FEDERAL MARITIME 

COMMISSION 

 

47th 

ANNUAL REPORT 

for 

 Fiscal Year 

2008 

TABLE OF CONTENTS

LETTER OF TRANSMITTAL ..................................................................... iii 

MEMBERS OF COMMISSION .................................................................. v

SENIOR COMMISSION OFFICIALS ........................................................ vii 

VISION . . . . . . . . ......................................................................................... ix

FMC MISSION ............................................................................................. ix 

I. THE COMMISSION

 A. History ....................................................................................... 1 

 B. Functions .................................................................................. 1

 C. Organization............................................................................... 4 

II. THE YEAR IN REVIEW .................................................................. 7

 A. Outreach ..................................................................................... 9 

B. Trade Developments .............................................................. 10

 C. Restrictive Trade Practices ...................................................... 13 

D. Trade Oversight ..................................................................... 13

 E. Alternative Dispute Resolution ................................................ 15 

F. Enforcement ........................................................................... 16

III. DEVELOPMENTS IN MAJOR U.S. FOREIGN TRADES

 A. North Europe............................................................................ 19 

 B. Mediterranean ........................................................................ 21

 C. Indian Subcontinent and the Middle East ................................ 23 

 D. Australia and Oceania ........................................................... 24

 E. Central America and the Caribbean ......................................... 26 

 F. Asia .......................................................................................... 27

 G. South America ......................................................................... 29 

H. Africa ...................................................................................... 30 

 I. Worldwide ............................................................................... 31 

IV. THE FOREIGN SHIPPING PRACTICES ACT OF 1988

 A. In General ................................................................................ 33 

 B. Top Twenty U.S. Liner Cargo 

 Trading Partners ................................................................ 34
V. SIGNIFICANT ACTIVITIES BY 

 ORGANIZATIONAL UNIT

A. Office of the Secretary ............................................................ 39 

 B. Office of Administrative Law Judges .................................. 45

 C. Office of the General Counsel ................................................. 49 

 D. Office of Equal Employment Opportunity .......................... 59

 E. Office of the Inspector General .............................................. 63 

 F. Office of Administration ...................................................... 67

 G. Office of Operations ................................................................ 81 

H. Bureau of Certification and Licensing................................ 85

 I. Bureau of Enforcement ........................................................... 91 

J. Bureau of Trade Analysis .................................................... 95

APPENDICES

A. Organization Chart ................................................................ 109 

 B. Commission Proceedings .................................................... 110

 C. Agreement Filings and Status ................................................ 111 

D. Form FMC-1 Tariff Location Addresses - 

 Electronic Service Contract Filings 

 and Special Permission Applications ............................. 112

 E. Civil Penalties Collected ....................................................... 113 

 F. Statement of Appropriations, Obligations 

 and Receipts ...................................................................... 114

-ii- 
FEDERAL MARITIME COMMISSION 

 WASHINGTON, D.C. 20573-0001 

 

 

March 31, 2009 

To the United States Senate and House of Representatives: 

 Pursuant to section 103(e) of Reorganization Plan No. 7 of 

1961, and section 208 of the Merchant Marine Act, 1936, now 

codified, as amended, at 46 U.S.C. §306 (a), I am pleased to 

submit the 47th Annual Report of the activities of the Federal 

Maritime Commission for fiscal year 2008. 

 Sincerely, 

 Karen V. Gregory 

 Secretary 

MEMBERS OF THE COMMISSION* 

Vacant

Chairman 

Appointed 

Expired

Harold J. Creel, Jr.

Commissioner 

Appointed 1994 

Term Expires 2009

Joseph E. Brennan

Commissioner 

Appointed 1999 

Term Expired 2008 

Rebecca F. Dye

Commissioner 

Appointed 2002 

Term Expires 2010 

A. Paul Anderson**

Commissioner 

Appointed 2003 

Term Expired 2007 

*One vacancy as of December 1, 2006 

**Commissioner Anderson resigned as of May 30, 2008. 

-v- 

SENIOR COMMISSION OFFICIALS 

Counsel to Commissioner Anderson ........... Lucille A. Streeter

Counsel to Commissioner Brennan ........... Steven D. Najarian 

Counsel to Commissioner Creel ........................ David R. Miles 

Counsel to Commissioner Dye .................... Edward L. Lee, Jr.

 

General Counsel ................................................. Peter J. King 

Secretary........................................................Karen V. Gregory

Administrative Law Judge ................................ Clay Guthridge 

Director, Office of 

 Equal Employment Opportunity ................................ Vacant

Inspector General ............................................ Adam Trzeciak

Director of Administration ........................................... Vacant 

Director of Operations ................................. Austin L. Schmitt 

Director, Bureau of Certification 

 and Licensing ...................................... Sandra L. Kusumoto

Director, Bureau of Enforcement .......................... Vern W. Hill

 

Director, Bureau of 

 Trade Analysis ............................................ Florence A. Carr
-vii- 

 
Vision 

Fairness and Efficiency in U.S. Maritime Commerce 

Mission 

The FMC’s Mission is to: 

• Develop and administer policies and regulations that foster a 

fair, efficient and secure maritime transportation system; 

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

practices and market-distorting activities; 

• Facilitate compliance with U.S. shipping statutes through 

outreach and oversight; and 

• Assist in resolving disputes 

-ix- 

 THE COMMISSION 

A. HISTORY

 The Federal Maritime Commission (“Commission” or 

“FMC”) was established as an independent regulatory agency by 

Reorganization Plan No. 7, effective August 12, 1961. Prior to 

that time, the Federal Maritime Board was responsible for both the 

regulation of ocean commerce and the promotion of the United 

States Merchant Marine. Under the reorganization plan, the 

shipping laws of the U.S. were separated into two categories -- 

regulatory and promotional. The newly-created FMC was charged 

with the administration of the regulatory provisions of the shipping 

laws. The responsibilities associated with the promotion of an 

adequate and efficient U.S. Merchant Marine were assigned to the 

Maritime Administration, now located within the Department of 

Transportation. 

 The Commission is responsible for the regulation of 

oceanborne transportation in the foreign commerce of the U.S. 

The passage of the Shipping Act of 1984 (Shipping Act) brought 

about major change in the regulatory regime applicable to shipping 

companies operating in the U.S. foreign commerce. The 

subsequent passage of the Ocean Shipping Reform Act of 1998 

(“OSRA”), with its deregulatory amendments and modifications to 

the Shipping Act, further signaled a significant shift in shipping 

regulation. 

B. FUNCTIONS

The principal statutes administered by the Commission are 

the Shipping Act, the Foreign Shipping Practices Act of 1988 

(FSPA), section 19 of the Merchant Marine Act, 1920 (1920 Act), 

and Pub. L. No. 89-777. Most of these statutes were amended by 
OSRA and are now codified in Title 46 of the U.S. Code at 

sections 44103 through 40904. 

The Commission’s regulatory responsibilities include: 

  Reviewing agreements among ocean common 

carriers and marine terminal operators (MTOs) 

relating to service in the U.S. foreign oceanborne 

trades, to ensure that they do not cause 

substantial increases in transportation costs or 

decreases in transportation services. 

  Reviewing service contracts between ocean 

common carriers and shippers to guard against 

detrimental effects to shipping in the U.S. foreign 

trades. 

  Ensuring that common carriers’ tariff rates and 

charges are accessible to the shipping public in 

private, electronically accessible systems. 

 Regulating rates, charges, and rules of 

government-owned or -controlled carriers to 

ensure that they are just and reasonable. 

  Issuing passenger vessel certificates evidencing 

financial responsibility of vessel owners or 

charterers to pay judgments for personal injury 

or death, or to refund passenger fares for the 

nonperformance of a voyage or cruise. 

 

  Licensing ocean transportation intermediaries 

(OTIs) in the U.S. to protect the public from 

unqualified, insolvent, or dishonest companies. 

  Ensuring that OTIs maintain sufficient financial 

responsibility to protect the shipping public from 

financial loss. 

2
  Ensuring against harm to the shipping public by 

investigating rates, charges, classifications, and 

practices of common carriers, MTOs, and OTIs 

operating in the foreign commerce of the U.S. 

  Taking action to address unfavorable conditions 

arising out of foreign government or business 

practices in the U.S. foreign shipping trades. 

 The Shipping Act is applicable to the operations of 

common carriers and other persons engaged in U.S. foreign 

commerce. It exempts agreements effective under the Shipping 

Act and the Commission’s jurisdiction from the U.S. antitrust laws, 

as contained in the Sherman and Clayton Acts. The Commission 

reviews and evaluates agreements to ensure that they do not result 

in an unreasonable increase in transportation cost or unreasonable 

reduction in service or otherwise violate the Shipping Act. 

 In addition to evaluating and monitoring agreements among 

carriers and marine terminal operators, the Commission is also 

responsible for ensuring that individual carriers and marine 

terminal operators, as well as those permitted by agreement to act 

in concert, treat shippers and other members of the shipping public 

fairly by not engaging in prohibited acts set out in the Shipping 

Act. The Shipping Act also requires all common carriers to make 

their rates, charges and practices available in automated tariff 

systems that must be available electronically to the public. Ocean 

common carriers are permitted to enter into service contracts with 

their shipper customers. Such contracts are confidentially filed 

with the FMC in its internet-based system. The Commission has, 

by regulation, also allowed non-vessel-operating common carriers 

(NVOCC) to offer service to customers under the terms of 

confidentially-filed contracts called NVOCC Service 

Arrangements (NSAs). The Commission does not approve or 

disapprove general rate increases (GRIs) or individual commodity 

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

certain foreign government-owned or -controlled carriers. 

3
 The Commission is authorized to take action to ensure that 

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

barriers to ocean shipping. The Commission may take 

countervailing action to correct unfavorable shipping conditions in 

U.S. foreign commerce and may impose penalties. The 

Commission may address actions by carriers or foreign 

governments that either adversely affect shipping in the U.S. 

foreign oceanborne trades, including the intermodal operations of 

carriers or the operations of OTIs, or that impair access of U.S.-

flag vessels to ocean trade between foreign ports. 

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

vessels with 50 or more berths, embarking passengers at U.S. 

ports, to establish financial coverage to indemnify passengers in 

cases of death, injury, or nonperformance of transportation. The 

Commission certifies such operators upon the submission of 

satisfactory evidence of financial responsibility. 

 The Commission also ensures that all OTIs have 

established sufficient financial responsibility to protect shippers 

from financial loss. Additionally, the Commission licenses all 

U.S. OTIs. 

 The Commission carries out its regulatory responsibilities 

by conducting informal and formal investigations. It holds 

hearings, considers evidence, renders decisions, and issues 

appropriate orders and regulations. The Commission also 

adjudicates and mediates disputes involving the regulated 

community, the shipping public, and other affected individuals or 

interest groups. 

C. ORGANIZATION

The Commission is composed of five commissioners 

appointed by the President with the advice and consent of the 

Senate. Commissioners serve five-year, staggered terms, and no 

more than three members of the Commission may belong to the 

same political party. The President designates one of the 

4
commissioners to serve as chairman. The chairman is the chief 

executive and administrative officer of the agency. 

 The Commission’s organizational units consist of: Office 

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

Library and the Office of Consumer Affairs and Dispute 

Resolution Services); Office of Administrative Law Judges; Office 

of Equal Employment Opportunity; Office of the Inspector 

General; Office of Administration (including the Offices of 

Financial Management, Human Resources, Information 

Technology, and Management Services); and Office of Operations 

(including the Bureaus of Certification and Licensing, 

Enforcement, Trade Analysis and the Commission’s Area 

Representatives). 

 In fiscal year 2008, the Commission was authorized a total 

of 180 full-time equivalent positions and had a total appropriation 

of $22,072,000. That appropriation supported the actual 

employment of 115 full-time equivalent positions during the fiscal 

year. While the majority of its personnel are located in 

Washington, D.C., the Commission has Area Representatives in 

Houston, Los Angeles, New Orleans, New York, Seattle and South 

Florida. 

5
6
II 

THE YEAR IN REVIEW 

In fiscal year 2008, the total volume of U.S. liner exports 

shipped worldwide grew by 15 percent. Liner imports to the U.S., 

however, continued to weaken, declining by 6 percent at fiscal year 

end. As in preceding years, China was the leading trading partner 

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

cargo (imports and exports) was concentrated in trade with nations 

in northeast Asia. At the end of the fiscal year, indications of a 

serious global economic downturn were present as the credit and 

financial crises unfolded and recessionary conditions began to 

affect economies worldwide. As consumer spending in the U.S. 

and abroad contracts, the demand for liner cargo is forecast to 

decline dramatically. 

 The Commission continued to monitor the international 

liner trade, focusing in large part on issues relating to ocean 

common carriers and marine terminal operators in filed 

agreements. The Commission, through several of its offices and 

bureaus, reviewed the Clean Truck Program (CTP) that was 

devised as part of the Clean Air Action Plan under the Los Angeles 

and Long Beach Port Infrastructure and Environmental Programs 

Cooperative Working Agreement and the Los Angeles/Long Beach 

Port/Terminal Operator Administration and Implementation 

Agreement. On September 24, 2008, the Commission initiated a 

formal investigation to determine whether certain practices of the 

Ports of Los Angeles and Long Beach (Ports) violate the Shipping 

Act of 1984. These actions and others by various components of 

the Commission are discussed in detail below. 

The Commission monitored agreements that had potential 

for the greatest competitive impacts due to the parties’ ratemaking 

authority or high market share, such as the Transpacific 

Stabilization Agreement. In August of 2008, the Commission 

7
issued an order under section 15 of the Shipping Act which 

required specific pricing and operational data from carriers serving 

the trade between the U.S. and Australia/New Zealand due to 

competitive concerns. Commission staff is preparing for an 

ongoing analysis of market changes in the liner trade between the 

U.S. and North Europe following the October 2008 expiration of 

antitrust immunity in the European Union. 

 

In fiscal year 2008, the Commission drafted a new Strategic 

Plan for FY 2010-2015, and restated its mission as follows: to 

foster a fair, efficient and reliable international ocean 

transportation system and to protect the public from unfair and 

deceptive practices. The Commission set forth three draft strategic 

goals: (1) to maintain an efficient and competitive international 

ocean transportation system; (2) to protect the public from 

unlawful, unfair and deceptive ocean transportation practices and 

resolve shipping disputes; and (3) to advance agency objectives 

through high-performance leadership and efficient stewardship of 

resources. The Strategic Plan was reviewed by OMB and 

submitted for public comment through publication on the 

Commission’s website. Once final, the Plan will be formally 

reported to Congress. 

 This Report highlights areas of particular interest and 

provides an office-by-office synopsis of activities and 

accomplishments during the past fiscal year. 

A. OUTREACH 

During fiscal year 2008, the Commission continued to 

enhance its website by adjusting how information is presented, 

expanding the amount of information available, and adding 

additional functions. For example, weekly agreement filing notices 

that appear in the Federal Register are now published on the 

agency’s website. This enhancement provided greater public 

awareness of agreement filings. The Commission continually 

evaluated the overall usefulness of the site and coordinated efforts 

8
agency-wide to improve the website’s content and userfriendliness. 

The Commission also expanded contact with all segments 

of the maritime industry and the public. The Commission hosted a 

number of industry briefings in Washington, DC. Staff made 

several presentations in port areas aimed at securing compliance 

with agency regulations and updating information. The 

Commission, through its Alternative Dispute Resolution program, 

also promoted discussions among carriers and shippers to address 

U.S. exporter difficulties in obtaining containers and booking 

space on outbound vessels, particularly in the trade from the U.S. 

Pacific coast to Asia. The Commission initiated a regular 

Commission meeting schedule to discuss industry and 

administrative matters in both public and closed sessions in fiscal 

year 2008 as well. 

During the fiscal year, the Commission continued to make 

more information and filed documents available electronically and 

to improve responsiveness to requests for public information. 

Specifically, key documents filed in formal proceedings are 

available to the public through the agency’s website. In addition, 

28 bound volumes of the Commission’s official decisions were 

converted to electronic format. The Commission is developing 

plans to post these decisions to its website during fiscal year 2009. 

The process of electronically scanning/imaging 

Commission records also continued during fiscal year 2008. The 

document management system that the Commission oversees has 

helped support the agency’s initiatives for continuity of operations 

by improving preservation of and Commission staff access to 

Commission documents. The electronic documents also improve 

Commission staff response time to public inquiries and public 

access to electronic files.

9
B. TRADE DEVELOPMENTS1

 In fiscal year 2008, the total volume of U.S. liner exports 

shipped worldwide grew at a rate of 15 percent. The growth rate 

was 12 percent in FY 2007. In contrast, the total volume of liner 

imports to the U.S. continued to decline by 6 percent. While 

import cargo still exceeded export cargo, the imbalance in cargo 

volume improved. For every loaded twenty-foot equivalent 

container unit (TEU) exported out of the U.S., 1.5 TEUs were 

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

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

liner cargo (imports and exports) was concentrated in trade with 

nations in northeast Asia. Containership capacity deployed on the 

world market continued to exceed demand, and it is forecasted that 

more capacity will be added to the market despite rapid declines in 

cargo volume expected as a result of the global recession. The 

worldwide ship capacity currently on order amounts to almost 60 

percent of the existing fleet capacity. Concentration in the liner 

shipping industry remained unchanged for the fiscal year, with the 

top ten ocean carriers in control of about 60 percent of the world’s 

containership capacity. 

 In the largest of the U.S. liner trades, fiscal-year growth in 

U.S. exports to Asia was strong at a rate of 18 percent. Generally, 

the weakness of the U.S. dollar relative to foreign currencies for 

much of the fiscal year made U.S. goods more affordable overseas. 

Declining conditions in the economy reduced the U.S. demand for 

imports from Asia, causing cargo volume to fall by 6 percent. 

Nonetheless, for every one TEU of U.S. exports that moved 

outbound, 2.2 TEUs of imports from Asia were shipped inbound. 

In the outbound direction to Asia, freight rates increased as a result 

of the strong export growth, and some shippers reported that they 

were having to book vessel space weeks in advance due to the 

increase in demand. In this trade direction, members of the rate 

 

1

 As to developments in particular trade lanes, please see section 

III, “Developments in Major U.S. Foreign Trades.” 

10
discussion agreement, i.e., the Westbound Transpacific 

Stabilization Agreement (WTSA), have a combined market share 

of 69 percent. Conversely, in the inbound direction from Asia, 

attempts by members of the Transpacific Stabilization Agreement

(TSA) to implement general rate increases were reportedly 

unsuccessful due to the decline in cargo volume. TSA, however, 

increased its market share from 80 to 86 percent with the addition 

of China Shipping Container Lines Co., Ltd. (“China Shipping”) as 

a new member to the rate discussion agreement. 

 In the liner trade between the U.S. and North Europe, U.S. 

export growth for the fiscal year was significant at 13 percent, 

while import cargo was down by 5.5 percent. Containerized 

automobiles topped the list of commodities shipped outbound, 

accounting for 13 percent of the total export cargo volume in 

TEUs. For the first time in over a decade, the cargo volume in each 

trade direction was approximately balanced. Recessionary 

conditions in the economies of North Europe and the U.S. are 

forecasted to reduce cargo volume in both trade directions. 

