the two agreements with vessel sharing authority that 

engage in joint purchasing of terminal and 

stevedoring services, at the time of the review, 

did so within the well-established boundaries of the guidelines for joint purchasing 

arrangements promulgated by the DOJ and 

FTC. Nevertheless, joint purchasing by these 

agreements of covered services warrants close 

monitoring to ensure that joint purchasing 

activity in the upstream and downstream markets continue to conform to the antitrust laws. 
58th Annual Report 37

Port of Gulfport Deputy Executive Director, Matthew S. Wypyski; Commissioner Daniel B. 

Maffei; Port of Gulfport Executive Director & CEO, Johnathan Daniels; and Commissioner 

Louis E. Sola
38 58th Annual Report
58th Annual Report 39

Developments in Major 

U.S. Foreign Trades

Worldwide

Worldwide, the volume of container cargo 

grew by 3 percent in FY 2019, down from 5 

percent growth in the preceding fiscal year. 

At the end of September 2019, there were 180 

idle containerships, including vessels undergoing scrubber retrofits to comply with the 

IMO 2020 low sulfur fuel mandate, which 

accounted for 3 percent of the world’s containership capacity. While market shares of the 

top global ocean carriers remained high, they 

were relatively unchanged from the preceding period. The top five carriers deployed 65 

percent of the world’s containership capacity, 

and the top ten controlled 83 percent. The top 

three carriers, Maersk Line, MSC, and COSCO, 

deployed 18, 16, and 13 percent of the world’s 

containership capacity, respectively.

Overall, in the U.S. liner trades, container 

cargo grew by 4 percent to 36.5 million TEUs, 

compared to 35 million TEUs last fiscal year. 

The growth rate in container cargo was 3 percent for U.S. exports and 5 percent for U.S. 

imports. Import containers exceeded export 

containers by a ratio of 2 to 1. The U.S. share 

of the world’s container cargo remained at 

16 percent.

Globally, the nominal capacity of the containership fleet grew by 4 percent. At the end 

of the fiscal year, 5,322 containerships, with 

a total fleet capacity of 23 million TEUs, were 

operational. There were 364 new containerships on order with an aggregate capacity of 

2.4 million TEUs, or 11 percent of the existing 

fleet capacity. Containerships with nominal 

capacities equal to or greater than 10,000 TEUs 

accounted for 33 percent of the existing fleet’s 

total capacity and 77 percent of the total capacity on order.

Worldwide

Worldwide, containership cargo 

continued to grow, 3 percent, although 

at a lower rate than in the preceding 

fiscal year, 5 percent.

Only 3 percent of world’s containership 

capacity remained idle, including 

vessel being retrofitted for scrubbers.

The top five ocean carriers deployed 65 

percent of the world’s containership 

capacity.

U.S. Liner Trades

Container volumes in the U.S. liner 

trades grew by 4 percent.

U.S. containers of imports exceeded 

exports by a ratio of 2 to 1.
40 58th Annual Report

Asia 

22 Million TEUs

The liner trades between the U.S. and 

nations in Asia accounted for the largest container cargo volume of over 22 million TEUs in 

FY 2019 (exports and imports combined), or 61 

percent of total U.S. container trade. The U.S. 

imported substantially more container cargo 

from the region than it exported. In FY 2019, 

the U.S. imported more than 16 million TEUs 

of goods from Asia, an increase of 4 percent 

over the previous fiscal year, while the U.S. 

exported 6 million TEUs, a slight decline of 

1 percent from the prior year. Northeast Asia 

(China, Japan, South Korea, Taiwan, and Hong 

Kong) accounted for 48 percent of total U.S. 

container cargo, and Southeast Asia (Brunei, 

Cambodia, Indonesia, Malaysia, the Philippines, Singapore, and Vietnam) accounted for 

13 percent. Trade tariffs and relations between 

the U.S. and China have led to increased 

The Republic of Korea is the third largest origin of containerized cargo bound for the 

United States with 1.5 million TEUs. Commission Louis Sola was a delegate to the July 

2019 U.S.-Korea Maritime Bilateral Meetings hosted in Busan (pictured).
58th Annual Report 41

Asia accounts for 68% of containerized imports to the U.S.; and 

49% of containerized exports from 

the United States

amounts of container cargo shifting to Southeast Asia since FY 2017. This trend is likely 

to continue as discussions between the two 

nations remain ongoing.

Just under half of the container imports 

from Asia moved through the ports of Los 

Angeles and Long Beach. U.S. Pacific ports 

handled 61 percent of all Asian imports and 

exports, and U.S. Atlantic and Gulf ports handled 38 percent.

The 2M Alliance, in partnership with Zim, 

added a second service connecting Asia with 

the U.S. Gulf Coast in August 2019, in order 

to cater to increased volumes moving to and 

from that region. 2M and Zim also began a 

joint service sailing from Asia to the Pacific 

Northwest in March 2019. Although Zim is not 

a member of the 2M Alliance, the carrier has 

entered into vessel sharing and slot swapping 

agreements with 2M on its transpacific routes. 

The Port of Tampa Bay also gained direct connections to Asia via services from two of the 

major alliances (2M and OCEAN).

Furniture and auto parts led the way as 

the two top imported commodities from the 

region. Outbound, the highest quantities of 

containerized exports that move to the region 

included wastepaper, and hay and other 

forage products.

North Europe

4 Million TEUs

The liner trade with North Europe is the 

second largest U.S. trade by volume, accounting for 4 million TEUs, or 11 percent of the 

total U.S. container cargo (exports and 

imports combined). The region of North 

Europe includes Iceland and all nations in 

North West/East Europe and Scandinavia. 

Compared to the prior period, U.S. container 

exports grew by 5 percent to 1.6 million TEUs, 

and U.S. container imports grew by 4 percent 

to 2.4 million TEUs.

The top imported commodities were auto 

parts, beer, and furniture, while the top U.S. 

container exports to the region included used 

cars, auto parts, and woodpulp. The cargo 

volume carried by MSC, Hapag Lloyd, Maersk 

Line and ONE accounted for 63 percent of the 

total trade.

