I want to thank Bob Voltmann and Ed Mortimer for the invitation to be here today. I am very pleased to have the opportunity to address and meet with the members of TIA. Transportation intermediaries play a vital and essential role in the ocean transportation system that underpins the international trade on which the vitality of the U.S. economy depends.

I am aware that at times in the past the Federal Maritime Commission may have been perceived as uninterested or even hostile to the concerns of the intermediary community. I hope that perception -- and any reality that may have been behind it -- has changed over the last several years.

Chairman Hal Creel deserves a great deal of credit for his efforts during his tenure to ensure a balanced and fair approach to the Commission's missions and activities. I hope that you now find a group of Commissioners and a Commission staff with open doors, open ears, and open minds. I hope you believe that there is now a Commission willing to listen to and attempt to understand your concerns, and that - even if you do not always agree with Commission actions - you view the process as fair and the decisions informed and principled.

I know that I arrived at the Commission two years ago more familiar with the shipper and vessel owning carrier communities than with the intermediaries. At Hal's suggestion, I have made an effort to remedy that deficiency. I have had the pleasure to get to know and work with Bob and Ed over the last couple of years and they have been of great assistance in helping me navigate and better understand the concerns of the multifaceted transportation intermediary world. I hope this knowledge and understanding has made me a better decision maker at the Commission.

And for me, decision making is probably the most exciting new challenge of being a Commissioner. In my career as a lawyer, Congressional staffer, lobbyist, and trade association representative, I have always analyzed the issues, weighed the pros and cons, and made recommendations for someone else's consideration and decision. Now, for the first time in my career, I have to swallow my own poison. That reality is both bracing and terrifying. And I assure you, nothing clears the head like facing a room full of stakeholders unhappy with the law you administer, your agency in general, and your vote on a particular issue. But the responsibility to meet with stakeholders, and listen and learn, accompanies the privilege of making decisions. And it is part of the job I enjoy.

I have been asked here today as one of the five Federal Maritime Commissioners to share with you my thoughts about the Ocean Shipping Reform Act of 1998, the mission of the FMC, the implications of the new law for your industry, and the future of ocean liner regulation. For the record, my views and opinions are my own, not official Commission positions.

We all know that the Ocean Shipping Reform Act is not a total deregulation of the ocean transportation system. Congress preserved and reaffirmed the long-standing antitrust immunity for ocean carriers and retained some elements of the tariff and common carriage system. Congress also continued the Federal Maritime Commission as the body to oversee and address substantially anticompetitive collective carrier activity.

But, even if the new law is more evolutionary than revolutionary, it is important to understand that it is a dramatic shift in emphasis. Congress and the President believed that a more competitive and efficient transportation system would be fostered by placing greater reliance on market forces rather than government regulation. If not total deregulation, the 1998 Act is, as one of the architects of the new law, Senate Majority Leader Trent Lott, said, "a paradigm shift in the conduct of the ocean liner business and its regulation by the FMC."

OSRA contemplates a diverse, dynamic world of ocean shipping. OSRA is about -- creating "win-win" partnerships. The possibilities for creative business relationships and the opportunities contemplated by OSRA are much greater than under the previous law. Majority Leader Lott went on to say, "Where ocean carrier pricing and service options (under the old law) were diluted by the conference system and "me too" requirements, an unprecedented degree of flexibility and choice will result (under OSRA).

The corollary to this enhanced freedom is that more responsibility is placed on the parties. No longer will a heavily regulated and structured environment dictate the conditions of ocean transportation. The parties must now examine and thoroughly understand their own needs and capabilities. They also have to understand the business and needs of their partners. And, especially in the realm of global contracting, the parties will have to learn to trust each other in order to achieve truly mutually beneficial long-term commercial relationships.

So, how does the new act change the mission of the Federal Maritime Commission and what will the Commission look like as we move into the new millennium under OSRA?

In those same remarks about OSRA, Majority Leader Lott said about the FMC's new mission, "Where agency oversight once focused on using rigid systems of tariff and contract filing to scrutinize individual transactions, the 'big picture' of ensuring the existence of competitive liner service by a healthy ocean carrier industry to facilitate fair and open maritime commerce among our ocean trading partners will become the oversight priority."

