Vessel Capacity and Equipment Availability Report Recommends Collaborative Approaches to Develop Supply Chain Reliability Solutions

Contact: Karen V. Gregory, Secretary (202-523-5725)

Commissioner Rebecca F. Dye’s final report and recommendations for action in the Commission’s Fact Finding Investigation No. 26, Vessel Capacity and Equipment Availability in the United States Export and Import Trades, were accepted at the December 8, 2010 Commission meeting. The final report concluded that although capacity conditions in the U.S. trades have stabilized, certain underlying problems revealed during the Commission’s investigation should be addressed. The Report also concluded that the most effective long-term solutions to the commercial problems experienced by U.S. exporters and importers this year will be developed by ocean carriers working closely with their customers within a framework organized by the Commission.

Commissioner Dye stated, “I want to personally thank the many U.S. exporters, importers, ocean transportation intermediaries, ocean carriers and other transportation officials who committed their time and resources to this investigation. We look forward to their continued voluntary participation as we build on the collaborative work conducted under the Fact Finding to strengthen the business relationships between ocean carriers and their customers and increase supply chain reliability.”

The Ocean Shipping Reform Act of 1998 contained confidential contracting provisions that changed the way ocean carriers and their shipper customers conduct business. Currently, 99 percent of the cargo carried in the U.S. transpacific trade is carried under service contracts. Recent tensions between ocean carriers and their customers resulting from vessel capacity and equipment shortages revealed a lack of mutual understanding between the parties regarding their contractual obligations.

The Commission adopted the following recommendations that will build on the relationships established during the Investigation and are designed to engage ocean carriers and their customers in an intense effort to improve the U.S. international ocean shipping system.

• • Rapid Response Teams: The Commission established Rapid Response Teams (“RRTs”) to provide prompt solutions for commercial disputes between shippers and carriers. There are currently 16 carriers committed to participate in this Commission program. Participating lines pledged that they will continue to participate in this program organized by the Commission’s Consumer Affairs and Dispute Resolution Services, and respond to specific concerns within 24 hours.

    Shippers involved in disputes with an ocean carrier or intermediary can contact our Rapid Response Teams through the Commission’s website. If the shipper identifies a problem as urgent, the Commission’s staff will, as soon as possible, contact the designated carrier representative of the carrier involved. The RRT process is a confidential Commission service and information provided by shippers and carriers is not disclosed to other Commission offices or other third parties.

• • International Ocean Transportation Working Group: The Commission will form a working group with ocean carriers, shippers, and ocean transportation intermediaries that will focus attention on the most pressing issues revealed during the Investigation. Participation will be voluntary and will be supported by Commission-trained facilitators. Subcommittees will be formed based on the issue to be explored.

    The first Working Group subcommittees will be organized to allow participants to develop:

    1. Carrier commercial practices, including those involving booking cancellations and rolling cargo;
    2. Shipper commercial practices, including forecasting improvement and minimum quantity estimates;
    3. Export capacity forecasting; and
    4. Other ways to improve the shipper-carrier relationship, including collaboration on major supply chain changes.

• • Intermodal Container Availability Working Group: The Commission will continue its collaboration with intermodal businesses regarding container access and availability. These businesses include railway officials, ocean carrier and shipper executives, intermodal software providers, container lessors, and chassis pooling experts.

• • Service Contract Enhancement Outreach Project: The Commission will develop an educational outreach project focused on helping small U.S. exporters and importers to improve their service contracting practices. The Commission plans to develop a web-based educational tool that may be used as part of outreach at Commission area offices and other venues.

• Transpacific Stabilization Agreement and Westbound Transpacific Stabilization Agreement Verified Transcripts; and Enhanced Monitoring of Global Alliances: In addition to its various efforts to use the Investigation as a vehicle to help shippers and carriers improve their business practices and commercial relationships, the Commission will continue its enhanced oversight of the Transpacific Stabilization Agreement (TSA) and Westbound Transpacific Stabilization Agreement (WTSA). Commission staff also will develop recommendations to enhance oversight of the three global alliances.

The findings and recommendations were based on more than 170 interviews with a wide variety of companies and organizations involved in international ocean shipping, a series of “best-practices discussion pairs” between shippers and carriers, and internet-based collaborative efforts concerning solutions to container availability.

The Commission strongly encourages shippers, ocean transportation intermediaries, and ocean carriers to contact the Commission’s Rapid Response Teams with commercial disputes that need immediate attention. The Commission also encourages the shipping public to contact the Commission’s Secretary to participate in the International Ocean Transportation Working Group or the International Container Availability Work Groups.

The Federal Maritime Commission (FMC) is the independent federal agency responsible for regulating the nation’s international ocean transportation for the benefit of exporters, importers, and the American consumer. The FMC’s mission is to foster a fair, efficient, and reliable international ocean transportation system while protecting the public from unfair and deceptive practices.