During his first speech as the new chairman of the Federal Maritime Commission, Richard A. Lidinsky Jr. says he noticed a member of the audience who kept looking through the printed program. After the speech, Lidinsky said, “He came up to me and said, ‘I hope you don’t think I was being rude during your speech, but I kept reading your bio. There’s no job description for being chairman, but your background ticked off all the boxes. You’ve come full circle.’ ”
That is certainly true. In nearly 40 years, Lidinsky has gone from FMC legislative counsel, to director of tariffs, national port affairs and counsel for the Maryland Port Administration, to Washington legislative counsel for Sea Containers. Now he’s back where he began. Lidinsky is shaking the dust of a dormant federal agency and giving it new purpose as the country’s only regulating body for the ocean shipping industry.
“I think that my perspective here has been colored by all aspects of my career,” Lidinsky said. “Our real mission lies in the fact that almost 96 percent of our foreign trade is carried on foreign-flag vessels. In view of that fact, the commission should refocus its regulatory efforts on behalf of the American importer, exporter and consumer.”
Lidinsky said a Congressional Research Service report found the commission’s role of protecting the interests of the U.S. shipping industry had all but gone away with the loss of the U.S.-flag merchant fleet. The FMC, the report said, should attend to the needs of shippers instead.
“I take that report very seriously,” he said.
It’s a view that has guided Lidinsky’s efforts to steer the agency back toward greater relevance after the FMC seemingly retreated toward the shipping world’s margins in the era after deregulation. Carriers and shippers certainly are taking the agency seriously, and if the attention the FMC has gotten on such hot-button issues as capacity management and equipment availability is a measure, then the commission has a prominent role in maritime industry affairs.
Those issues hadn’t fully formed when Lidinsky took command of the FMC in September 2009, in the midst of a global trade downturn that sent shipping rates and capacity on a roller-coaster ride that raised tension between carriers and their customers. Lidinsky’s first task was reorganization. “I found an agency that had not had a chairman for two years or longer. It had an organizational chart that made no sense to me. I found an agency that had very good, dedicated people, but who lacked the direction in the way things were going,” he said.
“The first crucial decision I had to make as chairman was to reorganize this agency,” he said. “People may argue about what course we’re on, but I don’t think there’s much dispute that the agency was criticized for doing nothing at times.”
Lidinsky named Ronald D. Murphy, a 44-year senior staff member, as executive director, responsible for the day-to-day operation of the commission. Murphy said staffers welcomed the new approach.
Lidinsky, Murphy said, “felt that we needed to have strong leadership, which he has been providing as chairman. I don’t think he’s a big believer in a committee style of management. He is not afraid to make decisions. I’ve worked for a lot of people over the years who were very hesitant to make decisions.”
That’s presumably because Lidinsky has spent virtually his entire professional life in the maritime world in one way or another.
He was still a law student at the University of Maryland in 1972 when he joined the staff of Rep. Edward Garmatz, D-Md., then chairman of the House Merchant Marine and Fisheries Committee. “Being a Baltimorean, you’re very well aware of the port and its vital role in the local and state economy,” Lidinsky said. “While working for him, that’s when I had my first spark of interest in maritime law. There’s no course in law school that you can take for it.”
Lidinsky grew up among Baltimore’s political elite. His father was chief of staff to Mayor Thomas D’Alesandro Jr. in the 1950s, and went on to be the city’s deputy comptroller for 28 years. That was no small connection — D’Alesandro’s daughter is former House Speaker Nancy Pelosi, D-Calif. Pelosi led the congressional delegation in giving Lidinsky strong support when the Obama transition team began seeking someone to be FMC chairman, and it was Pelosi who swore him in as chairman.
His brief career as political candidate occurred while he was counsel for the Maryland Port Administration. He ran for a seat in the Maryland General Assembly in 1978. At the time, state districts had three representatives. He came in fourth.
