FMCÆs new relevancy
Chairman Lidinsky says regulatory agency has role in country's economic recovery.
By Chris Gillis
There's no shortage of industry representatives who would like nothing more than the U.S. Federal Maritime Commission to go away.
However, newly appointed FMC Chairman Richard A. Lidinsky Jr. believes the agency, which regulates U.S. ocean freight markets against unfair trade practices, is more relevant than ever in today's weakened global economy where scammers are more likely to prey on struggling business owners.
'Our mission remains the oversight of an efficient and competitive international trade that moves on water and the protection of our fellow citizens from unfair, deceptive and unlawful transportation practices,' Lidinsky said in a recent interview at his Washington office.
In particular, the Internet has facilitated a proliferation of entities offering American shippers ocean transportation intermediary services, such as freight forwarding and consolidation activities, without the proper federal licenses and regard for the country's regulations.
'Our field representatives receive many reports of these types of illicit activities,' Lidinsky said. 'We're not playing gotcha. We expect compliance by those licensed and those who would take advantage of the shipping public. If we find unlicensed freight forwarders or other OTIs, we'll go after them.'
The FMC will unveil new Web site tools in early spring that allow shippers to more easily determine whether a forwarder or non-vessel-operating common carrier is indeed licensed with the agency. There are currently 1,136 forwarders and 1,720 NVOs with licenses.
'The Internet is a clever tool, but has to be approached at times with caution,' Lidinsky said. 'We now have people across all our departments who are tech savvy. We're using the Internet more than ever to track illicit operators.'
The chairman also noted the agency must not only monitor activities in existing U.S. ocean freight trades, but has a responsibility to analyze and prepare for new or emerging trades.
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| Richard Lidinsky Jr. chairman, FMC |
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| 'Our mission remains the oversight of an efficient and competitive international trade that moves on water and the protection of out fellow citizens from unfair, deceptive and unlawful transportation practices' | |
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'2011 will mark the 50th anniversary of this agency,' Lidinsky said. 'The FMC will continue to play a significant role well into the future.'
The Obama administration has placed significant emphasis on federal programs that encourage companies to increase their export activities as a way to help improve the national economy. Lidinsky said the FMC has a definite part to play in this.
'It is the role of the FMC, through its regulatory powers, to assist all segments of our waterborne commerce ' vessels, ports, support industries, labor both on board our ships and on our terminals, truckers and railroads ' in regaining their economic vitality and jobs when the upturn comes,' he told the Senate Commerce Committee during his July 8 nomination hearing.
Giving Back. Lidinsky is no stranger to the ways of Washington and the FMC. He started his career as a congressional aid to the former House Merchant Marine and Fisheries Committee before joining the FMC's Office of General Counsel as legislative counsel from 1973 to 1975.
In 1975, he was appointed by the Maryland Port Administration to be director of tariffs and national port affairs. He was considered a key architect of the port protection sections in the Panama Canal Treaty implementing legislation and the 1984 Shipping Act. He also helped negotiate on behalf of the Port of Baltimore one of the first U.S.-China trade agreements.
In 1985, Lidinsky joined Sea Containers Ltd., a container manufacturing and leasing company, to establish its Washington office. As a vice president of government affairs until 2006, he oversaw Sea Container's contracts to supply military equipment to the Defense Department from the company's factory in Charleston, S.C.
Lidinsky also served as a member of the Defense Transportation Association's Sealift Transportation Committee; as board director and on the Defense, Transportation and Port Security Committee of the British-American Business Association; and a high-level expert to the U.S. NATO Delegation on the Ports and Intermodal Transportation Committee from 1995 to 2005.
Prior to his FMC nomination by the White House, Lidinsky worked as an attorney and international trade consultant in private practice from his hometown of Baltimore.
With 37 years of maritime industry experience, Lidinsky could just have easily retired. 'I have had a diverse and interesting maritime career after I left the FMC ' a large port authority, an international maritime company, advisor to NATO ' so I wanted to serve our country by putting those experiences to use and have the honor in joining a new, change-oriented Obama administration,' he said.
President Obama nominated Lidinsky for commissioner in early June. He was confirmed by the Senate on July 24, and sworn into office on Aug. 7. His term expires June 30, 2012. It was further announced by the administration on Sept. 11 that he would also assume the role of FMC chairman.
When Lidinsky arrived at the FMC in August, he wasted no time meeting with the various department staffs to assess the overall operation.
During his first industry speech as chairman before the Maritime Administrative Bar Association on Oct. 1, he described his sense of the FMC's evolution during the past 30 years.
'In looking at the commission in the 1970s as in contrast to today, this year being described as the worst in 'modern maritime history,' I think there are two major distinctions that can be drawn,' he said.
'The first, is that if one looks back at the last 30 years or so, the 1970s and 1980s could be described as perhaps the 'golden age' of maritime regulation,' Lidinsky explained. '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, intermodalism, the triumph of containerization, etc. ' were fought and in large part settled in this era.
'The next period covering the 1984 Shipping Act until the 1999 revisions was important with its re-regulation of commission procedures, emergence of the NVOCCs, and the relationship of carriers and shippers as embodied in the service contract,' he said.