Further, carriers may have to increase the coordination of their 

operations to manage excess capacity in the trade in some areas. 

For the fiscal year, vessel capacity was cut by 5 percent in each 

trade direction. Notably, CMA CGM S.A. and China Shipping 

terminated their joint service under their vessel-sharing agreement. 

Instead, each carrier opted to charter vessel space from the existing 

services of other carriers in the trade. 

 Between the U.S. and the region of Australia, New 

Zealand, and the Pacific Islands (Oceania), U.S. export cargo grew 

by 17 percent, but import cargo from the region fell slightly. The 

volume of U.S. export cargo exceeded import cargo by 79,843 

TEUs, or over 40 percent. Over the fiscal year, various agreement 

changes and the rationalization of services between carriers 

resulted in vessel capacity reductions in both trade directions. 

ANL Singapore Pte., Ltd. (ANL), a subsidiary of CMA CGM, 

joined the Australia and New Zealand-United States Discussion 

Agreement (ANZUSDA), the voluntary rate discussion agreement 

from Australia/New Zealand to the United States. ANL’s 

membership in ANZUSDA increased the market share of the 

11
agreement to 85 percent. In the trade direction from the U.S. to 

Australia/New Zealand, the market share of the voluntary rate 

discussion agreement, i.e., the United States/Australasia 

Discussion Agreement (USADA), was 90 percent. In addition, 

CMA CGM and ANL joined the U.S. Pacific Coast-Oceania 

Agreement, the vessel sharing and sailing agreement among 

Maersk Line, Hamburg-Süd, and Hapag-Lloyd that operates 

services between Oceania and the U.S. Pacific Coast. As a result 

of these changes, all of the carriers providing direct services in the 

trade became interconnected as parties to the rate discussion and 

vessel-sharing agreements. To assess and monitor the competitive 

impact of these changes more thoroughly, in August 2008, the 

Commission issued an order under section 15 of the Shipping Act 

to obtain relevant pricing and operational data from carriers 

serving the trade. 

 In FY 2008, U.S. liner export cargo grew by 21 percent 

between the U.S. and South America. In contrast, liner import 

cargo from South America declined by 11 percent. Export cargo 

exceeded import cargo for the first time in a decade. The region is 

generally divided into two liner trade sectors: the west coast of 

South America and the east coast of South America. In the western 

sector, vessel capacity expanded by seven percent during the fiscal 

year. Major carriers providing direct service in the trade also 

participate in the West Coast of South America Discussion 

Agreement (WCSADA), a discussion agreement with voluntary 

rate authority between the U.S. and nations along the west coast of 

South America. During the fiscal year, Hapag-Lloyd withdrew 

from WCSADA. In the eastern sector of the trade, vessel capacity 

was cut by eight percent as a result of carriers redeploying excess 

capacity to other trades and entering into vessel-sharing 

agreements. Over the course of the fiscal year, five new vesselsharing agreements were formed in this trade sector. Unlike the 

western sector, carriers operating between the U.S. and east coast 

of South America do not participate in a broad-based discussion 

agreement. 

12
C. RESTRICTIVE TRADE PRACTICES

 The Commission is responsible for identifying and 

addressing protectionist practices of other countries that 

unreasonably favor their domestic companies or discriminate 

against U.S. trade interests in ocean shipping. In this regard, the 

Commission may issue rules in response to foreign practices that 

create conditions unfavorable to U.S. shipping in general. It also 

may institute countermeasures in response to foreign laws or 

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

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

unfair barriers in entering a foreign-to-foreign trade. 

 The Commission continued to monitor regulations and port 

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

Commission imposed its semiannual reporting requirement for 

U.S. and Japanese carriers. The Commission continued to require 

semiannual reports and to review them for any developments in 

Japanese practices. 

 The Commission’s Permanent Task Force on International 

Affairs, established in 2000, is chaired by an attorney in the Office 

of General Counsel and made up of personnel from that office and 

the Bureaus of Enforcement, Trade Analysis, and Certification and 

Licensing. The Task Force is responsible for identifying and 

evaluating foreign practices which might have adverse impacts on 

U.S. shipping interests. 

D. TRADE OVERSIGHT 

 As part of its statutory responsibilities, the Commission 

maintains systematic oversight of the commercial activities of 

ocean liner carriers and other regulated entities in the U.S. 

oceanborne trades. On a regular basis, the Commission also 

monitors economic and trade conditions that affect the ocean 

shipping industry. The Commission’s oversight helps to ensure 

13
regulatory compliance by uncovering unreasonable or unfair 

industry behavior. These efforts also help identify potentially 

unfavorable trade practices that could affect U.S. oceanborne 

commerce. 

 During the fiscal year, the Commission took action to 

address a number of competitive concerns relating to the 

agreement activities of ocean common carriers and marine terminal 

operators. Specifically, the Commission reviewed the Clean Truck 

Program (CTP) that was devised as part of the Clean Air Action 

Plan under the Los Angeles and Long Beach Port Infrastructure 

and Environmental Programs Cooperative Working Agreement. 

On August 1, 2008, the Ports of Los Angeles/Long Beach (Ports) 

filed an amendment with the FMC to their agreement that 

expanded the Ports’ authority to discuss and agree on provisions of 

the CTP such as the deadlines for banning older trucks in the use 

of drayage service at the Ports, a drayage truck replacement (or 

retrofit) program, a clean truck fee (with certain exceptions), a 

Clean Truck Fund, and a concession agreement for Licensed Motor 

Carriers (LMCs) to provide drayage service at the Ports. On 

September 12, 2008, the Commission issued a formal Request for 

Additional Information (RFAI) to conduct a thorough competitive 

impact assessment of the amended agreement in accordance with 

the U.S. shipping statutes. Responses to the RFAI were submitted 

by the Ports on September 19, and October 9, 2008. 

 On a related matter, on April 3, 2008, the Commission 

issued a formal Request For Additional Information for its review 

of the Los Angeles/Long Beach Port/Terminal Operator 

Administration and Implementation Agreement, which was filed 

with the FMC on February 14, 2008. That agreement authorizes 

the discussion of, and coordination on, the implementation of port 

programs, including certain elements of the CTP, between the 

Ports of Long Angeles/Long Beach and members of the West 

Coast MTO Agreement. Upon receipt of the requested 

information on May 15, 2008, the Commission took no further 

action to prevent the agreement from becoming effective under the 

Shipping Act. In allowing the agreement to take effect, the 

Commission gave notice that it did not wish to delay the 

14
implementation of aspects of port programs that are intended for 

the public benefit, such as improving air quality or port security. 

E. ALTERNATIVE DISPUTE RESOLUTION 

During fiscal year 2008, the Commission continued to 

support alternative dispute resolution (ADR) in resolving shipping 

industry disputes, and encouraged parties to disputes to utilize the 

program in lieu of litigation. Through the Office of Consumer 

Affairs and Dispute Resolution Service (CADRS), the Commission 

provides services to assist parties in resolving disputes and 

shipping problems arising in the international ocean shipping 

industry. A broad range of services are designed to avoid the 

expense and delays inherent in litigation, and to facilitate the flow 

of U.S. ocean commerce. In fiscal year 2008, 568 complaints 

were received that necessitated dispute resolution services. 

 CADRS also adjudicates small claims through informal 

proceedings under 46 CFR Part 502, Subpart S. Office personnel 

serve as settlement officers in such cases, which involve 

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

shipping statutes. Those claims generally involve alleged 

prohibited acts in connection with the international transportation 

of goods, or the failure to establish, observe, and enforce just and 

reasonable regulations and practices. Four of these complaints 

were filed in fiscal year 2008. CADRS also evaluates and 

adjudicates applications for permission to apply non-tariff rates, 

and to waive or refund freight charges arising from various errors 

in tariff publications, an inadvertent failure to publish an intended 

rate, or a misquotation of a rate. 

 During fiscal year 2008, the Commission also utilized its 

ADR program to address problems that U.S. exporters encountered 

in obtaining containers, particularly reefer containers, and booking 

space on outbound vessels, particularly from the U. S. west coast 

to Asia. Carriers had repositioned vessels from the U.S. trades to 

more profitable Europe-Asia and Intra-Asia trades at the same time 

15
that U.S. exporters experienced significantly higher demand for 

their products. The consequent shortage of containers and vessel 

space led to practices that exacerbated the difficulties. Shippers 

and carriers alike experienced significant booking and capacity 

problems. The Commission, through its ADR program, promoted 

discussions among carriers and shippers to address carrier and 

shipper concerns. 

F. ENFORCEMENT 

The Commission has Area Representatives in Houston, Los 

Angeles, South Florida, New Orleans, New York and Seattle. 

These representatives serve as liaisons between the Commission 

and various maritime interests in their respective areas and 

investigate activity that may violate the Shipping Act. 

 

 During fiscal year 2008, the Bureau of Enforcement 

investigated and prosecuted illegal practices in many trade lanes, 

including the Transpacific, North Atlantic, Central and South 

American, Mediterranean, West Africa, Oceana, and Caribbean 

trades. These included market-distorting activities such as various 

forms of rebates and absorptions, misdescription of commodities 

and misdeclaration of measurements, illegal equipment 

substitution, unlawful use of service contracts, as well as carriage 

of cargo by and for untariffed and unbonded NVOCCs. Most of 

these investigations were resolved informally, some with 

compromise settlements of civil penalties. 

 Several matters also arose with respect to activities 

pursuant to filed and unfiled agreements between and among ocean 

common carriers and marine terminal operators. A major 

investigative effort was initiated in fiscal year 2008 into the 

respective Clean Truck Programs of Los Angeles and Long Beach, 

CA, including the Ports’ operations and practices under several 

agreements filed with the Commission. Enforcement efforts also 

continued with respect to a number of unlicensed and unbonded 

NVOCCs specializing in the carriage of used household goods, 

16
including the VOCCs and licensed NVOCCs providing service to 

such unlicensed and unbonded operators. 

 The Commission collected $182,500 in civil penalties this 

past fiscal year, which was remitted to the U.S. Treasury (see

Appendix E). These collections represent a wide range of 

violations in our major trade lanes. 

17
 

18
III 

DEVELOPMENTS IN MAJOR 

U.S. FOREIGN TRADES 

A. NORTH EUROPE

Throughout much of fiscal year 2008, the pattern of cargo 

growth between the U.S. and North Europe mirrored the recent 

trend of past years. The weak value of the U.S. dollar against 

European currencies stimulated the demand for U.S. liner export 

cargo, which grew by about 13 percent in comparison to the 

preceding fiscal year. Containerized automobiles topped the list of 

liner commodities shipped from the U.S. to North Europe, 

accounting for 13 percent of the total export cargo volume in TEUs 

(twenty-foot equivalent units). Conversely, the troubled housing 

market curbed the U.S. demand for imported liner cargo from 

North Europe, which declined by 5.5 percent compared to the 

preceding fiscal year. Shipments of beer and ale from North 

Europe, however, remained strong as the top commodity for the 

fiscal year, accounting for 11 percent of the total import cargo 

volume in TEUs. Cargo volumes between the outbound and 

inbound trade directions came into approximate balance for the 

first time in over a decade. 

Toward the end of the fiscal year, as the subprime 

mortgage and financial crises unfolded, recessionary conditions 

began to affect the economies of North Europe and the United 

States. The demand for liner cargo notably declined as consumer 

spending in the U.S. and abroad contracted. It is expected that 

trade conditions will worsen for a prolonged period. Trade 

forecasts estimate that, in fiscal year 2009, import cargo from 

North Europe will fall by 12 percent, while the growth of U.S. 

export cargo will be flat in stark contrast to the substantial U.S. 

export growth of the past two fiscal years. 

19
It is anticipated that carriers serving the trade may increase 

the coordination of their operations through agreements to manage 

the likely oversupply of vessel capacity resulting from the drop in 

demand. Over the course of the fiscal year, vessel capacity in the 

trade was reduced by 5 percent in both directions, while the 

average utilization of vessel capacity was 83 percent in the 

outbound direction and 73 percent in the inbound direction. 

Notably, in April 2008, CMA CGM S.A. and China Shipping 

Container Lines Co., Ltd. (China Shipping) terminated the loop 

service that they jointly operated through their vessel-sharing 

agreement. Instead, each carrier chartered vessel space from the 

existing services of other carriers in the trade. CMA CGM entered 

into a space-charter agreement with Maersk Line, and China 

Shipping entered into a space-charter agreement with Evergreen 

Line. 

In response to the decision of the European Union (EU) to 

repeal the block exemption for liner shipping conferences (Council 

Regulation 4056/86), members of the Trans-Atlantic Conference 

Agreement (TACA) ceased operating under the agreement and 

canceled their conference tariffs in June 2008. At that time, the 

market share of the conference was about 40 percent in each trade 

direction. TACA was formally canceled in September 2008, and 

the repeal of the conference block exemption took effect on 

October 18, 2008. Rate volatility reportedly increased in the trade, 

especially in the application of surcharges, after the conference 

disbanded. Earlier in the fiscal year, it was also reported that rate 

levels in the outbound direction rose in response to the growth of 

U.S. exports. However, most recently, carriers reported that 

average freight rates between the U.S. and North Europe fell by 30 

percent with the decline in cargo volume. 

In June 2008, the European Commission (EC) issued its 

final guidelines for maritime transport services under the 

competition laws of the EU. Section 3.2 of the guidelines sets 

forth conditions for the exchange of information between ocean 

liner carriers in compliance with the competition laws. With the 

guidelines in place, 20 carriers operating between the U.S. and the 

20
member states of the EU filed the Container Trade Statistics 

Agreement (CTSA) with the FMC, which upon the Commission’s 

review, took effect under the Shipping Act on October 13, 2008. 

CTSA provides for a system of information exchange between its 

members as well as the formation of the European Liner Affairs 

Association (ELAA) as a trade association under which the 

members may conduct meetings. Under the provisions of CTSA, 

the members may not discuss or agree on the deployment of vessel 

capacity, rates, charges, or liner service terms. In the U.S./North 

Europe trade, the combined market share of the CTSA members 

was 88 percent in each trade direction. 

B. MEDITERRANEAN

Recessionary conditions in the U.S. and abroad restrained 

cargo growth in the trade between the U.S. and the Mediterranean. 

For fiscal year 2008, U.S. liner exports grew moderately at a rate 

of 4.5 percent. In the preceding fiscal year, U.S. exports rose by 

28 percent. The U.S. demand for Mediterranean imports continued 

to decline to a greater extent than in the past. Liner cargo volume 

from the Mediterranean to the U.S. fell by 13.3 percent in fiscal 

year 2008, compared to a decline of 5.3 percent in fiscal year 2007. 

The U.S. demand for such major goods as ceramic tiles, furniture, 

and marble from the Mediterranean region was hurt by the failing 

housing market and the subprime mortgage crisis. Wine was the 

top imported commodity, accounting for 8 percent of the total 

import cargo volume in TEUs. The imbalance in cargo volume, 

however, continued to favor imports. For every export TEU 

moving outbound from the U.S., 1.3 TEUs of import cargo moved 

inbound. The outlook for the trade foresees further declines in 

import cargo and no growth in export cargo. 

Traditionally, the existence of excess capacity in this trade 

unduly depresses freight rates because it is primarily a transit route 

for liner services that move through the Suez Canal to the Middle 

East and the Indian Subcontinent. In the preceding fiscal year, 

carriers in the trade endeavored to control excess capacity by 

21
cutting back on their services. These initiatives, however, were not 

sustained. Over the course of fiscal year 2008, vessel capacity was 

expanded by about 10 percent in each trade direction. The increase 

in capacity was largely attributed to vessel upgrades introduced in 

the existing services operated by the Mediterranean Shipping 

Company (MSC). With cargo growth expected to decline further, 

the expansion of capacity threatens to erode vessel utilization 

levels and freight rates to a greater extent. MSC, along with 

Maersk Line, Hapag-Lloyd AG, and Zim Intergrated Shipping 

Services, Ltd. (Zim) are the four largest carriers in the trade, 

accounting for about 65 percent of the total annual capacity. For 

the most part, they operate independent services in the trade. 

Carriers serving EU member states in the South Europe 

region of the Mediterranean were also required to comply with the 

EU’s repeal of the block exemption regulations for liner 

conferences. The last U.S. conference agreement in this region, the 

United States South Europe Conference, was terminated in 2006. 

The region, however, is included in the geographic scope of 

CTSA. Carrier members of CTSA operating between the U.S. and 

South Europe have a combined market share of about 95 percent in 

each trade direction. The operational agreements of carriers 

serving South Europe could also be impacted by any changes made 

to the consortia regulations that are currently under consideration 

by the EC. 

C. INDIAN SUBCONTINENT AND THE MIDDLE 

EAST

U.S. container exports in fiscal year 2008 grew by 14 

percent to the Indian Subcontinent and by 39 percent to the Middle 

East. Such strong growth can be attributed mainly to the weak U.S. 

dollar, as well as the military operations in Iraq and Afghanistan. 

During the fiscal year, the U.S. exported 316,000 TEUs to the 

Indian Subcontinent and 473,000 TEUs to the Middle East. The 

Middle East Indian Subcontinent Discussion Agreement (MIDA) 

and the Westbound Transpacific Stabilization Agreement (WTSA) 

22
are the two major rate discussion agreements that cover all or part 

of the U.S. outbound container trade to the Indian Subcontinent 

and the Middle East. 

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

Middle East and the Indian Subcontinent. Over the whole 

geographic scope, MIDA had a 53 percent market share, down 7 

percentage points from the previous fiscal year. This decrease is 

due, in part, to the resignations of four carriers: MacAndrews, the 

Shipping Corporation of India, Zim, and Emirates Shipping. The 

latter three carriers were part of a vessel-sharing agreement that 

offered a weekly service from the U.S. Atlantic coast via the Suez. 

Due to soaring bunker costs and low utilization levels, the service 

proved to be unprofitable, and the agreement decided to terminate 

the service in early 2008. Eighty percent of all U.S. container 

exports to the Middle East and Indian Subcontinent moved through 

the U.S. Atlantic and Gulf ports, and the six members of MIDA 

had 61 percent of this market. During the fiscal year, no new 

carriers joined MIDA. There were no rate discussion agreements 

covering U.S. imports from the Middle East in fiscal year 2008. 

In this trade region, WTSA’s geographic scope also covers 

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

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

exports to the Indian Subcontinent was 43 percent. WTSA 

dominates U.S. container exports from the U.S. Pacific coast to the 

Indian Subcontinent with a market share of 75 percent, down by 7 

percent from fiscal year 2007. 

The rate of decline in U.S. container imports from the 

Indian Subcontinent slowed. In fiscal year 2008, imports fell by 

less than 1 percent, compared to a 2 percent decline in the previous 

fiscal year. U.S. container imports from the Middle East also 

continued to decline. In fiscal year 2008, imports from this region 

dropped 10 percent, compared to a 6 percent decline in fiscal year 

2007. For the fiscal year, the U.S. imported approximately 622,000 

TEUs from the Indian Subcontinent and 134,000 TEUs from the 

Middle East. 