To improve service reliability, members 

of THE Alliance (Hapag Lloyd, ONE, and 

Yangming) redeployed excess vessels from 

the Mediterranean to North Europe, after THE 

and OCEAN Alliance members combined 

their two MED services under a vessel sharing 

agreement. No other major service changes 

were implemented. By the end of the fiscal 

year, the amount of vessel capacity had grown 

by 5 percent, and the utilization of capacity 

was 89 percent in the inbound direction and 56 

percent in the outbound direction. As reported 

by Drewry, in the stronger inbound direction, 

freight rates on the spot market rose to a high 

of $2,308 per FEU, an increase of 16 percent 

from the preceding period.
42 58th Annual Report

Looking forward, trade growth may be 

affected by the 25 percent tariff that the U.S. 

imposed on selected goods from European 

nations, and any retaliatory tariffs that the 

EU may impose on U.S. goods. The EU will 

also render a decision on whether to renew 

its block exemption regulations for consortia 

agreements between liner shipping carriers, 

which is due to expire in April 2020. The block 

exemption applies a market share threshold 

of 30 percent, which most of the present alliance agreements have exceeded. While there 

is opposition to the exemption from shipper 

groups, it is anticipated that the EU will renew 

the exemption for another 5 years with certain 

amendments.

Indian Subcontinent and Middle East

Combined 2.6 Million TEUs

The Indian Subcontinent and Middle East 

regions combined accounted for 7.5 percent 

of total U.S. container trade volume in FY 

2019, with the Indian Subcontinent being the 

larger of the two. The Indian Subcontinent 

alone (exports and imports combined) grew 

by 12 percent, totaling over 1.8 million TEUs. 

Top imports from this region include linens 

and clothing. The U.S. imported 1.08 million TEUs from the Indian Subcontinent, an 

increase of 13 percent from the prior year. U.S. 

container export cargo to this region grew as 

well, expanding by 10 percent to 777,000 TEUs. 

Wastepaper and cotton are the leading U.S. 

exports to the region. The Indian Subcontinent 

region comprises the countries of Bangladesh, 

Burma, India, Nepal, Pakistan and Sri Lanka.

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

East, U.S. container export volumes grew by 

4 percent (582,000 TEUs), while container 

imports to the U.S. from the region increased 

by 11 percent (284,000 TEUs). The Middle East 

region includes a range of countries in Western Asia from Israel, Lebanon, and Syria in 

the West to Afghanistan in the East. The U.S. 

exports more goods to the Middle East than it 

imports, with U.S. container exports exceeding imports by a ratio of 2 to 1. Motor vehicles 

and forage products were the top U.S. exports 

to the region, while plastics and aluminum 

were the top imported commodities from the 

Middle East.

Central America and the Caribbean

2.2 Million TEUs

The Central America and Caribbean regions 

collectively accounted for 6 percent of total 

U.S. import and export container cargo in FY 

2019 at 2.2 million TEUs. Nations in Central 

America are Belize, Costa Rica, El Salvador, 

Guatemala, Honduras, and Panama, while 

the Caribbean are those island nations in the 

West Indies and Caribbean Sea, including the 

Bahamas, Dominican Republic, and Jamaica. 

The U.S. saw strong growth 

in its trade with the Indian 

Subcontinent, as U.S. container 

exports increased by 10% and 

U.S. container imports increased 

by 13%
58th Annual Report 43

Of the two regions, trade between the U.S. and 

Central America was considerably higher in 

volume at 1.5 million TEUs (4 percent of total 

trade), while trade between the Caribbean and 

the U.S. was 738,032 (2 percent of total U.S. 

trade), imports and exports combined.

In FY 2019, U.S. container exports to Central 

America increased by 12 percent to 626,674 

TEUs, and container imports increased by 

2 percent to 880,806 TEUs. Paper products 

accounted for the largest share of U.S. containerized exports. Other major exports included 

cotton, grocery products, used automobiles 

and fabrics. On the import side, fresh fruit 

made up a majority of container imports from 

the region. Roughly two-thirds of fresh fruit 

imports consisted of bananas. The second largest commodity imported from this region was 

apparel. The major carriers serving the trade 

participate in the Central America Discussion Agreement (CADA); these are Seaboard 

Marine, Crowley Latin America Services, King 

Ocean Services, Dole Ocean Cargo Express, 

and Great White Fleet Liner Service Ltd.

In the liner trade between the U.S. and 

the Caribbean, U.S. container exports of 

mainly food, consumer goods, and manufactured products increased by 10 percent to 

553,715 TEUs. Container imports to the U.S. 

were unchanged at 184,317 TEUs. Container 

exports exceeded imports by a ratio of about 

3 to 1. Carriers in the U.S./Caribbean trade 

participate in two rate discussion agreements 

covering geographically discrete trades: (1) the 

ABC Discussion Agreement (covering Aruba, 

Bonaire and Curacao), and (2) the Caribbean 

Shipowners Association.

South America

2 Million TEUs

In FY 2019, the liner trades between the U.S. 

and South America represented 6 percent of 

total import and export container volume, 

at 2 million TEUs. South America includes 

all nations within the continent. Container 

import growth to the U.S. from South America 

increased by 8 percent to 1.1 million TEUs, and 

U.S. container exports grew by about 7 percent 

to 942,554 TEUs. The top export commodities to South America included automobile 

parts and chemical products, while bananas, 

wood, and coffee were among the top import 

commodities. Brazil and Chile are the largest U.S. liner trading nations on the continent, 

accounting for over 50 percent of the container 

cargo moving in the trade.

The market share of the West Coast of South 

America Discussion Agreement (WCSADA) 

was 9 percent outbound and 8 percent inbound. 

The two remaining members of WCSADA are 

Seaboard Marine and King Ocean Services. 

Carriers offering service independent of 

WCSADA included Dole Ocean Liner Express 

and Great White Fleet (a subsidiary of Chiquita Brands Intl. Inc.), which transport a high 

portion of proprietary cargo, such as fresh 

fruits and vegetables. Members of WCSADA 

also faced competition from other major carriers serving the trade through transshipment 

hubs in Mexico, Panama and the Caribbean. 

There are no active rate discussion agreements 

in the trade between the U.S. and the East 

Coast of South America.
44 58th Annual Report

Mediterranean

1.7 Million TEUs

Container volumes between the U.S. and 

the Mediterranean accounted for 5 percent, 

or 1.7 million TEUs, of the total U.S. container 

cargo in FY 2019. The Mediterranean region 

are those nations bordering the Mediterranean Sea, including South Europe, Turkey 

and Egypt. Compared to the prior period, 

container cargo growth was the strongest 

inbound. U.S. exports grew by 2 percent to 

473,943 TEUs, while imports from the region 

rose by 11 percent to 1.3 million TEUs. The 

trade imbalance widened with import containers exceeding export containers by a ratio of 2.7 

to 1. The top import commodities were wine, 

ceramic tiles, and furniture, while woodpulp, 

nuts, paperboard, and cotton were the top U.S. 

export commodities. A high concentration of 

cargo was moved by the major carriers, MSC, 

Hapag Lloyd, Maersk Line, CMA-CGM, and 

Zim, accounting for 87 percent of the total 

container cargo in the trade. A new service 

string was added to the trade. After its space 

charter agreement with Hapag Lloyd was 

terminated, CMA-CGM joined with Marfret 

to form the MedCar service under the CMACGM/Marfret Mediterranean-Caribbean/US 

Gulf Vessel Sharing Agreement. In this service, 

the carriers deploy eight 6,900 TEU containerships on a weekly rotation between Houston 

and ports in the Mediterranean, Caribbean, 

Central/South America, and Mexico. While 

vessel capacity was added by some carriers, 

others adjusted their services and removed 

capacity, including THE and OCEAN Alliance 

members under their vessel sharing agreement. By the end of the fiscal year, annual 

vessel capacity in the trade rose by 4 percent. 

