About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (June 11, 2021)

handle is hein.crs/govedqh0001 and id is 1 raw text is: Congressional Research Service MGM i Inforrning the legislative debate since 1914 S June 11, 2021 Shipping, Ports, and the Federal Maritime Commission Since summer 2020, U.S. overseas containerized trade has risen to record levels as the Coronavirus Disease 2019 (COVID-19) pandemic led households to spend less on services such as vacation trips and restaurant meals and more on imported goods. The demand surge has resulted in transport delays, higher freight rates, and increased tension between shippers and ocean carriers over ancillary fees and the availability of containers. These controversies have drawn attention to the role of the Federal Maritime Commission (FMC), a federal agency with jurisdiction over ports and ocean shipping. Background The FMC's mission, essentially, is to protect U.S. shippers-the owners of cargo being transported-from unfair practices of ocean carriers, freight consolidators, and port terminal operators. It was created by Congress in 1961. The five FMC commissioners are appointed by the President and confirmed by the Senate for five-year terms, with no more than three from the same political party. The President designates one of the commissioners to serve as chair. The FMC has a staff of about 130, comprising lawyers, tariff and transportation specialists, and economists. It has an annual budget of about $30 million. Before 1961, the functions now fulfilled by the FMC were handled by an agency that also was charged with promoting a domestic merchant marine industry. Under that arrangement, U.S. exporters and importers often perceived that their interests were subjugated to the interests of U.S. ship lines. The FMC was created as an independent agency, and responsibility for the domestic merchant marine industry was separated. It now rests with the Maritime Administration in the U.S. Department of Transportation. The FMC is charged by law with protecting the interests of U.S. shippers in international trade. It oversees the practices of U.S. ports and marine terminal operators, licenses U.S. ocean freight consolidators, and investigates claims by U.S. liner carriers of unfair practices by their foreign counterparts (46 U.S.C §42101-§42307). It also adjudicates among industry segments, as in cases of rate or service disputes between freight consolidators and liner carriers. It may enforce its decisions by issuing fines and binding orders, seeking court injunctions, awarding reparations, revoking licenses, and detaining vessels. Regulation of Liner Shipping The FMC focuses mostly on liner shipping services, which typically operate vessels such as containerships and car carriers on scheduled routes between U.S. and foreign ports. It administers an antitrust regime specific to these types of ship lines. The FMC's most recent major enforcement action, in 2016, led to large fines against car carriers that engaged in price fixing without filing an agreement with the FMC. Such agreements are part of a longstanding federally authorized regime intended to address persistent overcapacity in the shipping industry (notwithstanding the recent capacity shortage). Maritime trading nations generally have sought to develop and support their own fleets of ships for national and economic security reasons and/or to signify their nation's development and global presence. To counteract this phenomenon, since the late 1800s liner carriers have been allowed to form cartels, known as conferences, to control available capacity. Carriers serving the United States have thus been given a certain amount of antitrust immunity, under the regulation of the FMC, that is not available to most other businesses (46 U.S.C. §40307). The intent is to prevent rate wars and foster a more stable market for ocean shipping. Although the United States has generally favored competition among transportation carriers in recent years, allowing regulated antitrust immunity for ocean carriers recognizes the global nature of shipping and thus the difficulty of pursuing U.S. policy preferences unilaterally. Whether this antitrust immunity unnecessarily boosts carrier market power relative to shippers underlies other disputes between the two parties. Some carriers, mainly Chinese, are owned or otherwise substantially controlled by their governments. The FMC determines which carriers have this characteristic and monitors their rates and practices more closely. Types of Liner Agreements Congress began limiting conferences' practices in 1916 (P.L. 64-260). Beginning in the 1980s, various deregulatory shipping acts have reduced the market power of shipping alliances. Tariffs (official ocean rates) are no longer required to be filed with the FMC, merely posted on a carrier's website or other publicly accessible venue. The vast majority of containerized cargo is carried at contracted rates specified in confidential agreements between carriers and importers and exporters rather than at the posted rates. Carriers have traditionally effected their limited antitrust immunity by participating in two types of agreements with one another: rate discussion agreements (RDAs) and vessel sharing agreements (VSAs). The terms of RDAs must be non-binding, so that each ocean carrier signing an RDA is making only a voluntarily commitment to abide by the pricing terms laid out in the agreement. A carrier may ignore an agreement if it is in its interest to reach other rate and service terms with a shipper. The non-binding nature of the agreements is a key feature that has limited the carriers' ability to fix prices. ittps://Crsreports.congress.g(

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most