23
The Transpacific Stabilization Agreement (TSA) is the only 

rate discussion agreement covering U.S. inbound container imports 

from the Indian Subcontinent.2

 For the fiscal year, the fifteenmember TSA handled approximately 61 percent of all U.S. 

container imports from the Indian Subcontinent, up 4 percent from 

the previous fiscal year. 

D. AUSTRALIA AND OCEANIA

The Oceania region includes Australia, New Zealand, 

Papua New Guinea, Western Samoa, and other South Pacific 

Islands. Total trade in this region grew to almost 460,000 TEUs in 

fiscal year 2008, which is an increase of over ten percent from 

fiscal year 2007. The trade is imbalanced, with almost 270,000 

TEUs of exports from the U.S. to Oceania and almost 190,000 

TEUs of imports. Exports from the U.S. to Oceania grew over 17 

percent in fiscal year 2008, which is following over seven percent 

growth in fiscal year 2007. The growth was aided by the weakness 

of the dollar during 2007 and the first half of 2008, but short to 

medium term growth in the trade is likely to be reduced by recent 

increases in the value of the dollar and the problems in world credit 

markets. Imports from Oceania went down slightly in fiscal year 

2008 by about one percent or about 2,000 TEUs. 

Agreement activities in the Oceania region were notable in 

fiscal year 2008, in particular as concerns the Australia and New 

Zealand-United States Discussion Agreement (ANZUSDA), the 

U.S./Australasia Discussion Agreement (USADA), and the U.S. 

Pacific Coast-Oceania Agreement (referred to as the Oceania 

Vessel Sharing Agreement or (OVSA). Changes to these 

agreements, as well as the rationalization of services through 

vessel sharing agreements, have resulted in capacity reductions 

estimated at about 18 percent southbound and 5 percent 

northbound. 

 

2

The TSA’s geographic scope also includes southeast Asia and 

northeast Asia. 

24
ANZUSDA, the discussion agreement with voluntary rate 

authority from Australia/New Zealand to the U.S., was amended at 

the end of last fiscal year to reflect the addition of ANL Singapore 

Pte., Ltd. (ANL) to the agreement. ANL is a subsidiary of CMA 

CGM. Following the amendment, the agreement held about 85 

percent of the northbound trade in imports to the United States and 

included all carriers with direct services to the region. The 

agreement includes Maersk Line, Hamburg-Süd, Hapag-Lloyd, 

and ANL. USADA operates as the voluntary rate discussion 

agreement covering the movement of export cargo from the United 

States to Australia and New Zealand. In fiscal year 2008, the 

agreement held about 90 percent of the southbound trade, and it 

includes CMA CGM, ANL, Compagnie Maritime Marfret SA 

(Marfret), Hamburg-Süd, Hapag-Lloyd, and Maersk Line. 

Wallenius Wilhelmsen withdrew from the agreement in November 

2008. 

OVSA is a vessel-sharing and sailing agreement between 

Maersk Line, Hamburg-Süd, and Hapag-Lloyd. Notably, in July 

2008, CMA CGM along with its subsidiary, ANL, joined OVSA. 

Under this agreement, the parties jointly deploy three services: one 

fortnightly service to the Pacific Northwest and separate weekly 

and fortnightly services to the Pacific Southwest. CMA CGM and 

Marfret have a similar vessel-sharing agreement covering a route 

between the U.S. Atlantic Coast and Oceania, that provides a 

fortnightly service, while Hamburg-Süd in partnership with 

Maersk Line provides a weekly service on which Hapag-Lloyd 

takes space. 

All of the direct service providers between the United 

States and Oceania are now interconnected as parties to USADA, 

ANZUSDA, and OVSA. Because of these market changes and 

their potential to affect competition, in August 2008, the 

Commission issued an order under section 15 of the Shipping Act 

to obtain relevant pricing and operational data from carriers 

serving the trade. The Commission’s order explained that the 

combined effects of carriers acting as parties under the three 

agreements may potentially reduce competition, which could affect 

25
prices and services in the trade to an unreasonable extent or 

otherwise violate the Shipping Act. 

E. CENTRAL AMERICA AND THE CARIBBEAN

In fiscal year 2008, change in liner cargo volume between 

the U.S. and Central America was minimal. U.S. export cargo fell 

0.4 percent to 542,969 TEUs and imports from Central America 

grew only 3.8 percent to 651,853 TEUs. Fabrics, yarns, and raw 

cotton account for the largest share (about 14 percent) of US 

export containers to Central America, while fruits account for 

nearly half of all imports from the region, three-quarters of which 

consist of bananas. 

Most of the largest carriers in the U.S./Central America 

trade participate in the Central America Discussion Agreement

(CADA). The combined market share of CADA members for 

exports and imports remained nearly the same at 68 percent and 76 

percent, respectively. There were no significant changes in the 

provisions or memberships of this agreement during fiscal year 

2008. Three additional vessel-sharing agreements were 

implemented in the Central America trade during this period. 

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

volume of cargo increased in both trade directions compared to the 

preceding fiscal year. U.S. exports, mainly of food, consumer, and 

manufactured products, increased by 8.5 percent to 592,524 TEUs, 

while imports to the U.S. increased by 6.6 percent to 174,164 

TEUs. 

Carriers in the U.S./Caribbean trade participate in four rate 

discussion agreements covering discrete trades: (1) the Hispaniola 

Discussion Agreement, (2) the Caribbean Shipowners Association, 

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

and (4) the Aruba Bonaire and Curacao Discussion Agreement. 

There were no significant changes in the provisions or 

memberships of these agreements during fiscal year 2008, but two 

26
additional vessel-sharing agreements were filed covering the 

Caribbean trade. 

F. ASIA

In terms of containerized cargo, Asia is by far our largest 

trading region. In fiscal year 2008, Asia accounted for 62 percent 

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

percent of all U.S. container imports originated from Asia, and the 

region took 49 percent of all U.S. container exports. 

The major agreement in the transpacific trade, the 

Transpacific Stabilization Agreement (TSA), is a fifteen-member 

discussion and policy-setting agreement with voluntary pricing 

authority covering the inbound container trade from northeast and 

southeast Asia to the U.S.3 During fiscal year 2008, TSA’s market 

share of the U.S. inbound Asian trade was approximately 86 

percent, compared to 80 percent the previous fiscal year. The 

increase in market share was mainly due to the recruitment of 

China Shipping Container Lines as a member. 

During the fiscal year, Asian imports decreased by nearly 

seven percent. Northeast Asia accounted for 88 percent of all 

transpacific container imports, with most originating from China. 

For the fiscal year, the U.S. imported 12.9 million TEUs of Asian 

goods. The declining growth in Asian imports can be attributed to 

the U.S. financial and home mortgage crises and to the rising cost 

of energy. 

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

2008, TSA announced that its members had agreed to raise freight 

rates, on a voluntary, non-binding basis, by $400 per FEU for 

cargo discharged at U.S. Pacific coast ports and $600 per FEU for 

cargo discharged at U.S. Atlantic coast ports. In an effort to 

recover escalating bunker costs, TSA members also established a 

 

3

The TSA’s geographic scope also includes the Indian 

Subcontinent (discussed earlier under a separate heading). 

27
voluntary, non-binding guideline to include a floating bunker fuel 

surcharge in all service contracts. This surcharge was to be set 

separately from the base rates and periodically adjusted to reflect 

bunker fuel price fluctuations. It was reported that TSA members 

generally were not successful in obtaining the full amount of these 

planned rate increases during their service-contract negotiations 

with individual shippers, repeating a pattern of the past several 

years. However, TSA did appear to have some success in 

negotiating a floating bunker fuel surcharge into service contracts. 

The major agreement in the outbound transpacific trade is 

the Westbound Transpacific Stabilization Agreement (WTSA). 

Like TSA, the ten-member WTSA operates as a forum for the 

exchange of information between its members that enables them to 

discuss and agree upon rate levels for cargo exported from the U.S. 

to Asia. WTSA’s geographic scope covers all U.S. outbound 

shipments to northeast and southeast Asia as well as the Indian 

Subcontinent. In fiscal year 2008, WTSA maintained a market 

share of approximately 69 percent for northeast and southeast Asia. 

WTSA had no changes in membership over the fiscal year. 

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

expanded by 18 percent to reach 5.9 million TEUs. The declining 

value of the dollar generally made U.S. products cheaper overseas. 

U.S. container exports to northeast Asia grew by 14 percent, and 

by 41 percent to southeast Asia. Eighty-eight percent of all U.S. 

container exports to Asia are destined for northeast Asia. The surge 

in exports caused container vessels to leave port full and resulted 

in a shortage of containers in certain locations in the United States. 

 

WTSA does not have a distinct start to its annual servicecontract season like that of the TSA. Instead, WTSA members 

agree to voluntary service-contract rate guidelines for different 

types or groups of commodities throughout the year. This practice 

is dictated primarily by the seasonality of the major U.S. 

agricultural export commodities, which have different growing 

seasons and peak times when they are shipped. Because exports 

increased considerably during the fiscal year, container lines 

successfully increased rates as exporters sometimes had to book 

28
space on vessels several weeks in advance of their scheduled 

sailing dates. 

G. SOUTH AMERICA

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

reached 912,173 TEUs, recording an increase of 21 percent. 

However, import cargo from South America to the U.S. fell by 11 

percent to 895,321 TEUs. These trends mark the first year that 

exports surpassed imports in containerized cargo and clearly reflect 

the falling value of the U.S. dollar and the weakening U.S. 

economy. 

The South America region is generally divided into two 

trade areas – one to the west coast and the other to the east coast. 

Just over 43 percent of all of the U.S./South America cargo moved 

between the U.S. and the west coast of South America. By the end 

of fiscal year 2008, annualized vessel capacity had increased 

nearly 7 percent to about 760,000 TEUs in each trade direction. 

Most of the carriers that provide direct service to the west 

coast of South America are also members of the West Coast of 

South America Discussion Agreement (WCSADA). The combined 

market share of WCSADA members was about 74 percent in the 

U.S. outbound direction and 60 percent in the U.S. inbound 

direction. Some carriers also served the trade indirectly via 

transshipment services based at ports in Mexico, Panama, and the 

Caribbean. The only change to WCSADA provisions or 

membership this fiscal year was the departure of Hapag-Lloyd as a 

participant. One vessel-sharing agreement covering the Chilean 

sub-trade of WCSADA was implemented during this period. 

Liner cargo in the trade between the U.S. and the east coast 

of South America accounted for almost 57 percent of the 

U.S./South America liner cargo. By the end of fiscal year 2008, 

annualized vessel capacity in this trade had dropped 8 percent to 

about 930,000 TEUs in each trade direction. Unlike the west coast 

of South America trade, carriers serving the east coast of South 

29
America do not actively participate in a broad-based rate 

discussion agreement spanning the entire geographic scope of the 

trade. However, five new vessel-sharing/space charter agreements 

covering the trade were filed during the year. 

H. AFRICA

 Cargo volumes between the United States and Africa were 

up almost 20 percent in fiscal year 2008, following an almost 15 

percent increase in the previous fiscal year. This growth was 

generated by a 27 percent increase in U.S. exports to Africa from 

the previous fiscal year to over 250,000 TEUs. Imports from 

Africa decreased by 2.3 percent from the previous fiscal year to 

about 95,000 TEUs. The trade is heavily imbalanced; there was 

approximately one TEU inbound for every 2.6 TEUs that moved 

outbound. South Africa dominates the U.S. liner trade with Africa, 

accounting for about 33 percent of the overall container volume 

and over 50 percent of the imported containers. Nigeria is the 

second largest liner trading partner with the United States in the 

region, with 12 percent of container volumes. Morocco and Ghana 

are the third and fourth largest partners with about 6 percent of 

container volumes apiece. 

 There were no significant mergers, acquisitions, or changes 

in liner services during the fiscal year. Maersk Line, Safmarine 

(wholly owned by Maersk Line), and MSC continued to operate 

their joint weekly American Express (AMEX) service under the 

authorities of the Southern Africa/Oceania Agreement. This 

service, which sails from the U.S. East Coast to Port Elizabeth, 

Durban and Cape Town, utilizes 8 vessels of about 2,400 TEUs in 

size. Those three carriers are also the top carriers in the Africa 

trade, carrying approximately 76 percent of the containers 

traveling between the United States and Africa. 

 The Southern Africa/Oceania Agreement is subject to 

special reporting requirements due to some unique features, 

including a revenue pool. The revenue pool, which was capped in 

30
March 2005, is a rare method used by the three carriers to share the 

risks of operating this service. To ensure that the Agreement does 

not breach the Shipping Act’s section 6(g) standard or other 

prohibitions, the member carriers provide revenue and capacity 

information to the FMC on a per sailing basis. 

I. WORLDWIDE

 The world’s container trade expanded by 7 percent in fiscal 

year 2008, compared to almost 13 percent in 2007. Early in the 

year, growth had been particularly strong in the Asia to Europe 

head-haul trade. Just 12 months ago, steamship lines were making 

record profits in the Asia-Europe trade, but freight rates began 

falling dramatically in the summer and still were falling as the 

fiscal year came to a close. 

 Container volumes in the U.S. liner trades in fiscal year 

2008 increased to 30.5 million TEUs, compared to 29.7 million 

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

further this year to about 20.5 percent, compared to 21 percent last 

year (and 23 percent the year before that). Although U.S. container 

imports declined by over 6 percent to register 18.3 million TEUs in 

fiscal year 2008, U.S. container exports expanded by almost 15 

percent, reaching over 12.1 million TEUs. For every loaded 

container exported from the U.S., about 1.5 was imported, 

compared to 1.85 last year. 

 Container cargo through Pacific Northwest ports, such as 

Seattle, Tacoma and Portland, fell by about 5 percent. This coastal 

region’s share of U.S. container volume also fell to 10.9 percent 

from 11.6 percent last year. The Pacific Southwest region, which 

includes the ports of Los Angeles, Long Beach and Oakland, saw 

container cargo fall by about 1 percent. This coastal region’s share 

of U.S. container volume fell to 39.2 percent from 40.1 percent. 

Ports along the U.S. Atlantic and Gulf coasts did comparatively 

well. Container volumes at Atlantic coast ports expanded by about 

5 percent and by 2 percent at Gulf coast ports. While Atlantic coast 

31
ports lifted their share of U.S. container cargo from 40.7 to 42.2 

percent, Gulf coast ports maintained their share at 6.7 percent. 

 In fiscal year 2008, the U.S.’s top five liner cargo trading 

partners were China, Japan, South Korea, Taiwan and Hong Kong. 

South Korea advanced to occupy the third-place slot at the expense 

of Taiwan, which slipped to fourth. Collectively, these five trading 

partners accounted for 53.1 percent of the total U.S. container 

trade, compared to 54.5 percent last year. This year, trade with 

China accounted for 35.7 percent of the total U.S. container trade, 

compared to 37 percent in fiscal year 2007. 

 On a worldwide basis, containership capacity continued to 

grow much faster than container demand for the second year in a 

row. By July 2008, the containership fleet’s nominal capacity had 

grown by over 13 percent compared to the same month last year. 

Industry analysts anticipate capacity will further expand next year 

despite an expected rapid deceleration in shipping demand. As the 

end of the fiscal year approached, over 4,500 containerships, with 

a fleet capacity exceeding 11.4 million TEUs, were deployed in the 

world’s container trades. Four hundred containerships were added 

to the world fleet, net of vessels scrapped. As of July 2008, there 

were orders worldwide for 1,379 new containerships with an 

aggregate capacity of 6.8 million TEUs. The ship capacity on order 

amounts to almost 60 percent of the existing fleet capacity. 

 Concentration in the world’s container shipping industry 

remained unchanged during fiscal year 2008. The top five 

container operators were still Maersk Line, MSC, CMA CGM, 

Evergreen Line and Hapag-Lloyd. COSCO Container Line 

(COSCO) rose in rank to occupy sixth place, while China Shipping 

Container Line fell to eighth position, having been overtaken by 

COSCO and APL, a Singapore-based carrier. Among the top 100 

container operators at the end of fiscal year 2008, the top five 

operators reportedly controlled 43 percent of the world’s 

containership fleet capacity, the top 10 controlled about 60 percent, 

and the top 20 controlled 82 percent. 

32
IV 

THE FOREIGN SHIPPING 

PRACTICES ACT OF 1988 

A. IN GENERAL

 The Foreign Shipping Practices Act of 1988 (FSPA), which 

became effective on August 23, 1988, directs the Commission to 

investigate and address adverse conditions affecting U.S. carriers 

in U.S. oceanborne trades, when such conditions do not exist for 

foreign carriers in the U.S. under U.S. law or as a result of acts of 

U.S. carriers or others providing maritime or maritime-related 

services in the U.S. 

 In fiscal year 2008, the Commission monitored potentially 

unfavorable or discriminatory shipping practices by a number of 

foreign governments. However, no direct FSPA action was 

necessary. 

 

 

33
B. TOP TWENTY U.S. LINER CARGO

TRADING PARTNERS

 Pursuant to the Foreign Shipping Practices Act, the FMC 

must include in its annual report to Congress “a list of the twenty 

foreign countries which generated the largest volume of 

oceanborne liner cargo for the most recent calendar year in 

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

 The Journal of Commerce’s Port Import Export Reporting 

Service (PIERS) database was used to derive the Commission’s list 

of top twenty trading partners. PIERS obtains data on U.S. import 

and export shipments from tapes of manifests filed electronically 

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

Automated Manifest System (AMS). PIERS also stations 

personnel at individual ports to collect shipment data that is 

incomplete or not filed through AMS. The company edits the raw 

shipment data and distinguishes liner shipments from non-liner 

shipments, and employs additional procedures to increase data 

accuracy. 

 The most recent complete calendar year for which data are 

available is 2007. The table on the next page lists the twenty 

foreign countries that generated the largest volume of oceanborne 

liner cargo in bilateral trade with the U.S. in 2007. The figures in 

the table represent each country’s total U.S. liner imports and 

exports in thousands of TEUs. 

34
Top Twenty U.S. Liner Cargo

Trading Partners (2007)

Rank Country TEUs 

 (000s)

 1 China (PRC) ...................................... 11,247 

 2 Japan ................................................................1,626 

 3 Taiwan .............................................................1,286 

 4 South Korea......................................................1,203 

 5 Hong Kong4

 .....................................................1,071 

 6 Germany...............................................802 

 7 Brazil ...................................................655 

 8 Italy ....................................................613 

 9 India ...................................................589 

10 Belgium and Luxembourg ..........................572 

11 Thailand ................................................555 

12 Indonesia ..............................................527 

13 Netherlands ...........................................485 

14 Vietnam ................................................469 

15 United Kingdom (incl. N. Ireland) .................447 

16 Malaysia ...............................................371 

17 Honduras ..............................................336 

18 Chile ...................................................299 

19 Guatemala .............................................287 

20 Costa Rica .............................................282 

Three quarters of the top twenty trading partners saw gains 

in volume. U.S. liner trade with Vietnam grew by 30 percent over 

 

4

 On July 1, 1997, Hong Kong reverted to Chinese control as a special 

administrative region. However, PIERS continues to report data 

separately for Hong Kong because of its status as a major 

transshipment center. 

Source: All data are aggregated from the PIERS (Port Import 

Export Reporting Service) database maintained by the Journal of 

Commerce.

