Remarks of Commissioner Rebecca Dye Recipient of Outstanding Woman of the Year Award

Remarks of Commissioner Rebecca Dye
Recipient of Outstanding Woman of the Year Award
Global Trade Awards Gala
Women in International Trade, Los Angeles
October 6, 2016

Thank you, Gloria Cordero, for that very kind introduction. And thanks as well to this great organization and the event sponsors for making tonight’s gala possible.

I’ve been fortunate to visit the ports of LA/Long Beach since I began the FMC’s Supply Chain Innovation Teams initiative, and I have remarked several times to our FMC staff that I’d love to retire here.

The first thing I have done to increase my ties to the San Pedro Bay area is to become a member of Women in International Trade—and I look forward to being an active member of your organization.

I sincerely appreciate the honor of being named Outstanding Woman of the Year by the LA chapter of Women in International Trade. I am also pleased to join you tonight in recognizing the other accomplished recipients of leadership awards.

International Trade

As you know, 2016 is not shaping up as a banner year for trade. Connecting the dots is not difficult. Economic growth – across the globe, and here in the U.S. – is, to put it mildly, less than robust. Slower economic growth has meant that cargo volumes are not keeping pace with new vessel tonnage.

That, in turn, means the aggregate supply of vessel space continues to exceed demand, and rates and carrier revenues decline. Under such unfavorable conditions, liner companies try to reduce their costs and financial risks.

The results are:

• larger vessels, to seek economies of scale and remain competitive in a punishing financial environment;
• a greater focus on operational alliances, to spread the cost and risk of providing extensive international service networks;
• major mergers and acquisitions among even the larger lines; and
• most recently, the bankruptcy of Hanjin Shipping.

I note one bright spot this year: Late last April, the US Coast Guard clarified that U.S. laws and regulations were equivalent to the IMO’s new Safety of Law at Sea requirements for verified container weights. This action by our Coast Guard allowed American exporters to avoid unnecessary logistics costs and restrictions on cargo movement.

On a less happy note, the impact of Hanjin’s bankruptcy, and in particular, the resulting problems for shippers, ports, trucking companies and chassis providers – here in the San Pedro Bay area and around the world – has been challenging. The underlying problem – weak economic growth and excess vessel capacity — is expected to continue.

For the industry as a whole, expectations are that – along with the consolidation of today’s four major East/West alliances into three next spring – merger and acquisition activity likely will continue.

Major Alliances

For America’s importers and exporters, the revision of global alliances should present no significant competition problems. The individual lines in alliances will continue to market and price their services separately. Alliances do not increase seller concentration. Mergers and acquisitions, however, do reduce the available number of sellers in a market.

Fortunately, given the total number of competing liner companies, the still relatively low market concentrations in most U.S. trades and the relative ease of entry, even mergers are, under current conditions, unlikely to raise serious competition issues.

Let me underline that point: To the extent that, in response to market forces and financial pressures, many carriers feel they have to choose between operational alliances or mergers, alliances benefit shippers by, among other things, maintaining the same number of sellers. Alliances do not increase market concentration or market power. Mergers do. Alliances are not, as some tend to fear, the virtual equivalent of mergers or acquisition. Not by a long shot.

When the Commission reviews proposed alliance agreements, the lack of market concentration is a significant factor in the our analysis – just as it is in competition analyses undertaken by the Federal Trade Commission and the Department of Justice’s Antitrust Division.

Of course we have concerns about proposed alliances when their members also participate in rate discussion agreements in the same trade. But absent such special circumstances, operational agreements acting alone – even major alliances – are unlikely to substantially reduce competition, especially where markets are not concentrated and exhibit no barriers to entry.

Of course in certain cases, competitive pressure is forcing the sort organizational and technological innovation that free markets reward. The Ocean Alliance (CMA-CGM (APL)), Cosco, Evergreen and OOCL) agreement is currently under review with the Commission.

Hanjin Bankruptcy

The way Hanjin’s bankruptcy unfolded was unfortunate for everyone involved. It is pending before a US bankruptcy court – and is involved in similar legal processes in South Korea and around the world.

While the Commission has no direct role in those proceedings, we have industry expertise and a willingness to do what we can to keep American importers and exporters informed and resolve their problems without interfering with the bankruptcy proceeding.

Supply Chain Innovation Teams

Last February, the Commission issued an Order directing me to work with commercial interests to develop solutions to America’s international supply chain challenges. Under that Order, we have established three small teams composed of senior representatives from nine industries – public port authorities, marine terminal operators, shippers, liner operators, ocean transportation intermediaries, drayage trucking companies, chassis providers and port labor and railroads – to develop supply chain process improvements.

The teams have identified critical information availability as the best way to increase supply chain visibility and integrate key elements of the supply chain. Greater availability of critical supply chain information will result in changes in behavior among supply chain actors and in turn, reduce cargo bottlenecks.

It’s been challenging work – accomplished with great commitment from, and cooperation among our Innovation Team members. I’m proud to have had the opportunity work with such dedicated and accomplished business leaders.

Women’s Leadership

I’m often engaged as a mentor of young women and men through programs organized by several women’s professional organizations to which I belong. You can’t engage on a personal level with someone as a mentor without recalling and examining your own experiences.

My big break, without a doubt, was given to me by the United States Coast Guard. Before I was a commissioned officer, I never thought of myself as having a future in maritime policy. (Actually, I wanted to be a novelist.) As a Coast Guard Lieutenant, I was given incredible opportunities, including acting as a White House Social Aide during the Reagan Administration.

Because I successfully handled a controversial proposal for the Coast Guard, I was hired as a committee counsel in the House of Representatives, which led to my position on the Federal Maritime Commission.

So, from actual experience, here are a few of my “rules for professional success” that I emphasize to my mentees:

• Try never to report to a supervisor who wasn’t involved in hiring you;
• Don’t worry too much about excessive criticism from a bad boss, but never let a good boss down; and
• Do excellent work—no amount of networking will substitute for a good professional reputation.

Conclusion

Thank you again for the honor you’ve given me tonight. Being here with friends and colleagues makes me realize how truly fortunate I am.