Federal Maritime

Commission

56th Annual

Report

for

Fiscal Year

2017

Table of Contents

Letter of Transmittal 1

Members of the Commission 3

FMC Mission, Strategic Goals, and Functions 5

Strategic Goal 1 5

Strategic Goal 2 6

Statutory Authority 6

Year in Review 7

Efficiency and Competition 9

Strategic Goal 1 9

Agreement Filings and Review 11

Types of Agreements 12

Competitive Impact and Monitoring 14

Carrier Alliance Agreements 17

Tariffs, Service Contracts, NSAs, & MTO Schedules 19

Supply Chain Innovation Initiative 20

International Cooperation 22

Protecting the Public 25

Strategic Goal 2 25

Licensing 25

Passenger Vessel Program 27

Consumer Affairs and Education 28

Enforcement, Audits, and Penalties 30

Inter-Agency Cooperation 31

Leveraging Technology 33

Developments in Major U.S. Foreign Trades 35

Worldwide 35

Asia 36

Indian Subcontinent and Middle East 37

North Europe 37

Mediterranean 38

Australia and Oceania 39
Africa 39

Central America and the Caribbean 40

South America 40

Top Twenty U.S. Liner Cargo Trading Partners 43

Top Twenty U.S. Liner Cargo Trading Partners (CY2016) 44

Foreign Shipping Practices Act 45

Controlled Carriers 46

Formal Investigations, Private Complaints and Litigation 47

Formal Investigations 48

Private Complaints 48

Litigation 52

Rulemakings 54

APPENDICES 57

57

58

59

60
56th Annual Report 1

Letter of Transmittal

FEDERAL MARITIME COMMISSION

800 North Capitol Street, N.W.

Washington, DC 20573-0001

March 31, 2018

To the United States Senate and House of Representatives:

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

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

306(a), I welcome the opportunity to share with you the Federal Maritime Commission 56th 

Annual Report for Fiscal Year 2017 (FY 2017). This report highlights the key accomplishments, 

initiatives, and relevant events that occurred between October 1, 2016 and September 30, 2017.

It is the mission of the Federal Maritime Commission to ensure a competitive and reliable international ocean transportation supply system that supports the U.S. economy and 

protects the public from unfair and deceptive practices. As we work to foster competition 

and integrity for America’s ocean supply chain, we also focus on employing a minimum of 

government intervention and placing greater reliance on the marketplace. Every member of 

our FMC team remains dedicated to achieving this mission.

As highlighted in the Year in Review, the Commission took important steps in FY 2017 to 

reduce unnecessary regulatory costs and burdens on the regulated community. The Commission also facilitated the cooperation by stakeholders to develop non-regulatory commercial 

solutions to address bottlenecks in the international ocean supply chain. The Commission 

responded to ongoing structural changes in the international liner trade with aggressive 

agreement negotiations and enhanced monitoring programs.

I am proud of the Commission’s work. Thank you for your attention and the Commission 

welcomes the opportunity to be of assistance to you in any matter within the jurisdiction of 

the Federal Maritime Commission. 

Sincerely,

Michael A. Khouri

Acting Chairman
2 56th Annual Report
56th Annual Report 3

Members of the Commission

Michael A. Khouri

Acting Chairman

Appointed 2009

Term Expires 2021

Mario Cordero

Commissioner

Appointed 2011

Term Expires 2019

William P. Doyle

Commissioner

Appointed 2013

Term Expires 2018

Rebecca F. Dye

Commissioner

Appointed 2002

Term Expires 2020

Daniel B. Maffei

Commissioner

Appointed 2016

Term Expired 2017
4 56th Annual Report
56th Annual Report 5

FMC Mission, Strategic 

Goals, and Functions

The Federal Maritime Commission (FMC or Commission) is an independent agency responsible for the regulation of oceanborne transportation in the foreign commerce of the United 

States for the benefit of U.S. exporters, importers, and the U.S. consumer.

The FMC's Mission is to:

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

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

The Commission will achieve its Mission by ensuring that the fundamental dynamics of 

a free, open and competitive ocean transportation market 

drive economic outcomes. To that end, the Commission 

is committed to faithfully administer the Shipping Act 

while employing a minimum of government intervention 

and regulatory costs and by placing a greater reliance on 

the marketplace.

Strategic Goal 1

Maintain an efficient and competitive international ocean transportation system.

The FMC ensures competitive and efficient ocean transportation services for the shipping 

public by:

• Reviewing and monitoring agreements among ocean common carriers and marine

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

they do not cause substantial increases in transportation costs or decreases in transportation services;

• Maintaining and reviewing confidentially filed service contracts and Non-Vessel-Operating Common Carrier (NVOCC) Service Arrangements to guard against detrimental

effects to shipping;

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

to obtain relief from ocean shipping practices or disputes that impede the flow of

commerce;

• Ensuring common carriers’ tariff rates and charges are published in private, automated

tariff systems and electronically available;

• Monitoring rates, charges, and rules of government-owned or -controlled carriers to

ensure they are just and reasonable; and

Competition and Integrity for 

America’s Ocean Supply Chain
6 56th Annual Report

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

business practices in U.S. foreign shipping trades.

Strategic Goal 2

Protect the shipping public from unlawful, unfair and deceptive ocean 

transportation practices and resolve shipping disputes.

The FMC protects the public from financial harm, and contributes to the integrity and 

security of the U.S. supply chain and transportation system by:

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

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

that violate the Shipping Act;

• Licensing OTIs with appropriate character and adequate financial responsibility;

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

or disputes between cruise vessel operators and passengers;

• Identifying and holding regulated entities accountable for mislabeling cargo shipped

to or from the United States; and

• Ensuring that cruise lines maintain financial responsibility to pay claims for personal

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

Statutory Authority

The principal statutes administered by the Commission, now codified in Title 46 of the U.S. 

Code at sections 40101 through 44106, are:

• The Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998

(Shipping Act)

• The Foreign Shipping Practices Act of 1988 (FSPA)

• Section 19 of the Merchant Marine Act, 1920 (1920 Act)

• Sections 2 and 3 of Pub. L. No. 89-777, 80 Stat. 1350
56th Annual Report 7

Year in Review

The Federal Maritime Commission (FMC 

or Commission) is the agency responsible for 

regulation of ocean borne transportation in the 

foreign commerce of the United States for the 

benefit of U.S. exporters, importers, and the 

U.S. consumer. The FMC plays a vital role in 

ensuring competition and integrity for America’s ocean supply chain and we are proud of 

our work and contributions that you will find 

summarized in this 56th Annual Report.

During Fiscal Year 2017 (FY 2017), the 

Commission worked diligently to faithfully 

administer the Shipping Act of 1984 while 

employing a minimum of government intervention and placing greater reliance on the 

marketplace.

Throughout FY 2017, the Commission 

aggressively pursued ways to reduce unnecessary regulatory burdens and costs on the 

regulated community as mandated by the 

Shipping Act of 1984. Implementing Executive Order 13777, the Commission designated 

a Regulatory Reform Officer to lead a Regulatory Reform Task Force, charged with 

identifying outdated, cumbersome, ineffective, or expensive rules and regulations that 

can be amended or eliminated. While the work 

of the Task Force is ongoing, the Commission 

has already taken steps to amend regulations 

related to Service Contracts, Negotiated Rate 

Arrangements and NVOCC Service Arrangements to eliminate or reduce unnecessary 

filing obligations. Global supply chain efficiency will benefit through lower costs, which 

should result in savings realized by our U.S. 

exporters and importers.

In addition, through the work of the Supply 

Chain Innovation Teams led by Commissioner 

Rebecca F. Dye, the Commission has taken 

a direct role in facilitating cooperation by 

stakeholders to cooperatively develop nonregulatory commercial solutions to address 

supply chain bottlenecks that impede the 

flow of international ocean cargo. Beginning 

in May 2016, Commissioner Dye assembled 

two teams—one focusing on import supply 

chains and the second focusing on export 

supply chains. These teams were charged with 

identifying practical, achievable and private 

sector driven system process innovations 

that would lead to actual improvements in 

supply chain efficiency, resiliency, and competitiveness. Their conclusions that improved 

sharing of meaningful and actionable information demonstrates the potential of a National 

Seaport Information Portal.

In fulfilling its mission to ensure a competitive and reliable international ocean 

transportation system, the Commission 

continued in FY 2017 to address challenges 

presented by ongoing structural changes in 

the international liner trade. The ocean shipping industry continued a trend from the prior 

year with further consolidation among the 

lines. We are on a path to see the top 20 ocean 

carriers at the end of 2015 consolidated into 

a projected ten companies, operate in three 

global alliances, by mid-2018.

Responding to these changes, the Commission modified its economic analysis of 

agreements filed with the Commission to 

better understand competitive impacts of these 

competitor arrangements on the marketplace. 
8 56th Annual Report

The Commission also enhanced its data collection and agreement monitoring to better 

understand performance and trends in the 

marketplace. When necessary to address competition concerns, the Commission continued 

its recent practice of demanding changes to 

agreement language. We also changed the 

internal procedures and processes for how 

an agreement is reviewed by the Commission 

to make the most efficient use of the statutorily 

mandated 45 day agreement review period.

In furthering its mission to protect the 

public from unlawful, unfair, and deceptive 

practices, the Commission crossed an important milestone this year with the successful 

launch of the Ocean Transportation Intermediary (OTI) triennial update process. This is an 

online process where the “responsible parties” 

of an OTI update information related to ownership, corporate officers, business locations, 

changes in affiliation or branch office. Moving 

to a web-based update structure not only aids 

the Commission in meeting its mandate to 

safeguard the public, it significantly reduces 

the compliance burdens and costs upon the 

regulated entities.

Looking forward, as the Commission moves 

into FY 2018, we will finalize a new Strategic 

Plan for 2018-2022. This document will guide 

our work into the future as the Commission 

continues its important work to ensure competition and integrity for America’s ocean 

supply chain, while minimizing government 

intervention and placing greater reliance on 

the marketplace.
56th Annual Report 9

Efficiency and Competition

Strategic Goal 1

Maintaining an efficient and competitive international ocean transportation system and 

enhancing liner trade by evaluating and monitoring the use of various types of agreement 

authority for anticompetitive effects is a primary function of the Commission. An efficient and 

competitive transportation system facilitates commerce, economic growth, and job creation. 

Competition among participants in U.S. liner trades fosters competitive rates and encourages 

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

consumers.

The Shipping Act allows competitors to meet and discuss (and in some cases cooperate 

on) certain business issues, but first they must file a written agreement with the Commission. 

The Commission reviews agreements using traditional antitrust law and economic models to 
10 56th Annual Report

evaluate the potential competitive impact of a proposed agreement before it may go into effect. 

The initial review and analysis of a proposed agreement and subsequent monitoring of the 

members’ activities under the agreement, should it become effective, are designed to identify 

and guard against possible anticompetitive abuse of the filed authority, avoid unreasonable 

increases in transportation costs or decreases in transportation services, and address other 

activities prohibited by the Shipping Act.

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

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

1914 Clayton Act, and the Robinson-Patman Act of 1936 concerning various prohibitions of 

discriminatory or unfair business practices and standards regarding business combinations. 

The Shipping Act creates a separate regulatory regime from antitrust under which collective 

carrier or MTO activity is both evaluated when the agreement is initially filed and closely 

monitored thereafter for any adverse impact on competition in the trade.

So long as the regulated entities comply with the statutory and regulatory proscriptions 

of the Act, then the other federal antitrust statutes generally do not apply. Conversely, if a 

regulated entity violates the Shipping Act, they would be subject to penalties set forth in the 

Act, and may under certain circumstances be subject to investigation and prosecution under 

the full array of federal antitrust statutes.
56th Annual Report 11

Agreement Filings and Review

Under Sections 4 and 5 of the Shipping Act, 

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

among ocean common carriers to undertake 

any of the following are required to be filed 

with the Commission:

• fix rates or conditions of service,

• pool cargo revenue,

• allot ports or regulate sailings,

• limit or regulate the volume or character of cargo or passengers to be carried,

• control or prevent competition, or

• engage in exclusive or preferential

arrangements.

Except for certain exempted categories, 

agreements among marine terminal operators (MTOs) and among one or more MTOs 

and one or more ocean common carriers also 

must be filed with the Commission. Generally, 

an agreement becomes effective 45 days after 

filing, unless the Commission has requested 

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

are reviewed pursuant to the standard set 

forth in section 6(g) of the Shipping Act, 46 

U.S.C. §41307(b)(1). Effective agreements are 

exempt from U.S. antitrust laws, and instead, 

are subject to Shipping Act restrictions and 

Commission oversight.

In FY 2017, the Commission received 

144 agreement filings, including both new 

agreements and amendments to existing 

agreements. This level of activity is notable 

as it is the first time in several years that the 

number of agreement filings has decreased. 

This decline may be attributed to the global 

redeployment of vessel capacity and service 

reconfigurations that occurred with the shift 

from four to three in the global ocean carrier 

alliances. As carriers made operational adjustments consistent with their respective global 

alliance agreements, there may have been less 

need to file more geographically narrow space 

charter and vessel sharing agreements than 

under the previous alliance structure.