35
the previous year. U.S. liner trade with China grew by less than 

three percent over last year but maintained its top ranking. This is 

the smallest gain for China in several years. U.S. liner trades with 

Taiwan and Belgium & Luxembourg expanded by 15 and 14 

percent, respectively. Hong Kong's liner trade with the U.S. 

declined five percent. Guatemala regained a position in the top 

twenty ranking, while Spain dropped off the list. Costa Rica 

dropped from 18th to 20th in the ranking, with essentially the same 

volume of liner cargo as in 2006. 

 

36
37

V 

SIGNIFICANT ACTIVITIES 

BY 

ORGANIZATIONAL UNIT 
38
A. OFFICE OF THE SECRETARY

1. In General

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

Commission, the Office of the Secretary is the main public contact point 

with the FMC. The Office receives and processes a variety of documents 

filed by the public, including: complaints initiating adjudicatory 

proceedings for alleged violations of the Shipping Act and other 

applicable laws; special docket applications and applications to correct 

clerical or administrative errors in service contracts or NVOCC service 

arrangements; all communications, petitions, notices, pleadings, briefs, or 

other legal documents in administrative proceedings; and subpoenas 

served on the FMC, its members or employees. 

 The Office is responsible for preparing and submitting regular and 

notation agenda matters for consideration by the Commission and 

preparing and maintaining the minutes of actions taken by the 

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

Commission; maintaining official files and records of all formal 

proceedings and Commission regulations; issuing publications; and 

authenticating instruments and documents of the Commission. During 

fiscal year 2008, the Commission issued orders finalizing six formal 

proceedings and three informal dockets. In addition, two rulemaking 

proceedings remained pending at the end of the fiscal year. 

The Office also responds to information requests from 

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

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

Privacy Acts; compiles historical Commission decisions; maintains a 

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

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

coordination of agency-wide public relation/outreach activities. The 

Office of the Secretary also oversees the Office of Consumer Affairs and 

Dispute Resolution Services. 

39
As the Commission’s public information/press office, the Office of 

the Secretary prepares or coordinates the preparation of Commission news 

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

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

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

Commission staff. 

The Office remained involved in the Commission’s ongoing effort 

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

public. Initiatives undertaken by Commission staff to improve industry 

outreach included hosting a number of industry briefings and updating 

informational material. The Office implemented a regular Commission 

meeting schedule to discuss industry and administrative matters before the 

Commission in both public and closed sessions in fiscal year 2008 as well. 

The Office of the Secretary also manages the Commission’s 

website. During fiscal year 2008, the Office improved the Commission’s 

website by adjusting how information is presented, expanding the amount 

of information available, and adding functionality. For example, in August 

2008 the Office increased the accessibility of information on filed 

agreements through website publishing of weekly agreement filing notices 

that appear in the Federal Register. This enhancement provided greater 

public awareness of agreement filings. The Office continues to evaluate 

the overall usefulness of the site and works closely with other offices and 

bureaus to improve its content and user-friendliness. The Office also 

began discussing alternatives for redesigning the agency’s Intranet with 

the Commission’s Office of Information Technology. The scope of the 

agency’s Intranet redesign project has been expanded to encompass OIT’s 

plans to improve the agency’s collaborative capabilities and enhance its 

business processes. 

The process of electronically scanning/imaging Commission 

records continued during fiscal year 2008. The document management 

system that the Office oversees supports the agency’s initiatives for 

continuity of operations by improving preservation of and Commission 

staff access to Commission documents, as well as improving Commission 

staff response time to public inquiries and public access to electronic files. 

In addition to electronically converting all Commission official files (both 

current and historical), the Office has a program in place to systematically 

40
scan documents from other agency components. For example, during the 

fiscal year, the Office completed conversion of all historical case files for 

the Bureau of Enforcement and two-thirds of the General Counsel’s 

administrative files. 

During fiscal year 2008, the Office took the lead in accomplishing 

the agency’s performance goals related to making more Commission 

information and filed documents available electronically and to improving 

responsiveness to requests for public information. Specifically, the Office 

continued to make key documents filed in formal proceedings available 

through its website. In addition, the Office converted 28 bound volumes of 

the Commission’s official decisions to electronic format. These historical 

decisions are no longer available to the public in bound volume form. The 

Office is developing plans to post these decisions to the Commission’s 

website during fiscal year 2009. 

2. Office of Consumer Affairs and Dispute Resolution 

Services

The Office of Consumer Affairs and Dispute Resolution (CADRS) 

is responsible for developing and implementing the Commission=s 

Alternative Dispute Resolution (ADR) program. Through this program, 

the Commission provides services to assist parties in resolving disputes 

and shipping problems in the U.S. maritime industry that affect 

international ocean shipping. These include a broad range of services 

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

facilitate the flow of U.S. ocean commerce. 

With respect to matters already in litigation or moving toward 

litigation, parties to a dispute are encouraged to avail themselves of 

mediation or other ADR processes such as conciliation, facilitation, factfinding, mini-trials, or arbitration, as a means to resolve disputes. The 

Commission makes trained neutrals available to facilitate the resolution of 

shipping disputes at all stages. Outside neutrals also may be contracted 

for as needed. 

41
During fiscal year 2008, Commission mediators provided 

mediation services in several matters, thus assisting parties in avoiding 

significant litigation costs and risks. CADRS also provides ombudsman

services to participants in ocean shipping transactions. Typical 

complaints include situations where an NVOCC or VOCC has placed a 

lien on cargo in its possession, often for sums owed under a different 

contract of carriage, and cases in which an NVOCC has received cargo 

from its customer and taken payment for the transportation of the cargo, 

but failed to deliver the cargo. Tracking the whereabouts of a shipment 

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

payment of additional funds to obtain release of the shipment. 

During fiscal year 2008, 568 complaints were received that 

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

These included 189 complaints concerning cruise issues, 198 concerning 

household goods matters, and 181 concerning cargo shipment matters. 

During 2008, the number of cruise complaints declined 14 percent. The 

number of household good complaints increased by 37.5 percent, and the 

number of other cargo cases increased by approximately 25 percent. 

Cargo shipment complaints continued to be of increasing complexity. 

CADRS received a significantly greater number of complaints involving 

goods released to an improper party and without appropriate 

documentation than in the past, and an increased number of situations 

where difficulties arose in presenting an original bill of lading to receive 

the shipment. Problems concerning co-loaded shipments continue to be a 

significant issue. In addition to the above complaints, approximately 1,000 

information requests were received and processed. 

 In addition to the cases reported above, the office was involved in 

facilitating discussions to address a container and space shortage, the 

“exporters’ dilemma.” In early 2008, CADRS began receiving an 

increasing number of inquiries concerning difficulties U.S. exporters were 

having obtaining containers or space for outbound shipments. Essentially, 

the increasing profitability of the Europe-Asia and Intra-Asia trades, 

coupled with slower growth in U.S. demand for imports from Asia, 

resulted in carriers repositioning their vessels away from the U.S. Pacific 

trades. At the same time, the growth of Asian economies, coupled with 

the reduction in the value of the U.S. dollar, increased the demand for U.S. 

export products. Consequently, many U.S. exporters encountered 

42
difficulty obtaining space on outbound vessels. These factors, along with 

rising fuel costs, also made it difficult to obtain containers. The 

Commission’s ADR program facilitated initial discussions among carriers 

and shippers in an attempt to alleviate many of the difficulties for 

exporters. The problem was overtaken by the worldwide economic 

downturn at the end of the fiscal year causing the demand for U.S. exports, 

and therefore the demand for export containers, to drop sharply. Direct 

lines of communication were established between at least one major 

carrier and agricultural exporters, which should help alleviate export 

issues in the future. 

3. Library

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

Commission staff, government agencies, private organizations and the 

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

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

of specialized material, primarily covering the various segments of the 

international shipping industry, as well as historical and current regulatory 

materials covering all phases of shipping in the U.S. foreign trades. It also 

contains material on several related fields such as engineering, economics, 

political science and a collection of legal publications. The Library 

collection includes law encyclopedias, engineering textbooks, legal 

treatises, Comptroller General Decisions, and selected titles of the 

National Reporter system. The Library=s holdings consist of 

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

on-line services. 

In fiscal year 2008, the Office completed a needs assessment and 

evaluated recommendations for the development of an online catalogue 

for the Commission’s law/reference library collection. The Office 

anticipates implementing a plan during fiscal year 2009. 

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44
B. OFFICE OF THE

ADMINISTRATIVE LAW JUDGES 

1. In General

Administrative law judges (ALJs) manage the development of an 

evidentiary record through rulings and conferences with counsel for the 

litigating parties, rule upon dispositive motions, and preside at hearings 

held after the receipt of a complaint or institution of a proceeding on the 

Commission’s own motion. 

 The Office of ALJs has the authority to administer oaths and 

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

relevant evidence; take or cause depositions to be taken; regulate the 

course of the hearing; hold conferences for the settlement or simplification 

of the issues by consent of the parties; dispose of procedural requests or 

similar matters; make decisions or recommend decisions; and take any 

other action authorized by agency rule consistent with the Administrative 

Procedure Act. 

 At the beginning of fiscal year 2008, 18 formal proceedings were 

pending before the Office of ALJs. During the year, 5 formal proceedings 

were added. The Office dismissed three respondents in two formal 

proceedings, and two formal proceedings were settled. The Office also 

dismissed one case that the Commission reinstated on appeal. The ALJs 

entered an Initial Decision in one case that the Commission approved and 

entered a Partial Summary Judgment in one other case.

2. Final action by the Office of Administrative Law 

Judges and subsequent Commission action.

 In fiscal year 2008, the Office of Administrative Law Judges 

issued initial decisions partially or completely resolving six proceedings, 

and the Commission issued orders on nine proceedings that had been 

decided by administrative law judges. 

45
Anchor Shipping Co. v. Alianca Navegacao e Logistica Ltda., 

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

Hamburg Südamerikanische Dampfschifffahrts. [Docket No. 

02-04] 

 This case is on remand from the Commission. Anchor Shipping 

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

September 27, 2007, the ALJ granted Respondents’ motion to dismiss the 

claims of violation of sections 6 and 7 of the Act (as these sections impose 

no duties on Respondents) and the claims of violation of section 9 of the 

Act (as Respondents are not controlled carriers within the meaning of the 

Act). In the same order, the ALJ dismissed the claim for a civil penalty 

because the statutory scheme does not contemplate the imposition of civil 

penalties in a private-party complaint proceeding. On October 26, 2007, 

the ALJ denied Anchor’s motion to enlarge the time to file exceptions to 

the September 26 order. On November 1, 2008, the Commission served 

notice that it would not review the September 26 order. On January 18, 

2008, the ALJ vacated the portion of the October 26, 2007, order seeking 

enlargement of time to file exceptions, as it was a matter that should have 

been addressed by the Commission. On January 24, 2008, the 

Commission rescinded its November 1, 2007, notice not to review. On 

July 31, 2008, the Commission granted additional time for Anchor to file 

exceptions to the September 26 order. 

 On April 19, 2007, the ALJ referred to the Commission the 

Complainant’s motion for the Bureau of Enforcement to intervene. On 

November 8, 2007, the Commission denied the motion. On May 20, 

2008, the ALJ referred to the Commission a second Anchor motion to 

compel intervention by BOE. On July 31, 2008, the Commission denied 

the second motion. 

Verucci Motorcycles, LLC v. Senator International Ocean, 

LLC. [Docket No. 06-05]

 On March 13, 2008, the ALJ issued an Order Dismissing 

Complaint for Failure to Comply with the Commission’s Rules of Practice 

46
and Procedure and Orders Entered in this Proceeding. On May 7, 2008, 

the Commission remanded the case for further proceedings. 

EuroUSA Shipping, Inc., Tober Group, Inc., and Container 

Innovations Inc. – Possible Violations of Section 10 of the 

Shipping Act of 1984 and the Commission’s Regulations at 46 

C.F.R. § 515.27 [Docket No. 06-06]

 On July 12, 2008, the ALJ granted partial summary judgment for 

Tober Group, Inc., on the claim that Tober violated section 10(b)(11) of 

the Shipping Act. 

Armstrong World Industries, Inc. v. Expeditors International 

of Washington, Inc. [Docket No. 07-03] 

 On April 3, 2008, the ALJ approved the parties’ settlement and 

dismissed the complaint. On May 6, 2008, the Commission issued a 

Notice Not to Review. 

Frank J. Kuzela v. A.P. Moller-Maersk A/S [Docket No. 

1883(F)] 

 On June 26, 2008, the ALJ issued an order dismissing the 

complaint with prejudice. 

Nathan Freeman v. Mediterranean Shipping Co. S.A. and 

Shipco Transport, Inc. [Docket No. 08-01] 

 On April 24, 2008, the ALJ approved the parties’ settlement 

agreement and dismissed the complaint. On May 28, 2008, the 

Commission issued a Notice Not to Review. 

47
3. Pending Proceedings

 At the close of fiscal year 2008, there were 21 formal proceedings 

pending before the Office of ALJs. During fiscal years 2009 and 2010, 

the Office will conduct hearings and render decisions on adjudicatory 

proceedings and any rulemaking proceedings referred to the Office. 

48
C. OFFICE OF 

THE GENERAL COUNSEL 

 The General Counsel provides legal counsel to the Commission. 

This includes reviewing staff recommendations for Commission action for 

legal sufficiency, drafting proposed rules to implement Commission 

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

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

(OGC) provides written and oral legal opinions to the Commission, its 

staff, and the general public in appropriate cases. As described in more 

detail below, the General Counsel also represents the Commission before 

courts and Congress and administers the Commission’s international 

affairs program. 

1. Rulemakings and Decisions 

The following are rulemakings and adjudications representative of 

matters prepared by the General Counsel’s Office: 

Decisions by the Commission 

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

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

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

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

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

These cases came before the Commission for a determination of 

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

Commonwealth of Puerto Rico and therefore entitled to sovereign 

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

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

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

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

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

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

49
the terms of an agreement filed with the Commission. PRPA filed motions 

for summary judgment or motions to dismiss in all three cases, arguing 

that the complaints were barred by PRPA’s sovereign immunity as an arm 

of the Commonwealth of Puerto Rico. In Odyssea and Intership, the ALJ 

ruled that PRPA was not entitled to sovereign immunity. The 

Commission, sua sponte, decided to review the ALJ’s decision. On 

November 30, 2006, the Commission issued an order, on a 3-2 vote, 

finding that PRPA is not an arm of the Commonwealth of Puerto Rico and 

is therefore not entitled to sovereign immunity. 

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

Appeals for the D.C. Circuit (Case No. 06-1407). The Court heard oral 

argument on October 26, 2007. On July 8, 2008, the Court issued its 

opinion finding that PRPA is an arm of the Commonwealth of Puerto Rico 

and is therefore immune from suit absent its consent. Intership filed a 

motion on August 25, 2008, to stay the Court’s mandate pending filing of 

a petition for writ of certiorari. The Court granted Intership’s motion on 

September 16, 2008. A petition for a writ of certiorari at the United States 

Supreme Court was filed by Intership on October 8, 2008. 

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

Royster, III, [Docket No. 06-03], _____ S.R.R. _____ (June 11, 2008) 

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

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

Flanagan) alleging that Flanagan’s marine terminal leasing practices 

violated sections 10(b)(10), 10(d)(1) and 10(d)(4) of the Shipping Act, 46 

U.S.C. §§ 41102, 41104 and 41106. Mr. Flanagan and Mr. Royster were 

the Maryland Secretary of Transportation and the Executive Director of 

the Maryland Port Administration (MPA), respectively, and were sued 

because MPA possesses sovereign immunity. Flanagan filed a Motion to 

Dismiss arguing that (1) the case is barred by constitutional principles of 

state sovereign immunity; (2) the Shipping Act does not authorize private 

complaints for injunctive relief, and (3) the respondents should not be held 

liable as individuals under provisions of the Shipping Act which are 

specifically applicable to common carriers, OTIs and MTOs. Premier 

responded to the motion arguing that the action is within the Ex Parte 

Young, 209 U.S. 123 (1908), exception to state sovereign immunity and 

that the Shipping Act provides for prospective injunctive relief. The ALJ 

50
granted the motion to dismiss on March 31, 2006, finding that the 

complaint was barred by sovereign immunity since Young did not apply. 

Premier appealed the ALJ’s decision to the Commission, and oral 

argument was heard on June 13, 2007. The Commission dismissed the 

proceeding on June 11, 2008, finding that this proceeding is barred by the 

sovereign immunity interests of the State of Maryland. 

2. Litigation 

The General Counsel represents the Commission in litigation 

before courts and other administrative agencies. Although the litigation 

work largely consists of representing the Commission upon petitions for 

review of its orders filed with the U.S. Courts of Appeals, the General 

Counsel also participates in actions for injunctions, enforcement of 

Commission orders, actions to collect civil penalties, and other cases 

where the Commission’s interest may be affected by litigation. 

The following is representative of matters litigated by the Office: 

Puerto Rico Ports Authority v. The Federal Maritime Commission and 

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

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

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

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

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

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

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

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

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

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

proceedings have been stayed by the Court pending resolution of the 

appeal. The Commission’s brief was submitted on June 28, 2007, and oral 

argument was heard on October 26, 2007. On July 8, 2008, the U.S. 

Court of Appeals for the D. C. Circuit issued its opinion finding that the 

Puerto Rico Ports Authority is an arm of the Commonwealth of Puerto 

Rico and is, therefore, immune from suit absent its consent. Intervenor 

International Shipping Agency, Inc. (Intership) filed a motion on August 

51
25, 2008, to stay the Court’s mandate, pending filing of a petition for writ 

of certiorari. The Court granted Intership’s motion on September 16, 

2008. A petition for a writ of certiorari at the United States Supreme Court 

was filed by Intership on October 8, 2008. The FMC remains a respondent 

in this proceeding before the Supreme Court by reason of the agency’s 

issuance of the order central to the appeal. 

Landstar Express America, Inc. and Landstar Global Logistics, Inc. v. 

Federal Maritime Commission, D. C. Circuit, Case No. 08-1152 

This proceeding is an appeal of the Commission’s February 15, 

2008 order in Commission Docket No. 06-08, In the Matter of the 

Lawfulness of Unlicensed Persons Acting as Agents for Licensed Ocean 

Transportation Intermediaries – Petition for Declaratory Order. The 

Commission denied the petition filed by Team Ocean Services, Inc., 

(Team Ocean) following review of the petition and three comments 

submitted thereon, including the comments of Landstar America, Inc. and 

Landstar Global Logistics, Inc. (“Landstar”). On April 14, 2008, Landstar 

filed a Petition to Review the Commission’s Order, asserting in its Petition 

that it is a party aggrieved by the Commission’s denial of Team Ocean’s 

Petition. Petitioners submitted a single issue to be raised to the Court: 

Whether the FMC Order’s determination that it is unlawful under 

The Shipping Act of 1984, as amended, for an unlicensed agent to 

provide Non-Vessel Operating Common Carrier (NVOCC) 

services in the name of and on behalf of a licensed NVOCC is 

arbitrary, capricious, contrary to the FMC’s statutory authority, 

jurisdiction and existing precedent, inconsistent with the plain 

language of the applicable statute, an abuse of discretion, 

unsupported by substantial evidence, or otherwise contrary to law. 