First, I expect that the Commission will devote more of its attention to identifying and addressing major market-distorting problems that are not being addressed by competition and, if left unchecked, would undermine the deregulatory or pro-competitive goals of the Ocean Shipping Reform Act.

The single most important pro-competitive element of OSRA is the provision allowing for confidential service contracts. And, under OSRA, the Commission is the only entity with access to all service contracts. So I expect a major focus for the Commission in the future will be to understand what is happening with service contracting to ensure that the important role for these contracts envisioned under the new act is not circumvented or undermined by the carriers.

And while I am on the subject of the importance of service contracting and the Commission's unique responsibility for protecting the role of service contracts under OSRA, I want to briefly address a recent Commission action and some of the concerns it raised in the intermediary community.

In March, the Commission took action to address concerns about the accuracy and accessibility of published tariffs. TIA has expressed a strong concern that by this action "(t)he FMC took yet another step away from deregulation and back into the world of regulation when they announced a renewed interest in ocean tariff enforcement." TIA also focused on FMC language that TIA saw as an indication of the Commission's intention to rely on "corrective action(s)," including civil penalties, for those not in compliance.

First, as to the issue of the Commission's intention to rely on traditional enforcement measures such as penalties to achieve compliance, I do not think the Chairman or the Commission receives credit from TIA for FMC's effort to achieve compliance primarily through education and informal assistance to stakeholders. To me, it is of some importance - and worth recognizing -- that in this case the Commission's first efforts to achieve compliance are intended to be done through cooperation with, rather than confrontation with or prosecution of stakeholders. I sincerely hope that spirit serves as a precedent for future Commission endeavors - and I hope that spirit is reciprocated by our stakeholders.

Second, the Commissioners had been advised that many of the service contracts filed with the Commission by vessel operating carriers cross-reference their published tariffs. I made it clear at the March meeting that, at least for me, the issue of tariff accuracy and accessibility takes on more importance where there is this relationship between tariffs and service contracts. Because the Commission has the responsibility to ensure that this important pro-competitive feature of the new law is not undermined or circumvented, it is the accessibility and accuracy of the published tariffs of service contract filers that must be of special importance for the Commission. In a time of limited resources, the Commission should focus on priorities, such as ensuring the accuracy and accessibility of those tariffs cross-referenced in service contracts.

In addition to focusing attention on service contracts, I expect that the Commission will continue to focus attention and resources on analyzing and understanding carrier agreements and their potential for unreasonably reducing transportation services or unreasonably increasing transportation costs. This is particularly important in light of the increasing popularity of broad "discussion agreements" among carriers in place of conferences, combined with the right of carrier agreements under OSRA to issue "voluntary guidelines."

It is clear that under OSRA that Congress expects the Commission to be vigilant and willing to take strong action to ensure that the pro-competitive features of the act are not undermined by anticompetitive behavior. Congress clearly indicated it wants the Commission to be more proactive in its application of its injunctive powers.

A second major challenge for the Commission is to explore ways to further reduce regulatory costs and burdens that limit market flexibility without serving substantial regulatory interests or needs. It is clear to me from the liberalized exemption authority provided to the Commission in the 1998 act that Congress expects us to actively pursue this objective. I would like to see the Commission examine all of its rules and regulations in an effort to further identify and eliminate unnecessary regulatory costs and burdens.

Of all of the groups directly affected by the Ocean Shipping Reform Act, I find you -- the transportation intermediaries -- to be the most interesting in terms of the opportunities and challenges posed by the new Act.

As a group, you are the most unhappy with the changes contemplated by OSRA and feel you benefitted the least from the Ocean Shipping Reform Act. You may be right -- at least in terms of an immediate reduction of regulatory burdens and benefits flowing from the Act. Among other things, under OSRA you are subject to increased licensing requirements, do not have the right to offer confidential service contracts to your customers, and continue to shoulder the legal responsibility and expense of publishing tariffs.