FY 2017 was the first year that the Commission primarily utilized the new eAgreements 

electronic agreement filing and review system 

for ocean common carrier agreements. The 

deployment of this system has proven to 

be well received by the industry, with more 

than 90 percent of carrier agreement filings 

now submitted electronically. The online 

system has streamlined FMC business processes by reducing initial agreement intake 

time resulting in faster public access to pending filed agreements - significantly reducing 

administrative costs for both the industry 

and Commission staff. In FY 2018, the FMC 

intends to conduct a full audit of all MTO 

agreements currently on file, a process that 

began in FY 2017. Once compliance with all 

applicable regulations is ensured, the Commission will upload those agreements to the 

new eAgreements system. In doing so, the 

benefits described above will be extended to 

all agreements, not just those between and 

among vessel operating common carriers, and 

provide 24/7 public access to these filings.
12 56th Annual Report

Types of Agreements

When launching the eAgreements system 

in FY 2016, the Commission introduced a 

method of categorizing ocean common carrier 

agreements that reflected changes in the types 

of agreements currently utilized by the ocean 

transportation industry, recognized trends 

among types of agreement filings, and provided more refined information to users. The 

current categories are summarized below.

Space charter agreements authorize an 

ocean common carrier(s) to sell or exchange 

vessel space for use by another shipping line. 

Space charter agreements do not include the 

authority to discuss the provision of space in 

a trade, only the chartering of space already 

deployed.

Vessel sharing agreements authorize two 

or more shipping lines to discuss and agree on 

the supply of vessel capacity in a defined U.S. 

trade through the deployment of a specific 

service string or strings.

Global vessel sharing agreements/alliances authorize two or more shipping lines 

to discuss and agree on the supply of vessel 

capacity across multiple trades. Alliance 

agreements may contain other authorities 

such as, information exchange, joint procurement of goods or services necessary to operate 

their services, etc. While there are currently 

seven global alliance agreements on file with 

the Commission, only three are jointly/collectively operating container services in the 

U.S. trades.

Vessel operating common carrier (VOCC) 

conference agreements are distinguished 

from all other types of agreements because 

they authorize two or more shipping lines to 
56th Annual Report 13

collectively discuss, agree, and fix uniform 

freight rates, charges, practices, and conditions of service relating to the receipt, carriage, 

handling and/or delivery of passengers or 

cargo. There are currently no conference 

agreements on file that cover the movement 

of general commercial cargo. The only conference agreements currently on file with the 

Commission only involve the transport of 

government impelled cargo.

Joint service agreements authorize two or 

more shipping lines to establish and operate a 

combined vessel service or joint venture that 

uses a distinct operating name and generally 

acts as a single shipping line independent of 

the shipping lines that are parties to the joint 

service agreement.

Equipment discussion agreements are 

agreements between shipping lines that primarily focus on the discussion, exchange, and 

transportation of containers, chassis, LASH/

SEABEE barges, and related equipment.

VOCC rate discussion agreements focus on 

any type of rate matter or charges, but unlike 

conferences, any consensus on rates among 

the shipping line members is non-binding on 

the members.

VOCC cooperative working agreements 

(CWAs) authorize shipping lines to establish 

exclusive, preferential, or cooperative working 

relationships that are subject to the Shipping 

Act, but that do not fall precisely within the 

parameters of any other specifically defined 

agreement category.

Assessment agreements, whether part of a 

collective bargaining agreement or negotiated 

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

other than a uniform man-hour basis regardless of the cargo handled or type of vessel or 

equipment utilized. These agreements can be

between common carriers and labor organizations, or marine terminal operators and labor

organizations, and are effective upon filing

with the Commission.

Marine terminal rate discussion agreements authorize marine terminal operators to

discuss rates and/or charges related to marine

terminal operations.

Marine terminal facilities agreements

generally refer to lease agreements between 

a marine terminal operator and the owner of 

the land or warehouse/facility at a port.

Marine terminal services agreements are 

agreements between a marine terminal operator and a shipping line concerning marine

terminal services provided to and paid for

by a shipping line. These services include:

dockage, free time, handling, heavy lift, loading and unloading, terminal storage, usage,

wharfage, wharf demurrage, and checking

(the service of counting and checking cargo

against the shipping documentation), and

including any marine terminal facilities that 

may be provided incidentally to such marine 

terminal services.

Marine terminal joint venture agreements 

are agreements between or among two or 

more marine terminal operators, or between 

one or more marine terminal operators and 

one or more shipping lines, operating as a 

joint venture whereby a separate marine terminal operator is established.

MTO cooperative working agreements

authorize marine terminal operators to establish exclusive, preferential, or cooperative

working relationships subject to the Shipping

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

agreement categories.
14 56th Annual Report

As part of the comprehensive audit of all 

MTO agreements on file with the Commission and continuing updates to complete the 

eAgreements system during the fiscal year, 

Commission staff identified agreements that 

have been re-categorized, terminated of their 

own accord, or are otherwise no longer active. 

These efforts will lead to a more accurate representation of active agreements on file with 

the Commission.

As in previous years, the vast majority of 

VOCC agreements in effect at the end of FY 

2017 were either slot charter or vessel sharing agreements, which collectively comprised 

approximately 82 percent of all VOCC agreements. With respect to VOCC rate discussion 

agreements, recent amendments to those 

agreements reflect the accelerated departure 

of carrier members, suggesting that rate discussion agreements have become less effective 

in bringing about carrier cooperation to sustain freight rate levels in the face of continued 

excess capacity. The majority of agreements 

filed with the Commission historically have 

concentrated on the container industry, 

however increasingly, a significant portion 

of VOCC agreements are focused on other 

areas of ocean transportation, most notably, 

on the Roll on/Roll off (Ro/Ro) trade. Of the 

233 active space charter agreements on file, 

over 40 percent are specific to the Ro/Ro trade.

Competitive Impact and Monitoring

The Commission reviews all agreements 

filed under the Shipping Act as well as 

evolving commercial conditions in the U.S. 

foreign trades to determine whether cooperation contemplated between or among 

ports, ocean common carriers, and/or MTOs 

is likely to or has resulted in an unreasonable reduction in service or increase in rates. 

When the Commission is unable to determine 

the likely competitive impact of a proposed 

agreement within the 45-day statutory review 

period, based on an analysis of economic 

data and information filed with the agreement, independent trade data sources, and 

other commercial data, the Commission 

may issue a request for additional information (RFAI) to the agreement parties to obtain 

additional data and/or clarification on unclear 

or indefinite proposed agreement authority. 

The Commission has the authority to reject 

a pending agreement filing if it determines 

the filing fails to meet the Shipping Act and 

Commission regulations requiring filed agreements to be clear and definite, or if the filing 

is outside the Commission’s jurisdiction.

The following are examples of agreements 

filed with the Commission during the fiscal 

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

with the Shipping Act.

West Coast MTO Agreement 

(WCMTOA):

Since 2005, under the authorities of this 

agreement, the twelve container terminals that 

presently operate at the Ports of Los Angeles 

and Long Beach have collaborated to provide 

an off-peak gate program called PierPASS. 

This program charges a traffic mitigation fee 

(TMF) to users who access these terminals 

during the weekday daytime (peak) shift to 

help offset the cost of providing a second 
56th Annual Report 15

(off-peak) night or weekend shift. The Commission examines activities conducted by 

WCMTOA under the section 6(g) standard 

of the Shipping Act. Notably, during the fiscal 

year, Commission staff regularly met with 

shippers, motor carriers, intermodal equipment providers, and trade associations who 

have raised concerns about existing and possible future programs under the agreement. 

Of major concern to the Commission, as well 

as stakeholders, have been annual increases 

in the TMF, a lack of transparency about the 

cost to operate the off-peak shifts, the revenue 

collected from the TMF, how that revenue is 

re-distributed among the terminals, and the 

quality of services made available during the 

second shift. At the urging of the Commission 

during the fiscal year, WCMTOA commissioned and made public an independent 

analysis of the PierPASS off-peak program 

cost calculation conducted by KPMG Advisory Services. Although vulnerabilities in 

PierPASS’s cost calculation methodology 

were highlighted in KPMG’s report, all of the 

Commission’s concerns were not adequately 

addressed. The Commission subsequently 

issued updated monitoring requirements 

focusing on specific areas of concern and further refined those requirements once updated 

reports were received. During this period, 

PierPASS announced its intention to retain a 

transportation consulting firm to evaluate two 

alternative models to the current off-peak program; namely, truck appointments combined 

with a flat fee on both day and night moves, 

and port-wide peel-off, in which trucks operate like taxis in an airport queue by picking up 

the next container in the stack. A contract was 

recently awarded to evaluate these alternative 

business models.

Port of New York/New Jersey Equipment Optimization Discussion 

Agreement:

This Agreement, FMC Agreement 012445, 

between the port authority and the Ocean 

Carrier Equipment Management Association (OCEMA) carriers, was rejected by the 

Commission on January 9, 2017. A prior filing, 

FMC Agreement 012420, had been withdrawn 

by the parties after the Commission issued 

an RFAI to collect information needed for 

the competition analysis of the Agreement. 

Outstanding issues identified in the earlier 

agreement filing had not been addressed by 

the parties, resulting in the Commission’s 

rejection of the subsequent agreement for failure to meet the clear and definite standard. 

The parties later filed a more narrowly tailored 

agreement, Agreement No. 012484, and the 

Commission took no action to prevent or delay 

its effectiveness.

Tripartite Agreement:

Filed on March 24, 2017, this Agreement 

sought to authorize the three largest Japanese container carriers, K Line, Nippon Yusen 

Kaisha and Mitsui O.S.K. Lines, to engage in 

limited cooperation for transition planning 

purposes in advance of the merger of their 

container operations into a single entity in 

early 2018, to be known as ONE. The Shipping Act does not provide the Commission 

with authority to review and approve mergers. 

Thus, after careful consideration, the Commission determined that the parties to the 

Tripartite Agreement were ultimately establishing a merged, new business entity and 

that action is among the type of agreements 
16 56th Annual Report

excluded from FMC review. Consequently, 

the Commission rejected the Tripartite Agreement on jurisdictional grounds on May 2, 2017.

East Coast Gateway Terminal 

Agreement:

This Agreement between two major U.S. 

East coast port authorities, the Virginia Port 

Authority and Georgia Ports Authority is an 

example of an evolving shift away from traditional MTO agreement filings that set port 

charges, such as, dockage, wharfage, and 

demurrage, toward broader operational cooperation. The Agreement authorized the ports 

to engage in discussions about marketing and 

commercial opportunities regarding carriers, 

operating systems and cargo handling. The 

ports sought this agreement authority to allow 

them to work together to better serve their 

customers in light of changing market conditions, the deployment of larger vessels, and 

the introduction of new carrier alliances, with 

the aim of enhancing the competitiveness of 

both ports.

Transpacific Stabilization Agreement 

(TSA):

As part of a 2003 settlement agreement 

between the Commission and TSA members, 

the Commission holds biannual meetings 

with representatives of TSA to review major 

activities of the Agreement and discuss significant developments in the ocean liner trade 

between the U.S. and Asia to ensure transparency and compliance with the Shipping 

Act. TSA is also required to provide periodic 

reports for review and analysis regarding 

each member’s performance and activities. 

With transpacific rate levels remaining low, 

in April 2017, the TSA members discontinued 

issuing general rate increase guidelines for 

the upcoming shipping season. The agreement also lost three of its members: NYK and 

Hanjin withdrew in November 2016, and Zim 

resigned in December 2016, leaving 10 remaining agreement carriers.
56th Annual Report 17

Carrier Alliance Agreements

At the end of FY 2017, the three global 

carrier alliances, namely, THE Alliance, the 

OCEAN Alliance and the 2M Alliance, controlled 91 percent of vessel capacity in the two 

largest U.S. trades, the transpacific and the 

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

U.S., while the transatlantic trade includes

cargo moving between Europe and the U.S.

The current configuration of ocean carrier alliances have continued to grow their market

shares in these trades, in many cases through

acquisition of other carriers. The three alliances collectively hold market shares of 94

percent of cargo moving in the transpacific

trade and 87 percent in the transatlantic at

the end of the fiscal year.

A number of factors have been converging over the last several years to prompt 

carriers both to reconfigure their alliance 

arrangements under the Shipping Act and 

to consolidate their operations. While cargo 

volumes have increased in recent years, the 

rate of increase has not returned to the stronger levels of growth that existed prior to the 

2008-2009 global recession. The slower growth 

in demand for liner shipping services and the 

ongoing deployment of mega container ships 

have impacted the financial stability of liner 

carriers. Vessel capacity continues to be more 

than sufficient to meet demand. The ongoing imbalance of vessel supply over demand 

continued to place downward pressure on 

ocean freight rates during the fiscal year. 

Globally, during FY 2017, the average utilization of vessel capacity was 82 percent in the 

headhaul trades (trade lanes generating the 

highest revenues, and generally those with 

the greater cargo volume) and 47 percent in 

the backhaul trades (trade lanes that carry less 

cargo volume on the return leg).

As a result of downward pressure on

ocean freight rates and the resulting financial

pressures for carriers, FY 2017 witnessed a 

continued wave of mergers, acquisitions and 

joint ventures; as well as increased cooperation 

among ocean carriers subject to the Shipping 

Act. During the fiscal year, Hapag Lloyd

acquired United Arab Shipping Company, 

Maersk Line began the process of acquiring 

Hamburg Sud, and COSCO announced plans 

to purchase OOCL. The three Japanese carriers, 

K Line, MOL, and NYK, plan to merge their 

liner shipping services effective April 2018. 

In addition, carriers reconfigured their global 

alliance arrangements and services from four

agreements (2M, CKYHE, G6, and Ocean 3) to

three agreements (2M, OCEAN Alliance, and

THE Alliance), as discussed below.