The Commission filed a Motion to Dismiss and a Certified Index 

to the Record on June 9, 2008. Landstar filed a response opposing the 

motion on June 17, 2008, and the FMC replied to Landstar’s response on 

June 27, 2008. On September 16, 2008, the Court issued an order 

instructing the parties to brief the issues in the motion to dismiss in their 

briefs on the merits of the petition for review. The Court established 

52
December 4, 2008 as the Petitioners’ opening brief due date and January 

12, 2009 as the due date for the Commission’s opening brief. 

3. Legislative Activities

The OGC represents the Commission’s interests in all matters 

before Congress. This includes preparing testimony for Commission 

officials, responding to Congressional requests for information, 

commenting on proposed legislation, and responding to the Office of 

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

testimony. 

During fiscal year 2008, 80 bills, proposals and Congressional 

inquiries were referred to the OGC for review or comment. The Office 

prepared and coordinated testimony, responses to Questions for the 

Record and a 60-day written report in relation to the agency’s fiscal year 

2009 budget authorization hearing before the U.S. House of 

Representatives Committee on Transportation and Infrastructure, 

Subcommittee on Coast Guard and Maritime Transportation. In addition, 

the Office assisted in the written testimony and responses to Questions for 

the Record for the agency’s fiscal year 2009 budget requests submitted to 

the U.S. House of Representatives Committee on Appropriations, 

Subcommittee on Transportation, HUD, and Related Agencies. The office 

also prepared and coordinated testimony, responses to Questions for the 

Record and a 90-day written report in relation to the U.S. House of 

Representatives Committee on Transportation and Infrastructure, 

Subcommittee on Coast Guard and Maritime Transportation’s oversight 

hearing regarding Federal Maritime Commission management and 

regulation of international shipping. 

In fiscal years 2009 and 2010, the OGC will continue to take the 

lead in providing assistance and technical advice to Congress regarding 

issues for possible legislative consideration. The Office may also 

recommend legislative amendments as necessary, to ensure uniformity 

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

of ocean transportation. 

53
4. Other Significant Activity 

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

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

Long Beach Port Infrastructure and Environmental Programs 

Cooperative Working Agreement 

The Port of Los Angeles and the Port of Long Beach (the Ports) 

are members of the “Los Angeles and Long Beach Port Infrastructure and 

Environmental Programs Cooperative Working Agreement” (FMC 

Agreement No. 201170), currently on file with the Commission, that 

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

implementation of programs and strategies to improve port-related 

transportation infrastructure and to decrease port-related air pollution. 

This agreement became effective on August 10, 2006. The Ports have 

been in the process of developing a Clean Trucks Program as the first 

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

been to significantly reduce air pollution from port drayage trucks by 

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

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

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

The Ports have been considering ways to finance and implement 

the Clean Trucks Program, including a cargo fee and a concessions 

system, which require trucking companies to use only employee drivers, 

rather than independent contractors. An amendment to the Ports’ 

Infrastructure Agreement was filed on August 1, 2008 which allows the 

Ports to implement the Clean Truck Program. The Commission requested 

additional information on September 11, 2008, in order to complete its 

economic analysis of the impacts of the agreement on transportation costs 

and service. The Ports filed their responses to the Commission’s questions 

on September 18, 2008. The Commission has received information and 

letters from various stakeholders expressing support for or opposition to 

certain aspects of the proposed Clean Trucks Program. Certain groups 

have asserted that the proposed Clean Trucks Program may violate 

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

allegations include concerns that the Ports’ agreement will unreasonably 

54
increase transportation costs or reduce service, in violation of section 6(g) 

of the Shipping Act. 

As a step designed to help the Ports of Los Angeles and Long 

Beach implement the Clean Trucks Program, the Ports and the West Coast 

Marine Terminal Operators Agreement entered into and filed the “Los 

Angeles/Long Beach Port/Terminal Operator Administration and 

Implementation Agreement.” (FMC Agreement No. 201178) (AIA). The 

Commission required the parties to submit additional information relative 

to the AIA and subsequently allowed the Agreement to become effective 

as of June 13, 2008. The Commission noted that its decision does not 

foreclose future actions with respect to the AIA, or those Parties' activities 

under other related agreements, that may violate the Shipping Act. The 

Commission also advised that any further agreements reached pursuant to 

the AIA, and those related agreements of the Ports of Los Angeles and 

Long Beach, must be timely filed with the Commission to allow for the 

competitive review and analysis required by Congress. 

On September 24, 2008, the Commission initiated FMC Docket 

No. 08-05, an investigation to determine whether certain practices of the 

Ports of Los Angeles and Long Beach (Ports) violate the Shipping Act of 

1984. Practices under investigation include: the mandate, on a phased-in 

basis, that Licensed Motor Carriers (LMCs) that serve the Port of Los 

Angeles utilize only employee drivers and not independent owners and 

operators; the ban on independent owner operators providing drayage 

service at the Port of LA; Port payments to certain motor carriers as an 

incentive to provide drayage service at the port, but not to other similarly 

situated motor carriers; exemption of some cargo owners from paying a 

Clean Truck Fee but not others despite the fact that their cargo is moved in 

compliant trucks; the requirement that motor carriers providing container 

drayage service at the port submit an application for a concession, but not 

publishing standards or criteria by which such applications will be granted 

or denied; and, refusal to deal or negotiate with motor carriers otherwise 

authorized to provide drayage service at the port who conduct their port 

operations using independent owner-operators. 

55
5. Foreign Shipping Restrictions and International 

Affairs

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

international affairs program. The OGC monitors potentially restrictive 

foreign shipping laws and practices, and makes recommendations to the 

Commission for investigating and addressing such practices. The 

Commission has the authority to address restrictive foreign shipping 

practices under section 19 of the Merchant Marine Act of 1920 and the 

Foreign Shipping Practices Act. Section 19 empowers the Commission to 

make rules and regulations governing shipping in the foreign trade to 

adjust or meet conditions unfavorable to shipping. The FSPA directs the 

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

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

In fiscal year 2008, the Commission continued to monitor 

potentially restrictive shipping practices of the Government of Japan, 

including the effects of amendments to the Port Transportation Business 

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

evaluate semi-annual reports from United States-flag and Japanese-flag 

vessels operating in the trades with Japan pursuant to its proceeding in 

Docket No. 96-20, Port Restrictions and Requirements in the United 

States/Japan Trade. The OGC also pursued informally several matters that 

involved potentially restrictive foreign practices, including new 

legislation, new interpretations of existing legislation and new regulations 

of non-domestic carriers’ terminal handling charges. 

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

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

in April, 2008. OGC also acted as technical advisor and presented views 

on the possible effects of the European Union’s elimination (in October, 

2008) of the block exemption for liner conferences. 

Another responsibility of the OGC is the identification of 

“controlled carriers” subject to section 9 of the Shipping Act. Common 

carriers that are owned or controlled by foreign governments are required 

to adhere to certain requirements under the Act, and their rates are subject 

to Commission review. The OGC investigates and makes appropriate 

56
recommendations to the Commission regarding the status of potential 

controlled carriers. The OGC, in conjunction with other Commission 

components, also monitors the activities of controlled carriers. 

 The OGC continues to take the lead in accomplishing the agency's 

performance goals relating to eliminating restrictions that unjustly 

disadvantage U.S. interests. OGC will monitor foreign laws and practices 

to determine whether there are any unjust non-market barriers to trade. 

The OGC will recommend appropriate action to the Commission. 

6. Designated Agency Ethics Official

 The Ethics Official is administratively within the Office of the 

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

in the OGC. 

 The Commission’s Ethics Official is responsible for administering 

public and confidential financial disclosure systems in order to prevent 

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

regulatory functions. The Ethics Official also conducts annual training 

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

standards of ethical conduct that apply to Executive Branch officials. 

57
58
D. OFFICE OF EQUAL 

EMPLOYMENT OPPORTUNITY 

 The Office of Equal Employment Opportunity (OEEO) manages a 

comprehensive program of equal employment opportunity, consistent with 

federal equal employment opportunity (EEO) and personnel management 

laws, regulations and directives. This program promotes equal 

employment opportunity, processes complaints of discrimination and 

identifies and eliminates any discriminatory practices and policies. 

 The Chairman of the Federal Maritime Commission (FMC) is 

responsible for ensuring equal opportunity at the Commission. The 

Chairman has delegated this authority to the Director of Equal 

Employment Opportunity (DEEO). Operational responsibility for 

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

managers and supervisors. 

The Director of EEO works independently under the direction of 

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

management in improving and carrying out its policies and program of 

non-discrimination, workforce diversity and affirmative employment 

program planning. In accordance with regulations and guidance issued by 

the Equal Employment Opportunity Commission, the DEEO arranges for 

EEO counseling or alternative dispute resolution for employees who raise 

allegations of discrimination; provides for the investigation, hearing, factfinding, adjustment, or early resolution of such complaints of 

discrimination; accepts or rejects formal complaints of discrimination; 

prepares and issues decisions for resolution of formal complaints; and 

monitors and evaluates the program’s impact and effectiveness. 

Additionally, the DEEO represents the Commission on intergovernmental 

committees, directs programs of special emphasis, and coordinates the 

activities of the Selective Placement and Federal Equal Opportunity 

Recruitment Coordinators. The DEEO also supervises two collaterally 

assigned EEO counselors. 

The OEEO works with senior management and with the 

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

59
employment opportunity; (2) monitor affirmative employment programs; 

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

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

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

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

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

develop program plans and progress reports. 

Significant Accomplishments for fiscal year 2008

During fiscal year 2008, for the fourth year in a row, women and 

minorities continue to represent a majority of the workforce at the 

Commission. Significant accomplishments include the following: (1) 

provided EEO briefings to senior staff and new employees; (2) provided 

information to employees about Internet sites with diversity/EEO related 

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

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

planning for the FY 2009 No FEAR Act refresher training for all 

employees; (4) provided counseling assistance to Commissioners, 

managers, supervisors, and employees; (5) provided support and 

assistance to managers and supervisors in maintaining and effectively 

managing a diverse workforce; (6) reviewed and assessed human resource 

activities and actions; (7) maintained an effective discrimination 

complaint process that resolved issues informally, expeditiously, and at 

the lowest possible level; (8) held special commemorative programs for 

all FMC employees for National Hispanic Heritage, National Disability 

Employment Awareness, National American Indian Heritage, African 

American History, Women’s History, Asian Pacific American, Gay and 

Lesbian Pride months, and Dr. Martin Luther King, Jr. Day; (9) 

participated in meetings of several inter-agency councils regarding special 

emphasis matters, including the Federal Women’s Program Interagency 

Council; (10) participated in EEO-related training/conferences; and (11) 

prepared all required affirmative employment program accomplishment 

reports and plans. 

60
 During fiscal years 2009 and 2010, the OEEO will continue all 

existing programs and initiate activities designed to increase an 

understanding of EEO concepts and principles, including monitoring 

workforce diversity, outreach, retention, and career-development 

initiatives.

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62
E. OFFICE OF THE 

INSPECTOR GENERAL 

The Inspector General Act of 1978, as amended, establishes the 

responsibilities and duties of an Inspector General. The Inspector General 

Act was amended in the 1980’s to increase the number of agencies with 

statutory IGs, culminating in 1988 with the establishment of Office of 

Inspectors General (OIG) in smaller, independent agencies, including the 

Federal Maritime Commission. Currently, there are 67 statutory IGs 

within executive and legislative departments and agencies. The mission of 

the OIGs, as identified in the IG Act, is to: 

 Conduct and supervise independent and objective 

audits and investigations relating to agency programs 

and operations. 

  Promote economy, effectiveness and efficiency within 

the agency. 

  Prevent and detect fraud and abuse in agency programs 

and operations. 

  Review and make recommendations regarding existing 

and proposed legislation and regulations relating to 

agency programs and operations. 

  Keep the agency head and Congress informed of 

problems in agency programs and operations. 

To ensure objectivity, the IG Act empowers independent IGs to 

determine what reviews to perform; access to all information for the 

reviews; and authority to publish findings and recommendations based on 

the reviews. 

During fiscal year 2008, the OIG issued the following audit reports 

and evaluations: 

63
Audit Report Number Subject of Audit

A08-01 Review of FMC 

Implementation of Federal 

Information Security 

Management Act for 

FY 2007 

A08-02 Audit of the FMC’s FY 

2007 Financial Statements 

A08-02A Management Letter to the 

FY 2007 Audited Financial 

Statements 

A08-03 Audit of the FMC’s 

Telephone Services 

A08-04 Review of Expenses to 

Furnish, Redecorate or 

Improve the Offices of 

FMC Commissioners 

A08-05 Audit of the Management 

of BlackBerry

Communication Devices 

A08-06 Audit of the Federal 

Maritime Commission’s 

Budget Execution 

Processes, Procedures and 

Policies for Fiscal Year 

2007 

64
A08-07 Implementation of the 

Federal Information 

Security Management Act 

for Fiscal Year 2008 

A08-08 Privacy and Data 

Protection Evaluation 

Report 

 OIG audits and evaluations issued during FY 2008 identified 

$41,000 in funds that could have been put to better use and issued 41 

recommendations to enhance program performance and effectiveness. 

In addition to these completed audits and reviews, the OIG began 

its annual financial statement audit, performed an investigation into 

allegations of wrongdoing by FMC staff, referred 13 “hotline” complaints 

to the appropriate FMC program offices for disposition and responded to 

several public requests to look into various maritime-related issues. The 

OIG also prepared a narrative summary of “management challenges” 

facing the FMC for inclusion in the FY 2007 PAR. 

In addition to these audit and investigative activities and outcomes, 

the OIG worked with the agency’s webmaster to enhance the utility of the 

OIG’s webpage and to comply with legislative requirements to install a link 

on the FMC/OIG’s webpage that supports anonymous communications to 

the OIG; revised its investigative manual; responded to a request from the 

Chairman, House Committee on Oversight and Reform, for information on 

recommendations made by the OIG dating back to 2001; and met with staff 

from the Senate Committee on Commerce, Science and Transportation, 

Subcommittee on Surface Transportation and Merchant Marine, to discuss 

agency operations and administration. 

In fiscal year 2009, the OIG will continue to place a high priority on 

audits and reviews with the objective of improving agency programs and 

operations. The OIG will complete statutorily-required reviews to include 

separate audits of the FMC’s fiscal year 2008 Financial Statements and an 

evaluation of the agency’s information security program and privacy 

assurance controls, as required by the Federal Information Security 

Management Act. The OIG will also review agency checkout processes for 

65
separating employees and its time and attendance documentation. Finally, 

the OIG will focus remaining resources on the agency’s mission critical 

programs and outreach activities with the objective of enhancing 

performance and improving outcomes.

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F. OFFICE OF ADMINISTRATION 

 The Office of Administration (OA) provides administrative 

support to the program operations of the Commission. OA interprets 

governmental policies and programs, and administers these in a manner 

consistent with Federal guidelines, including those involving procurement, 

information technology (IT), financial management, and human resources. 

OA initiates recommendations, collaborating with other elements of the 

Commission as warranted, for long-range plans, new or revised policies 

and standards, and rules and regulations, with respect to its program 

activities. The Director of OA is responsible for the direct administration 

and coordination of the: 

  Office of Financial Management

  Office of Human Resources 

 Office of Information Technology

  Office of Management Services

 The Director of OA provides administrative guidance to the: 

  Office of Operations 

  Office of the Secretary

  Office of the General Counsel

  Office of Administrative Law Judges

and administrative assistance to the: 

 Offices of the Commissioners 

 Office of the Inspector General

  Office of Equal Employment Opportunity 

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 The OA Director is the FMC’s Chief Acquisition Officer (CAO), 

Audit Follow-up and Management (Internal) Controls Official, Senior 

Agency Official for Privacy, and Forms Control Officer. The Director 

also represents the FMC as Principal Management Official to the Small 

Agency Council. As the Chief Financial Officer, the Director provides 

program oversight for the agency’s budget and financial management 

responsibilities, and ensures agency compliance with the Financial 

Integrity Act, the Antideficiency Act, and the Debt Collection 

Improvement Act of 1996. 

 The Deputy Director of Administration is the FMC’s Chief 

Information Officer (CIO). The CIO oversees the Office of Information 

Technology operations and activities administered under the ClingerCohen Act of 1996, as well as other applicable laws which prescribe 

responsibility for operating the office. As the FMC’s Competition 

Advocate, the Deputy Director promotes more competitive procurement 

practices, and reports to the CAO as required. The Deputy Director also 

serves as Records Management Officer. 

 The Office of the Director had significant program achievements 

in fiscal year 2008. The Office guided the agency’s continuing efforts to 

enhance its IT program, and received an “unqualified” opinion in its fiscal 

year 2008 financial statement audit. The Office engaged in the orderly 

transition to the Office of Operations of responsibility for preparation of 

the Annual Performance Plan, the Annual Program Performance Report, 

and the agency Strategic Plan, as required by the Government 

Performance and Results Act of 1993. The Office also prepared the 

Federal Activities Inventory Reform Act report and the Performance and 

Accountability Report (which included the Management’s Discussion and 

Analysis and the Federal Managers Financial Integrity Act report). Also 

during the fiscal year, the Office directed the update of the internal 

Commission issuances that specify procedures for a variety of programs 

and activities, and guided Commission efforts to comply with the 

Government Paperwork Elimination Act and the Federal Information 

Security Management Act of 2002 (FISMA). Additionally, the Office 

guided the development of the fiscal year 2009 Congressional budget 

submission and the fiscal year 2010 baseline budget request to the Office 

of Management and Budget (OMB), and directed all efforts involving the 

audit of the Commission’s fiscal year 2008 financial statements. The 

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Office also provided primary support for the OMB clearance and records 

management programs, and guided the further development of the 

agency’s Continuity of Operations (COOP) Plan. 

 OA’s key objectives for fiscal year 2009 are to: continue to 

implement policy directions aimed at refining and enhancing agency 

administrative programs and operations; monitor the accomplishment of 

agency performance goals, particularly those related to the implementation 

of Pay.gov and GSA’s Smart Pay Program for agency-wide and industry 

acceptance of electronic payments; initiate further IT improvements, 

including the replacement, integration or update of agency database 

systems, the upgrading of network and desktop operating systems, and the 

implementation of Voice over Internet Protocol (VoIP); and work with 

senior managers to ensure effective strategic succession planning. The 

Office also will take the lead in assuring that the agency-wide computer 

security program is effective, that the agency’s financial management 

system receives an unqualified opinion in annual financial audits, and that 

the agency complies fully with the government-wide identity card 

(“HSPD-12”) initiative. 

1. Office of Financial Management

 (a) General Office Responsibilities

 The Office of Financial Management (OFM) administers the 

Commission’s financial management program and is responsible for 

offering guidance on optimal utilization of the Commission’s fiscal 

resources. OFM is charged with interpreting government budgetary and 

financial policies and programs, and developing annual budget 

justifications. The Office also administers internal control systems for 

agency funds, travel, workyears, and cash management. Additionally, 

OFM manages the Commission’s Travel Charge Card Program and 

administers all budget execution functions. 