As in North Europe, trade growth with EU 

nations in the Mediterranean may be impacted 

by the tariffs imposed by the U.S., and any 

retaliatory tariffs by the EU.

Africa

503,127 TEUs

In FY 2019, imports and exports combined 

between the U.S. and Africa were 503,127 

TEUs, accounting for approximately 1.5 percent of all U.S. container volume. The Africa 

region includes all of the nations within the 

continent except Egypt, which is traditionally 

serviced via the Mediterranean. Compared to 

the previous period, U.S. container exports 

to nations in Africa increased by 17 percent 

to 365,237 TEUs, and U.S. container imports 

from the region increased by 11 percent to 

137,890 TEUs. Consequently, U.S. container 

exports exceed imports by a ratio of 2.6 to 1.

The top container U.S. exports to Africa 

included automobiles and poultry, while 

swimwear, cocoa beans and citrus fruit were 

among the top import commodities. Egypt and 

the Republic of South Africa are the largest 

two U.S. liner trading nations on the continent, 

accounting for about 50 percent of the total 

containerized cargo. MSC and Maersk Line, 

including its subsidiary, Safmarine, carried 66 

percent of the total container cargo in the trade. 

Under the Southern Africa Agreement, MSC 

and Maersk continue to share space on each 
58th Annual Report 45

other’s ships in the America Express (AMEX) 

service between the U.S. Atlantic Coast and 

the Republic of South Africa with calls at Cape 

Town, Port Elizabeth and Durban.

Australia and Oceania

445,962 TEUs

Oceania consists of Australia, New Zealand, and the South Pacific Islands. The liner 

trades between the U.S. and Oceania comprised just over 1 percent of total U.S. import 

and export cargo volumes combined in FY 

2019, at 445,962 TEUs. The volume of U.S. 

container exports was 240,821 TEUs, and 

the top exported commodities included auto 

parts, general merchandise, and tires. U.S. 

container import cargo was 205,142 TEUs, 

and the top imported commodities included 

wine and fresh or frozen meat products. The 

U.S. Pacific-Oceania Agreement is one of the 

major vessel sharing agreements that remains 

operational in the trade. In FY 2019, the agreement was amended to replace Hamburg Süd 

with Maersk Line after its acquisition and 

remove CMA CGM as a party, resulting in 

the combining of two vessel strings into a 

single string. The amendment also removed 

a restriction on operating in the trade outside 

of the agreement.
46 58th Annual Report

Top Twenty U.S. Liner Cargo 

Trading Partners

The Foreign Shipping Practices Act requires 

the FMC to 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 Commission derives its list of toptwenty trading partners from the Port Import 

Export Reporting Service (PIERS) database. 

The most recent complete calendar year of 

available data is 2018. The table on the next 

page lists the twenty foreign countries that 

generated the largest volume of oceanborne 

liner cargo in the bilateral trade with the 

United States in calendar year 2018. The figures in the table represent each country’s U.S. 

liner imports and exports combined in thousands of loaded TEUs. 

Bilateral trade with the United States’ toptwenty liner trading partners represented 

approximately 80 percent of the nation’s total 

liner trade in 2018. The total volume of trade 

with our top-twenty liner trading partners 

increased by 4.9 percent year-to-year.

The top-twenty list has been comprised of 

nearly the same trading partners since 2009. 

Several changes in ranking occurred among 

the top-twenty countries during 2018, however. Most notably, Vietnam passed both 

Japan and South Korea to become the U.S.’s 

second-largest trading partner, with containerized traffic increasing by 17 percent. Turkey 

is the only new entrant to the top twenty, 

growing its trade with the U.S. by 9 percent 

during the year. China remained the U.S.’s 

top trading partner in 2018, with over 13 million TEUs moving between the two countries. 

India (#5) and Malaysia (#15) saw the highest growth among the top twenty, with each 

country increasing its trade by 20 percent. 

Japan (#4) and Hong Kong (#14) were the only 

two countries to see their container trade with 

the U.S. decline, with decreases of 2 percent 

and 5 percent respectively. Countries in Asia 

make up half of the U.S.’s top twenty partners, while six European countries make the 

list. South America and Central America each 

contribute two countries to the top twenty.

Vietnam, India, Italy, the Netherlands, Malaysia, Chile, and 

Turkey climbed up in the rankings, while South Korea, Japan, 

Taiwan, Germany, Brazil, Hong Kong, Guatemala, and the 

United Kingdom slipped down.
58th Annual Report 47

Top Twenty U.S. Liner Cargo Trading Partners 

(CY2018)

Rank Country TEUs 

(000)

1 China (PRC) 13,274

2 Vietnam 1,565

3 South Korea 1,503

4 Japan 1,340

5 India 1,243

6 Taiwan (ROC) 1,224

7 Germany 1,101

8 Thailand 770

9 Indonesia 767

10 Belgium & 

Luxembourg

726

11 Italy 664

Rank Country TEUs 

(000)

12 Brazil 637

13 Netherlands 563

14 Hong Kong1 539

15 Malaysia 505

16 Guatemala 458

17 Chile 433

18 United Kingdom 431

19 Honduras 359

20 Turkey 346

1 Hong Kong reverted to Chinese control 

in July 1997. However, PIERS continues to 

report data separately for Hong Kong due 

to its status as a major transshipment center.
48 58th Annual Report

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 (FSPA). Section 19 empowers the Commission to make rules and regulations governing 

shipping in the foreign trade to adjust or meet conditions unfavorable to shipping. The FSPA 

directs the Commission to address adverse conditions that affect U.S. carriers in the foreign 

trade and that do not exist for foreign carriers in the United States.