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

The 2M Alliance consists of Maersk Line 

and Mediterranean Shipping Company. The 

Commission monitors the activities of the 

parties in the alliance, and their capacity and 

utilization levels. The parties also provide 

advance notice of any planned capacity reductions in the U.S. liner trade. In FY 2017, 2M 

entered into a slot exchange and purchasing 

agreement with Hyundai Merchant Marine 

in the liner trades between the U.S. and Asia, 

..
18 56th Annual Report

and Europe. Once Maersk’s acquisition of 

Hamburg Süd is complete, it will be folded 

into the alliance as well.

OCEAN Alliance Agreement:

The OCEAN Alliance between COSCO, 

CMA CGM, Evergreen Line, and OOCL was 

filed with the Commission in July 2016. After a 

request for additional information and extensive regulatory review, the agreement became 

effective under the Shipping Act on October 

24, 2016. The agreement authorizes the parties 

to share and charter vessel space among each 

other, and to form and operate liner services 

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

hand and the U.S. and Europe on the other. 

The Commission monitors the activities of 

the parties and their vessel capacity and utilization levels along with any planned vessel 

capacity reductions in the U.S. liner trades 

covered under the agreement. In April 2017, 

the parties implemented their “Day One” 

product, consisting of 23 weekly U.S. liner 

services. In July 2017, COSCO reported its 

plan to buy OOCL, with the help of Shanghai 

International Port Group. Subject to regulatory approvals, the deal would maintain both 

carriers’ brands.

THE Alliance Agreement:

THE Alliance between Hapag Lloyd, K 

Line, MOL, NYK, and Yang Ming was filed 

in November 2016, and after the Commission’s review and competitive analysis, the 

agreement took effect on December 19, 2016. 

The agreement authorizes the parties to share 

and charter vessel space among each other, 

and to form and operate liner services in 

the U.S. liner trades. Similar to the OCEAN 

Alliance, in April 2017, THE Alliance parties 

launched 23 weekly vessel strings serving the 

U.S. liner trades with Asia and Europe. As 

a group, THE Alliance parties also entered 

into separate space charter agreements with 

Zim, CMA CGM, and OOCL. Most recently, 

in September 2017, the parties amended their 

alliance agreement to provide for a contingency fund to protect their operations and 

mitigate potential disruptions in cargo flow in 

the event of a parties’ insolvency. As with the 

other major alliances, the Commission monitors THE Alliance parties’ activities under the 

agreement, along with their capacity, utilization, and planned capacity reductions in the 

U.S. liner trades.
56th Annual Report 19

Tariffs, Service Contracts, NSAs, & MTO 

Schedules

Tariffs

The Shipping Act requires common carriers and conferences to publish their tariffs 

containing rates, charges, rules, and practices, 

electronically in private systems. For ease of 

public access, the Commission publishes the 

web addresses of those tariffs on its website. 

At the close of the fiscal year, 5,547 tariff location addresses were posted. Of that number, 

5,381 tariff addresses were for NVOCCs.

The Commission provides regulatory relief, 

allowing licensed and foreign registered 

NVOCCs to “opt out” of the requirement to 

file rate tariffs when using NVOCC Negotiated 

Rate Arrangements (NRAs). As compared to 

the regulatory requirements associated with 

rate tariffs, NRAs are a less burdensome commercial pricing option which NVOCCs have 

indicated save them both time and money. At 

the end of the fiscal year, nearly 1,550 active 

NVOCCs or 29 percent of all 5,381 NVOCCs, 

had filed prominent notices or a rule in their 

respective tariff indicating that they had 

invoked the NRA exemption as an alternative to tariff filing. The majority of NVOCCs 

which implemented NRAs continue to use a 

combination of NRAs and tariff rate filings.

Service Contracts

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

90 and 95 percent of the total cargo transported in the major U.S. liner trades moves 

under service contracts, rather than tariffs. 

Service contracts enable the parties to tailor 

transportation services and rates to their commercial and operational needs and to keep 

these arrangements confidential. During the 

fiscal year, the Commission received 47,110 

new service contracts, compared to 52,968 in 

fiscal year 2016, and 766,329 contract amendments, compared to 734,106 in FY 2016. During 

the fiscal year, the Commission implemented 

new regulatory flexibilities for service contracts through its Docket 16-05 rulemaking 

(see discussion below) to address commercial 

issues raised by contracting parties without 

compromising regulatory oversight.

NVOCC Service Arrangements (NSAs)

Commission rules allow NVOCCs to offer 

transportation services pursuant to individually negotiated, confidential service 

arrangements with customers, rather than 

under a published tariff. During the fiscal 

year, the Commission received 969 NSAs, 

compared to 984 in fiscal year 2016, and 1,778 

NSA amendments, compared to 1,814 in fiscal 

Service Contracts and 

NSAs filed in FY 2017

Newly filed service contracts: 47,110

Amendments to service contracts: 

766,329

Newly filed NSAs: 969

Amendments to NSAs: 1,778
20 56th Annual Report

year 2016. During the fiscal year, a total of 97 

NVOCCs took advantage of the ability to use 

NSAs to conclude their transportation arrangements with shippers. While 1,881 NVOCCs 

have registered with the Commission to file 

NSAs, only 282 NVOCCs (approximately 15 

percent) have filed an NSA. The additional 

regulatory flexibilities introduced in the Commission’s Docket No. 16-05 rulemaking should 

enhance NSAs as an option for NVOCCs and 

their shippers.

Marine Terminal Schedules

An MTO may voluntarily make available to 

the public a schedule of rates, regulations, and 

practices, including limitations of liability for 

cargo loss or damage, pertaining to receiving, 

delivering, handling, or storing property at 

its marine terminal. An MTO schedule made 

available to the public is enforceable by an 

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

During the fiscal year, 255 MTOs maintained 

an active Form FMC-1, which reports the electronic location of an MTO’s terminal schedule, 

with 156 MTOs electing to voluntarily publish 

their actual terminal schedules. The internet 

address of these MTO terminal schedules are 

posted on the Commission’s website.

Supply Chain Innovation Initiative

On February 1, 2016, the Commission issued 

an Order directing Commissioner Rebecca F. 

Dye to engage leaders from commercial sectors of the U.S. international supply chain in 

discussions to identify commercial solutions 

to U.S. supply chain operational challenges. 

The initiative that resulted was an outgrowth 

of the Commission’s previous work on port 

congestion issues in the fall of 2014.

During 2016, the supply chain initiative’s 

initial phase focused on U.S. import trades 

associated with America’s three largest container seaports – the ports of Los Angeles, 

Long Beach, and New York/New Jersey. At 

the close of phase one, Commissioner Dye 

issued an interim report to the Commission.

In 2017, phase two of the initiative – dealing with export supply chains and the ports 

of Charleston, Houston and Seattle/Tacoma 

– was undertaken and completed.

On July 11th and 12th, the three export 

supply chain teams met in Washington, D.C.

During phase two, Commissioner Dye 

convened three teams to identify process 

innovations that would enhance export 

supply chain reliability and resilience. The 

export teams were composed of participants 

from seven to twelve different supply chain 

organizations, including public port authorities, marine terminals, beneficial cargo owners, 

ocean transportation intermediaries, liner 

shipping companies, drayage trucking firms, 

longshore labor, railway companies and chassis providers.

As with the import teams, the export team 

process encouraged creative interaction and 

candid dialogue and debate. The Teams 

were encouraged to suspend their individual 

organizational perspectives and address the 

international supply chain as a unified system. 

In addition, Commissioner Dye sought advice 
56th Annual Report 21

from a variety of academic and 

business experts in supply chain 

management, process innovation, 

transportation research and the use 

of business teams. Phase two also 

included interviews with the CEOs 

of public port authorities for the 

top U.S. container ports.

By early fall, the export teams 

completed their lists of: the critical information needs of the 

various actors; the likely sources 

of that information; optimal timing 

requirements; and the expected 

operational improvements likely 

to result from the parties’ access 

to that critical information.

The export teams, like the import 

teams that preceded them, focused 

on enhanced supply chain visibility. Availability of timely and 

accurate critical information, they 

agreed, was needed to promote 

supply chain efficiency.

They concluded that timely 

access by all supply chain actors 

to relevant critical information via 

a national seaport portal would 

be their overall goal. Viewing 

information technology as "the 

new infrastructure," the teams 

addressed how best to provide 

the right information, to the right 

person, at the right time, in order 

to more fully integrate and harmonize the supply chain system.

The work of both the import and export 

teams was summarized in the Final Report 

prepared by Commissioner Dye and presented to the Commission on December 5, 

2017. “Supply Chain Innovation Teams Initiative: Final Report” presents the teams’ view 

that greater visibility across the American 

freight delivery system was the one operational innovation likely to most increase U.S. 

international supply chain performance.

Commissioner Rebecca F. Dye
22 56th Annual Report

The report also highlights the concept of a 

common National Seaport Information Portal 

for critical shipment information, possibly 

organized by business dashboards tailored 

to the needs of each supply chain actor.

The Final Report is posted on the Commission’s website and copies were provided to 

interested and relevant Congressional offices 

and committees, and other federal agencies.

International Cooperation

Shipping Policy Discussion with Maritime Attachés

In March 2017, Acting Chairman Khouri 

and Commissioners Dye, Doyle, and Maffei 

met with nearly 20 officials from 13 different 

embassies at the Federal Maritime Commission. This group of attachés, who handle 

maritime affairs for their respective nations, 

is commonly referred to as the “Cotton Club.” 

Participants discussed the Commission’s 

history, jurisdiction, and mission, the Commission’s Supply Chain Innovation Teams 

Initiative, the role and activities of the Cotton 

Club, business trends in the container shipping industry, international trade matters, and 

the global economic outlook. The attachés 

attending represented the nations of Belgium, 

Denmark, Finland, France, Germany, Greece, 

Italy, the Netherlands, Norway, Poland, Spain, 

Sweden, and the United Kingdom.

Third Global Maritime Regulatory 

Summit

In April 2017, Acting Chairman Khouri 

and Federal Maritime Commission General Counsel Tyler Wood participated in the 

Third Global Maritime Regulatory Summit 

in Beijing, China, with representatives from 

China’s Ministry of Transport and the European Commission’s Directorate General for 

Competition. The summit was part of ongoing 

consultations in which participants discussed 

container shipping industry trends and developments. Other discussion topics included 

consolidation among the ocean liners, new 

carrier alliances, addressing carrier insolvencies, and other policy issues specific to the 

governments participating in the summit.

U.S.-U.K. and U.S.-EU Bilateral Maritime Consultations and the London

International Shipping Week 2017

In September 2017, Acting Chairman 

Khouri and the General Counsel traveled to 

London, England, to attend and participate 

in the London International Shipping Week, 

as well as to represent the United States government at two separate bilateral maritime 

consultations with the United Kingdom and 

the European Union. Acting Chairman Khouri 

met with representatives from the United 

Kingdom Department for Transport for consultative discussions involving the state of 

the shipping industry, port and infrastructure development, trends in technology and 

vessel operations, and strengthening maritime 

cooperation between the United Kingdom and 

the United States. Acting Chairman Khouri 

also spoke at a luncheon where he discussed 

the role the Commission plays in maintaining 

a competitive ocean transportation services 

marketplace.

Acting Chairman Khouri met with Magda 

Kopczynska, the European Commission 
56th Annual Report 23

Director for General Mobility and Transport, 

to exchange views and information on a variety of industry and policy matters. The Acting 

Chairman and General Counsel also met with 

Secretary General Lim Ki-Tack of the International Maritime Organization.

Global Liner Shipping Asia Forum in 

Singapore

In September 2017, Commissioner Dye participated in the Asia Forum on Global Liner 

Shipping where she spoke about the FMC’s 

efforts, through the Supply Chain Innovation 

Teams initiative, to promote enhanced supply 

chain reliability and resilience in the U.S. 

trades. She also discussed FMC regulatory 

reform plans to identify, revise, or eliminate 

ineffective or unnecessarily burdensome regulations. The Asia Forum dealt with a number 

of other topics including new digital technologies, shipping investment, and consolidation 

and competition.

Acting Chairman Michael Khouri with International Maritime Organization SecretaryGeneral Lim Ki-Tack in London
24 56th Annual Report

Global Liner Shipping Conference in 

Hamburg

In May, 2017, Commissioner Daniel B. 

Maffei presented at the Global Liner Shipping Conference in Hamburg, Germany. 

The Commissioner’s presentation provided 

an overview of the United States’ (U.S.) legislative and regulatory framework, as well 

as discussing major changes in the maritime 

industry such as the new carrier alliances and 

consolidation in the industry. While in Europe 

the Commissioner also visited the ports of 

Hamburg and Rotterdam, where he met with 

port officials and discussed the role of those 

major transshipment ports in ocean trade with 

the U.S. and global trading networks.

FMC-Japan Fair Trade Commission 

Senior Staff Consultative Meeting

After attending the Global Regulatory 

Summit in Beijing in April 2017 (see above), 

the General Counsel traveled to Tokyo, Japan 

to meet with representatives from the Japan 

Fair Trade Commission. The General Counsel 

and JFTC representatives had a wide-ranging dialogue about industry conditions and 

discussed in depth the competition concerns 

within the ocean liner trades.
56th Annual Report 25

Protecting the Public

Strategic Goal 2

The FMC engages in a variety of activities 

that protect the public from financial harm, 

including licensing and registering of ocean 

transportation intermediaries; helping resolve 

disputes about the shipment of goods or the 

carriage of passengers; investigating and 

prosecuting unreasonable or unjust practices, 

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

contribute to the integrity and security of the 

nation’s import and export supply chains and 

ocean transportation system. In addition, the 

FMC ensures that passenger vessel operators 

maintain proper financial coverage to reimburse cruise passengers in the event their 

cruise is cancelled or to cover liability in the 

event of death or injury at sea.