Notwithstanding these concerns, in the long-run, I believe you may turn out to be the biggest beneficiaries of the new law. Why? Because OSRA contemplates that very diverse, dynamic world of ocean shipping I discussed earlier. Some vessel operating carriers want to be full service, door-to-door logistics providers. Others simply want to carry a box from Port A to Port B. Some shippers want in-house transportation departments to handle all of their global shipping needs and some shippers want and need someone else to handle all their transportation needs. And services will be needed and provided in every conceivable variation between these extremes. This is no longer a "one size fits all" world and this is the area where you as transportation intermediaries play an indispensable role in the ocean transportation system.

Intermediaries are the most creative, flexible and entrepreneurial part of the ocean transportation industry. Those of you who creatively fill the niches that develop in this diverse world of ocean transportation under OSRA will thrive and possibly be the new law's biggest beneficiaries. Ironically, OTI's may also turn out to be a key to the success of the new law. You may prove to be the mortar between the odd size stones in the ocean transportation system contemplated by OSRA.

As with any deregulation, the biggest challenge may be having the vision to see the needs and meet them. The future will belong to those who quickly identify and understand the need, have the vision about how it can be creatively met, and quickly implement that vision in a manner contemplated in the new law.

Some intermediaries will make the transition to the new environment very successfully. Others may not and will fail to make the changes necessary in a new deregulated environment -- as will some carriers and shippers that cannot make the same transition.

But, you should not fail just because you are intermediaries and are victims of collective carrier conduct that violates the Ocean Shipping Reform Act. It is incumbent on the Commission to see that this does not occur. If we fail, I expect that failure will be very quickly brought to the attention of Congress.

There are a number of activities and developments that -- combined with the unhappiness of some stakeholders with the legislative efforts that resulted in OSRA -- ensure that the Ocean Shipping Reform Act and the underlying issue of antitrust immunity will continue to be discussed and debated.

Even little over a year after enactment of OSRA, we continue to see a lot of Congressional interest in the Ocean Shipping Reform Act. And Congress should and will regularly and routinely review the implementation of its handiwork and any changes that may affect OSRA or its underlying policy. And just as it did in the Ocean Shipping Reform Act of 1998, Congress can and will change the law if necessary, address problems in the law or changing realities.

As he promised to do in 1998 when Congress passed OSRA, Chairman Hyde focused the attention of the House Judiciary Committee on ocean shipping regulation and carrier antitrust immunity in a hearing earlier this year. The Committee reexamined the carrier antitrust immunity in light of several ongoing developments.

One of these developments is the recent sale of the last major U.S. owned global liner carrier to a Danish company. Even though Maersk-SeaLand will operate vessels under the U.S.-flag, this development raises the question in some circles of why the United States should preserve antitrust immunity that, on one level, may benefit only foreign-owned companies.

Another ongoing development that may influence the future regulation of ocean transportation in the United States is the state of competition policy in the rest of the world. The antitrust immunity provided for collective carrier activities under U.S. shipping law is in part premised on the fact that antitrust immunity is provided for carriers by our trading partners.

International perspectives on competition policy, however, have been evolving in recent years. In addition to the United States, a number countries have recently revised their laws governing collective carrier activities: Japan, Australia, Korea, and the European Union. Other countries and entities, including the Organization for the Economic Cooperation and Development, are in the process of reviewing antitrust immunity for liner vessel owners. These deliberations by our trading partners and international organizations of which we are members will certainly influence future discussions about carrier antitrust immunity under U.S. law -- just as the U.S. experience with OSRA should influence our trading partners' deliberations.

The continuation of antitrust immunity in the long-term may well depend on whether policy makers in the United States and abroad remain convinced that the conditions and economics of international ocean liner shipping dictate some degree of antitrust immunity -- that the disadvantages of carrier antitrust immunity is outweighed by broader public benefits to international trade -- and that government oversight is effective in preventing abuse by the carriers of the antitrust immunity.

