FMC chairmen in reunion panel
Seven former heads of the Federal Maritime Commission joined the agency's current Chairman Richard A. Lidinsky Jr. on Wednesday at the FMC's headquarters yesterday for a mixture of industry analysis, reminiscence, and humor.
Helen D. Bentley, Richard J. Daschbach, Elaine L. Chao, Christopher L. Koch, Harold J. Creel, Steven R. Blust, Joseph E. Brennan and Lidinsky participated in a 'chairmen's roundtable' that is one of several events the FMC is planning to mark the 50th anniversary of its founding during the Kennedy administration.
Bentley 1969-75. Bentley said intermodalism was the most important development during her tenure, noting this led the FMC and Interstate Commerce Commission to 'knock heads' on who was the proper regulatory agency for inland moves. On this issue, she said, the FMC 'won out' and the ICC 'disintegrated.' (Some ICC duties were assumed by the Surface Transportation Board.)
Containerization and intermodalism has caused tremendous consolidation in the liner industry, she said, with a great reduction in the number of ships calling at a port like Baltimore. 'It's a whole different ballgame. The lines are all working together on a ship — the regulations had to change.'
A recent report prepared for the Maritime Administration found U.S.-flag ships carry only about 1.5 percent of U.S. foreign trade, and Bentley said that without the FMC 'we would be on the negative end of all the foreign-flag shipping, and the United States would be the one suffering.'
She recalled intermodalism sparked litigation by both the International Longshoremen's Association and groups like the New York Shipping Association and Pacific Maritime Association.
When a court decision on the so-called '50-mile rule,' where the ILA claimed it had jurisdiction over the stuffing and stripping of containers close to ports, went against the union, Bentley recalled getting a telephone call in Washington from then ILA President Teddy Gleason, accusing her of somehow influencing the decision. The angry Gleason was loud enough that Bentley joked she did not need a telephone to hear him from New York.
Bentley, who began her career as a newspaper reporter covering the Port of Baltimore, said she had a difficult time obtaining her appointment. 'I was utterly disliked in the legal maritime community in Washington, first of all because I was a woman and, No. 2, I was not a lawyer, and that was really frowned upon.' Bentley went on to be a five-term member of the U.S. House.
Daschbach 1977-81. Daschbach said the FMC was eventually able to extricate itself from the 50-mile controversy, which he judged to be 'one of the smartest things we did. That really is a labor agreement, let the labor board deal with that.'
Daschbach said one of the agency's biggest mistakes was to accept the ruling of a South American country that a U.S.-flag carrier, Sea-Land Service, could not participate in a trade because it had 35-foot containers instead of 20- or 40-foot boxes.
Chao 1988-89. Chao said enforcement of the Shipping Act of 1984 was a major focus of the agency then. She recalled numerous settlements involving illegal rebates in the transpacific trade. The FMC collected $4.7 million in penalties.
A second major focus was performing a review of the 1984 Act. She noted that many of its conclusions were quite controversial, including finding the effect of the law was minor compared to market forces, that it had no impact on services offered by carriers in the U.S. trade, and the commercial environment under the 1984 Act was favorable to carriers who operated independently of conferences.
Chao, like most of the commissioners, expressed affection for their time at the agency. She noted the long tenure of many employees, which she said made yesterday's visit 'like a homecoming.'
Lidinsky recalled that after serving as an aide on the U.S. House of Representatives Merchant Marine and Fisheries Committee, he began his professional legal career working in the FMC’s Office of General Counsel in 1973-75. When he returned in 2009, for his swearing he said 17 colleagues still working at the agency showed up.
'It was an amazing tribute to the longevity and expertise and the pool of expertise we have to draw on,' he said.
Koch 1990-93. Koch, current president of the World Shipping Council, remembered his time at the agency as a busy one, with the FMC implementing bonding of non-vessel-operating common carriers, and a system for the automatic filing of tariffs.
He said the agency tried to become more responsive to commercial demands with a deregulatory bent, making changes such as ending a requirement that carriers file agreements with marine terminal operators, permitted carriers and shippers to amend their service agreements, forbid conferences from impeding independent action, and allowed shippers to enter into shippers associations.