The Commission, both through Commission action and through OGC, informally pursued 

several matters involving potentially restrictive foreign practices. This included the examination of restrictive foreign legislation and regulations. No formal section 19 or FSPA action by 

the Commission was necessary.
58th Annual Report 49

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. As of the end 

of fiscal year 2019, four controlled carriers operated in the U.S. trades. All four controlled 

carriers are subsidiaries of COSCO SHIPPING Holdings Co., Ltd.:

1. COSCO SHIPPING Lines Co., Ltd. – People’s Republic of China

2. Orient Overseas Container Line Limited – People’s Republic of China

3. OOCL (Europe) Limited – People’s Republic of China

4. COSCO Shipping Lines (Europe) GmbH – People’s Republic of China
50 58th Annual Report
58th Annual Report 51

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 Administrative Law Judge (ALJ) who issues an initial decision 

which is 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, OTIs, MTOs, 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 and may be reviewed 

by the Commission.

The following summarizes the results of docketed proceedings concluded during FY 2019 

by the OALJ and the Commission:

Santa Fe Discount Cruise Parking, Inc. 

d/b/a EZ Cruise Parking, Lighthouse 

Parking Inc., and Sylvia Robledo d/b/a 

81st Dolphin Parking v. The Board of 

Trustees of the Galveston Wharves 

and the Galveston Port Facilities Corporation [Docket No. 14-06]

Respondents operate the cruise terminal 

at the Port of Galveston. Complainants operate parking facilities near the Port where 

they provide parking for passengers who 

embark on cruises from the cruise terminal. 

As part of their service, Complainants provide 

transportation to and from the terminal via 

shuttles. On June 16, 2014, Complainants filed 

a complaint alleging that Respondents’ tariff 

imposing charges on Complainants’ shuttles 

violated three sections of the Shipping Act. 

In 2014, the ALJ dismissed claims under two 

sections of the Act but allowed claims alleging an unreasonable preference or prejudice 

under 46 U.S.C. § 41106(2) to proceed. The ALJ 

subsequently dismissed these claims. Complainants filed exceptions to the ALJ decision, 

and in January 2017, the Commission affirmed 

the dismissal of the complaint.

The Complainants petitioned for review 

in the D.C. Circuit. Oral argument was held 

on March 12, 2018, and on May 11, 2018, the 

Court vacated the Commission’s January 

2017 decision and remanded the case to the 

Commission for further proceedings. The 

Commission in turn remanded the case to 

the ALJ to address all remaining issues. In 
52 58th Annual Report

November 2018, the ALJ on remand found 

Complainants had not proved that Respondents violated § 41102(c) and again dismissed 

the complaint. Complainants filed exceptions 

to the remand decision, and the matter is 

pending before the Commission. 

Ngobros and Company Nigeria 

Limited v. Oceane Cargo Link, LLC 

[Docket No. 14-15]

Complainant alleges that Respondents violated the Shipping Act in transporting three 

vehicles from Georgia to West Africa. The ALJ 

found that Respondents had violated 46 U.S.C. 

§ 41102(c) and awarded Complainant reparations. The Commission reviewed the ALJ 

decision, but while review was underway, 

one of the Respondents filed for bankruptcy. 

Because of the bankruptcy, the Commission 

stayed the proceeding. In October 2017, the 

Commission learned that the Respondent had 

received a Chapter 7 bankruptcy discharge. 

The stay was lifted. Meanwhile, the same 

Respondent was indicted in federal court. In 

May 2019, the Respondent pleaded guilty to 

fraud and identity theft. The matter is pending 

before the Commission. 

Crocus Investments, LLC v. Marine 

Transport Logistics, Inc. [Docket No. 

15-04]

Complainants allege that Respondents overcharged them and transferred custody of three 

boats to a storage facility without their consent 

in violation of 46 U.S.C. § 41102(c). They also 

allege that one of the Respondents violated 46 

U.S.C. § 40901(a) by providing ocean freight 

forwarder services without a license from the 

Commission. The ALJ dismissed the claims 

for lack of jurisdiction and on substantive 

grounds. Complainants filed exceptions to 

the ALJ decision. On July 16, 2019, the Commission affirmed the ALJ decision except as to 

the § 41102(c) claim with respect to one boat 

and a limited time period, which the Commission remanded for further consideration. 

The Commission also denied Complainants’ 

petition to reopen the proceeding and submit 

new evidence. The matter is pending before 

the ALJ. 

Ovchinnikov vs. Hitrinov [Docket No. 

15-11] consolidated with Nurgazinov 

v. Khitrinov [Docket No. 1953]

 Complainants allege that Respondents 

violated the Shipping Act and Commission 

regulations by not releasing or delivering 

three vehicles shipped from the United States 

to Finland. During litigation, counsel for the 

parties moved for sanctions against each other. 

The ALJ denied the sanctions motions, and on 

March 9, 2017, the ALJ dismissed Complainants’ claims. Respondents filed exceptions 

with respect to sanctions. Complainants filed 

exceptions with respect to the dismissal of 

their claims. This matter is pending before 

the Commission. 

In Re: Vehicle Carrier Services [Docket 

Nos. 16-01, 16-07, 16-10, 16-11]

Complainants in these four consolidated 

cases allege that Respondents violated multiple provisions of the Shipping Act for nearly 

two decades by secretly agreeing and conspiring to fix, raise, and stabilize prices and 

allocate customers and market share in the roll 

on/roll off shipping trade. Complainants allege 

that Respondents’ illegally inflated charges 

were passed along to them, either directly as 

freight charges or indirectly in the purchase 
58th Annual Report 53

prices of vehicles. Complainants sued on their 

own behalf and on behalf of similarly situated 

members of a class. In May 2018, the ALJ dismissed the claims as time-barred and for lack 

of standing and also provisionally ruled that 

the Commission does not have the authority to adjudicate class actions. Complainants 

appealed. The matter is pending before the 

Commission. 

MAVL Capital Inc. v. Marine Transport Logistics, Inc. [Docket No. 16-16]

Complainants allege that Respondents 

violated 46 U.S.C. §§ 41102(c), 41104(3), 

and 41104(10) in connection with the storage and shipment of several vehicles. The 

ALJ dismissed certain of the claims for lack 

of jurisdiction and failure to state a claim. 

Complainants filed exceptions to the ALJ’s 

decision, and, subsequently, petitioned for 

leave to supplement the record. The matter 

is pending before the Commission. 

Hangzhou Qianwang Dress Co., Ltd. 

v. RDD Freight International Inc. 

[Docket No. 17-02]

Complainant alleges that Respondent violated the Shipping Act by releasing goods to 

a consignee before it had received the original 

bills of lading and permission to release from 

Complainant. The ALJ found that Respondent released cargo without the original bill of 

lading in violation of 46 U.S.C. § 41102(c) and 

awarded Complainant reparations. On March 

7, 2019, the Commission vacated the ALJ decision and remanded the case so that the ALJ 

could determine whether Respondent’s acts or 

omissions occurred on a “normal, customary, 

and continuous basis.” The matter is pending 

before the ALJ. 