69
(b) Achievements 

During fiscal year 2008, OFM: 

 Collected and deposited in the General Fund $489,446 

from fines and penalty collections, publications, 

reproductions, and user fees. 

 Coordinated and prepared budget justifications and 

estimates for the fiscal year 2009 Congressional budget 

and developed fiscal year 2010 baseline budget 

documents for OMB. 

 Prepared a variety of external reports, including: the 

Annual Leave Year Report and the Report on 

Workyears and Personnel Costs for 2007 (Office of 

Personnel Management – OPM); the Report on 

International Travel for FY 2007 (OMB); the Report on 

First-Class Airline Accommodations for fiscal year 2007 

(General Services Administration – GSA); and Monthly 

Reports of Full-Time/Equivalent Work-year Civilian 

Employment (OPM). 

 Prepared monthly status reports on workyears, 

funding, travel, receivables, and bureau/office budget 

allocation reports to provide management with 

meaningful, timely expense data by program. 

 Completed a process for the individual bureaus/offices 

to forecast annual goals in accordance with the 

Commission’s strategic goals. 

 Worked with Bureau of Public Debt (BPD) staff and the 

Commission’s independent auditors regarding the 

audits of fiscal years’ 2007 and 2008 financial 

statements. The Commission received unqualified 

opinions for both fiscal years. 

70
 Pursued delinquent receivables and referred applicable 

debts to the Department of Treasury for collection. 

 Worked with the Director of Administration to finalize 

the Commission’s fiscal year 2007 Management’s 

Discussion and Analysis and prepare the Commission’s 

fiscal year 2007 Performance and Accountability 

Report, and to initiate fiscal year 2008 versions of those 

reports. 

 (c) Future Plans

 Goals in fiscal year 2009 include: facilitating implementation of 

Pay.gov and GSA’s Smart Pay Program for agency-wide and industry 

acceptance of electronic payments; continuing to pursue initiatives leading 

to economy and efficiency in budget and financial operations; and 

improving OFM’s Cash Management Program, including migrating to 

updated platforms for the Paperless Check Conversion through the Federal 

Reserve Bank in Cleveland. 

2. Office of Human Resources

 (a) General Office Responsibilities

 The Office of Human Resources (OHR) administers a complete 

human resources management program, including recruitment and 

placement, position classification and pay administration, occupational 

safety and health, employee assistance, employee relations, workforce 

discipline, performance management and incentive awards, employee 

benefits, career transition, retirement, employee development and training, 

and personnel security. 

(b) Achievements

 During fiscal year 2008, OHR: 

71
 Monitored the activities of the agency’s 

payroll/personnel service provider, National Finance 

Center (NFC), and worked with OA staff to ensure 

security, continuity and accuracy of payroll and 

personnel services. 

 Coordinated with senior management in administering 

certain employee development programs and activities 

to address succession planning.

 Conducted a comprehensive training program in 

accordance with the agency’s budget and strategic and 

performance plans, promoting e-learning and on-line 

training opportunities, continuing the college tuition 

reimbursement program, ensuring training for new 

employees on the No Fear Act, and participating in the 

Small Agency Council Training Program. 

 Planned, implemented, and promoted new programs for 

Personal Financial Literacy Education and 

Volunteer/Community Service Awareness and issued 

newsletters highlighting appropriate information and 

activities. 

 Conducted a comprehensive personnel and information 

security program, including initiating and adjudicating 

security investigations for new and reinvestigated 

employees, completing work necessary for reporting 

and updating data in the Clearance Verification System 

pursuant to the E-clearance initiative, and collaborating 

with the U.S. Customs and Border Protection to gain 

access to the Automated Commercial 

Environment/International Trade Data System. 

 Coordinated with OPM in administering the Federal 

Human Capital Survey and worked with senior 

management to identify areas needing improvement. 

72
 Implemented provisions of the Federal Workforce 

Flexibility Act and related legislation and met with 

contractor to continue to finalize a Human Capital 

Plan, Workforce Succession Plan, and Accountability 

System Policy and Plan in accordance with OPM’s 

Human Capital Assessment and Accountability 

Framework. 

 Conducted a performance management and incentive 

awards program. 

 Conducted a comprehensive recruitment program 

utilizing flexibilities and recruitment alternatives to 

staff critical positions. 

 Coordinated with OPM, OMB, and pertinent partners 

on a variety of human capital initiatives related to 

accomplishment of action items pursuant to the 

President’s Management Agenda. 

 Maintained the partnership for acquisition of assistive 

devices through the Department of Defense’s 

Computer/Electronic Accommodations Program. 

 Continued to work with the Small Agency Consortium, 

OPM and Northrop Grumman officials to complete 

program activities for the Fast Track implementation of 

E-OPF. 

 Promoted the Preventive Health and Awareness 

Program and OPM’s Healthier Feds initiatives, and 

hosted wellness seminars sponsored by the Employee 

Assistance and Federal Occupational Health Programs. 

 Oversaw preparation for implementation of the 

Enterprise Human Resources Integration project, and 

administered other E-Gov initiatives such as 

Recruitment One-Stop, E-payroll, E-clearances, and Elearning. 

73
 Conducted a proactive retirement program that 

included computing benefits, providing retirement 

seminars and related training, and processing all 

retirements. 

 Coordinated with other administrative units and GSA 

to implement pertinent provisions of HSPD-12 and meet 

OMB requirements related to issuance of Federal 

employee credentials. 

 Evaluated contractor performance in the areas of 

personal suitability adjudication and 

classification/position management. 

 Worked with contractors to facilitate agencywide 

implementation of the automated training data 

management reporting system required by OPM. 

 

 (c) Future Plans 

 In fiscal year 2009, OHR plans to continue to: advise agency 

management and staff on all human resources matters and ensure the 

maintenance of a sound and progressive human resources program; 

implement pertinent portions of the agency’s strategic, training and related 

performance plans, particularly performance goals related to the 

management of human resources; explore and implement simplification, 

flexibility, and accountability of human resources management programs, 

including investigating automated solutions to address program 

requirements; in conjunction with administrative components and the 

GSA, evaluate the implementation of eOPF and conversion of HR records 

to electronic format to address program requirements and meet agency 

business needs; complete implementation of HSPD-12 and the 

credentialing of all employees; monitor the processes and database 

modernization activities of the NFC in conjunction with the governmentwide e-payroll initiative and to ensure timely and accurate payroll and 

personnel services; and implement and evaluate agency Human Capital, 

74
Workforce Planning and Accountability Plans and associated metrics to 

assess progress in meeting strategic and performance goals and to 

determine necessary modifications. 

3. Office of Information Technology 

 (a) General Office Responsibilities

 The Office of Information Technology (OIT) provides 

management support to the program and administrative operations of the 

Commission with respect to IT, and thus is responsible for ensuring that 

the Commission’s IT program is administered in a manner consistent with 

applicable rules, regulations, and guidelines. OIT receives programmatic 

guidance from the agency’s CIO. 

 The OIT Director serves as the Commission’s IT Officer, 

Telecommunications Manager, Help Desk and Database Administration 

Manager, and oversees the IT security program. The OIT Director plans, 

coordinates, and facilitates the use of automated information systems. 

(b) Achievements

 During fiscal year 2008, OIT: 

 Contracted out services to reevaluate the Form FMC-18 

system. The three-month project concluded with the 

contracting company recommending a review of the 

FMC Enterprise Architecture and rebuilding the FMC 

applications from an enterprise point of view. 

 Initiated the VoIP project, which will transfer all 

agency phones into an Internet-based phone system and 

increase the bandwidth for the FMC, providing 

redundancy for the phone system as well as Internet 

activity. 

75
 Began working with GSA and the Office of 

Management Services on a one- year project to redesign 

the FMC Data Center (server room). 

 Successfully upgraded Microsoft Office within the 

FMC. 

 Began a six-month contract in the fourth quarter of the 

fiscal year to redevelop all the necessary Federal 

Information Security Act (FISMA) documentation 

needed to comply with OMB requirements. 

 Successfully relocated the FMC IT COOP site from San 

Antonio, Texas, to Germantown, Maryland. 

 Continued the development and enhancement of FMC 

systems to automate processes consistent with the EGovernment Act. 

 Continued to update the policies and procedures 

associated with the technical assistance provided to 

FMC staff and changes in the IT infrastructure. 

 (c) Future Plans

 Major OIT initiatives for fiscal year 2009 include plans 

to: maintain compliance with FISMA requirements; complete 

implementation of VoIP; create an FMC Enterprise Architecture Plan; 

upgrade the FMC’s E-mail system; improve the VPN security 

infrastructure to be FIPS compliant; complete the FMC Datacenter 

redesign project; support the Pay.gov and HSPD-12 initiatives; and begin 

development of an Online Agreements system. 

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4. Office of Management Services 

(a) General Office Responsibilities 

The Office of Management Services (OMS) directs and 

administers a variety of management services that principally provide 

administrative support to the regulatory program operations of the 

Commission. The Director of the Office serves as the Commission’s 

Contracting Officer. 

 The Office’s support programs include procurement of 

administrative goods and services, property management, space 

management, printing and copying management, mail and record services, 

facilities and equipment maintenance, and transportation. The Office’s 

major functions are to secure and furnish all supplies, equipment and 

services required in support of the Commission’s mission, and to 

formulate regulations, policies, procedures, and methods governing the 

use and provision of these support services in compliance with the 

applicable Federal guidelines. 

(b) Achievements

 During fiscal year 2008, OMS: 

 Through the Office Director, continued to serve as the 

Agency’s Technical Representative for oversight of the 

Headquarters (HQ) building security contract, and 

served as Chairman of the tenants’ Building Security 

Committee and the Government’s Designated Official 

for the HQ site regarding emergency preparedness. 

 Worked with the Department of Homeland Security’s 

Federal Protective Service (FPS) and the current 

physical security contractor, American Security 

Programs, on awarding the physical security services 

contract for FMC’s HQ building. 

77
 Coordinated with the Office of the Secretary (OS) and 

BPD to award a five-month contract bridge for 

scanning services to keep these services available to OS, 

while completing the re-solicitation and award of a new 

scanning services contract. 

 Established an HQ-wide shredding services program 

and arranged for quarterly disposal of unwanted 

documentation and recycled materials at the agency’s 

HQ facility. 

 Coordinated with the CIO for the development of a fullscale FISMA support package of required program 

services, and arranged with BPD to solicit pricing 

information and establish an acquisition plan to acquire 

the support; a contract was awarded for this critical 

agency-wide services requirement. 

 

 Traveled to Houston, Texas to conduct site surveys with 

the agency’s Area Representative (AR) and GSA Realty 

Specialist, and assisted the AR in relocating to new, 

permanent office space. 

 Coordinated with GSA and the Office of Operations to 

renew office space leases in the agency's New York, Los 

Angeles, and Seattle Area Representative locations. 

 Traveled to Hollywood, Florida to conduct site surveys, 

and arranged through GSA to relocate the two AR’s in 

this area to GSA-leased space. 

 Coordinated with the CIO, OIT, and BPD to acquire 

“project planning and development” services for the 

Form FMC-18 system. 

 Transferred the agency’s invoice processing program 

and function to OFM with no disruption in support to 

agency activities, and worked closely with OFM to 

ensure a smooth transition. 

78
(c) Future Plans 

 In fiscal year 2009, the Office’s objectives include: continuing to 

work with GSA, FPS, and other tenant agencies at HQ facilities and field 

locations to upgrade and/or improve the building’s security measures and 

emergency preparedness; continuing to work with the other Directors in 

OA to improve communication and agency-wide administrative support 

through regular dialogue and/or information-sharing sessions and by 

promoting a customer-service and team-building environment throughout 

the OA; continuing to work with BPD on ways to improve the FMC’s 

acquisition and procurement processes; and continuing to provide office 

support and administrative services. 

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80
G. OFFICE OF OPERATIONS

1. Oversight Responsibilities 

The Director of Operations is responsible to the Chairman for 

leadership and coordination of the following Commission bureaus or 

units: 

  Bureau of Certification and Licensing 

  Bureau of Enforcement 

  Bureau of Trade Analysis 

  Area Representatives (AR) 

The Office of Operations oversees the operation of various 

Commission programs and recommends necessary changes in staff 

objectives. 

Fiscal year 2008 brought a significant rise in the number of MTO 

agreements filed and an increase in the number of OTI licenses sought and 

granted. Fiscal year 2008 saw a surge in export cargo from the U.S. and a 

corresponding lack of available container space, followed quickly by the 

first signs of the impact of the global economic downturn on the shipping 

industry. The Office worked with the bureaus and other agency offices to 

report to the Commission with regard to emerging industry changes in all 

sectors. The Office continues to lead the Bureau of Enforcement and the 

Bureau of Certification and Licensing in review and coordination of 

compliance and enforcement policy. In fiscal year 2008, the Commission 

reviewed the Los Angeles/Long Beach/Terminal Operator Administration 

and Implementation Agreement, and the Los Angeles and Long Beach 

Port Infrastructure and Environmental Programs Cooperative Working 

Agreement. The Office coordinated and assisted in the Bureaus’ 

recommendations and consideration of these high-profile agreements. 

2. Administrative Responsibilities

The Director of Operations was designated as the agency’s 

Performance Improvement Officer (PIO) in December of 2008. Executive 

81
Order 13450: “Improving Government Program Performance” required 

executive agencies to name PIOs who would have responsibility for 

coordinating the performance management activities of the agency, 

including the development of strategic and annual performance plans and 

reports, and continual assessment of strategic and performance goals and 

means for measurements of progress. 

In fiscal year 2008, the agency drafted a new Strategic Plan for 

fiscal years 2010 through 2015. The Office of Operations led the drafting 

process, with the participation of all Commission bureaus and offices. 

After the Commission approved the new plan, the Office worked with the 

Office of Management and Budget (OMB) to finalize objectives and 

performance measures. At the end of the fiscal year, a draft Strategic Plan 

was posted on the agency website for public comment. A new mission 

statement and three strategic goals were developed, along with objectives 

and performance measures for the six-year period. The goals and 

objectives in this plan will link directly to annual performance plans for 

the same fiscal years as well as to the agency's annual budget, as called for 

by the above-mentioned Executive Order and OMB Circular A-11. 

 The Office of Operations also has responsibility for coordination 

of budget requests and spending by the three bureaus, from the point of 

submitting budget requests to monitoring spending on travel and training. 

The Office is responsible for travel planning and final approval for the 

bureau staff. As well, in fiscal year 2008, the Office drafted the Annual 

Report for Fiscal Year 2007. 

3. Area Representatives

The Commission maintains a presence in Los Angeles, South 

Florida, New Orleans, New York, Houston and Seattle through ARs. 

These representatives serve other major port cities and transportation 

centers within their respective areas. The Area Representatives report 

directly to the Office of Operations. In addition to their monitoring and 

investigative functions, Area Representatives represent the FMC within 

their jurisdictions, provide liaison between the FMC and the maritime 

industry and the shipping public, collect and analyze information of 

regulatory significance, and assess industry conditions. The Area 

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Representatives support the functions of each bureau under the Office of 

Operations. Liaison activities include: cooperation and coordination with 

other governmental agencies and departments; providing regulatory 

information and relaying FMC policy to the shipping industry and the 

public; and handling informal complaints. 

In fiscal year 2008, hundreds of informal complaints were handled 

by Area Representatives. These complaints often involved reports of 

unlawful activities by regulated entities, or requests for assistance in 

recovering lost cargo or payments. In many cases the Area 

Representatives were able to assist in the resolution of these complaints 

directly or referred cases to the Commission’s Office of Consumer Affairs 

and Dispute Resolution Services. Where unlawful activity could not be 

resolved and compliance achieved informally, and in other cases as 

required, investigations were opened by the Office of Operations. In fiscal 

year 2008 over 40 investigations of potential violations of the Shipping 

Act were opened and conducted with the support of Bureau of 

Enforcement attorneys. The Area Representatives investigate these 

violations through visits to regulated entities and review of documents and 

commercial or governmental databases. If a potential violation remains 

unresolved, a proceeding will be referred to the Bureau of Enforcement for 

further action as described later in this report. 

Public service announcements were published by the Office of 

Operations in each major port area warning against the use of unlicensed 

OTIs. The Area Representatives led this effort through review of the text 

and selection of the appropriate local publications. These warnings led to 

numerous inquiries and reports to ARs regarding licensed and unlicensed 

OTI activity and an apparent decrease in complaints about the activities of 

unlicensed entities in communities in which they were published. 

In fiscal year 2008, Area Representatives made presentations, with 

the assistance of the Bureau of Certification and Licensing, on OTI 

licensing requirements and compliance for recently licensed companies, 

current applicants and persons interested in becoming licensed, to 

audiences in Florida and Hawaii. ARs also briefed or addressed key 

officials of the New York and New Jersey Port Authority, the New Jersey 

State Police, the Houston Air Cargo Association, the Houston Maritime 

Area Safety and Security Team, the Houston Maritime Awareness 

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Security Terrorism Training Conference, the Memphis Multi Modal 

Conference and U.S. Customs and Border Patrol. 

In fiscal year 2008, the Los Angeles Area Representative 

participated along with other FMC staff in PIER PASS discussions with 

the Ports of Los Angeles and Long Beach and issues concerning the Los 

Angeles/Long Beach/Terminal Operator Administration and 

Implementation Agreement, and the Los Angeles and Long Beach Port 

Infrastructure and Environmental Programs Cooperative Working 

Agreement. 

Area Representatives participated in tasks forces or initiatives 

sponsored by local law enforcement agencies, the U.S. Department of 

Justice, the Department of Homeland Security (through Customs and 

Border Patrol or Immigration and Customs Enforcement) and the 

Department of Commerce. This participation facilitates sharing of 

information on illegal activities primarily involving export. 

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H. BUREAU OF

 CERTIFICATION AND LICENSING

 

1. In General

 The Bureau of Certification and Licensing has responsibility for 

the Commission’s ocean transportation intermediary (OTI) licensing 

program and passenger vessel certification program. The Bureau: 

  Licenses and regulates OTIs, including ocean freight 

forwarders and non-vessel-operating common carriers 

(NVOCCs). 

 Issues certificates to owners and operators of passenger 

vessels that have evidenced financial responsibility to 

satisfy liability incurred for nonperformance of voyages 

or for death or injury to passengers and other persons. 

 Manages programs assuring financial responsibility of 

OTIs and passenger vessel operators, by developing 

policies and guidelines, and analyzing financial 

instruments and financial statements. 

  Develops and maintains information systems that 

support the Bureau’s programs and those of other 

Commission entities.

 The Bureau is organized into two offices: the Office of 

Transportation Intermediaries and the Office of Passenger Vessels and 

Information Processing. The former reviews and approves applications 

for OTI licenses, and maintains and updates records about licensees. The 

latter reviews applications for certificates of financial responsibility with 

respect to passenger vessels, manages all activities with respect to 

evidence of financial responsibility for OTIs and passenger vessel 

owner/operators, and develops and maintains all Bureau databases and 

records of OTI applicants and licensees. 