'These things sound a little antiquated now, but they represented the sustained efforts to change a culture that existed at the time. It also represented the effort by the agency to modernize itself without having to have Congress make those changes,' he said.
He noted the FMC during his tenure split 2-2 on a proposal to end a requirement for NVOs to file tariffs — ironically a similar proposal is before the agency today.
The FMC helped breakdown foreign barriers to U.S. ocean carriers and NVOs, he said.
Bentley recalled how she won concessions from the Japanese in the 1970s because of the agency's power to approve or deny carrier rationalization. (She also recalled how on the trip she mended one of her colleague's pants when a seam ripped.)
Koch said during his term, Japan agreed to end a harbor fee, and the agency brought cases against China, Taiwan and Korea to break down barriers against intermodalism, including restrictions against U.S. companies doing things such as establishing branch offices, feeder services, shipping agencies, rail and truck contracts.
Creel 1996-2002. Creel said the event that garnered the most publicity during his tenure was the decision to take action against Japan for unfair trade practices because of restrictions against U.S. carriers in Japanese ports.
The FMC voted to deny entry to Japanese vessels and levy fines of $100,000 per voyage.
Many were surprised 'this tiny, relatively unknown agency had taken on this country, unilaterally to address these unfair conditions,' he said. 'There were acquisitions that this agency had 'gone rogue,' that we had acted while the president was out of town, that we had overstepped our authority. Clearly, we had not, we were acting within our jurisdiction under Section 19.'
'The president came out and publicly supported the position we had taken,' said Creel.
Blust 2002-2006. The agency under Blust forged a bilateral agreement with China that allowed U.S. carriers to open their own offices in China and allow ocean transportation intermediaries (OTIs) to post bonds in the United States rather than deposit cash in China.
Blust also recalled how NVO service arrangements (NSAs) were approved and have since become more popular — from about 300 in 2006 to around 1,400 today.
The development of NSAs was important, he said, because it showed how the FMC could use its authority under Section 16 of the shipping act to grant an exemption from tariff filing and publishing, and 'allow the industry to match up demand of customers and the supply of service.
'The industry keeps getting more complex,' Blust noted. 'Who would have thought we would see prime time advertisement for 'we love logistics,' ' an apparent reference to the recent UPS commercials that reworked the words to Dean Martin's 1952 hit 'That's Amore.'
Brennan 2009. Brennan was appointed to the FMC in 1999 and remains a commissioner. But he noted he was only briefly chairman in 2009 before Lidinsky was named. He chose to highlight his dissent from other commissioners in 2008 to seek a federal injunction to stop the Clean Trucks Program (CTP) of the Port of Los Angeles.
'I characterize it as a monumental error,' Brennan said. 'Maybe one of the reasons that I was so feisty about it is that I came out of state government. (Brennan was a two-term governor of Maine and also represented the state for two terms in Congress.) I was pleased that case was ultimately dropped. But it's interesting the one time we brought an action, I thought it was outrageous.'
Brennan also said he would like to see a repeal of antitrust immunity for liner companies.
Daschbach also expressed reservations about antitrust immunity, though he also expressed concerns about what deregulation has done to the airline industry.
After he left the agency, Daschbach worked within ocean transportation, and said he came to sense that the FMC 'was looking through wrong end of the telescope — that we were focused on the milk truck when sort of the national objective was to get milk into the stomachs of the population, and here is the FMC was worried about the milk truck.'
Lidinsky noted that three years ago the Congressional Research Service suggested the FMC should refocus its attention on importers, exporters and consumers.
Brennan also questioned whether it made sense for the FMC to have five commissioners, but Lidinsky said he thought five was the appropriate number.
Creel said the passage of the Ocean Shipping Reform Act of 1998 was another watershed event during his time at the agency, allowing one-on-one confidential service contracts between shippers and carriers. Today, he noted, about 90 percent of cargo or more moves under such service contracts. And while carriers complained about the change at the time, he said today both carriers and shippers like the approach.
Koch agreed that the shipping industry is not as American as it used to be, but said shipping and ports are still part of the critical infrastructure of the United States.
'Congress has taken some of the heavy thumb of regulation off. But I think everybody understands it still has the same mission. There are as many similarities as there are differences over time as to what the commission has tried to do. I think it has tried maintained a pretty good sense of balance,' he added. ' Chris Dupin