Lima v. Fastway Moving and Storage, 

Inc. [Docket No. 17-03]

Complainant alleges that in the course of 

shipping his household goods from the United 

States to Brazil, Respondent allowed illegal 

items to be combined with Complainant’s 

shipment, failed to comply with tariff or service contract rates, and knowingly accepted 

cargo without a tariff, bond, insurance or 

surety, all in violation of 46 U.S.C. §§ 41102(c) 

and 41104. In January 2018, the ALJ entered 

a default judgment in Complainant’s favor 

and awarded Complainant reparations. On 

June 24, 2019, the Commission vacated the 

ALJ decision with respect to § 41102(c) but 

affirmed in all other respects and awarded 

Complainant reparations of $39,041.38. 

CMI Distribution Inc. v. Service by 

Air, Inc., Radiant Customs Services 

Inc. (formerly known as SBA Consolidators, Inc.) and Las Freight System 

Ltd. [Docket No. 17-05]

On May 23, 2017, Complainant filed a 

complaint alleging violations of 46 U.S.C. 

§40901 for acting as an OTI without holding a license issued by the Commission; 46 

U.S.C. §41102(c) for failing to observe just and 

reasonable practices; 46 U.S.C. §41104(2)(c) 

for failing to provide services in accordance 

with rates, charges, and rules contained in 

a published tariff; and 46 U.S.C. §40501 for 

failing to maintain a tariff showing all rates, 

charges, rules and practices. Respondent Las 

Freight System Ltd. did not respond to the 

complaint. On May 24, 2019, an initial decision was issued. The decision dismissed with 

prejudice the claims against Radiant Customs 

Services Inc. and LAS Freight Systems Ltd. 

The other Respondent, Service by Air, Inc., 
54 58th Annual Report

was ordered to cease and desist from operating as an NVOCC without a license and to pay 

reparations to the Complainant. This proceeding is pending before the Commission.

Port Elizabeth Terminal & Warehouse 

Corp. v. The Port Authority of New 

York and New Jersey [Docket No. 

17-07]

On July 21, 2017, Complainant filed a complaint against Respondent alleging violations 

of 46 U.S.C. §§41106(2), 41106 (3), and 41102(c) 

due to leasing decisions made by Respondent. On August 17, 2017, Respondent filed 

its answer denying the allegations, asserting 

that its actions were justified because it acted 

in accordance with the Shipping Act, and raising affirmative defenses. On April 17, 2018, an 

initial decision was issued granting a motion 

to partially dismiss the complaint, dismissing 

the claim for reparations with prejudice, and 

dismissing the claims for violation of 46 U.S.C. 

§§41106(3) and 41102(c) without prejudice. 

This first initial decision was appealed and is 

pending before the Commission. On March 25, 

2019, a second initial decision was issued dismissing with prejudice the remaining claims 

against Respondent. This second initial decision is also pending before the Commission.

Calstar Group LLC f/k/a Carlisle 

Transportation Products, Inc. and CTP 

Transportation Products, LLC v. UTI, 

United States, Inc.; UTI United States, 

LLC; and DSV Air & Sea, Inc. [Docket 

No. 17-08]

On August 31, 2017, Complainants filed 

a complaint against Respondents alleging 

that they violated 46 U.S.C. §41102(c) by 

failing to establish, observe and enforce just 

and reasonable regulations and practices; 46 

U.S.C. §41104(2), by charging rates higher than 

reflected in their published tariff and/or service agreements; and 46 U.S.C. §41102(4), by 

charging unfair and discriminatory fees. On 

December 8, 2018, Respondents filed a motion 

to dismiss the complaint. On May 18, 2018, an 

Initial Decision was issued dismissing Complainants’ section 41102(c) claim but denying 

Respondents’ motion to dismiss in all other 

respects. On September 13, 2018, a joint petition for approval of settlement and dismissal 

of this proceeding was received from the parties. On October 17, 2018, an order was issued 

granting the joint petition by the parties and 

dismissing this proceeding with prejudice.

Fiat Chrysler Automobiles NV, FCA US 

LLC, and FCA Italy S.P.A. v. Wallenius 

Wilhelmsen Logistics AS, Wallenius 

Wilhelmsen Logistics Americas LLC, 

Eukor Car Carriers Inc., Nippon Yusen 

Kabushiki Kaisha, NYK Line (North 

America) Inc., Mitsui O.S.K. Lines, 

Ltd., MOL (America) Inc., Kawasaki 

Kisen Kaisha, Ltd., “K” Line America, Inc. Compañía Sud Americana De 

Vapores, and Hoëgh Autoliners AS 

[Docket No. 17-09]

On October 6, 2017, Complainants, three 

Fiat entities, filed a complaint alleging that 

Respondents, ocean common carriers that 

provide ocean transport of new, assembled 

motor vehicles using specialized roll-on/rolloff cargo ships, violated the Shipping Act 

from as early as 1997 and alleging that the 

violations are continuing. Respondents filed 

a motion to dismiss in this and four related 

cases. On May 7, 2018, an order was issued 

finding that the statute of limitations bars 
58th Annual Report 55

reparations, except for violations that Fiat 

can establish that occurred within the statute of limitations period. The order was not 

appealed to the Commission and the parties 

engaged in discovery. On April 2, 2019, an 

initial decision was issued approving a confidential settlement with Mitsui and MOL. On 

April 2, 2019, and April 29, 2019, the Office of 

the Secretary issued Notices of Dismissal of 

three respondents. On May 31, 2019, the ALJ 

approved four settlement agreements with 

the remaining respondents. On July 2, 2019, 

the Commission issued a notice not to review.

Falcone Global Solutions, LLC v. 

Maurice Ward Networks, Ltd. d/b/a 

Maurice Ward Group; Maurice Ward 

& Co., BV.; and Maurice Ward & Co. 

S.R.O [Docket No. 18-04]

On June 19, 2018, Complainant filed a complaint against Respondents alleging that they 

failed to establish, observe and enforce just 

and reasonable regulations and practices, in 

violation of 46 U.S.C. §41102(c), related to 

the transportation of Complainant’s cargo; 

imposed and attempted to collect improper 

fees and charges not contained in the service 

agreement between the parties or in a tariff, 

in violation of 46 U.S.C. §41104(2); retaliated against Complainant in violation of 46 

U.S.C. §41104(3), by withholding release of 

Complainant’s containers when Complainant 

disputed those fees and charges; engaged in 

unfair practices by billing Complainant those 

inaccurate fees and charges, in violation of 46 

U.S.C. §41104(4); and unreasonably refused to 

deal or negotiate in good faith, in violation of 

46 U.S.C. §41104(10). The ALJ served an initial 

order, an order denying a motion for a more 

definite statement, and an order extending 

time to file a responsive pleading. On October 31, 2018, a joint stipulation of dismissal 

was received from the parties. On November 

7, 2018, the Office of the Secretary issued a 

notice of voluntary dismissal, discontinuing 

this proceeding.