Licensing

There are two types of OTIs that serve as 

transportation middlemen for cargo moving in 

the U.S.-foreign oceanborne trades: NVOCCs 

and ocean freight forwarders (OFFs). An 

NVOCC is a common carrier that holds itself 

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

equivalent document, but does not operate the 

vessel by which ocean transportation is provided. An ocean freight forwarder domiciled 

in the U.S. arranges for the transportation of 

cargo with a common carrier on behalf of shippers and processes documents related to U.S. 

export shipments.

All NVOCCs and OFFs located in the U.S. 

must be licensed by the Commission and 

must establish financial responsibility. In 

FY 2017, licensed NVOCCs and OFFs had 

financial responsibility in the form of surety 

bonds on file with the FMC in excess of $438 

million. NVOCCs doing business in the U.S.-

foreign trades but located outside the U.S. 

(foreign NVOCCs) may choose to become 

OTI Bond Coverage

• U.S.-based licensed NVOCCs and

OFFs aggregate evidence of financial

responsibility: $438 million

• Foreign-based NVOCCs aggregate

evidence of financial responsibility:

$234 million

Licensing Activity in FY 2017

• New OTI applications accepted: 360

• Amended applications accepted: 341

• New OTI licenses issued: 271

• Amended licenses issued: 98

• Licenses revoked: 331

• New registrations accepted: 199
26 56th Annual Report

FMC-licensed, but are not required to do 

so. Foreign-based NVOCCs must register 

with the Commission and establish financial 

responsibility if not licensed under the FMC’s 

program. Foreign NVOCCs (registered and 

licensed) had approximately $234 million in 

surety bonds on file with the FMC in FY 2017.

The triennial update program for OTIs 

licensed with the FMC was successfully 

launched in March 2017. Approximately 1,600 

OTI licenses will be updated annually. As 

planned, 17 percent or 804 of the 4,839 FMClicensed OTIs completed their renewals in 

the first 6 months of this new program. The 

update process is online and in most cases 

takes only 5 minutes – a user-friendly process facilitated by pre-populating the outgoing 

FMC inquiry with the OTI’s information currently on file for quick verification.

The update process is already improving 

the accuracy of OTI records, and timeliness 

of reporting material changes in ownership 

and operations, for the benefit of OTI sureties, carriers and the shipping public. During 

this initial 6-month period, the following 

updates or changes to information on file 

with the Commission were reported during 

the license update process: 613 ownership 

and/or officer changes, 220 affiliation changes, 

99 branch office changes, and 118 business 

address changes.

Foreign-registered NVOCCs must also 

update their registrations every three years. 

In FY 2017, 346 updates were processed.

NVOCCs wishing to serve in the U.S.- 

China trade may file an Optional Rider for 

Triennial Update 

• Licenses updated: 804

• Registrations updated: 346
56th Annual Report 27

Additional NVOCC Financial Responsibility, 

to meet the Chinese government's financial 

responsibility requirements. This rider adds 

additional financial liability to meet the bond 

aggregate amount of $125,000 and is available to pay fines and penalties for activities 

in the U.S.-China trades that may be imposed 

by the Chinese government. This rider is 

accepted as a convenience to U.S. NVOCCs. 

During the fiscal year, 50 China Bond Riders 

were received and 37 were terminated. At the 

close of the fiscal year, 463 U.S. NVOCCs held 

China Bond Riders, with aggregate evidence 

of financial responsibility totalling $23.2

million.

Passenger Vessel Program

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

U.S.C. §§ 44102-44103), requires evidence of 

financial responsibility for vessels which have 

berth or stateroom accommodations for 50 

or more passengers and embark passengers 

at U.S. ports and territories. Certificates of 

performance cover financial responsibility 

used to reimburse passengers in the event 

their cruise is cancelled. Certificates of casualty are required to cover liability that may 

occur for death or injury to passengers or 

other persons on voyages to or from U.S. 

ports.

At the close of FY 2017, 227 vessels owned 

by 47 passenger vessel operators were certified under the PVO program. The combined 

evidence of financial responsibility for nonperformance of transportation for all cruise 

vessels in the program is $615.8 million. 

Under the Commission’s program, there is 

$728 million in aggregate financial responsibility for casualty coverage. During the 

fiscal year, 12 new performance certificates 

and 13 casualty certificates were issued.

The maximum coverage requirement is 

currently $30 million per cruise line. The 

cap is adjusted every two years based on the 

Consumer Price Index for All Urban Consumers (CPI-U). The cap adjustment based on the 

CPI-U was completed in 2017. Based on the 

adjustment formula, the adjusted cap figure 

of $30.4 million was rounded to the nearest $1 

million, and the maximum coverage requirement remained $30 million per cruise line. The 

next adjustment is set for 2019.

PVO Participants

• 47 PVOs certified

• 227 vessels certified

• 12 new Performance Certificates issued

in FY 2017

• 13 new Casualty Certificates issued in

FY 2017

PVO Financial Coverage

• Aggregate evidence of financial

responsibility for nonperformance:

$615.8 million

• Aggregate evidence of financial

responsibility for casualty: $728 million
28 56th Annual Report

Consumer Affairs and Education

Dispute Resolution

The Commission, through its Office of 

Consumer Affairs and Dispute Resolution 

(CADRS) provides alternative dispute resolution (ADR), ombuds, and mediation services, to 

assist parties in resolving international ocean 

shipping and cruise disputes, including a 

Rapid Response Team especially focused on 

addressing problems exporters may encounter. Such services are available to the shipping 

public at any stage of a dispute, regardless of 

whether litigation has been filed at the FMC 

or another jurisdictional forum.

The Commission’s ADR services help parties avoid the expense and delay inherent 

in litigation, and facilitate the flow of U.S. 

foreign commerce. This fiscal year, the Commission closed a total of 411 ombuds matters: 

138 involved household goods; 137 relating 

to commercial cargo; and 136 cruise matters. 

Nine mediation matters were concluded.

In one example, notable for its monetary 

value, a shipment of hundreds of containers 

of perishable U.S. agricultural exports was at 

risk of non-delivery. The agricultural exporter 

shipped through an NVOCC that became 

Commissioner Daniel B. Maffei and Area Representative Shadrack Scheirman with Officials 

of the Port of Seattle
56th Annual Report 29

insolvent, resulting in liens being placed on 

the containers and subsequent refusal to 

release by the VOCC. The estimated value of 

the cargo shipped through just one of the several VOCCs involved was estimated to be over 

$500,000 USD. CADRS successfully mediated 

between the VOCC and the exporter to allow 

for the release of the shipments.

The Commission, through CADRS continued to assist shippers that encountered 

challenges involving the Hanjin bankruptcy, 

handling a total of 69 related matters.

CADRS staff continued leadership roles in 

the Interagency ADR Working Group, including leading a long-term project to develop a 

Spectrum of Collaborative Processes to meet 

the needs of federal agencies exploring and 

implementing new collaborative dispute prevention and resolution tools. The spectrum 

includes various agency objectives, sample 

processes, available ADR tools, and the role 

of the neutral. A presentation on the use of 

the Spectrum was provided during the fiscal 

year to other federal agencies.

 The Commission published consumer 

alerts on the Commission’s website to assist 

shippers and staff gave various educational 

presentations to industry and consumer trade 

associations regarding regulatory compliance, 

best practices, and the use of alternative dispute resolution to resolve regulatory and 

commercial ocean transportation disputes.

Area Representatives

Area Representatives (ARs) represent the 

FMC at regional field offices located in Southern California, South Florida, New Orleans, 

New York/New Jersey, Houston and Seattle/

Tacoma. They investigate alleged violations 

of the shipping statutes, resolve complaints 

and disputes between parties involved in 

international oceanborne shipping (often coordinating with CADRS staff), and participate in 

local maritime industry groups. ARs provide 

advice and guidance to the shipping public, 

collect and analyze trade information, and 

assess industry conditions.

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

associations, and worked with other Federal, state and local government agencies to 

achieve and enhance regulatory compliance 

and protect the public from financial harm. 

They also made industry presentations in their 

regions, explaining OTI licensing, bonding 

requirements, and compliance with tariff filing 

requirements and provisions applicable to 

NRAs and NSAs. The ARs conducted investigations of regulated entities, both VOCC 

and OTIs, when required to protect the shipping public from deceptive and unfair trade 

practices.
30 56th Annual Report

Enforcement, Audits, and Penalties

The Commission’s Bureau of Enforcement 

(BOE) staff and ARs work to gain compliance 

with the shipping statutes administered by 

the Commission to ensure equitable trading 

conditions in the foreign oceanborne commerce of the United States.

During the fiscal year, staff investigated and 

prosecuted possible illegal practices in many 

trade lanes, including the Transpacific, North 

Atlantic, Middle East, South American and 

Caribbean trades. These market-distorting 

activities included various forms of unfiled 

agreements, misrepresentation of customer 

accounts, misdescription of commodities, and 

unlawful use of service contracts, as well as 

carriage of cargo by and for untariffed and 

unbonded NVOCCs.

At the beginning of the fiscal year, 17 enforcement cases were pending final resolution, BOE 

was party to 2 formal proceedings, and there 

were 14 matters pending which BOE was 

monitoring or providing internal legal advice. 

Inclusive of cases opened at headquarters, the 

ARs referred 19 new investigative matters 

for enforcement action or informal compromise; 16 matters were compromised and 

settled, administratively closed, or referred 

for formal proceedings; and 20 enforcement 

cases were pending resolution at fiscal year’s 

end. BOE added 3 liaison cases for monitoring, 

concluded its liaison activities in 5 matters, 

and 12 matters remained pending at the end 

of the fiscal year. Also, 1 formal proceeding 

was completed, and 1 formal proceeding was 

pending at the end of the fiscal year.

Major investigations undertaken or completed during the fiscal year addressed VOCC 

operations pursuant to agreements that were 

not filed with the Commission; deceptive or 

fraudulent practices of certain OTIs operating 

primarily in the China-U.S. inbound trades; 

and U.S.-based, licensed OTIs unlawfully 

facilitating the operations of unlicensed entities acting as OTIs by accepting cargo for ocean 

transportation from unlicensed companies. 

In an Initial Decision issued June 29, 2017, 

an FMC Administrative Law Judge ordered 

the revocation of the OTI license of Washington Movers, Inc., an NVOCC, on the basis of 

the Federal felony conviction of its former 

owner President and Qualifying Individual 

(QI). The QI was convicted of attempting to 

smuggle weapons to a foreign country, which 

crime was facilitated through the use of the 

company’s NVOCC status. The final decision 

remains pending with the Commission.

The Formal Investigations section of this 

report includes more information on formal 

proceedings concluded during the fiscal year. 

Cumulatively, the Commission collected 

nearly $1.9 million in penalties which were 

deposited directly into the U.S. Treasury 

General Fund during FY 2017. Most of these 

investigations were resolved informally, some 

with compromise settlements and civil penalties. A list of parties and penalties can be 

found in Appendix D.

The Commission’s compliance audit program reviews the operations of licensed OTIs 

to assist them in complying with the statutory requirements and the Commission’s rules 
56th Annual Report 31

and regulations. The program also reviews 

entities holding themselves out as VOCCs, 

where there is no indication of actual vessel 

operations. During the fiscal year, 157 audits 

were commenced, 143 audits were completed 

(including audits carried over from FY 2016), 

and 14 remained pending at the close of the 

fiscal year.

Inter-Agency Cooperation

The Commission regularly works with 

a number of other federal, state, and local 

transportation and law enforcement agencies, either through established memoranda 

of understanding (MOU), collaborations or 

partnerships to address specific transportation 

related policies, issues or incidents in both 

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

Interaction between the Commission and 

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

on the exchange of investigative information continues to be beneficial to all parties. 

Cooperation with CBP included staff interactions 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, Federal Bureau of Investigation, and 

Immigration and Customs Enforcement, when 

necessary.

The Commission completed its fifth year 

under a formal MOU with the Census Bureau, 

U.S. Department of Commerce, which provides the FMC with access to the Census’ 

Automated Export System (AES) database - 

a database used to review confidential U.S. 

export shipment data for law enforcement 

purposes. The Commission also continued 

its membership in the Homeland Security Investigations-led National Intellectual 

Property Rights Coordination Center (IPR 

Center), a partnership of 21 Federal and 

international agencies targeting intellectual 

property- and trade-related crimes.

 The ARs participated in a number of federal 

law enforcement initiatives sponsored by other 

Federal agencies: the Department of Homeland Security (CBP and ICE); the U.S. Coast 

Guard; FMCSA; the Department of Commerce (Bureau of Industry and Security); the 

FMC works with 

Federal Partners to 

Protect the Public:

• Federal Motor Carrier Safety

Administration

• Federal Bureau of Investigation

• Bureau of Alcohol, Tobacco,

Firearms and Explosives (DOJ)

• Customs and Border Patrol (DHS)

• Immigration and Customs

Enforcement (DHS)

• Joint Terrorism Task Forces

(operated regionally)

• Census Bureau (DOC)

• U.S. Coast Guard

• Bureau of Industry and Security

(DOC)
32 56th Annual Report

Department of Justice (including the Bureau 

of Alcohol, Tobacco, Firearms and Explosives, 

and the FBI); and interagency Joint Terrorism 

Task Forces operating regionally in the U.S. 

