The Federal Maritime Commission has initiated an investigation that appears to be part of the Trump administration’s effort to reduce U.S. reliance on foreign-owned cargo ships. The FMC states that it is currently focused on gathering information and proposed solutions and that discussion of any remedial measures – which could include restrictions on vessel and cargo entry into U.S. ports – would occur later.
Background
46 USC 50101 states that it is necessary for U.S. national defense (which has been cited by the Trump administration as the basis for a wide range of actions) and for U.S. commerce that the U.S. have a merchant marine that is (1) sufficient to carry waterborne domestic commerce and a substantial part of waterborne imports and exports, (2) sufficient to provide shipping service essential for maintaining the flow of waterborne domestic and foreign commerce at all times, (3) owned and operated as vessels of the U.S. by U.S. citizens, and (4) composed of the best-equipped, safest, and most suitable types of vessels constructed in the U.S. and manned with a trained and efficient citizen personnel.
To aid the development and maintenance of a merchant marine satisfying these objectives, 46 USC 42101 directs the FMC to “prescribe regulations affecting shipping in foreign trade, not in conflict with law, to adjust or meet general or special conditions unfavorable to shipping in foreign trade, whether in a particular trade or on a particular route or in commerce generally, including intermodal movements, terminal operations, cargo solicitation, agency services, ocean transportation intermediary services and operations, and other activities and services integral to transportation systems, and which arise out of or result from laws or regulations of a foreign country or competitive methods, pricing practices, or other practices employed by owners, operators, agents, or masters of vessels of a foreign country.”
Investigation
The FMC is therefore investigating whether the laws, regulations, or practices of foreign governments or the practices of foreign-flag vessels owners or operators have created unfavorable shipping conditions at global maritime chokepoints, including the English Channel, the Malacca Strait, the Northern Sea Passage, the Singapore Strait, the Panama Canal, the Strait of Gibraltar, and the Suez Canal. According to the FMC, factors of concern in these areas include geopolitical tensions, customs checks, congestion and delays, piracy and terrorism, military activity, capacity limitations, navigational challenges, and environmental risks and regulations. Further details can be found in this FMC notice.
As part of this investigation the FMC is soliciting input from government authorities, container shipping interests, tramp operators, bulk cargo interests, vessel owners, individuals and groups with relevant information on environmental and resource-conservation considerations, and anyone else with relevant information or perspectives on these matters. Comments may be submitted through May 13 on the following issues.
- the causes, nature, and effects of constraints on these chokepoints
- the extent to which these constraints are caused by or attributable to (1) the laws, regulations, practices, actions, or inactions of foreign governments or (2) the practices, actions, or inactions of owners or operators of foreign-flag vessels
- the likely causes, nature, and effects of any continued transit constraints during the rest of 2025
- the best steps the FMC might take, over the short term and the long term, to alleviate transit constraints and their effects
- the obstacles to implementing such steps and how to address them
Consequences
46 USC 42106 permits the FMC to take the following measures to remedy any unfavorable shipping conditions it may identify in this investigation.
- limiting voyages to and from U.S. ports or the amount or type of cargo carried
- suspending, in whole or in part, tariffs and service contracts for carriage to or from U.S. ports, including an ocean common carrier's right to use tariffs of conferences and service contracts of agreements in U.S. trades of which it is a member for any period of time the FMC may specify
- suspending, in whole or in part, an ocean common carrier's right to operate under any agreement filed with the FMC, including those authorizing preferential treatment at terminals, preferential terminal leases, space chartering, or pooling of cargo or revenue with other carriers
- imposing fees not to exceed $1 million per voyage
- taking any other action deemed necessary and appropriate
In addition, 46 USC 42107 allows the FMC to (1) direct U.S. Customs and Border Protection to refuse clearance to vessels of a country named in a regulation prescribed under Section 42101 and (2) direct the Coast Guard to deny entry of such vessels to U.S. ports for purposes of oceanborne trade and to detain such vessels about to depart for another U.S. port. The FMC notice suggests that any such measures would primarily affect vessels registered under Panama’s flag, of which there are currently more than 8,000.
Copyright © 2025 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.