Hanlon Sculpture Studio v. SAE 

Worldtrans Logistics f/k/a Worldtrans 

[Docket No. 18-09]

On October 19, 2018, Complainant initiated 

this proceeding by filing a complaint alleging 

that Respondent violated 46 U.S.C. §41102(b), 

by failing to provide account pricing or explanation of the charges it billed to Complainant, 

and 46 U.S.C. §41102(c), by failing to enforce 

reasonable regulations and practices in connection with Complainant’s property tendered 

to Respondent for shipping. On November 12, 

2018, Respondent filed a motion to dismiss 

the complaint. On November 28, 2018, the 

ALJ issued an order denying Respondent’s 

motion to dismiss. On December 11, 2018, 

a joint stipulation of dismissal was received 

from the parties. On December 17, 2018, the 

Office of the Secretary issued a notice of voluntary dismissal of this proceeding.

Logfret, Inc. v. Kirsha, B.V., Leendert 

Johanness Bergwerff A/K/A Hans 

Bergwerff, and Linda Sieval [Docket 

No. 18-10]

On November 14, 2018, Complainant filed a 

complaint alleging Shipping Act violations by 

a corporation and two individual respondents. 

Complainant Logfret is an NVOCC that provides transport, logistics, and related shipping 

services to customers in the United States and 

worldwide and is an affiliate of Logfret B.V., 

a common carrier based in The Netherlands. 
56 58th Annual Report

Respondents are Mr. Bergwerff, a Dutch 

national and Managing Director of Logfret 

B.V., and Ms. Sieval, a Dutch national and 

sales manager for Logfret B.V. The corporate 

respondent, Kirsha B.V., is a corporation in 

The Netherlands whose owner and managing 

director is Mr. Bergwerff, one of the individual respondents. On September 17, 2019, an 

initial decision was issued granting a motion 

to dismiss the proceeding based on a lack of 

personal and subject matter jurisdiction. The 

time for exceptions has not yet passed.

Donna Katri Wynder v. Ryan Sims; 

Waters & Associates, Inc. dba Sunshine Global Transport; Mohammad 

Madi; Debra Caesh dba Sea & Shore 

Shipping Inc. [Docket No. 1962(F)]

On November 16, 2018, Complainant 

filed a small claims complaint alleging that 

Respondents violated 46 U.S.C. §41102(c) of 

the Shipping Act in connection with a 2007 

Cadillac Escalade ESV which Complainant 

tendered to Respondents for shipping. On 

November 19, 2018, Respondent Sims, Waters 

& Associates filed a notice of refusal to consent 

to adjudication of Complainant’s claim under 

the Commission’s informal procedures; this 

proceeding was thus converted from an informal proceeding to a formal proceeding. On 

February 27, 2019, a stipulation of dismissal 

was received from the parties. On February 

28, 2019, a notice of voluntary dismissal was 

issued, discontinuing this proceeding. On 

April 3, 2019, the Commission issued a notice 

not to review the voluntary dismissal.

M/S Parsons Overseas v. Seven Seas 

Shipping USA, Inc. [Informal Docket 

No. 1960(I)]

On March 6, 2018, Claimant filed a small 

claims complaint alleging that Respondent 

violated 46 U.S.C. §41102(c) of the Shipping 

Act. On July 9, 2018, the small claims officer 

issued a Decision finding that Seven Seas 

violated 46 U.S.C. §41102(c) and granting reparations in the amount of $48,200 to Claimant. 

On March 7, 2019, the Commission issued an 

order vacating and remanding the decision to 

the small claims officer for consideration consistent with the provisions of a newly issued 

interpretive rule. On July 2, 2019, a decision 

on remand was issued finding that Complainant failed to demonstrate a section 41102(c) 

violation under the interpretive rule. On July 

31, 2019, the Commission issued a notice to 

review the decision on remand and the matter 

remains pending before the Commission. 

Rulemakings

Interpretive Rule; Shipping Act of 

1984 [Docket No. 18-06]

On September 7, 2018, the Commission 

issued a Notice of Proposed Rulemaking 

(NPRM) seeking comments on an interpretive 

rule to clarify the Commission’s interpretation 

of the scope of 46 U.S.C. § 41102(c) (section 

10(d)(1) of the Shipping Act of 1984). (83 FR 

45367) Section 41102(c) prohibits common 

carriers, terminal operators, and ocean 

transportation intermediaries from failing to 

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

or connected with receiving, handling, storing, 
58th Annual Report 57

or delivering property.

The Commission received five comments, 

all of which supported the rulemaking. The 

Commission published a Final Rule in the 

Federal Register on December 17, 2018, which 

went into effect immediately. The final interpretive rule clarifies that in order to violate 

46 U.S.C. § 41102(c), a regulated entity must 

be engaged in a practice or regulation on a 

normal, customary, and continuous basis and 

that such practice or regulation is unjust or 

unreasonable. 

Licensing, Registration and Financial Responsibility Requirements for 

Ocean Transportation Intermediaries 

[Docket No. 18-11] 

The Commission proposed minor changes 

to the requirements for ocean transportation intermediaries in a Notice of Proposed 

Rulemaking published on December 17, 

2018. The proposed changes involved minor 

adjustments to the application and renewal 

procedures for licenses and registrations, such 

as changes to the form, type, and timing of 

information required to be submitted to the 

Commission. The Commission received three 

comments to the NPRM. The comments were 

generally supportive of the NPRM, though 

one commenter expressed concern about the 

proposed changes to the initial license period. 

After reviewing the comments, the Commission voted on May 1, 2019, to publish a final 

rule with minor changes from the NPRM, 

pending alignment of the final rule with 

updates to the associated information collection under the Paperwork Reduction Act. As 

of the end of fiscal year 2019, the Commission 

was preparing to publish the Final Rule in the 

Federal Register.

Hearing Procedures Governing 

Denial, Revocation, or Suspension of 

an OTI License [Docket No. 19-04]

On September 3, 2019, the Commission 

issued a Notice of Proposed Rulemaking 

(NPRM) seeking comments on a proposed 

rule that would modify the hearing procedures governing the denial, revocation, or 

suspension of an ocean transportation intermediary (OTI) license. Through this rule, the 

Commission is seeking to align these hearing 

procedures with other Commission proceedings, ensure a more streamlined process, and 

fulfill the need for more detailed procedural 

requirements. As of the end of fiscal year 2019, 

the comment period for the NPRM was open.