“I ran for office once — and I lost. My wife voted against me to keep me out of public office,” Lidinsky said. “I came from a political background. It’s funny, you think at the time, that door is closed, but no, you can serve the public in other ways.”
He represented the Baltimore port in negotiations that led to the Panama Canal treaty and the Shipping Act of 1984. Part of his job was arresting ships for nonpayment of port fees. That brought him into contact with shippers who had federal court papers allowing them to retrieve their cargo from a vessel in detention.
One of the shippers was Sea Containers. The container-leasing company eventually hired him to open a Washington office for the company. He stayed with the company for 20 years, working closely with the U.S. and its NATO allies as they developed containerized supply chains. He’s proud of his 20 years of service on a NATO transportation advisory committee.
Sea Containers filed for Chapter 11 bankruptcy protection in 2006, and eventually emerged as GE-SeaCo. The company closed its Washington office, and Lidinsky joined his brother Frank’s law firm. After the 2008 elections, he decided to re-enter the public sector. “After all these years, after President Obama was elected, I thought I could make a contribution by coming back here and help reinvigorate the agency,” he said.
“Fast forward six months of my being here, little did I think that the issue of the day was going to be container shortages,” he said.
The container shipping industry was coming out of its nosedive in early 2010 and rates that had fallen to historic lows were shooting back up. Shippers began complaining that was because carriers were artificially manipulating vessel capacity and container supply to recover lost revenue. The FMC responded with Fact Finding No. 26 conducted by Commissioner Rebecca F. Dye.
The investigation resulted in FMC orders for tighter oversight of two discussion groups and vessel alliances. Lidinsky also gave a higher profile to the FMC’s existing alternative dispute resolution program, a voluntary process for settling disagreements between parties without resorting to formal litigation.
Lidinsky wants legislation to make ADR mandatory and indeed offered a bill including that last year. The bill died in committee, but Lidinsky said he’d consider the same legislation again. He’d like the commission to handle all service contract disputes through ADR before they land in court.
But he rejects the notion that the actions somehow represent a retreat from the broader moves toward transportation deregulation over the past three decades. The FMC’s moves, he suggests, are focused on fostering private industry solutions to fissures in the market.
“I’m more convinced than ever that the key to helping our consumers, importers and exporters, and setting the regulatory tone for the future is getting the service contract right,” Lidinsky said. No one can argue with the service contracts’ success, he said. The commission has 3 million of them on file and is working on a model service contract for small and midsize shippers.
“Of all of the issues that flow out of the bad 2009-2010 season, the majority could have been cured with good service contracts,” Lidinsky said. “When people complain that their cargo was rolled, or they didn’t get proper compensation, these are issues that should have been dealt with in the service contract.”
And while looking more closely at the market dynamics through its fact finding, the commission also has pressed to extend the deregulatory drive by exempting non-vessel-operating common carriers from their legal obligation to maintain tariffs. The commission voted 3-1 on Feb. 16 for new regulations, which are now out for public comment. The rules, however, will apply only to NVOs licensed by the commission. The FMC will study exempting foreign NVOs for another year. Lidinsky said he’s not opposed to further deregulation, but said it should be approached cautiously.
Commissioner Joseph E. Brennan strongly objected to the new rule, arguing the commission overstepped its authority from Congress. Lidinsky said someone might challenge the commission’s authority in federal court, but “I can’t let that stop what I think is more important, moving ahead and doing it, but doing it in a cautious manner.
“I’ve seen how carriers operate, I’ve seen how shippers operate. It’s not a black-and-white world. There are tremendous shades of gray,” Lidinsky said.
He suggests that if the commission remains passive, critics charge it is dead in the water. If it plays an active role, it’s accused of putting its regulatory muscle on steroids. “The trick is to steer a middle course, and that’s what I’ve tried to do,” Lidinsky said. “But you have to move ahead and be active if you’re going to reach any kind of meaningful conclusion.”
Contact R.G. Edmonson at email@example.com.