The law enforcement activities included criminal and civil investigations of entities licensed 

or regulated by the FMC, as well as violations 

of export and import statutes and regulations. 

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

OTI practices, procedures and documentation 

related to shipping transactions.

Several ARs participated with CBP, the 

Coast Guard and other federal agencies in 

annual Multi-Agency Strike Force Operations 

conducted at marine terminals at the ports 

of New York/New Jersey, Oakland, CA and 

Seattle, WA.

The ARs continued to work closely with 

a number of local law enforcement agencies, 

including local police jurisdictions in New 

York, New Jersey, South Florida and Houston, 

in matters relating to international shipping, 

such as the export of stolen motor vehicles.

Under the MOU between the FMC and the 

Federal Motor Carrier Safety Administration 

(FMCSA), Commission staff continued to 

participate in the FMCSA’s Moving Fraud 

Task Force and Moving Fraud Partnership 

initiatives. Staff participated on the FMCSA’s 

Consumer Protection Working Group, a Federal Advisory Committee, established by the 

Fixing America’s Surface Transportation 

(FAST) Act, P. Law 114-94, Section 5503.

In a notable matter highlighting the cooperative efforts between the Commission and 

FMCSA, CADRS sought the assistance of the 

Los Angeles-based ARs involving an apparent “hostage shipment” of household goods 

detained by a Gardena, California OTI. In 

coordination with FMCSA’s Los Angeles 

investigator, the ARs conducted an on-site 

interview with the firm’s president, and the 

agencies jointly secured a commitment for the 

release of the household goods shipment. This 

matter was reported favorably in the national 

media in a television broadcast that acknowledged the efforts of the FMC in resolving the 

matter. The LA ARs continue to meet with 

FMCSA investigators to discuss future collaborative efforts involving investigations.

CADRS also worked with FMCSA and the 

Brazilian Consulate to recover cargo that was 

being held by a former FMC licensee. 

Essen-tially, the company accepted the 

cargo from the consumer and demanded 

additional money while refusing to deliver 

or provide the consumer with information 

regarding the disposition of the cargo. 

CADRS’s efforts resulted in the cargo 

ultimately being located and delivered to the 

consumer. FMCSA issued a civil penalty 

against the company for vari-ous violations 

of its regulations.

The FMC actively participates in the U.S. 

Committee on the Marine Transportation 

System (CMTS), a partnership of Federal 

departments and agencies with responsibility for the Marine Transportation System 

(MTS). The CMTS is authorized by Congress 

to assess the adequacy of the MTS and coordinate Federal maritime policy amongst the 

many Federal maritime interests. The FMC’s 

Acting Chairman sits on the Committee’s 

Cab-inet-level Committee and the 

Commission is represented on the subCabinet Coordinating Board and in the work 

of the various CMTS Integrated Action 

Teams and Task Teams.
56th Annual Report 33

Leveraging Technology

One of the Commission’s investment 

priorities is the ongoing development and 

deployment of the agency’s information systems infrastructure. The FMC’s automated IT 

systems are used by the shipping public to file 

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

data used by the Commission’s economists to 

conduct mission critical competition analysis. 

Planned IT investments will further streamline 

and improve the Commission’s internal business processes; expand research and analysis 

capabilities; and provide better public access 

to FMC information.

During FY 2017, the FMC made significant 

progress to upgrade its information systems 

infrastructure and architecture, and continued to fortify its security posture by further 

supplementing its use of cyber security management tools. The Commission completed a 

major infrastructure upgrade to support the 

Trusted Internet Connections (TIC) Initiative 

and EINSTEIN cybersecurity capabilities. 

Telecommunications and network infrastructure for the FMC headquarters and field 

offices was upgraded, enabling the agency to 

respond faster to business requirements and 

better serve the public. Moreover, all internal 

line-of-business applications were made available to staff over cloud computing services.

The FMC adopted a cloud-based Disaster 

Recovery as a Service (DRaaS) which provides 

failover to a cloud computing environment 

during emergency events, eliminating the 

existing operating costs for maintaining 

a physical disaster recovery solution, and 

facilitating faster restoration of data services. 

These IT investments allowed the Commission to extend telework to a greater number 

of employees, thus furthering the Federal 

government’s policy to promote workplace 

flexibilities.

The FMC continues to increase public access 

to information through its website. In FY 2017, 

the FMC expanded its e-Agreements system 

to introduce a redesigned, more user-friendly 

Agreements Library. Originally launched in 

FY 2016, the first phase of the eAgreements 

system introduced the portal for electronically filing carrier and MTO agreements with 

the Commission and updated the in-house 

review and online publication process for filed 

agreements. In the fiscal year, the Commission deployed the new Agreements Library 

module, providing an easier, 24/7 online 

research tool to search for, identify, and review 

vessel-operating common carrier agreements 

directly through the Commission’s website. 

Key benefits of the new Agreements Library 

include: real-time notice to the public of 

recently filed agreements and amendments; 

synopses of agreements and amendments, as 

well as filing and effective date information; 

and the availability of full text of nearly all 

effective agreements and amendments filings, including those previously available 

only upon request.

The Commission also continued its efforts 

to develop a plan that will improve the design, 

usability and platform of its online docket 

library and historical document repository. 

When completed, the new design and functionality will expand the availability of public 

documents on the Commission’s website, 
34 56th Annual Report

including Sunshine Act meeting materials. Increasing information available to the 

public will enhance the public’s awareness 

and ability to participate in important regulatory review proceedings.

In FY 2017, the Commission initiated an 

effort to upgrade severely outdated audio/

visual equipment in its Main Hearing Room. 

Equipment will be replaced to allow for live 

streaming and closed captioning of public 

Commission meetings and events for higher 

quality remote public access.

The FMC’s Information Resources Management (IRM) Strategic Plan guides the FMC’s 

efforts to manage its IT resources: promoting 

efficiency, reliability and effective delivery 

of customer service, ensuring cybersecurity 

readiness, and aligning our information and 

information systems with the agency’s key 

business strategies and investment decisions. 

In FY 2017, the Commission began developing its 5-year IRM Strategic Plan covering FY 

2018-2022, continuing the efforts of the FY 

2014-2017 IRM Strategic Plan’s work, and 

ensuring information management consistent with the objectives and goals outlined in 

the FMC’s draft FY 2018-2022 Strategic Plan. 

The IRM Strategic Plan for FY 2018-2022 will 

be finalized in FY 2018.

Sandra L. Kusumoto, Director, Bureau of Certification and Licensing, with Commissioner 

Daniel B. Maffei
56th Annual Report 35

Developments in Major 

U.S. Foreign Trades

Worldwide

The world’s container trade expanded 

by nearly 5 percent in FY 2017 compared 

to growth of just 1 percent in 2016. As the 

fiscal year ended, 145 containerships lay idle, 

representing only 2 percent of the total fleet 

capacity measured in twenty-foot equivalent 

units (TEUs). In contrast, 371 ships or 7 percent of the containership fleet capacity lay idle 

at the end of FY 2016.

Due to a number of liner carrier mergers 

and acquisitions, the world’s container shipping industry continued to become more 

concentrated during the fiscal year. The top 

three container operators controlled 44 percent of the world’s containership capacity; the 

top five container operators controlled 59 percent; and the top ten controlled 75 percent. A.P. 

Moller-Maersk A/S (Maersk Line) (17 percent), 

Mediterranean Shipping Company SA (MSC) 

(15 percent) and CMA CGM S.A. (12 percent) 

continued to hold the top three positions in 

terms of vessel capacity deployed.

Container volumes in U.S. liner trades 

during the fiscal year expanded by 4.4 percent to 33.3 million TEUs, compared to 31.9 

million last year. The U.S. share of the world’s 

container trades was 16.4 percent down 

slightly from FY 2016. U.S. container imports 

expanded by nearly 7 percent to 21.8 million 

TEUs, compared to 20.4 million in 2016. This 

was the fourth consecutive year in which U.S. 

imports surpassed the pre-recessionary record 

of 18.6 million TEUs in FY 2007.

The volume of U.S. container exports during 

FY 2017 remained unchanged from last fiscal 

year, holding at approximately 11.5 million 

TEUs. As a result, the U.S. container imbalance 

worsened; for every 100 loaded containers 

exported from the U.S., 190 were imported, 

compared to 177 imported in FY 2016.

Worldwide

For the eighth consecutive year, worldwide 

container trade grew – expanding by 

nearly 5 percent.

The 60 percent reduction in the number 

of container ships that lay idle by year’s 

end reflects, in part, improving economic 

conditions in the industry.

The world’s top three operators controlled 

44 percent of the worldwide vessel 

capacity.

U.S. Liner Trades

Container volumes in the U.S. liner trades 

(imports and exports combined) grew for 

the eighth consecutive year.

Imported cargo continued to outpace 

exports which worsened the U.S. 

container imbalance.
36 56th Annual Report

The world’s containership fleet expanded 

slightly with nominal capacity growing by 

approximately 3 percent. At the end of the 

fiscal year, 5,163 containerships, with a total 

fleet capacity of 20.9 million TEUs, were available to serve the world’s container trades. 

There were orders worldwide for 344 new 

containerships with an aggregate capacity of 

2.8 million TEUs, 13.5 percent of the existing 

fleet capacity. Vessels with nominal capacities 

exceeding 10,000 TEUs comprised 29 percent 

of the existing containership fleet capacity and 

84 percent of the orderbook fleet capacity at 

year-end, reflecting the ongoing, increasing 

size of containerships on order.

Asia

The liner trades between the U.S. and 

nations in Asia accounted for the largest container cargo volume. The U.S. traded 21 million 

TEUs with the region in FY 2017 (exports and 

imports combined), representing 63 percent of 

total U.S. container trade. The U.S. imported 

substantially more container cargo from the 

region than it exported. In FY 2017, the U.S. 

imported 14.9 million TEUs of goods from 

Asia, a 7.1 percent increase over the previous 

fiscal year, while the U.S. exported 6 million 

TEUs, an increase of less than 1 percent over 

the same time period. Fifty-two percent of 

U.S. container trade was with Northeast Asia 

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

Kong). Countries in Southeast Asia (Brunei, 

Cambodia, Indonesia, Malaysia, the Philippines, Singapore, and Vietnam) collectively 

accounted for 11 percent of the total U.S. trade 

in 2016.

More than half of the container imports 

from Asia moved through the ports of Los 

Angeles and Long Beach. U.S. West Coast 

ports collectively handled nearly two-thirds 

of all Asian imports and exports. U.S. East and 

Gulf Coasts collectively handled 36 percent of 

goods arriving from or destined to Asia. With 

the expansion of the Panama Canal in 2016, 

the formation of new ocean carrier alliances 

in 2017, and the raising of the Bayonne Bridge 

in New York, ocean carriers deployed larger 

ships in their East Coast services. Ships up to 

14,000 TEUs in size now regularly call along 

the East Coast. Additionally, the transpacific 

trade saw the entrance of a new carrier in 2017. 

South Korean carrier, SM Line, began service 

in April and currently serves the U.S. West 

Coast.

The Transpacific Stabilization Agreement (TSA) 

is the major rate discussion agreement covering the inbound and outbound transpacific 

trade. Its geographic scope includes portions 

of the Indian Subcontinent (i.e., Bangladesh, 

Pakistan and Sri Lanka, but not India or the 

Middle East). In 2017, TSA announced a shift 

in focus from rate discussion toward issues of 

broad industry impact in the transpacific trade. 

Consequently, TSA discontinued announcing General Rate Increases in 2017. During 

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

over half of containerized exports 

from the U.S.
56th Annual Report 37

the fiscal year, the 10 TSA carriers moved 75 

percent of the container cargo between the 

U.S. and Asia, down from the 90 percent that 

the agreement carriers moved in 2016. This 

decline corresponds to the withdrawal of K 

Line, NYK, and Zim from membership in the 

agreement towards the end of 2016. Currently, 

10 carriers participate in TSA.

Indian Subcontinent and Middle East

The Indian Subcontinent and Middle East 

regions combined accounted for over 6 percent of total U.S. container trade volume in FY 

2017, with the Indian Subcontinent being the 

larger of the two. U.S. container trade with 

the Indian Subcontinent alone (exports and 

imports combined) grew by 3.8 percent, totaling about 1.4 million TEUs. The U.S. imported 

862,000 TEUs from the Indian Subcontinent, 

an increase of 6.5 percent from the prior year. 

U.S. container export cargo to this region was 

543,000 TEUs, a decrease of 0.2 percent over 

FY 2016 export volumes.

In the trade between the U.S. and Middle 

East, U.S. container export volumes remained 

relatively unchanged from FY 2016 export volumes (551,000 TEUs), while container imports 

to the U.S. from the region grew by almost 

6 percent. Even with this 6 percent growth 

in imports against flat export volumes, U.S. 

container exports exceeded imports by a ratio 

of 2.40 to 1.

With respect to the Indian Subcontinent, 

TSA is the rate discussion agreement covering 

U.S. inbound and outbound container trade 

with Bangladesh, Pakistan and Sri Lanka. For 

the fiscal year, TSA’s market share for these 

trades was 78 percent, down from 92 percent 

in FY 2016. These three countries collectively 

comprise approximately 399,000 TEUs of the 

trade. India is by far our largest trading partner in this region, with combined imports/

exports totaling roughly 991,000 TEUs.

