Chairman Lidinsky’s Speech Before the Cotton Club - Federal Maritime Commission
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Chairman Lidinsky’s Speech Before the Cotton Club

May 7, 2010

Thank you very much for inviting me here this afternoon to share with you what the Federal Maritime Commission has been doing since I became Chairman last September and to touch on several key issues now on our plate.

In looking back, as well as looking ahead, it is helpful to take a long view of where the FMC has been since modern incorporation in 1961. I had the honor of being the FMC Legislative Counsel in the mid-1970s, so I experienced firsthand most of the changes discussed below.

In looking at the Commission as we approach its 50th anniversary in 2011, the 1970s – 1980s could be described as perhaps the “Golden Age” of maritime regulation. I’m using the word “golden” in the sense that all of the major waterborne issues we take for granted today – minibridge, microbridge, dual bills of lading, intermodialism, the triumph of containerization, etc. – were fought and in large part settled in this era.

The next period covering the 1984 Shipping Act until their 1999 revisions was important with its themes of Re-regulation of Commission procedures, Emergence of the NVOCCs, and the New Relationship of carriers and shippers as embodied in the service contract.

Before I comment on the current age, I thought it would be interesting to draw a contrast between FY 1975 and FY 2010:

Fiscal Year 1975 Fiscal Year 2010
Number of FMC Employees & Budget Budget: $7,400,000
Employees: 319 Permanent + 5 Temporary/Part time
Budget: $24,135,000 (’10)
Employees: 130 Permanent + 3 Temporary/Part time
Tariff Totals Received: 259,511 Service Contracts: 380,475
NSAs: 4,481
Conference Agreements 81 6
Service Contracts 0 2.5 million
Licensed FFs 1,103 2,600
Licensed NVOCCs 0 3,213
Cruise Lines Vessels 46 203
US Flag – General Cargo Ships 571 138
TEU’s Worldwide 398,435 20,636,709

In looking at these numbers the obvious message is that the regulatory regime of the FMC has greatly changed. In examining the above chart one glaring figure is the reduction of conference agreements from 81 to 6. Does this mean, that carriers are no longer in alliance for certain trades or geographic areas? No, the answer is that 26 Talking Agreements have in large part replaced the conference system and one agreement in particular; the Trans-Pacific Stabilization Agreement with 16 carrier members is by far the largest under the Commission’s jurisdiction.

This leads us to the third age of the Commission – i.e., the period from 2000 until today.

What is now the dominant issue – is it the shrinkage of the U.S. flagged fleet? Is it the emergence of foreign-flagged carriers dominating certain trades? Is it preparing our ports for the “new normal” which will follow this great economic crisis our industry is still going through? It could be these, or it could be circumstances that are yet to arise.

During my confirmation hearing last year, I identified the three primary Obama Administration tasks for the FMC:

First, provide economic relief to the regulated parties where appropriate–and we have begun that task with our NVOCC tariff exemption proceedings and other port agreement realignments. Second, to give the Commission a green consciousness and work with carriers and ports to stimulate this activity and jobs–the landmark slow-steaming permission granted to the TSA late last year, as well as our internal Maritime Environmental Committee symbolize our action in this area. Third, we needed to refocus on importers, exporters, and consumers–our action are evident with our fact-finding proceeding on export capacity, cracking down on false license claims, our bond review for passenger vessel tickets, and finally a soon to be announced new fact-finding in this area as well.

As always, it is the duty of the Commission to keep focused on all the disparate parts of our foreign waterborne trade and here is what we have before us at the moment:

  1. Reorganization of the FMC
  2. Economic Recovery of Maritime Industry
  3. Capacity for U.S. Exporters
  4. Studying Possible Impact of EU Shipping Deregulation on U.S.
  5. Shanghai Shipping Exchange
  6. Passenger Vessel Financial Responsibility
  7. Canadian Cargo Diversion
  8. NVOCC Petition to Eliminate Tariff Filings
  9. Environmental Activities
  10. Haiti & Oil Spill Regulatory Relief

Thanks again for this opportunity to speak to you today. More importantly, thanks to your countries for their interest in, involvement with, and having you here in Washington, DC to provide your input on their crucial issues facing the global maritime industry.