Remarks of Steven R. Blust,

Chairman, Federal Maritime Commission

New Orleans Maritime Alliance
New Orleans, LA

February 12, 2003

The industry has come along way with tools and technology over the years, but it the people who make it work. Relationships, cooperation and collaboration are key elements to success. The Maritime Alliance is a great example of how the New Orleans Maritime community works together. Congratulations and keep it going.

Functions of the Federal Maritime Commission

The Act requires that any person in the United States who operates as an ocean transportation intermediary ("OTI") obtain a license from the Federal Maritime Commission. OTIs include both ocean freight forwarders, which have historically been licensed by the Commission, as well as non-vessel operating common carriers (NVOCCs). Moreover, all OTIs, whether in the U.S. or foreign based but engaged in the U.S. foreign commerce, must furnish evidence of financial responsibility in the form of a surety bond, guarantee or insurance. This is available to pay for damages arising from the OTIs' transportation related activities. On our website, under the heading "View Carrier List," you will find a list of the locations of tariffs of licensed OTIs. We intend soon to post a comprehensive list of licensed OTIs.

The Commission also issues certificates of financial performance and casualty to cruise lines which have sufficient financial responsibility to pay judgments for personal injury and death or for nonperformance of a voyage.

The Commission reviews operational and pricing agreements between ocean common carriers to ensure they do not produce excessive anticompetitive effects.

The Commission also receives all service contracts entered into by ocean common carriers and shippers, and maintains a database of those service contracts. It makes sure that carriers' electronic tariffs are published in an accessible manner. The Service Contract Filing System can be accessed from our website, though the database is of course not public. On our carrier list page you will also find the location information for VOCC tariffs.

Further, as part of our mandate to protect against discriminatory, unfair, or unreasonable rates, charges, classifications, and practices of ocean common carriers, terminal operators, and freight forwarders, the Commission has jurisdiction to hear complaints brought against any party subject to the Shipping Act of 1984. Private parties can bring complaints before an administrative law judge, or the Commission may initiate investigations or other enforcement proceedings on its own initiative. We also provide an alternative dispute resolution service and an Office of Informal Complaints to help any party to a transaction, including customers, ocean transportation intermediaries or carriers, in resolving disputes quickly and informally. Through this program we provide assistance to cruise passengers as well.

The Commission is authorized to address restrictive foreign shipping trade practices pursuant to Section 19 of the Merchant Marine Act of 1920 and the Foreign Shipping Practices Act of 1988. These statutes empower the Commission to make rules and regulations governing shipping in the foreign trade to adjust or meet conditions unfavorable to shipping and to address adverse conditions that affect carriers, OTIs and shippers in the foreign trade, but which conditions are not otherwise applied to foreign entities operating in the U.S. Simply stated - reciprocity.

Outreach - Seminars

One new initiative the Commission is undertaking to enhance our outreach is a series of seminars hosted by our five field offices to help educate the industry and the public about our functions and services and to provide instruction regarding the regulatory obligations of providers and users of ocean liner shipping services in the U.S. foreign trades. The first of such seminars will be held in Miami on February 25th. The second will be held here in New Orleans on March 19th hosted by Al Kellogg, our area representative here. Our thanks to the World Trade Center for the hospitality for that event. Our area representatives in New York, Miami, New Orleans, Los Angeles and Seattle, have always functioned as a kind of "help desk" for the industry and we hope to formally expand this role through these seminars. Topics will likely range from the assistance the Commission can offer in day to day business to topics of timely interest to the industry as a whole. I hope that these seminars will also provide a forum for continuing dialogue between the industry and the Commission. We offer our services to you and hope that you will continue to educate us in turn.

I know that the FMC has historically been quite responsive to the industry and I will do all that I can to ensure that it continues to be. FMC staff are easily accessible and always available to answer questions you might have concerning the requirements and regulations that may be relevant to your businesses. We encourage you to utilize our website, www.fmc.gov , which contains contact phone numbers and email addresses, plus other useful information concerning the FMC and the laws which we administer.

Security

I know that maritime security is a topic of much interest to you and to the industry in general. While our role at the FMC is primarily of support to the front line organizations, I would just like to assure you that it is something we at the FMC include in our day to day functions, such as the licensing of OTIs. We hope to use our expertise and vast collection of commercial information to assist the various entities on the front lines of securing our ports and vessels. As such, we regularly provide technical expertise and assistance to those entities.

As many have said before, I believe it is essential that each entity in the supply chain, including government agencies, do its own part towards securing the chain. I believe that all of the entities involved in ocean transportation, including government agencies, must form a collaborative and integrated system to ensure the safety and efficiency of the supply chain. By working with trusted partners, you can help to ensure the safe and expedient transportation of cargo. In practice, the burden falls heavily on all of you at the local level to keep those of us in the great seaport of Washington, D.C. informed of the business realities in this new era.

Industry Imbalance

I believe that our industry is striving for balance in many arenas. And imbalances of various sorts prove the greatest challenges. The most obvious example of an imbalance facing the industry is the trade imbalance. Currently on many trade lanes, cargo volumes are high in one direction only. Ships are full, rates are low, and most ocean carriers are losing money. Ocean carriers are attempting to adjust to this trade imbalance in various ways, including cost reduction through the use of larger ships and carrier consolidation, finding additional cargo sources, and increased revenue compensation through the use of surcharges. US exporters are challenging the proposed implementation of the surcharges because the increased costs may limit their export opportunities.

Balance

Balance is crucial in other areas as well - balance between shipper and carrier interests, balance between governmental and commercial interests, balance in the international trades, and so forth. Today, I would like to add to that my hope and prognostication that we are entering an era where the industry will come to value cooperation and collaboration over confrontation. Unilateral efforts on the part of any segment in the ocean shipping industry will not work as effectively as what can be achieved through collaboration and cooperation among the parties involved. The industry, the shipping public and the government must work together to balance the need for secure and high quality shipping services with the need for an efficient and economical transportation system as a whole. Each industry player has an important role to play in ensuring the efficient and safe functioning of ocean commerce. With recognition of this interdependence, the industry can thrive in difficult times.

Thank you and best wishes for your safety and prosperity.