There are no rate discussion agreements 

covering the trade lanes between the U.S. and 

India or the Middle East.

North Europe

The liner trades between the U.S. and North 

Europe represent the second largest U.S. trade 

by volume, comprising almost 11 percent of 

all U.S. trade, at 3.6 million TEUs (exports and 

imports combined). Compared to the prior 

period, U.S. container exports in FY 2017 grew 

by nearly 3 percent to 1.4 million TEUs, and 

container imports from North Europe rose 

by 6 percent to 2.2 million TEUs. The top 

imported commodities included auto parts, 

beer, and furniture. The cargo volume carried 

by MSC, Hapag Lloyd, Maersk Line and CMA 

CGM accounted for 58 percent of the total 

trade. Liner services in the trade lane were 

reconfigured as the new alliance agreements 

took effect and became operational. Services 

U.S. export growth to the Indian 

Subcontinent and Middle East 

remained flat during FY 2017, while 

U.S. container imports from both 

regions grew in the range of 6%.
38 56th Annual Report

under the former G6 Alliance Agreement were 

replaced by services under the OCEAN Alliance Agreement and THE Alliance Agreement 

and resulted in a net increase in the supply of 

vessel capacity in the trade. By fiscal year end, 

the supply of vessel capacity had increased 

by 9 percent, with an average vessel utilization rate of 60 percent in the outbound 

direction and 88 percent in the inbound 

direction. Consequently, outbound freight 

rates remained at low levels, while carriers 

attempted to boost inbound freight rates with 

announced rate increases for October 2017. 

In future projections, greater growth in U.S. 

container exports to North Europe is anticipated as the value of the U.S. dollar against 

the Euro declines and the European Central 

Bank raises interest rates.

Mediterranean

Container volumes between the U.S. and 

the Mediterranean accounted for 4.5 percent of 

all U.S. import and export cargo in FY 2017, at 

1.5 million TEUs. The volume of U.S. container 

exports to the Mediterranean declined fractionally in FY 2017 to 441,572 TEUs compared 

to the prior year, while container imports from 

the region rose by 6 percent to roughly 1.1 

million TEUs. The trade imbalance grew as 

import containers exceeded export containers by a ratio of 2.41 to 1. Major imported 

commodities included wine, ceramic tiles 
56th Annual Report 39

and furniture, while wood pulp, paper, nuts 

and cotton were some of the top U.S. export 

commodities. A high concentration of the 

cargo was moved by the top carriers. MSC, 

Hapag Lloyd, Maersk Line, CMA CGM, and 

Zim carried 85 percent of the total trade. As 

in other trades, services were reconfigured 

under the new alliance agreements. The AZX 

service under the G6 Alliance Agreement was 

discontinued. In its place, carrier members of 

THE Alliance Agreement initiated the weekly

AL6 loop service between U.S. Atlantic ports 

and Mediterranean ports in France and Italy. 

Further, THE Alliance carriers expanded their

service options in the region by exchanging

space on Zim’s weekly ZCA loop service

between the U.S. and Spain under THE Alliance/Zim MED-USEC Slot Exchange Agreement. 

The changes in service increased the supply 

of vessel capacity in the trade by 7 percent.

Australia and Oceania

Oceania consists of Australia, New Zealand, 

and the South Pacific Islands. The liner trades 

between the U.S. and Oceania comprised just 

over 1 percent of total U.S. import and export 

cargo volumes in FY 2017, at 456,316 TEUs. 

The volume of U.S. container exports was 

267,271 TEUs, and the top exported commodities included auto parts, general merchandise, 

and tires. U.S. container import cargo was 

189,045 TEUs, and the top imported commodities included wine and chilled or frozen meat 

products. Compared to the preceding period, 

growth in U.S. container exports was flat, and 

container imports declined slightly. However, 

U.S. container exports exceeded imports by a 

ratio of 1.4 to 1. The major carriers serving the 

trade, Hamburg Süd, Hapag Lloyd, Maersk 

Line, MSC, and CMA-CGM and its subsidiary 

ANL Singapore Pte Ltd., moved 86 percent of 

the total container cargo.

The two main rate discussion agreements in 

the trade are the United States/Australasia Discussion Agreement (USADA) in the outbound 

direction and Australia and New Zealand-United 

States Discussion Agreement (ANZUSDA) in the 

inbound direction. In 2017, MSC withdrew its 

membership from ANZUSDA but remained 

in USADA. The members of USADA and 

ANZUSDA accounted for 82 percent of the 

outbound cargo and 75 percent of inbound 

cargo, respectively.

Africa

In FY 2017, imports and exports combined 

between the U.S. and Africa were 380,136 

TEUs, accounting for approximately 1 percent of all U.S. container volume. Compared 

to the previous period, U.S. container exports 

to nations in Africa declined slightly during 

FY 2017 to 270,189 TEUs, and U.S. container 

imports from the region grew by about 2 percent 

to 109,947 TEUs. Consequently, U.S. container 

exports exceed imports by a ratio of 2.5 to 1.

The top container U.S. exports to Africa 

included automobiles and poultry, while 

cocoa bean and citrus fruit were among the 

top import commodities. The Republic of 

South Africa is the largest U.S. liner trading 
40 56th Annual Report

nation on the continent, accounting for about 

31 percent of the containerized cargo. MSC 

and Maersk Line, including its subsidiary, 

Safmarine, carried approximately 71 percent 

of the container cargo in the trade. Under the 

Southern Africa Agreement, MSC and Maersk 

continue to share space on each other’s ships in 

the America Express (AMEX) service between 

the U.S. Atlantic Coast and the Republic of 

South Africa with calls at Cape Town, Port 

Elizabeth and Durban.

Central America and the Caribbean

The Central America and Caribbean regions 

collectively accounted for 6 percent of total 

import and export container volumes between 

the U.S. and the two regions in FY 2017 at 

approximately 2.1 million TEUs. Of the two 

regions, trade between the U.S. and Central 

America was considerably higher in volume 

at roughly 1.5 million TEUs (4 percent of total 

trade), while trade between the Caribbean and 

the U.S. was 666,106 (2 percent of total U.S. 

trade), imports and exports combined.

In FY 2017, U.S. container exports to Central 

America fell by 3 percent to 622,920 TEUs, and 

container imports increased by 8 percent to 

834,832 TEUs. Paper products accounted for 

the largest share of U.S. containerized exports. 

Other major exports included cotton, grocery 

products, used automobiles and fabrics. On 

the import side, fresh fruit made up a majority 

of container imports from the region. Roughly 

three quarters of fresh fruit imports consisted 

of bananas. The second largest commodity 

imported from this region was apparel.

The major carriers serving the trade participate in the Central America Discussion 

Agreement (CADA); these include Seaboard 

Marine, Crowley Latin America Services, King 

Ocean Services, Dole Ocean Cargo Express, 

and Great White Fleet Liner Service Ltd.

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

Caribbean, U.S. container exports of mainly 

food, consumer goods, and manufactured 

products decreased by 4 percent to 497,325 

TEUs. Container imports to the U.S. increased 

by 3 percent to nearly 169,000 TEUs. Container 

exports exceeded imports by a ratio of about 

3 to 1.

Carriers in the U.S./Caribbean trade participate in two rate discussion agreements 

covering geographically discrete trades: (1) 

the Aruba Bonaire and Curacao Discussion 

Agreement, and (2) the Caribbean Shipowners 

Association.

South America

In FY 2017, the liner trades between the U.S. 

and South America represented 5.6 percent of 

total import and export container volume, at 

almost 1.9 million TEUs. The volume of containerized cargo between the U.S. and South 

American nations grew by about 3 percent in 

FY 2017. While imports to the U.S. from South 

America grew by 5 percent to over 1 million 

TEUs, exports remained flat at 842,478. For 

every container moving outbound from the 
56th Annual Report 41

U.S. to countries in South America, 1.2 containers moved inbound from South America 

to the U.S. The top export commodities to 

South America included automobile parts and 

chemical products, while bananas, wood, and 

coffee were among the top import commodities. Brazil and Chile are the largest U.S. liner 

trading nations on the continent, accounting 

this year for about 61 percent of the container 

cargo moving in the trade.

The market share of the West Coast of South 

America Discussion Agreement (WCSADA)

plummeted from 76 to 39 percent outbound 

and from 62 to 23 percent inbound. The steep 

drop was due to the membership withdrawal 

of MSC, Hapag Lloyd and Trinity Shipping 

Line from the agreement. The remaining

WCSADA members are CMA CGM, Hamburg S

..

ud, Seaboard Marine and King Ocean 

Services.

Independent carriers offering service outside of WCSADA included Dole Ocean Liner 

Express and Great White Fleet (a subsidiary 

of Chiquita Brands Intl. Inc.), but mainly 

transport proprietary cargo such as fresh 

fruits and vegetables. WCSADA also faced 

competition from other major carriers serving the trade through transshipment hubs in 

Mexico, Panama and the Caribbean. There are 

no active rate discussion agreements in the 

trade between the U.S. and the East Coast of 

South America.
42 56th Annual Report
56th Annual Report 43

Top Twenty U.S. Liner Cargo 

Trading Partners

The Foreign Shipping Practices Act requires 

the FMC to include in its annual report to Congress “a list of the twenty foreign countries 

which generated the largest volume of oceanborne liner cargo for the most recent calendar 

year in bilateral trade with the United States,” 

46 U.S.C. § 306 (b)(1).

The Commission derives its list of toptwenty trading partners from the Journal of 

Commerce’s Port Import Export Reporting 

Service (PIERS) database. The most recent 

complete calendar year for which data are 

available is 2016. The table on the next page 

lists the twenty foreign countries that generated the largest volume of oceanborne liner 

cargo in the bilateral trade with the United 

States in calendar year 2016. The figures in 

the table represent each country’s U.S. liner 

imports and exports combined in thousands 

of loaded TEUs.

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

approximately 80 percent of the nation’s total 

liner trade in 2016. The total volume of trade 

with our top-twenty liner trading partners 

increased by 3 percent year-to-year. 

The top-twenty list has been comprised of 

the same trading partners since 2009. Several 

changes in ranking occurred among the toptwenty countries during 2016. Reflecting the 

greatest year-to-year liner volume increase 

of 20 percent, Vietnam rose above Taiwan 

(ROC) to occupy 4th place. Following Vietnam 

with the second largest year-to-year volume 

increase of nearly 17 percent, Thailand entered 

the top–ten ranks at 8th place. Hong Kong, 

a perennial top-ten trading partner, for the 

second year in a row again slipped in the 

rankings, falling to 12th place, having experienced a 5 percent decrease in volume this year. 

Australia experienced the largest percentage 

decrease in trade volume, but maintained its 

position as the 20th largest U.S. liner cargo 

trading partner. 

South Korea, Vietnam, Thailand, and 

Guatemala climbed up in the rankings, while Japan, Taiwan, Belgium & 

Luxembourg, Hong Kong, Brazil, and 

the United Kingdom slipped down.
44 56th Annual Report

Top Twenty U.S. Liner Cargo Trading Partners 

(CY2016)

Rank Country TEUs 

(000)

1 China (PRC) 12,469

2 South Korea 1,386

3 Japan 1,373

4 Vietnam 1,223

5 Taiwan (ROC) 1,090

6 Germany 1,010

7 India 956

8 Thailand 655

9 Belgium & 

Luxembourg 648

10 Indonesia 633

11 Italy 607

Rank Country TEUs 

(000)

12 Hong Kong1 603

13 Brazil 597

14 Netherlands 489

15 Guatemala 438

16 United Kingdom 427

17 Chile 387

18 Malaysia 387

19 Honduras 350

20 Australia 304

1 Hong Kong reverted to Chinese control in July 1997. 

However, PIERS continues to report data separately 

for Hong Kong due to its status as a major transshipment center.
56th Annual Report 45

Foreign Shipping Practices Act

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

pursued several matters involving potentially restrictive foreign shipping practices. 

This included the examination of restrictive 

foreign port/harbor practices, foreign legislation, and regulations. No formal FSPA action 

by the Commission was necessary.

The Commission has the authority to 

address restrictive foreign shipping practices 

under section 19 of the Merchant Marine Act 

of 1920 and the Foreign Shipping Practices Act 

of 1988. Section 19 empowers the Commission to make rules and regulations governing 

shipping in the foreign trade to adjust or meet 

conditions unfavorable to shipping. The FSPA 

directs the Commission to address adverse 

conditions that affect U.S. carriers in foreign 

trade and that do not exist for foreign carriers 

in the United States.
46 56th Annual Report

Controlled Carriers

A controlled carrier is an ocean common 

carrier that is, or whose operating assets are, 

owned or controlled directly or indirectly 

by a foreign government. The Shipping 

Act provides that no controlled carrier may 

maintain rates or charges in its tariffs or service contracts that are below a level that is 

just and reasonable, nor may any such carrier establish, maintain, or enforce unjust or 

unreasonable classifications, rules, or regulations in those tariffs or service contracts. In 

addition, tariff rates, charges, classifications, 

rules, or regulations of a controlled carrier 

may not, without special permission of the 

Commission, become effective sooner than 

the 30th day after the date of publication. The 

Commission’s staff monitors U.S. and foreign 

trade press and other information sources to 

identify controlled carriers and any unjust or 

unreasonable controlled carrier activity that 

might require Commission action. As of the 

end of fiscal year 2017, two controlled carriers 

operated in the U.S. trades:

1. COSCO SHIPPING Lines Co., Ltd. —

People’s Republic of China

2. CNAN Nord SPA—People’s Democratic

Republic of Algeria
56th Annual Report 47

Formal Investigations, Private 

Complaints and Litigation

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

or by order of the Commission upon petition, or upon its own motion. Types of docketed 

proceedings include:

• Private complaints: Any person may file a formal complaint alleging violations of specific

sections of the Shipping Act found at 46 U.S.C. Chapter 411. Formal complaints are

generally assigned to an Administrative Law Judge (ALJ) who issues an initial decision

which is reviewed by the Commission.