85
2. Licensing of Ocean Transportation Intermediaries

 OTIs are transportation middlemen for oceanborne cargo moving 

in the U.S.-foreign trades. There are two types: NVOCCs and ocean 

freight forwarders. NVOCCs are common carriers who do not operate the 

vessels by which transportation is provided. Ocean freight forwarders in 

the U.S. arrange for the transportation of cargo with a common carrier on 

behalf of shippers and process documents related to those shipments. 

Both NVOCCs and ocean freight forwarders must be licensed by the 

Commission if they are located in the U.S. NVOCCs doing business in 

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

may choose to become licensed, but are not required to do so. Whether 

licensed or not, foreign NVOCCs must establish financial responsibility. 

All NVOCCs must publish electronic tariffs which contain the NVOCC’s 

rates, charges, rules and practices. 

 To become licensed by the Commission, an OTI must establish 

that it, through its Qualifying Individual (QI), has a minimum of three 

years of experience in ocean transportation intermediary activities in the 

U.S. and the necessary character to render OTI services as well as 

establish its financial responsibility by means of a bond, insurance, or 

other instrument. An investigation of the applicant’s qualifications address 

such issues as accuracy of information provided in the application; 

integrity and financial responsibility of the applicant; character of the 

applicant and its QI; and length and nature of the QI’s experience handling 

OTI duties. Licensed ocean freight forwarders must establish financial 

responsibility in the amount of $50,000, and licensed NVOCCs, $75,000. 

An additional $10,000 of coverage is required for each unincorporated 

U.S. branch office in the United States other than the one used to establish 

a presence. If an OTI is a licensed NVOCC, it must file a Form FMC-1 

and publish a tariff. Furthermore, non-U.S.-based NVOCCs that do not 

wish to be licensed must provide the Commission with proof of financial 

responsibility in the amount of $150,000, file a Form FMC-1, and ensure a 

tariff is published at the site listed on the Form FMC-1. A non-U.S.-based 

NVOCC must list in its tariff an agent for service of process in the United 

States, and it must use a licensed OTI for any OTI services performed on 

its behalf in the United States. The financial instrument must be available 

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to pay claims against the OTI arising from its transportation-related 

activities, any order of reparation assessed under the Shipping Act, and 

any judgments for damages against an OTI arising from its transportationrelated activities under the Shipping Act. 

 During fiscal year 2008, the Commission received 502 new OTI 

applications and 236 amended applications, issued 474 OTI licenses, 

revoked 227 licenses, and reissued approximately 13 licenses. At the end 

of the fiscal year, 1,136 ocean freight forwarders, 1,720 U.S. NVOCCs, 

1,367 joint NVOCC/ocean freight forwarders, and 49 foreign NVOCCs 

held active OTI licenses. An additional 1,032 foreign NVOCCs 

maintained proof of financial responsibility on file with the Commission, 

but chose not to be licensed. Overall, there has been a gain of 254 

licensed and/or bonded OTIs, representing a 5% increase from 5,050 OTIs 

in fiscal year 2007 to 5,304 in fiscal year 2008. U.S. NVOCCs may file 

riders to their existing NVOCC bonds to meet financial responsibility 

requirements imposed by the Chinese government. The Commission 

received 103 riders providing optional proof of financial responsibility for 

NVOCCs serving the U.S.-China trade. 

The Bureau also developed an electronic system to permit online 

submissions of the OTI application, Form FMC-18. Approximately 80% 

of all incoming OTI applications received are from the electronic system. 

The FMC continued its outreach program and promoted awareness of OTI 

licensing requirements. Specifically, in conjunction with the efforts of 

Hawaii State Representative John Mizuno’s office, FMC personnel 

presented a general information session to those involved in OTI activities 

which necessitate licensing. Further, staff participated at the Florida 

Customs Brokers and Forwarders Association Seminar on how to obtain 

an OTI License/Responsibilities of an OTI under the Shipping Act and 

FMC regulations. 

3. Passenger Vessel Certification

 The Commission administers 46 U.S.C. §§ 44102-44103, which 

requires evidence of financial responsibility for vessels which have berth 

or stateroom accommodations for 50 or more passengers and embark 

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passengers at U.S. ports and territories. The program now encompasses 

203 vessels and 48 operators, which have aggregate evidence of financial 

responsibility coverage in excess of $339 million for nonperformance and 

over $725 million for casualty. Certificates of performance cover 

financial responsibility for the indemnification of passengers for 

nonperformance of transportation. This requirement also helps prevent 

unscrupulous or financially weak operators from operating from U.S. 

ports. The required levels of coverage for nonperformance are determined 

by Commission regulation, which do not currently require coverage 

exceeding 15 million dollars per entity. Even after an operator has ceased 

operations and dissolved its corporate existence, the evidence of financial 

responsibility is still valid and available to claimants against the guarantor. 

Certificates of casualty are required to meet liability that may 

occur for death or injury to passengers or other persons on voyages to or 

from U.S. ports in the amounts established by the statute. The law 

provides for $20,000 coverage per person for the first 500 passengers, and 

the scale decreases to $5,000 per person for passengers in excess of 1,500. 

The certificates issued pursuant to this program are necessary for 

U.S. Customs and Border Protection’s clearance of thousands of passenger 

vessel sailings annually. During fiscal year 2008, the Commission 

approved and issued 30 casualty certificates and 37 performance 

certificates an increase of 20% and 6% respectively from the previous 

fiscal year. 

 In conjunction with CADRS, the Bureau offers information and 

guidance to the cruising public throughout the year on passenger rights 

and obligations regarding monies paid to cruise lines that fail to perform 

voyages. Over the past few years, a number of cruise operators 

discontinued operations or filed for bankruptcy. When cruise lines fail to 

perform because of bankruptcies or other failures, the Commission works 

with the cruise line and the financial responsibility provider to facilitate 

the refund process. The public is kept informed through press releases 

posted on the Commission’s website, and advice is given to passengers 

who contact the FMC staff. During fiscal year 2008, one cruise operator 

under the Commission’s PVO program ceased operation, and none filed 

for bankruptcy. Staff continued its efforts to assist passenger vessel 

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operators and financial responsibility providers to resolve passenger 

claims for several cancelled cruises. 

The Bureau continues to monitor PVO activities and operations by 

performing oversight of current industry events and reviews of cruise 

line’s financial records. PVO analysts perform oversight of cruise line 

operator’s operations and activities to ensure compliance with applicable 

statute and Commission regulations. One component of the Bureau’s PVO 

monitoring program is to perform on-site reviews to evaluate PVOs’ 

financial responsibility with respect to oversight of cruise lines 

participating in the Commission’s PVO program. The purpose of the onsite review is to confirm the passenger vessel operator’s compliance with 

the Commission’s reporting requirements relating to unearned passenger 

revenue and the appropriate amount of coverage required to ensure 

adequate financial responsibility. The Commission also wants to 

determine if a PVO is in compliance with the Commission’s reporting 

requirements relating to unearned passenger revenue and the appropriate 

amount of coverage required to ensure financial responsibility. During 

fiscal year 2008, an on-site review was conducted of a cruise line which 

established its financial responsibility with an escrow account. 

4. Automated Database Systems

 During fiscal year 2008, BCL continued to modernize and expand 

the Regulated Person Index (RPI), a Commission database containing upto-date records of licensed OTIs, ocean common carriers and other 

entities. Among other data uses, the RPI is used to post on the 

Commission’s website a list of OTIs which are compliant with OTI 

requirements so that carriers and others can ascertain whether an OTI is 

properly licensed and bonded, and, if required, has posted the location of 

its automated tariff. Furthermore, the Bureau planned for the development 

of an automated Form 131, Application for Certificate of Financial 

Responsibility, and conducted preliminary requirements analysis. 

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5. Future Plans 

In fiscal year 2009, the Bureau will: 

• Carry on efforts to enhance the electronic FMC-18 system to 

expedite licensing, integrate FMC databases, improve the 

functionality for electronic payments and e-signature capability, 

and support electronic filing of bond information. 

• Continue to promote awareness of regulatory requirements for 

OTIs and PVOs to increase compliance by VOCCs, OTIs, and 

PVOs with the Shipping Act. 

• Assure that the PVO program meets the contemporary needs of the 

cruising public. The Bureau will review the effectiveness of the 

PVO monitoring procedures; make appropriate corrections to staff 

procedures and monitoring schedules; and follow up to ensure that 

the new procedures are timely implemented. 

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I. BUREAU OF ENFORCEMENT

 The Bureau of Enforcement is the primary prosecutorial arm of 

the Commission. Attorneys of the Bureau serve as trial attorneys in 

formal proceedings instituted under section 11 of the Shipping Act, and in 

investigations instituted under the FSPA. Bureau attorneys serve as legal 

advisors to the Office of Operations and other Commission bureaus, and 

also may be designated investigative officers in nonadjudicatory factfinding proceedings. The Bureau monitors all other formal proceedings, 

including relevant court proceedings, in order to identify major regulatory 

issues and advise the Director of Operations and the other bureaus. The 

Bureau also participates in the development of Commission rules and 

regulations and serves on inter-bureau task forces and special committees. 

On occasion, under the direction of the General Counsel, attorneys from 

the Bureau may participate in matters in court or in other agency litigation 

to which the Commission is a party. 

 Through investigative personnel, and most often as the result of 

information provided by the industry and other government entities, the 

Bureau monitors and investigates the activities of ocean common carriers, 

OTIs, shippers, ports and terminals, and other persons to ensure 

compliance with the statutes and regulations administered by the 

Commission. Monitoring activities include: (1) service contract and 

NVOCC service arrangement (NSA) reviews to determine compliance 

with applicable statutes and regulations; (2) reviews and audits of ocean 

common carrier, NVOCC and ocean freight forwarder operations, 

including compliance with licensing, tariff, and bonding requirements; 

(3) audits of passenger vessel operators to ensure the financial protection 

of cruise passengers; (4) monitoring of agreements among ocean carriers 

and MTOs; and (5) various studies and analyses to support Commission 

programs. Investigations involve alleged violations of the full range of 

statutes and regulations administered by the Commission, 

including: illegal or unfiled agreements; abuses of antitrust immunity; 

unlicensed OTI activity, including servicing of noncompliant OTIs by 

VOCCs and licensed NVOCCs; illegal rebating; misdescriptions or 

misdeclarations of cargo; untariffed cargo carriage; unbonded OTI and 

passenger vessel operations; and various types of consumer abuses, 

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including failure of carriers or intermediaries to carry out transportation 

obligations, resulting in cargo delays or financial losses for shippers. The 

Bureau adheres to the agency’s objectives of obtaining statutory 

compliance and ensuring equitable trading conditions. 

 The Bureau prepares and serves notices of violations of the 

shipping statutes and Commission regulations and may compromise and 

settle civil penalty demands arising out of those violations. If settlement is 

not reached, Bureau attorneys act as prosecutors in formal Commission 

proceedings that may result in settlement or in the assessment of civil 

penalties. The Bureau also participates, in conjunction with other 

Commission units, in special enforcement initiatives, fact-finding 

investigations and rulemaking. 

 During fiscal year 2008, the Bureau of Enforcement investigated 

and prosecuted possible illegal practices in many trade lanes, including the 

Transpacific, Oceana, North Atlantic, Mediterranean, West Africa, Central 

and South American and Caribbean trades. These market-distorting 

activities included various forms of rebates and absorptions, 

misdescription of commodities and misdeclaration of measurements, 

illegal equipment substitution, and unlawful use of service contracts, as 

well as carriage of cargo by and for untariffed and unbonded NVOCCs. 

Most of these investigations were resolved informally, some with 

compromise settlements and civil penalties. 

 In addition, several matters arose with respect to activities pursuant 

to filed and unfiled agreements between and among ocean common 

carriers and marine terminal operators. A major investigative effort was 

initiated in fiscal year 2008 into the respective Clean Truck Programs of 

Los Angeles and Long Beach, CA, including the Ports’ operations and 

practices under several agreements filed with the Commission. 

Enforcement efforts also continued concerning the operations of 

unlicensed and unbonded NVOCCs specializing in the carriage of used 

household goods, including licensed OTIs providing service to the 

unlicensed. 

 The exchange of investigative information among the Bureau, the 

Commission’s Area Representatives, and the CBP continues to be 

beneficial to all parties. Cooperation with CBP included staff interactions 

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and joint field operations to investigate entities suspected of violating both 

agencies’ statutes or regulations. Such cooperation also has included local 

police and other government entities, including the U.S. Attorney’s Office 

and the Federal Bureau of Investigation, when necessary. 

 In fiscal year 2008, the compliance audit program continued. This 

program, conducted from headquarters primarily by mail, reviews the 

operations of licensed OTIs to assist them in complying with the statutory 

requirements and the Commission’s rules and regulations. The audit 

program also includes review of entities holding themselves out as 

VOCCs with no indication of vessel operations. At the beginning of fiscal 

year 2008, 6 audits were pending. During the fiscal year, 117 audits were 

commenced, 116 audits were completed, and 7 were pending in the 

Bureau on September 30, 2008. 

 At the beginning of fiscal year 2008, 18 enforcement cases were 

pending final resolution by the Bureau, the Bureau was party to 7 formal 

proceedings, and there were 78 matters pending which the Bureau was 

monitoring or for which it was providing legal advice. During the fiscal 

year, 21 new enforcement actions were commenced; 14 were 

compromised and settled, administratively closed, or referred for formal 

proceedings; and 25 enforcement cases were pending resolution at fiscal 

year’s end. Also, 4 formal proceedings were initiated; 2 formal 

proceedings were completed, and 9 were pending at the end of the fiscal 

year. Additionally, 77 matters involving monitoring or legal advice were 

received during the fiscal year, 62 such matters were completed, and 93 

were pending in the Bureau on September 30, 2008.

 In fiscal year 2009, the Bureau will continue to investigate marketdistorting, fraudulent and anticompetitive practices not in compliance with 

the statutes and regulations administered by the Commission, including 

the operations of licensed and unlicensed OTIs and possible noncompliance by the parties with the regulatory requirements for service 

contracts and NSAs. 

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J. BUREAU OF TRADE 

ANALYSIS

1. In General

 The primary function of the Bureau is the oversight of concerted 

activity by ocean common carriers and marine terminal operators under 

the standards of the Shipping Act. Further, the Bureau administers the 

Commission’s agreements, service contract, and NSA programs, and 

monitors the accessibility and accuracy of all published tariffs. The 

Bureau’s major program activities include: 

  Administering comprehensive trade monitoring 

programs to identify and track relevant competitive, 

commercial, and economic activity in each major U.S. 

foreign trade, and to advise the Commission and its 

staff on current trade conditions, trends, and regulatory 

concerns affecting oceanborne liner transportation. 

  Conducting systematic surveillance of carrier activity in 

areas relevant to the Commission’s administration of 

statutory standards. 

  Developing economic studies and analyses in support of 

the Commission’s regulatory responsibilities. 

  Providing expert economic testimony and support in 

formal proceedings, particularly regarding unfair 

foreign shipping practices. 

  Processing and analyzing ocean common carrier and 

MTO agreements.

 Reviewing and processing service contracts, NSAs, and 

amendments filed by ocean common carriers, 

conferences of such carriers, and NVOCCs, including 

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service contract and NSA statements of essential terms 

published by such entities. 

  Reviewing tariff publications in automated systems of 

carriers and conferences and ensuring that tariffs under 

OSRA are accessible to the public and accurate.

2. Agreement Filings and Review

 Under sections 4 and 5 of the Shipping Act, all agreements by or 

among ocean common carriers to fix rates or conditions of service, pool 

cargo or revenue, allot ports or regulate sailings, limit or regulate the 

volume or character of cargo or passengers to be carried, control or 

prevent competition, or engage in exclusive or preferential arrangements, 

are required to be filed with the Commission. Except for certain exempted 

categories, agreements among MTOs and among one or more MTOs and 

one or more VOCCs also are required to be filed with the Commission. 

Generally, an agreement becomes effective 45 days after filing, unless the 

Commission has requested additional information. These agreements are 

reviewed pursuant to the standard set forth in section 6(g) of the Shipping 

Act. Effective agreements are exempt from the antitrust laws. 

 In fiscal year 2008, the Bureau received 183 agreement filings, a 

decrease of eight (or four percent) from the previous year. The Bureau 

analyzed and processed 176 agreement filings during the year. Statistics 

on agreement filings for fiscal year 2008 are in Appendix C. 

(a) Ocean Common Carrier Agreements

 There are two broad categories of ocean common carrier 

agreements filed with the Commission: (1) pricing agreements, where the 

focus is on rates, and (2) operational agreements, where the focus can 

range from the sharing of vessel space to the management of an internet 

portal. Descriptions follow of the two categories of agreements. 

(1) Pricing Agreements 

There are two types of pricing agreements: conference agreements 

and rate discussion agreements. Conference agreements provide for the 

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collective discussion, agreement, and establishment of ocean freight rates 

and practices by groups of ocean common carriers. Conferences publish a 

common rate tariff in which all the member lines participate. Rate 

discussion agreements (RDAs) also focus on rate matters, but unlike 

conferences, any consensus reached under RDAs is non-binding on the 

parties. RDAs do not publish common rate tariffs, as each party publishes 

its own tariff. Pricing agreements represented 16 percent of all agreement 

filings last year. At the end of the year, conference agreements accounted 

for 3.1 percent of all carrier agreements on file, while RDAs made up 11.9 

percent. 

While in years past conference agreements were the dominant 

pricing forum in many trades, their commercial significance has 

effectively disappeared in recent years. Since FY 2000, the number of 

conferences has declined by 70 percent, from 23 to 7 agreements. No new 

conference agreement has been filed with the Commission since FY 2000. 

The last traditionally functioning conference, the Trans-Atlantic 

Conference Agreement, disbanded and officially terminated on September 

30, 2008, in response to the European Union’s repeal of its block 

exemption for conferences. Of the remaining seven conferences in the 

U.S. trades, three cover only government cargoes, two are inactive, one 

focuses solely on joint service contracting between its two parties, and one 

deals exclusively with U.S. inland charges. Agreement filing activities of 

conferences also diminished last year with just four filings, representing 

about two percent of all filings received last year. 

 RDAs have become the primary pricing forum in most U.S. trade 

lanes. Since FY 2000 the number of RDAs has declined from 36 to 27 

agreements, a 25 percent reduction. During fiscal year 2008, there were 

no new RDAs filed. Twenty-five modifications to existing RDAs were 

filed, about 15 percent of all filings for the year. The vast majority added 

or deleted members. One rate discussion agreement was terminated 

during the fiscal year, the Indian Subcontinent Discussion Agreement. 

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 (2) Operational Agreements 

 Operational agreements include vessel-sharing agreements, joint 

service agreements, cooperative working agreements, and non-rate 

discussion agreements. Operational agreement filings during the fiscal 

year accounted for 57 percent of all carrier filings. 

 Vessel-sharing agreements (VSAs) typically authorize some level 

of service cooperation with the goal of reducing individual operating 

costs. VSAs range from alliance agreements, which involve considerable 

operational cooperation among the parties, to slot charter agreements, 

which require only minimal commitments. VSAs account for 70 percent 

of effective carrier agreements and accounted for 62 percent of carrier 

agreement filings received last year. Thirty-eight new VSAs were filed 

last year, representing 95 percent of all new carrier agreements filed. 