Interpretative Rule on Demurrage and 

Detention under the Shipping Act 

[Docket No. 19-05]

On September 13, 2019, the Commission 

issued a Notice of Proposed Rulemaking 

(NPRM) seeking public comment on its interpretation of the Shipping Act prohibition 

against failing to establish, observe, and 

enforce just and reasonable regulations and 

practices relating to or connected with receiving, handling, storing, or delivering property 

with respect to demurrage and detention. 

Specifically, the Commission is proposing 

guidance as to what it will consider in assessing whether a demurrage or detention practice 

is unjust or unreasonable. As of the end of 

fiscal year 2019, the comment period for the 

NPRM was open. 
58 58th Annual Report

Regulatory Amendments Implementing the Frank LoBiondo Coast Guard 

Authorization Act of 2018 [Docket No. 

19-06]

On September 26, 2019, the Commission 

voted to issue a Notice of Proposed Rulemaking (NPRM) to update the Commission’s 

regulations to reflect FMC-specific provisions 

of the LoBiondo Act. The proposed regulatory changes would implement the statutory 

changes made by the LoBiondo Act with 

respect to: (1) certain nonpublic Commission 

meetings; (2) the types of persons required 

to be licensed as ocean transportation intermediaries and comply with relevant financial 

responsibility requirements; (3) prohibited 

acts by common carriers; (4) the confidentiality of third-party comments on filed ocean 

common carrier and marine terminal operator 

agreements. As of the end of fiscal year 2019, 

the Commission was preparing to publish the 

NPRM in the Federal Register.

Delegations to Bureau of Enforcement 

and Enforcement Procedures [Docket 

No. 19-07]

On September 26, 2019, the Commission 

voted to issue a Direct Final Rule amending 

its enforcement procedures. The Direct Final 

Rule would amend the process to: (1) provide notice to the subject of investigations 

and allow them the opportunity to respond 

before BOE recommends that the Commission 

take enforcement action; and (2) to require 

Commission approval to initiate formal or 

informal action and Commission approval 

of proposed compromise agreements. As of 

the end of fiscal year 2019, the Commission 

was preparing to publish the Direct Final Rule 

in the Federal Register.

Petition of the World Shipping Council for an Exemption and Rulemaking 

[Petition No. P3-18]

The World Shipping Council, a trade association of ocean common carriers, petitioned 

the Commission for an exemption from the 

service contract filing and essential terms publication requirements set forth at 46 U.S.C. § 

40502(b) and (d), and further petitioned for 

the initiation of a rulemaking proceeding to 

amend the Commission’s service contract 

regulations in 46 C.F.R. Part 530 consistent 

with the requested exemption. The Commission received three comments in favor of the 

petition and two comments opposed to the 

petition. On September 26, 2019, the Commission voted to grant in part and deny in part 

the petition by exempting ocean carriers from 

publishing essential terms of service contracts, 

as required by § 40502(d), but continuing to 

require ocean carriers to file service contracts 

pursuant to § 40502(b). The Commission also 

approved the issuance of a Notice of Proposed 

Rulemaking to adopt this regulatory relief, 

subject to the issuance of the order, and is 

finalizing both documents for publication.
58th Annual Report 59

Leveraging Technology

Digital transformation and cybersecurity are the highest investment priorities for 

modernizing the Commission’s information 

system infrastructure. The deployment of 

technologies, applications and systems to support the Commission’s business functions and 

migration away from paper-based systems to 

automated computer systems continues. The 

FMC’s automated information technology (IT) 

systems are used by the shipping public to file 

license applications, carrier and MTO agreements, and commercially sensitive operational 

data used by the Commission’s economists 

to conduct mission-critical competition 

analysis. Planned information system infrastructure and architecture investments across 

all agency tasks and processes will streamline 

the Commission’s core workflow and business 

functions to maximize productivity, expand 

research and analysis capabilities, and provide 

better public access to FMC information. 

The FMC’s Information Technology Strategic Plan for FY 2018-2022 (IT Strategic Plan), 

finalized in December 2018, guides the FMC’s 

efforts to support and manage its information 

technology assets. This 5-year Plan reflects the 

FMC’s progress with prior year initiatives; 

next steps for improving IT services and solutions; and guides the FMC’s IT mission setting 

performance goals, objectives and timelines. 

The IT Strategic Plan is aligned with the Commission’s agency-wide Strategic Plan for FY 

2018-2022 and outlines how technology will 

be used to meet the Commission’s mid-term 

strategy and long-term mission goals and 

objectives.

The FMC has identified four strategic goals 

in its IT Strategic Plan that target quality, efficiency, cybersecurity, and compliance, with 

action-oriented objectives supported by key 

initiatives. The four IT strategic goals are:

• IT Strategic Goal 1 – Manage and 

deliver quality IT systems and services critical for the FMC to fulfill its 

mission and support related administrative, business, and operational 

functions.

• IT Strategic Goal 2 – Maintain IT policies, procedures, and practices that 

support efficient and effective FMC 

business, administrative, and mission 

processes. 

• IT Strategic Goal 3 – Expand on current 

progress to strengthen cybersecurity 

of FMC’s networks and systems.

• IT Strategic Goal 4 – Ensure reliability 

and accuracy of federal information 

technology as required by statutes, 

government-wide requirements, 

directives, or guidance. 

At the enterprise level, IT capital planning 

and investment control (CPIC) is informed 

through engagement with the FMC’s Information Technology Advisory Board (ITAB). 

The ITAB is responsible for reviewing IT planning and the budget appropriate to support IT 

application development, business continuity 

and disaster recovery, information assurance 

and cybersecurity, data management and user 

support, as well as network and telecommunications systems maintenance. 

The Commission continued progress on 

several key initiatives in 2019. During FY 
60 58th Annual Report

2019, the FMC made significant progress in 

modernizing its information systems and 

information technology infrastructure components. The Commission deployed a new 

laptop-based personal computer infrastructure and network printer solution across the 

agency. The FMC strengthened its cybersecurity and infrastructure by implementing DHS 

binding operational directives and guidance. 

The FMC also installed a new Secure Sockets 

Layer Virtual Private Network (SSL VPN) to 

provide staff more secure remote access to the 

FMC’s IT network.

During the fiscal year, the Commission 

also implemented a new Radio-Frequency 

Identification (RFID) Inventory Asset Management System for the day-to-day inventory 

and tracking of IT equipment at FMC’s headquarters and regional offices. This system will 

further secure and track the Commission’s IT 

equipment.