• Small claims complaints: For claims of $50,000 or less, an informal complaint may be

filed. The complaint is handled by a settlement officer for resolution using informal

procedures that do not tend to include discovery or motions practice.

• Investigative proceedings: The Commission may investigate the activities of ocean

common carriers, OTIs, MTOs, and other persons to ensure effective compliance with

the statutes and regulations administered by the Commission. Formal orders of investigation and hearing are assigned to an ALJ for an initial decision and may be reviewed

by the Commission.

In FY 2017, seven new private party complaints and five small claims complaint were filed. 

The Office of Administrative Law Judges (OALJ) issued nine initial decisions, including one 

initial decision partially dismissing the complaint, one initial decision approving settlement 

agreement and dismissing proceeding with prejudice, and one initial decision approving 

confidential settlement. The Commission issued notices finalizing the ALJ’s decisions in 

four private complaint cases. Three ALJ’s decisions were affirmed in whole or in part by the 

Commission on exceptions or its own review, and nine proceedings remained pending before 

the Commission. The Commission entered orders in a total of three small claims cases. The 

Small Claims Officer served three decisions in small claims proceedings.

The following summarizes the results of formal docketed proceedings concluded during 

FY 2017 by the ALJs and the Commission.
48 56th Annual Report

Formal Investigations

Revocation of Ocean Transportation 

Intermediary License No. 017843, 

Washington Movers, Inc. [Docket No. 

15-10]

On October 8, 2015, the Commission ordered

Washington Movers, Inc., to show cause why 

the Commission should not revoke its ocean 

transportation intermediary license due to 

the felony weapons smuggling convictions of 

its qualifying individual and various alleged 

regulatory violations. After receiving briefing, on February 12, 2016, the Commission 

assigned this matter to the Office of Administrative Law Judges for further proceedings. 

The ALJ issued an Initial Decision revoking 

Washington Movers’ license on June 29, 2017.

The ALJ concluded that revocation was warranted on the basis of the felony conviction of 

the company’s owner, President, and Qualifying Individual for attempted smuggling of 

weapons to Lebanon using his position and 

the company’s status as an NVOCC to commit 

the crimes. Although removed as the owner 

and President after his arrest, the company 

continued to hold him out to act on its behalf. 

The ALJ also found that Washington Movers 

violated various Commission regulations 

including failing to advise the Commission 

of the arrest, indictment and conviction of 

its President and Qualifying Individual and 

seek approval of a replacement. Washington 

Movers filed exceptions to the ALJ’s decision, 

and the Commission’s Bureau of Enforcement 

filed a reply in support of revocation. The 

matter is pending before the Commission.

Private Complaints

Yakov Kobel and Victor Berkovich 

v. Hapag-Lloyd A.G., Hapag-Lloyd

America, Inc., Limco Logistics, Inc.,

and International TLC, Inc. [Docket

No. 10-06]

On July 6, 2010, Complainants filed a Shipping Act complaint alleging that Respondents 

violated various sections of the Shipping Act 

in connection with the damage, delay, and 

liquidation of containers transported from 

Portland to Poland. The ALJ dismissed the 

complaint. The Commission affirmed in part 

and vacated in part in 2013, and remanded 

the case to the ALJ. On remand, the ALJ 

found that Respondents Limco Logistics 

and International TLC violated 46 U.S.C. § 

41102(c) and awarded Complainants reparations. On May 26, 2015, the Commission 

affirmed. Respondent Limco petitioned for 

reconsideration, but the Commission denied 

the petition on May 5, 2016, leaving Complainants’ request for attorney fees the only 

outstanding issue. On April 3, 2017, after the 

Commission requested supplemental briefing and the parties complied, Complainants 

and Respondent Limco sought Commission 

approval of a settlement agreement. The Commission approved the settlement agreement 

on August 31, 2017, and stayed the attorney 

fee proceedings until November 29, 2017.
56th Annual Report 49

Maher Terminals, LLC v. The Port 

Authority of New York & New Jersey 

[Docket No. 12-02]

On March 30, 2012, Maher Terminals, LLC, 

filed a complaint against the Port Authority 

alleging numerous violations of 46 U.S.C. §§ 

41102(c), 41106(1), 41106(2), 41106(3) involving the Port Authority’s change-of-control 

practices, preferential treatment of oceancarrier-affiliated terminals, lease terms, letting 

of a parcel adjoining the Global terminal, and 

preferential treatment of another terminal 

operator. On January 30, 2015, the ALJ dismissed the complaint for failure to state a 

claim. The Commission affirmed in part and 

reversed in part on December 18, 2015. On 

September 30, 2016, the parties jointly moved 

for approval of a settlement agreement and 

dismissal of this case and Docket No. 08-03. 

The Commission granted the motion and 

approved the settlement on October 26, 2016. 

Per the settlement, this case and Docket No. 

08-03 were dismissed with prejudice effective

November 16, 2016.

Baltic Auto Shipping, Inc. v. Michael 

Hitrinov a/k/a Michael Khitrinov and 

Empire United Lines Co., Inc. [Docket 

No. 14-16]

On November 28, 2014, Baltic filed a complaint alleging that on several thousand 

shipments between November 2007 and January 2012, Empire, an NVOCC, violated several 

sections of the Shipping Act, 46 U.S.C. §§ 

41102, 41104, 40501, and 46 C.F.R. Part 515, by 

charging rates not set forth in a tariff, charging 

Baltic rates greater than rates charged other 

shippers, and by failing to provide Baltic with 

shipping documents. On September 15, 2015, 

the ALJ held that based on the material facts 

not in dispute, Baltic’s claims accrued more 

than three years before Baltic filed the complaint and were barred. It was also determined 

that no other relief was warranted, and the 

complaint was dismissed.

Complainant filed Exceptions on January 15, 

2016. On August 15, 2016, Complainant filed a 

Motion to Withdraw Appeal and Discontinue 

Action and also filed a status report. Respondents did not agree to the joint stipulation to 

withdraw the appeal.

On April 21, 2017, the Commission granted 

the request for withdrawal and dismissal of 

the action in its entirety, with prejudice, in 

part, pursuant to 46 C.F.R. § 502.72(a)(3). The 

Commission, however, denied Complainant’s 

request to extinguish the ability of either party 

to seek attorney fees.

Subsequently, on July 19, 2017, Respondents filed a timely petition for attorney fees. 

On August 22, 2017, the Complainant filed 

a reply to the petition for attorney fees, a 

request for an evidentiary hearing, a motion 

for confidential treatment, and a certification 

of Complainant’s counsel. On August 31, 

2017, Complainant filed a motion to correct 

the record (and other relief) and appendix. 

At the close of fiscal year 2017, these matters 

were pending before the Commission.

Crocus Investments, LLC & Crocus, 

FZE v. Marine Transport Logistics, Inc. 

and Aleksandr Solovyev d/b/a Royal 

Finance Group Inc. [Docket No. 15-04]

On May 27, 2015, Complainants filed a 

shipping act complaint alleging that Respondents, a licensed NVOCC, and an individual, 

overcharged them and transferred custody of 

cargo to a storage facility without their consent, 

all in violation of 46 U.S.C. § 41102(c). They 
50 56th Annual Report

also alleged that the individual Respondent 

violated 46 U.S.C. § 40901(a) by providing 

ocean freight forwarder (OFF) services without a license from the Commission. The ALJ 

dismissed Complainants’ claims for lack of 

jurisdiction and on substantive grounds. Complainants filed exceptions, and the matter is 

pending before the Commission.

General Motors, LLC v. Nippon Yusen 

Kabushiki Kaisha [Docket No. 15-08]

On September 2, 2015, Complainant "General Motors, LLC" (GM) filed a Shipping Act 

complaint against Respondents Nippon 

Yusen Kabushiki Kaisha (NYK), Wallenius 

Wilhelmsen Logistics AS (WWL) and Eukor 

Car Carriers, Inc. (Eukor). GM alleged that 

Respondents violated numerous provisions 

of the Shipping Act by secretly agreeing to 

rig bids, allocate customers, restrain capacity, and otherwise fix, raise, stabilize, and 

maintain prices for vehicle carrier services. 

The ALJ granted the parties’ joint motion to 

stay the case, and on July 25, 2016, GM, WWL, 

and Eukor moved for approval of a settlement agreement and dismissal of the case 

against those respondents. The ALJ granted 

the motion on July 29, 2016.

The Commission determined to review 

the Initial Decision on August 26, 2016, 

and ordered the settling parties to submit 

additional information, which they did on 

September 1, 2016. On September 12, 2016, 

GM and NYK filed a joint motion to approve 

a settlement agreement. The Commission 

affirmed the ALJ’s approval of the GM/WWL/

Eukor settlement and dismissal on October 13, 

2016. On October 14, 2016, the ALJ approved 

the settlement between GM and NYK, which 

disposed of the only remaining claims in the 

case. The Commission issued a notice not to 

review the ALJ’s decision on November 16, 

2016.

Igor Ovchinnikov, Irina Rzaeva, and 

Denis Nekipelov vs. Michael Hitrinov a/k/a Michael Khitrinov, Empire 

United Lines Co., Inc., and CarCont 

Ltd., [Docket No. 15-11] consolidated 

with Kairtat Nurgazinov v. Michael 

Khitrinov, Empire United Lines Co., 

Inc., and CarCont Ltd., [Docket No. 

1953(I)]

 Complainants Igor Ovchinnikov, Irina

Rzaeva, and Denis Nekipelov filed a complaint on November 12, 2015, alleging that

Respondents Michael Hitrinov a/k/a Michael 

Khitrinov, Empire United Lines Co., Inc., and

CarCont Ltd., violated 46 U.S.C. §§ 40301,

40302, 40501, 40701, 41102, 41104, and 41106, 

as well as 46 C.F.R. Part 515, by not releasing or delivering three vehicles shipped from

the United States to Finland. Respondents

filed a Motion for Consolidation with Informal Docket No. 1953(I) on April 22, 2016, as 

Informal Docket 1953(I) involved the same

violations of laws, was filed by the same Counsel, and involved Respondents not releasing 

or delivering cars shipped from the United

States to Finland. Following consolidation

of the cases, Respondents filed a Motion for

Judgment on the Pleadings on June 10, 2016.

Respondents’ Counsel filed a Motion for an

Order to Show Cause Why the Commission 

Should Not Revoke Complainants’ Counsel’s

Privilege of Practicing Before the Commission on September 7, 2016. Complainants’

Counsel filed a Cross-Motion requesting that 

Respondents’ counsel be similarly sanctioned

on September 8, 2016. The ALJ issued an order
56th Annual Report 51

denying both motions without prejudice on 

September 16, 2016. Respondents filed exceptions to the ALJ Order on October 11, 2016.

The ALJ issued an initial decision on March 

9, 2017 that granted Respondents’ Motion for 

Judgment on the Pleadings. Complainants 

filed exceptions to the initial decision on May 

3, 2017. Respondents filed their reply on June 

23, 2017. The exceptions to the ALJ’s denial of 

Respondents’ motion for sanctions, the exceptions to the ALJ’s initial decision dismissing 

the Complaint, and several outstanding 

motions are pending before the Commission.

D. F. Young, Inc. v. NYK Line (North

America) Inc. [Docket No. 16-02]

On January 29, 2016, D.F. Young, Inc. (DFY), 

a licensed freight forwarder, filed a complaint 

alleging that Respondent NYK Line (North 

America) Inc. (NYK), an ocean common carrier violated the Shipping Act of 1984 . DFY 

alleged violations of 46 U.S.C. § 41102(c) and 

46 C.F.R. § 515.42.

On August 1, 2017, the ALJ issued an initial 

decision denying DFY’s motion for summary 

judgement and granting NYK’s motion for 

summary decision. DFY, subsequently, on 

September 6, 2017, submitted a motion to 

recognize the terms of Respondent’s bills 

of lading and tariff; or, in the alternative, to 

reopen and remand the proceeding. DFY also 

submitted exceptions to the ALJ’s August 1, 

2017, initial decision. The matters are pending 

before the Commission.

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

On August 5, 2016, MAVL Capital Inc., IAM 

AL Group Inc., and Maxim Ostrovskiy filed a 

complaint alleging that Respondents Marine 

Transport Logistics, Inc. and Dimitry Alper 

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

41104(10) in connection with the storage and 

shipment of five vehicles. On January 17, 2017, 

the ALJ dismissed certain of the claims for 

lack of jurisdiction and failure to state a claim. 

The ALJ stayed the case as to the remaining 

claims. Complainants filed exceptions to the 

ALJ’s decision, which Respondents opposed. 

On March 7, 2017, Complainants petitioned 

for leave to supplement the record. The matter 

is pending before the Commission.

Taylors Resources Inc (USA) d/b/a 

Bridgewater Landing Inc (USA) v. 