'What is now the dominant issue? Is it the shrinkage of the U.S.-flagged fleet? (One recent report suggested that the commission should refocus its regulatory mission and scope on the American consumer/importer/exporter since a large portion of the U.S.-flagged ownership is now offshore.) Is it the emergence of foreign-flagged carriers dominating certain trades? Is it preparing 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 issues that are yet to emerge.'
Three, Four, Five. Prior to Lidinsky's appointment, the FMC was down to two commissioners, Democrat Joseph E. Brennan and Rebecca F. Dye, a Republican, meaning that all decisions out of the FMC had to be unanimous. Long-time Commissioner and former Chairman Harold J. Creel, a Democrat, concluded his term at the end of June and joined Arlington, Va.-based government relations firm Alcalde & Fay. The agency hasn't had a chairman since November 2006 when Steven R. Blust left to become president of the Institute of International Container Lessors.
During an FMC budget hearing in 2008, the House Transportation and Infrastructure's Coast Guard and maritime transportation subcommittee put the commission on the defensive after questioning how the then four sitting commissioners, which included former Commissioner A. Paul Anderson, spent their time at the office and cited reports of low morale among the agency's staff.
The commission immediately responded to the subcommittee's criticisms by instituting more transparency into its activities. It established biweekly meetings, portions of which are open to the public, and set out to improve conditions for staff. In 2009, The Best Places to Work in the Federal Government survey placed the FMC among the long list of small agencies in the No. 1 and No. 2 spots for strategic management, effective leadership, pay and benefits, and teamwork.
During the past year, the commission has continued to monitor the international liner trades, keeping an eye on agreement activities related to ocean common carriers and marine terminal operators:
' The commission became involved in the competition debate associated with the ports of Los Angeles and Long Beach. On Oct. 31, 2008, the agency challenged the plan in U.S. District Court on the basis that it violated the anti-competitive standards of the Shipping Act. A judge denied the FMC's request for preliminary injunction. The agency reviewed its options and requested to dismiss the case on June 16.
' The Transportation Stabilization Agreement backed off a proposed amendment to jointly rationalize capacity due to the FMC's inquiries and the shippers' opposition to the plan.
White House confirmed on Oct. 7 that it will seek to fill all five positions on the commission. While some industry and government officials have argued that only three commissioners are necessary, Lidinsky said, 'a fully seated commission will be most beneficial to the agency, industry and the American taxpayer.'
The FMC has a staff of 124 employees and a budget of $22.8 million for fiscal year 2009. Lidinsky said he will seek to increase staff levels in areas of licensing and compliance. While technology has helped the agency fine tune its activities without adding staff, he affirmed that 'there's still a need for good people to analyze data and apply it to specific situations.'
Lidinsky has started to lay the groundwork for a 'green team' within the FMC to assist ports and carriers with clean air initiatives, and will strengthen ties with the Environmental Protection Agency, National Oceanic and Atmospheric Administration, and Coast Guard.
'We're not the EPA but we can provide clean air examples through agreements and arrangements like those in place in Oakland, Seattle and New York that reflect a green dimension,' Lidinsky said.
'Having viewed our industry from the port perspective for nearly a decade, I tend to have great faith in their abilities to serve their customers and provide the vital waterborne commerce link,' he said. 'However, the FMC has no obligation to prevent a port from taking on an adverse business decision, since we provide the framework for their legal activities. They have to make the local, state and ultimate cargo results decisions, working with their transport partners.'
Full Throttle. Since taking office in August, Lidinsky has maintained a hectic schedule of staff meetings and attending to industry matters.
On Sept. 28, the FMC published a request for comments regarding a recent petition asking the agency to use its authority to exempt NVOs from the requirement to publish tariffs. The National Customs Brokers and Forwarders Association of America's petition, which was filed on July 31, includes the following principles:
' Exemption would be voluntary and apply only to rate tariffs.
' Negotiated rates and related disputes would be governed by contract law.
' NVO Service Arrangements (NSAs) would continue to be filed with the FMC and essential terms published.
' All NVO-negotiated rates would be 'memorialized' in writing.
' FMC would have access to documentation underlying negotiated rates.
' Exemption would not apply to antitrust immunity on NVOs.
' Exemption would apply to FMC-licensing and registered to NVOs.
The FMC closed the public comment period on Sept. 26, and is reviewing the comments. The commission plans hold a hearing on the issue as well.
The FMC continues to monitor the European Union's progress to end antitrust immunity for ocean liner operations in the European trades and how the commission itself may eventually revisit the liner carrier antitrust immunity still allowed in the U.S. trades. Lidinsky said the FMC will announce the framework for its analysis of the European trades' impact on U.S. waterborne commerce later this year.
On Capitol Hill, bills have recently surfaced that will require the FMC's input and operations if ultimately passed by Congress.
Sen. Frank Lautenberg, D-N.J., introduced legislation that would require shipping agents to be licensed, and there's talk in the House about introducing a bill that would license container leasing companies. Both industries are currently unregulated.
I intend to ensure this agency works closely with Congress on issues of mutual concern,' Lidinsky said. 'We'll request expanded powers for the agency when necessary.'