The FMC modernization of the agency’s line 

of business (LOB) applications. The agency 

acquired internal IT skill sets and implemented 

an Agile development approach for software 

development. The Agile development model 

is being used to develop the agency’s upcoming E-bonds application. 
58th Annual Report 61
62 58th Annual Report
58th Annual Report 63

APPENDICES

A – FMC Organization Chart
64 58th Annual Report

B – FMC Senior Officials – FY 2019

Chief of Staff Mary T. Hoang

Counsel to Chairman Khouri John A. Moran

Counsel to Commissioner Dye Robert M. Blair

Counsel to Commissioner Maffei Katharine Primosch

Counsel to Commissioner Sola Cory Cinque

General Counsel Tyler J. Wood

Secretary Rachel E. Dickon

Chief Administrative Law Judge Clay G. Guthridge*, Erin Wirth

Director, Office of CADRS Rebecca A. Fenneman

Director, Office of EEO Ebony Jarrett

Inspector General Jon Hatfield

Managing Director Karen V. Gregory

Deputy Managing Director Peter King

Director, Bureau of Certification and Licensing Sandra L. Kusumoto

Director (Deputy), Bureau of Enforcement Benjamin K. Trogdon

Director, Bureau of Trade Analysis Florence A. Carr

*Retired June 1, 2019
58th Annual Report 65

C – Statement of Appropriations, Obligations, 

and Receipts

Appropriations

For necessary expenses of the Federal Maritime Commission, as authorized by §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, $27,490,000. Provided, 

that not to exceed $2,000 shall be available for official reception and representation expenses.

Public Law 116-6 $27,490,000

Total Budgetary Resources $27,490,000

Obligations and Unobligated Balance:

Net obligations for salaries and expenses 

for the fiscal year ended September 30, 2019

$27,339,179

Statement of Receipts:

Deposited with the General Fund of the Treasury for the Fiscal 

Year Ended with September 30, 2019

Publications and reproductions, fees and 

vessel certification, and freight forwarder 

applications

$231,042

Fines and penalties $660,125

Total general fund receipts $891,166
66 58th Annual Report

D – Agreement Types

Types of Agreements

First introduced with the current eAgreements system in FY 2016, the Commission categorizes ocean common carrier agreements by the types of agreements currently utilized by 

the ocean transportation industry, recognizing trends among types of agreement filings, and 

provided more refined information to users. The current categories are summarized below. 

Space charter agreements authorize an ocean common carrier(s) to sell or exchange vessel 

space for use by another shipping line. Space charter agreements do not include the authority 

to discuss the provision of space in a trade, only the chartering of space already deployed. 

Vessel sharing agreements authorize two or more shipping lines to discuss and agree on 

the supply of vessel capacity in a defined U.S. trade through the deployment of a specific 

service string or strings. 

Global vessel sharing agreements/alliances authorize two or more shipping lines to discuss and agree on the supply of vessel capacity across multiple trades. Alliance agreements 

may contain other authorities such as, information exchange, joint procurement of goods or 

services necessary to operate their services, etc. While there are currently seven global alliance agreements on file with the Commission, only three are jointly/collectively operating 

container services in the U.S. trades. 

Vessel-operating common carrier (VOCC) conference agreements are distinguished from 

all other types of agreements because they authorize two or more shipping lines to collectively 

discuss, agree, and fix uniform freight rates, charges, practices, and conditions of service 

relating to the receipt, carriage, handling and/or delivery of passengers or cargo. There are 

currently no conference agreements on file that cover the movement of general commercial 

cargo. The conference agreements currently on file with the Commission only involve the 

transport of government impelled cargo. 

Joint service agreements authorize two or more shipping lines to establish and operate a 

combined vessel service or joint venture that uses a distinct operating name and generally 

acts as a single shipping line independent of the shipping lines that are parties to the joint 

service agreement. 

Equipment discussion agreements are agreements between shipping lines that primarily 

focus on the discussion, exchange, and transportation of containers, chassis, LASH/ SEABEE 

barges, and related equipment.

VOCC rate discussion agreements focus on any type of rate matter or charges, but unlike 

conferences, any consensus on rates among the shipping line members is non-binding on the 

members.

VOCC cooperative working agreements (CWAs) authorize shipping lines to establish 

exclusive, preferential, or cooperative working relationships that are subject to the Shipping 
58th Annual Report 67

Act, but that do not fall precisely within the parameters of any other specifically defined 

agreement category. 

Assessment agreements, whether part of a collective bargaining agreement or negotiated 

separately, authorize the parties to collectively bargain for fringe benefit obligations on other 

than a uniform man-hour basis regardless of the cargo handled or type of vessel or equipment utilized. These agreements can be between common carriers and labor organizations, 

or marine terminal operators and labor organizations, and are effective upon filing with the 

Commission.

Marine terminal rate discussion agreements authorize marine terminal operators to discuss 

rates and/or charges related to marine terminal operations.

Marine terminal facilities agreements generally refer to lease agreements between a marine 

terminal operator and the owner of the land or warehouse/facility at a port.

Marine terminal services agreements are agreements between a marine terminal operator 

and a shipping line concerning marine terminal services provided to and paid for by a shipping 

line. These services include: dockage, free time, handling, heavy lift, loading and unloading, 

terminal storage, usage, wharfage, wharf demurrage, and checking (the service of counting 

and checking cargo against the shipping documentation), and including any marine terminal 

facilities that may be provided incidentally to such marine terminal services. 

Marine terminal joint venture agreements are agreements between or among two or more 

marine terminal operators, or between one or more marine terminal operators and one or 

more shipping lines, operating as a joint venture whereby a separate marine terminal operator is established. 

MTO cooperative working agreements authorize marine terminal operators to establish 

exclusive, preferential, or cooperative working relationships subject to the Shipping Act, but 

do not fall precisely within the parameters of any of the above specifically defined agreement 

categories
68 58th Annual Report

E – Civil Penalties Collected

International Global Logistics, Inc $40,000

American Freight Logistics, INC. $85,000

Soonest Express, Inc. $60,000

Square Deal Shipperss & Movers, Inc. $25,000

MTI Worldwide Logistics Corp. $50,000

KBL Container Line, Inc. $50,000

PDL International Pte Ltd. 

Sofrana Unilines (NZ) Ltd. and ANL Singapore Pte Ltd (dba 

Sofrana ANL Pte Ltd.)

Pacific Forum Line (Group) Limited and Pacific Forum Line 

(NZ) Limited; and, 

Neptune Pacific Line, Inc. - Jointly

$350,000

Total: $660,000
58th Annual Report 69