While some groups and legislators called for revision of the Ocean Shipping Reform Act even before the new law went into effect, Congress just spent four years considering the regulation of ocean shipping and just completed action on the matter a year ago last October. I would be surprised to see any repeal or major change to the law until Congress has the opportunity to see how the Ocean Shipping Reform Act does or does not achieve its objectives.

I think much of the Congressional attention will focus on how the law is working in the real world -- whether there is a general satisfaction that the balances and compromises embodied in the act benefit the public and facilitate international commerce, whether the pro-competitive elements built into the act together with FMC oversight have prevented carrier abuse of the antitrust immunity, and whether the various groups involved in ocean transportation -- carriers, shippers, intermediaries, labor, and ports -- are as groups benefitting from the new law as Congress intended. In the short to midterm, whether the new law is a practical solution to real world problems is more likely to affect the immediate future of the Ocean Shipping Reform Act than any broad, generalized, or theoretical debate over the merits or demerits of antitrust immunity.

This then begs the question of how the Ocean Shipping Reform Act is working. Again, what follows is only my opinion. And while there are certainly those who will disagree both within and without the Commission, I think the testimony and the response of the members at the hearings held by both the House Judiciary and Transportation and Infrastructure Committees earlier this year by-and-large support this analysis.

First, it is really too early to have a clear or complete answer to the question of how the new law is working.

Because the Ocean Shipping Reform Act contemplates a very different environment from the previous scheme of heavily regulated common carriage, the learning curve is steep. Many of the participants -- shippers, carriers, and intermediaries -- are having to learn a new way of business and a new attitude about entering into ocean transportation arrangements. For all the parties, it is taking some time to prepare for, enter into, and make fully successful the types of relationships contemplated by OSRA.

Second, while it will take some time to fully understand how the act is working, there are at least some preliminary indications that the new law is having some positive impact on the business of ocean shipping.

One indication is that confidential service contracting is increasingly being utilized as the means of moving cargo. We have had an explosion in the number of service contracts and amendments filed with the Commission - more than 127,000 - representing an increase of 125 percent compared to the same period in the previous year.

There are also some indications that the terms and provisions of service contracts are starting to vary from contract-to-contract as parties obtain experience with the process and tailor contracts to address individual needs. One recent press report indicated that "carrier and shipper representatives who spoke [at a recent seminar] ... said service contracts negotiated in the busy trans-Pacific trades this year will evolve significantly from those negotiated last year." I believe the use and sophistication of service contracts will only continue to expand as the parties become more comfortable with the process and with their business partners.

Another indication that the act is performing as Congress intended is this past year's experience in the east bound trans-Pacific trade. In 1998, the conduct of the carriers in that trade gave rise to multiple allegations of abuse, an FMC investigation, and concerns that competition would be all but eliminated in the trade during this year's peak season. To my knowledge, the Commission has heard few reports of the type of alleged carrier abuses that caused so much concern in 1998.

Nor have the fears about the elimination of competition in the trade been realized. This may be due in part to the FMC's interest, but I believe it has more to do with the fact that OSRA dramatically changed the regulatory landscape. Market forces and competition, not regulation, helped determine last year's outcome. Confidential contracting fostered direct and individualized commercial relationships between shipper and carrier. And as rates went up, substantial new capacity was added to the trade by both new entrants into the trade and existing players. This is what OSRA contemplated.

But one contracting season does not a successful act make, and we really do need several rounds of service contracting and more experience with the new law before we know how the act is doing. The Commission will continue to monitor carrier activities, especially for the use of "voluntary guidelines" to undermine confidential service contracting.

Over the next year the Commission will perform an assessment of the Act to provide Congress, the President, and the public with information and analysis about the Act. With this assessment and with surveys conducted by stakeholder organizations such as the National Industrial Transportation League, we should be in a position to understand if the law is working as intended and hoped by Congress and what changes, if any, should be made - either legislatively by Congress -- or administratively by the Commission within the authority provided in OSRA -- to address any problems and help the Act achieve its goals.

Again, I thank you for the opportunity to be here with you today. I am here to learn from you as well as to talk, so I hope we will have some time remaining for some discussion.