Twenty-seven VSAs were terminated. Since FY 2000, the number of 

VSAs has increased by seven percent, from 148 to 159. 

 Under joint service agreements (JSAs), two or more carriers 

operate a joint venture under a single name in a specified trading area. 

The JSA issues its own bills of lading, sets its own rates, and acts as an 

individual ocean common carrier. At the end of the year there were seven 

JSAs on file. This is three percent of the total number of effective carrier 

agreements. No new JSAs were received during fiscal year 2008, and one 

was terminated. Since FY 2000, the number of effective JSAs has fallen 

by 50 percent, from 14 to 7. This is due to carriers’ preferences for more 

flexible arrangements such as VSAs. 

 Cooperative working agreements (CWA) are non-pricing 

agreements that tend to deal with unique operational considerations 

relating to acquisitions, joint service contracting, sharing of administrative 

services, or internet portal management. Other agreements filed with the 

Commission in very small numbers include agency, sailing, 

transshipment, and equipment interchange (including chassis pooling) 

agreements. At the end of the year, there were 18 CWAs and other 

agreements on file, representing eight percent of all carrier agreements. 

One new CWA was filed last year. Since FY 2000, the number of CWAs 

and other agreements has decreased by one, from 19 to 18. 

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 Non-rate discussion agreements (NRDAs) provide ocean common 

carriers with a forum for discussing matters of mutual interest other than 

rates. Typically, these agreements focus on regulatory, safety, and security 

issues. At the end of the year, there were eight such agreements on file, or 

2.5 percent of the total. The Bureau received only one new NRDA during 

the year. This agreement, the Container Trades Statistics Agreement, 

provides the parties with a means to compile and share trade data in the 

North Atlantic trades and is meant to replace the terminated Trans-Atlantic 

Conference Agreement. Since FY 2000, the number of active NRDAs has 

declined slightly, from 11 to 8. 

(b) Marine Terminal Operator Agreements 

 Marine terminals, operated by both public and private entities, 

provide facilities, services, and labor for the interchange of cargo and 

passengers between land and ocean carriers, and for the receipt and 

delivery of cargo from shippers and consignees. The Bureau is 

responsible for reviewing and processing agreements among MTOs. 

 During fiscal year 2008, the Bureau received 50 MTO agreement 

filings, including nine terminations or withdrawals. This represents a 400 

percent increase over last year. MTO agreements accounted for 27 percent 

of all agreement filings during the fiscal year. This significant increase 

from last year (when MTOs accounted for just three percent of all 

agreement filings) is primarily due to the decision of a port authority to 

file its recently executed service agreements with carriers, despite the 

filing exemption for this type of agreement. The other filings fall into two 

categories: joint venture cooperative working agreements and agreements 

addressing environmental concerns and practices. At the end of the fiscal 

year, there were 182 marine terminal agreements on file, down from 255 

the previous year, or a decrease by 28 percent. This decline resulted from 

the identification of a large number of leases that had expired without 

notice to the Bureau. 

 The Bureau received five joint venture cooperative working 

agreements during the year for the Ports of Miami, Houston, Mobile, 

Seattle, and New Orleans. In general, these agreements establish a joint 

venture between two or more holding companies, usually owned by larger 

organizations already involved in marine terminal operations. These 

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holding companies, the joint venture, and other related parties enter into 

an agreement allowing them to discuss and agree on rates and charges, 

provide underlying operational and administrative support to the joint 

venture, and reassign existing operating leases for terminal facilities to the 

joint venture. 

 Increasingly, marine terminal operators are looking more closely at 

the environmental impact of their port operations trying to minimize the 

environmental consequences resulting from these activities. These 

coordinated efforts can include the use of certain types of fuel in container 

handling equipment, incentives for the use of cleaner fuel in vessels while 

in port, and significant changes to drayage trucks serving a given port 

area. 

 In larger port areas, MTOs are discussing and agreeing on 

measures to be taken to reduce negative environmental effects. The 

number of these kinds of discussion agreements filed over the past two 

years has increased. In FY 2008, discussion agreements were filed for 

New York/New Jersey, Los Angeles/Long Beach, and Seattle/Tacoma. 

3. Monitoring and Economic Analysis

 The systematic monitoring of common carrier activities and 

commercial conditions in the U.S. foreign trades is an integral part of the 

Commission’s responsibilities under the Shipping Act. The activities of 

certain types of agreements among marine terminal operators are 

monitored in a similar fashion. Such monitoring helps ensure that carriers 

and marine terminal operators comply with the statutory standards of the 

Shipping Act and the requirements of relevant Commission regulations. 

To that end, the Bureau administers monitoring programs and researches 

current trade conditions, contemporary issues adversely affecting the 

industry, emerging commercial trends, and carrier pricing and service. 

 The Commission’s monitoring program examines carrier 

competition within individual U.S. trade lanes, including market share, 

concentration, barriers to market entry, coordination between carriers or 

groups of carriers. The program also examines the availability of 

alternative services and alternative supply sources for imports, as well as 

cargo volume trends, congestion bottlenecks, commercial pricing 

100
practices, operational cost pressures, service offerings, vessel capacity 

utilization, capacity management programs, service contracting activity, 

and shipper complaints. 

 Major projects begun or completed by the Bureau in fiscal year 

2008 included: (1) the Bureau’s monitoring and analysis projects arising 

in connection with the Los Angeles–Long Beach Infrastructure and 

Environmental Programs Cooperative Working Agreement; the U.S. 

Pacific-Oceania Agreement, the U.S./Australia Discussion Agreement and 

the Australia and New Zealand-U.S. Discussion Agreement as discussed 

earlier; (2) staff participation in the Maritime Data Working Group, 

including contributions to the publication of Maritime Trade and 

Transportation produced under the auspices of the U.S. Department of 

Transportation, Bureau of Transportation Statistics; (3) a study of the 

repeal by the EU of the block exemption for liner shipping conferences;

(4) an analysis of market variables affecting the availability of containers 

and vessel space for shippers of U.S. exported goods; (5) compilation of 

data on U.S. container export and import volumes by trade region; (6) an 

assessment of the economics of U.S. west coast container cargo diversion 

and the implications for ports in Florida; (7) staff participation in the 

development of the Automated Commercial Environment/International 

Trade Data System (ACE/ITDS); (8) migration from paper filing to the 

electronic filing of monitoring reports, meeting minutes and other related 

materials that certain agreements are required to file pursuant to the 

Commission’s agreement reporting requirements; and (9) meetings with 

industry representatives on agreement and trade matters, including two 

trips to southern California to discuss issues relating to the San Pedro Bay 

ports’ Clean Air Action Plan. 

 The Bureau also provides economic expertise for Commission 

initiatives, including rulemaking proceedings. Bureau economists prepare 

testimony in fact-finding investigations and cases of unfair shipping 

practices under section 19 of the 1920 Act and FSPA. Professional staff 

provides briefings and supporting materials for senior agency officials on 

agreements and trade conditions for the Commission’s hearings before 

Congress and the official speaking engagements of FMC Commissioners, 

and conducts outreach on behalf of the Commission to industry and the 

public. 

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4. Tariffs 

 The Shipping Act requires common carriers and conferences to 

publish their tariffs electronically, in private systems. These electronic 

tariffs contain rates, charges, rules, and practices of common carriers 

operating in the U.S. foreign commerce. The Bureau monitors the public 

accessibility of these private tariff systems and reviews published tariff 

material for compliance with the requirements of the Shipping Act. The 

Bureau also determines whether to grant applications for special 

permission to deviate from tariff publishing rules and regulations. During 

fiscal year 2008, the Bureau received and processed eight special 

permission applications. 

 Further, the Bureau is responsible for processing the electronic 

Form FMC-1, Tariff Registration Form, required to be filed with the 

Commission by common carriers, conferences, and MTOs. The data on 

this form identifies the location of common carrier tariffs, including 

common carrier and conference service contract essential terms 

publications or any MTO schedules. At the end of fiscal year 2008, 4,543 

tariff location addresses were posted on the Commission’s website. Of 

that number, 4,061 tariff addresses were for NVOCCs. The Bureau also 

collaborates with other Commission bureaus and offices to verify that 

VOCCs and NVOCCs comply with the Commission’s licensing, bonding 

and tariff publication requirements. 

5. Service Contracts 

 Service contracts are an alternative to transportation of cargo under 

tariff rates. Service contracts enable the parties to tailor transportation 

services to their commercial and operational needs and to keep many 

terms of these arrangements confidential. 

 During fiscal year 2008, the Commission received 44,438 new 

service contracts, compared to 46,608 in fiscal year 2007, and 294,880 

contract amendments, compared to 262,076 in fiscal year 2007. Over the 

last two fiscal years, the number of original filings has decreased, while 

the filings of amendments to those original service contracts have 

increased. During the fiscal year, the total number of service contracts 

filed into SERVCON, the Bureau’s service contract filing system, reached 

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two million. Original service contract or NSA filings that contain errors 

due to clerical errors can be corrected within two business days by filing a 

“corrected transmission” copy into SERVCON. During the fiscal year, 

2,305 records involving corrected transmission copies were filed into 

SERVCON. 

6. NVOCC Service Arrangements 

 Commission rules allow NVOCCs to offer transportation services 

pursuant to individually negotiated, confidential service arrangements with 

customers (NSAs) rather than under a published tariff. The Commission’s 

rules implementing NSAs, 46 CFR Part 531, NVOCC Service 

Arrangements, became effective on January 19, 2005. 

 At the end of fiscal year 2008, there were 662 NVOCCs registered 

with the Commission to file NSAs. During fiscal year 2008, 

approximately 990 NSAs and 1,434 amendments were filed by 63 

NVOCCs. Since January 2005, when the practice was established, there 

have been 2,411 NSAs and 2,823 amendments filed by 115 NVOCCs. 

7. Controlled Carriers

 A controlled carrier is an ocean common carrier that is, or whose 

operating assets are, owned or controlled directly or indirectly by a 

government. The Shipping Act provides that no controlled carrier may 

maintain rates or charges in its tariffs or service contracts that are below a 

level that is just and reasonable, nor may any such carrier establish, 

maintain, or enforce unjust or unreasonable classifications, rules or 

regulations in those tariffs or service contracts. In addition, tariff rates, 

charges, classifications, rules, or regulations of a controlled carrier may 

not, without special permission of the Commission, become effective 

sooner than the 30th day after the date of publication. 

 The Commission’s staff monitors U.S. and foreign trade press and 

other data to identify controlled carriers and any unjust or unreasonable 

controlled carrier activity that might require Commission action. There are 

currently eight controlled carriers operating in the U.S. trades: 

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(1) American President Lines, Ltd and APL Co., Pte. (RPI 

No. 000240) – Republic of Singapore; 

(2) Ceylon Shipping Corporation (RPI No. 016589) – 

Democratic Socialist Republic of Sri Lanka; 

(3) COSCO Container Lines Company, Limited (RPI No. 

015614) - People's Republic of China; 

(4) China Shipping Container Lines Co., Ltd. (RPI No. 

016435) - People's Republic of China; 

(5) China Shipping Container Lines (Hong Kong) Company, 

Ltd. (RPI No. 019269) - People’s Republic of China; 

(6) Compagnie Nationale Algerienne de Navigation (RPI No. 

000787) - People’s Democratic Republic of Algeria; 

(7) Sinotrans Container Lines Co., Ltd. (d/b/a Sinolines) (RPI 

No. 017703) – People’s Republic of China; and 

(8) Shipping Corporation of India Ltd., The (RPI No. 001141) 

– Republic of India. 

8. Marine Terminal Activities

 Pursuant to the Ocean Shipping Reform Act (OSRA) an MTO may 

make available to the public a schedule of rates, regulations, and practices, 

including limitations of liability for cargo loss or damage, pertaining to 

receiving, delivering, handling, or storing property at its marine terminal. 

Any such schedule made available to the public shall be enforceable by an 

appropriate court as an implied contract without proof of actual knowledge 

of its provisions. Pursuant to the Commission’s regulations governing 

MTO schedules, any terminal schedule that is made available to the public 

must be available during normal business hours and in electronic form. 

Each MTO must notify the Bureau of the electronic location of its terminal 

schedule by submitting Form FMC-1 before commencing operations. A 

total of 260 MTOs have filed Form FMC-1. At the close of fiscal year 

2008, 152 of these MTOs had published their terminal schedules. The 

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internet addresses for these MTO terminal schedules are posted on the 

Commission’s website. 

9. Automated Database Systems

 The Bureau currently maintains and uses the following automated 

databases and filing systems: (1) Form FMC-1 System; (2) SERVCON, 

the system for filing service contracts and NSAs (as well as internal 

database systems related to SERVCON registration forms); and (3) the 

Agreement Profile Database. 

 At the end of fiscal year 2008, the Form FMC-1 System reflected 

the tariff location addresses of 324 VOCCs, 4,061 NVOCCs, six 

conferences, and 152 MTOs. The FMC-1 System also allows the 

Commission to track the status of any Form FMC-1 submitted. 

 SERVCON contains service contract and NSA data, most of which 

is available only to the Commission’s staff due to confidentiality 

requirements. Carriers must register to file service contracts by submitting 

Form FMC-83, and NVOCCs must submit Form FMC-78 to file NSAs. 

During fiscal year 2009, the Bureau intends to implement an electronic 

registration procedure for carriers/OTIs filing service contracts and NSAs. 

 The Agreement Profile Database contains information about the 

status of carrier and terminal agreements, as well as related monitoring 

reports. 

 These databases and filing systems provide support for many of the 

Commission’s programs and the Bureau’s monitoring efforts. Through 

specially tailored reports, certain database information is available to the 

general public. 

 The Bureau also maintains an electronic library of effective carrier 

and MTO agreements. This library is accessible through the Commission’s 

website. 

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10. Future Plans 

During fiscal year 2009, the Bureau will review and evaluate 

various agreements related to the Los Angeles and Long Beach proposed 

Clean Truck Program; provide economic testimony in two Commission 

actions arising in response to elements of the Clean Truck Program 

(Docket No. 08-05 and U.S. District Court Civil Action No. 1:08-cv-1895-

RJL, FMC vs. City of Los Angeles, et al.); and update the Bureau’s 

original section 6(g) analysis of the revised Los Angeles and Long Beach 

Cooperative Working Agreement (FMC No. 201170-001) to take into 

account any changed economic circumstances affecting the San Pedro 

Ports and any changes to the Clean Truck Program made by the parties. 

The Bureau will also analyze the impact of the European Union’s 

elimination of the immunity for liner shipping from competition laws, 

including any affects on U.S. exports or imports; contribute to the 

Commission’s analysis of Petition No. P1-08, Petition of the National 

Customs Brokers and Forwarders Association of America, Inc. for 

Exemption from Mandatory Rate Tariff Publication and review new ocean 

carrier agreements. 

The Bureau will continue to monitor the activity of ocean common 

carrier and MTO agreements; assist other bureaus with analytical support; 

participate in agency strategic planning; and engage in other research 

projects concerning liner shipping, marine terminal operations, and intermodal transportation. 

 

106
APPENDICES 

107
108

APPENDIX B

COMMISSION PROCEEDINGS 

Fiscal Year 2008

Formal Proceedings

 Discontinuances, Dismissals and Settlements ..............................6 

 Rulemakings - Final Rules .............................................................0 

 Total ................................................................................6 

 

Informal Dockets.............................................................................3

 

110
 APPENDIX C

AGREEMENT FILINGS AND STATUS 

Fiscal Year 2008

Agreements Filed in FY 2008 

 (including modifications and terminations) 

Carrier ............................................................................................................ 133 

Terminal .......................................................................................................... 50 

Total .............................................................................................................. 183 

Agreement Processing Categories in FY 2008

Forty-Five Day Review ................................................................................... 36 

Expedited Review ............................................................................................. 9 

Exempt-Effective Upon Filing ...................................................................... 126 

Rejection of Filing ............................................................................................. 0 

Formal Extension of Review Period .................................................................. 2 

Withdrawals....................................................................................................... 2 

Not Subject ........................................................................................................ 1 

Total ............................................................................................................. 176 

Carrier Reports Submitted for Commission Review

Minutes of Meetings .................................................................................. 1,016 

Ad Hoc Reports ............................................................................................. 221 

Monitoring Reports ....................................................................................... 199 

Total ........................................................................................................... 1,436 

Agreements on File as of September 30, 2008

Conference......................................................................................................... 7 

Rate Discussion ............................................................................................... 27 

Non-Rate Discussion. ........................................................................................ 8 

Joint Service ...................................................................................................... 7 

Vessel-Sharing ............................................................................................... 159 

Cooperative Working & Other ....................................................................... 18 

Terminal ........................................................................................................ 182 

Total .............................................................................................................. 408 

111
 APPENDIX D 

FORM FMC-1 

TARIFF LOCATION ADDRESSES - ELECTRONIC 

SERVICE CONTRACT AND NSA FILINGS AND 

SPECIAL PERMISSION APPLICATIONS 

Fiscal Year 2008

 

Form FMC-1 Filings

 VOCCs .........................................................324 

 OTI/NVOCCs ............................................4,061 

 MTOs ...........................................................152 

 Conferences ......................................................6 

Electronic Service Contract Documents

 New Service Contracts ...........................44,438 

 Service Contract Amendments ..............294,880 

NVOCC Service Arrangement (“NSA”) Documents

 New NSAs ...................................................990 

 NSA Amendments.....................................1,434 

Special Permission Applications

 Granted .............................................................3 

 Denied ..............................................................1 

 Pending .............................................................1 

 Withdrawn ........................................................3 

112
APPENDIX E 

CIVIL PENALTIES COLLECTED 

Fiscal Year 2008

Curiel International Logistics. .................................$ 20,000.00 

Double Ace Cargo .................................................. 32,500.00 

Laparkan Trading Limited CFS. .................................30,000.00 

Oriental Air Transportation (Chicago) Inc. ................20,000.00 

Pudong Trans USA Inc. ..............................................60,000.00 

Sunway Logistics (USA), Inc. ....................................20,000.00

Total Civil Penalties Collected .............................$182,500.00

113
114

APPENDIX F

STATEMENT OF APPROPRIATIONS, 

OBLIGATIONS AND RECEIPTS FOR 

THE FISCAL YEAR ENDED 

SEPTEMBER 30, 2008 

APPROPRIATIONS:

Public Law 110-161, 110th Congress: For necessary expenses of the 

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

Merchant Marine Act of 1936, as amended (46 App. U.S.C. 1111), 

including services as authorized by 5 U.S.C. 3109; hire of passenger motor 

vehicles authorized by 31 U.S.C. 1343(b); and uniforms or allowances 

therefor, as authorized by 5 U.S.C. 5901-5902, $22,072,000: Provided, 

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

representation expenses. 

$22,072,000 

OBLIGATIONS AND UNOBLIGATED BALANCE:

Net obligations for salaries and expenses for the fiscal year 

ended September 30, 2008. $21,624,421

STATEMENT OF RECEIPTS: Deposited with the General 

Fund of the Treasury for the Fiscal Year Ended September 30, 2008: 

 Publications and reproductions, 

 Fees and Vessel Certification, 

 and Freight Forwarder Applications $ 306,946 

 Fines and penalties $ 182,500

 

Total general fund receipts $ 489,446