Mitsui O.S.K. Lines Ltd. [Docket No. 

1954(F)]

Claimant Taylors Resources Inc (USA) d/b/a 

Bridgewater Landing Inc (USA) filed a small 

claim for informal adjudication under Subpart 

S alleging Mitsui O.S.K. Lines Ltd. violated the 

Shipping Act in its handling of a shipment of 

scrap plastic from the United States to China 

that resulted in detention and demurrage 

charges imposed on Complainant. A parallel 

proceeding by Mitsui against Complainant 

for the charges was also pending in a New 

Jersey state court. After briefing on the merits 

by the parties, the administrative law judge 

issued a decision finding that Mitsui had not 

violated the Act. On August 21, 2017, Complainant filed a “request to vacate decision.” 

The request is pending before the Commission.
52 56th Annual Report

Litigation

The following docket matters were litigated 

during the fiscal year in the United States 

Courts of Appeals by the OGC on behalf of 

the Commission.

Maher Terminals, Inc. v. The Port 

Authority of New York and New Jersey 

[Docket No. 08-03], United States 

Court of Appeals for the District of 

Columbia Circuit

Maher leases a marine terminal from the 

Port Authority, and on June 3, 2008, Maher 

filed a Shipping Act complaint alleging that 

the Port Authority: (a) violated 46 U.S.C. § 

41106(2) by granting another terminal operator, APM Terminals North America, Inc. 

(APM) unduly and unreasonably more favorable lease terms than it provided Maher; (b) 

violated 46 U.S.C. § 41102(c) by failing to 

establish, observe, and enforce just and reasonable regulations regarding Maher’s lease 

terms; and (c) violated 46 U.S.C. § 41106(2) 

by unreasonably refusing to deal with Maher 

regarding its request for parity with APM 

and its attempts to settle counterclaims from 

another case. The Commission granted partial summary judgment to the Port Authority 

on statute of limitations grounds. Maher 

petitioned the D.C. Circuit for review of this 

decision and petitioned the Commission for 

reconsideration. The D.C. Circuit dismissed 

the petition for lack of appellate jurisdiction, 

and the Commission rejected the petition for 

reconsideration. Maher then filed a petition 

for review of the summary judgment and 

reconsideration orders, which the D.C. Circuit 

again dismissed for lack of jurisdiction based 

on a Commission motion to dismiss.

As to the merits, after extensive discovery 

and motion practice, the ALJ denied Maher’s 

claims and counterclaims and dismissed them 

with prejudice on April 25, 2014. On December 17, 2014, the Commission affirmed the 

ALJ’s decision. Maher petitioned the D.C. Circuit for review of the Commission’s orders, 

which the Commission opposed. On March 

22, 2016, the court issued an opinion granting 

Maher’s petition and remanding the case to 

the Commission for additional explanation 

of its decision, although it did not vacate the 

Commission’s order or reverse its decision. 

On September 30, 2016, the parties moved 

for approval of a settlement agreement and 

dismissal of this case and Docket No. 12-02. 

The Commission granted the motion and 

approved the settlement on October 26, 2016. 

Per the settlement, this case and Docket No. 

12-02 were dismissed with prejudice effective

November 16, 2016.

Adebisi A. Adenariwo v. BDP International, Zim Integrated Shipping, Ltd. 

and Its Agent (Lansal) et al. [Informal Docket Nos. 1920(I) and 1921(I)], 

United States Court of Appeals for the 

District of Columbia Circuit

The Claimant filed two claims on May 2, 

2011, alleging violations of Section 10(d)(1), of 

the Shipping Act (46 U.S.C. 41102(c)) for problems arising from their shipment of concrete 

products equipment from Michigan to Lagos, 

Nigeria. After reviewing the evidence, the 
56th Annual Report 53

settlement officer dismissed Informal Docket 

No. 1920(I) on April 18, 2012, and on March 

7, 2013, issued a decision in Informal Docket 

No. 1921(I) awarding the Claimant reparations in the amount of $18,308.94, limiting 

the award based on the principles of mitigation. The Commission affirmed on February 

20, 2014. On March 21, 2014, Claimant filed a 

petition for review in the United States Court 

of Appeals for the District of Columbia Circuit. On December 15, 2015, the Court adopted 

the Commission’s argument that the Court 

lacked jurisdiction over the dispute in Informal Docket No. 1920(I) because the petition 

was not timely filed, but the Court vacated the 

Commission’s decision relating to mitigation 

of damages in Informal Docket No. 1921(I) and 

remanded with instructions to the Commission to award damages as supported by the 

record without applying the principle of mitigation. Following supplemental briefing, the 

Commission issued a final order on remand 

on February 14, 2017, awarding Claimant 

$50,000 in reparations. Claimant subsequently 

petitioned for attorney fees, which the Commission denied on June 28, 2017.

Santa Fe Discount Cruise Parking, Inc., 

d/b/a EZ Cruise Parking, Lighthouse 

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

81st Dolphin Parking v. The Board of 

Trustees of the Galveston Wharves 

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

States Court of Appeals for the District 

of Columbia Circuit

Respondents operate the cruise terminal 

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

they provide parking for passengers who 

embark on cruises from the cruise terminal. 

As part of their service, Complainants provide 

transportation to the Port. On June 16, 2014, 

Complainants filed a complaint alleging that 

Respondents’ tariff imposing charges on Complainants’ shuttles transporting passengers to 

and from the terminal violated three sections 

of the Shipping Act.

On November 21, 2014, the ALJ granted 

Respondents’ motion to dismiss claims under 

two sections of the Act, but denied dismissal of 

claims under 46 U.S.C. § 41106(2), finding that 

the Complaint stated a claim that Respondents 

gave an undue or unreasonable preference or 

advantage or imposed an undue or unreasonable prejudice or disadvantage with respect 

to Complainants. On December 23, 2014, the 

Commission issued a Notice Not to Review 

the partial dismissals and the decision became 

administratively final.

On December 4, 2015, the ALJ issued 

an Initial Decision dismissing Complainants’ remaining claim regarding § 41106(2). 

Complainants and Respondents filed their 

Exceptions and Reply to the Exceptions on 

January 11, 2016, and February 2, 2016, respectively. The Commission issued an order on 

January 13, 2017, affirming the dismissal of 

complaint.

The Complainants filed a Petition for 

Review in the D.C. Circuit on March 14, 2017, 

and the parties filed their briefs. The matter 

is pending before the court.

In re Vehicle Carrier Services Antitrust 

Litigation [Case Nos. 15-3353, 15-3354, 

and 15-3355 (3d Cir.)]

This case involved the Commission as 

an amicus curiae. Plaintiffs alleged that the 

Defendants, who are ocean common carriers 
54 56th Annual Report

who transport vehicles, entered into secret 

agreements that violated the Sherman Act. 

The district court dismissed Plaintiffs claims, 

holding that (1) Plaintiffs’ Clayton Act claims 

were barred by 46 U.S.C. § 40307(d) because 

operating under an anticompetitive agreement 

not filed with the Commission constituted a 

violation of the Shipping Act; and (2) Plaintiffs’ state antitrust claims were preempted 

by the Shipping Act. Plaintiffs appealed. On 

October 4, 2016, the Third Circuit invited 

the Commission to file an amicus brief. The 

Commission and the Department of Justice 

accepted the invitation and filed an amicus 

brief on November 30, 2016. The Third Circuit 

affirmed the district court on January 26, 2017. 

The Third Circuit denied Plaintiffs’ petition for 

panel and en banc rehearing on February 22, 

2017, and the Supreme Court denied a petition for writ of certiorari on October 2, 2017.

Rulemakings

The Commission has initiated a number of 

rulemakings this year to update its regulations 

and reduce regulatory burdens. The Commission also received one petition for rulemaking.

Service Contract and NVOCC Service 

Arrangements [Docket No. 16-05]

On February 29, 2016, the Commission 

sought comments on possible amendments 

to its rules governing Service Contracts and 

NVOCC Service Arrangements to update, 

modernize, and reduce the regulatory burden 

of the regulations. (81 FR 10198) The Commission issued a proposed rule on August 22, 

2016. (81 FR 56559) After receiving comments, 

the Commission issued a Final Rule on March 

29, 2017, which became effective on May 5, 

2017. (82 FR 16288)

Petition of the Coalition for Fair Port 

Practices for Rulemaking [Petition 

P4-16]

On December 7, 2016, the Coalition for Fair 

Port Practices (Coalition), a group of 26 trade 

associations representing importers, exporters, drayage providers, freight forwarders, 

customs brokers, and third-party logistics 

providers, filed a petition requesting that the 

Commission initiate a rulemaking proceeding 

to adopt a rule that would interpret 46 U.S.C. §

41102(c) to clarify what constitutes “just and

reasonable rules and practices” with respect to

the assessment of demurrage, detention, and

per diem charges by ocean common carriers

and marine terminal operators when ports

are congested or otherwise inaccessible. The

Coalition proposed a rule for adoption and

requested specific guidance as to the reasonableness of such charges when port conditions

prevent the timely pickup of cargo or return

of carrier equipment because of broad circumstances beyond the control of shippers,

receivers, or drayage providers.

The Commission published a notice of the 

filing in the Federal Register on December 28, 

2016, and requested comments by February 28, 

2016. (81 FR 95612) In addition to the 15 verified statements from members of the Coalition 

that accompanied the petition, the Commission received over 100 comments from a 

wide variety of stakeholders, including shippers, shippers’ associations, NVOCCs, OFFs, 

customs brokers, drayage providers, trade 

associations, carriers, and MTOs (including 
56th Annual Report 55

several port authorities). Hearings were held 

January 16 and 17, 2018 and further action is 

being considered.

Inflation Adjustment of Civil Monetary Penalties [Docket No. 17-01]

The Commission published its annual civil 

penalty adjustments for inflation on February 

15, 2017 (applicable January 15, 2017), pursuant to the Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 2015.

Regulatory Reform Initiative [Docket 

No. 17-04]

The Commission published a notice on 

July 5, 2017, announcing the creation of a 

Regulatory Reform Task Force in line with 

Executive Order 13777, Enforcing the Regulatory Reform Agenda, and requesting comment 

on how to make Commission regulations less 

burdensome and more effective in achieving 

the objectives of the Shipping Act. (82 FR 

25221) This notice solicited input from all 

stakeholders, including regulated entities 

(ocean common carriers, ocean transportation 

intermediaries, marine terminal operators) 

and the shipping public. The Commission 

is reviewing the comments and considering 

potentially responsive rulemaking actions.
56 56th Annual Report
56th Annual Report 57

APPENDICES

A - FMC Organization Chart
58 56th Annual Report

B - FMC Senior Officials - FY 2017

Chief of Staff Mary T. Hoang

Counsel to Acting Chairman Khouri John A. Moran

Counsel to Commissioner Dye Robert M. Blair

Counsel to Commissioner Cordero Rachit J. Choksi

Counsel to Commissioner Doyle David J. Tubman, Jr*.; Patrick Parsons

Counsel to Commissioner Maffei Carrol Hand**; Zoraya de la Cruz

General Counsel Tyler J. Wood

Secretary (Assistant) Rachel E. Dickon

Chief Administrative Law Judge Clay G. Guthridge

Director, Office of CADRS Rebecca A. Fenneman

Director, Office of EEO Howard F. Jimenez***

Inspector General Jon Hatfield

Managing Director Karen V. Gregory

Deputy Managing Director Peter King

Director, Bureau of Certification and Licensing Sandra L. Kusumoto

Director (Deputy), Bureau of Enforcement Brian L. Troiano

Director, Bureau of Trade Analysis Florence A. Carr

*Assumed January 2017; **Assumed October 2016; ***Departed July 2017
56th Annual Report 59

C - Statement of Appropriations, Obligations, 

and Receipts

Appropriations

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

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

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

uniforms or allowances therefore, as authorized by 5 U.S.C. §§5901-5902, $27,490,000. Provided, 

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

Public Law 115-31 $27,490,000

Total Budgetary Resources $27,490,000

Obligations and Unobligated Balance:

Net obligations for salaries and expenses 

for the fiscal year ended September 30, 2017

$27,331,928

Statement of Receipts:

Deposited with the General Fund of the Treasury for the Fiscal 

Year Ended with September 30, 2017

Publications and reproductions, fees and 

vessel certification, and freight forwarder 

applications

$227,724

Fines and penalties $1,887,513

Total general fund receipts $2,115,237
60 56th Annual Report

D - Civil Penalties Collected

Brilliant Group Logistics Corp. $100,000 

Interglobo North America, Inc. $150,000 

Fastic Transportation Co., Inc. $110,000 

Pudong Prime Int’l Logistics, Inc. $100,000 

Seamaster Logistics, Inc., and 

Toll Global Forwarding (Hong Kong) Limited $275,000 

Pacific International Import Export, LLC $30,000

A-Sonic Logistics (USA), Inc. $70,000 

Honour Lane Shipping Limited; Global Ocean, Agency 

Lines LLC; and World Express Shipping,Transportation and 

Forwarding Services, Inc. 

$300,000

RS Logistics Limited $75,000 

Hyundai Glovis Co., Ltd. $157,500 

Worldwide Container Transfer, Corp. and 

U-Ocean USA, Corp. $220,000

United Transport Tankcontainers, Inc. $30,000 

LF Logistics (China) Ltd. and LF Logistics USA, LLC $180,000 

King Freight (USA), Inc. $90,000 

Total: $1,887,500