The U.S. Federal Maritime Commission (FMC) has recently launched two investigations that could have implications for international shipping and U.S. trade. These actions reflect the FMC’s stated concern over regulatory practices by foreign governments and vulnerabilities in key global shipping routes which the FMC believes may be resulting in unfavourable shipping conditions in U.S. foreign trade.
The investigations are information-gathering, and specific measures have not been proposed or threatened. Nevertheless, due to the potential importance of the investigations, they bear monitoring.
What Is the FMC and What Does It Do?
The FMC is the U.S. government agency responsible for regulating the international ocean transportation system for the benefit of U.S. exporters, importers, and consumers. Its mission includes ensuring a competitive and reliable international ocean transportation supply system that supports the U.S. economy and protects the public from unfair or deceptive practices.
The FMC oversees common carriers, marine terminal operators, ocean transportation intermediaries, and carrier agreements. Amongst other activities, the FMC maintains and reviews service contracts, ensures common carrier tariffs are published, and regulates certain cruise ship bonds. Additionally, the FMC is authorized to investigate and take action when foreign laws, regulations, or business practices result in conditions that are unfavourable to U.S. shipping interests. The FMC has a range of tools at its disposal, including the ability to suspend service contracts, impose fees, restrict port access, and deny vessel clearance.
Focus on Global Maritime Chokepoints
An investigation announced earlier this year seeks to analyse the impact on U.S. trade of global transit constraints at maritime “chokepoints”. [1] The FMC identified seven such chokepoints: the English Channel, the Malacca Strait, the Northern Sea Passage, the Singapore Strait, the Panama Canal, the Strait of Gibraltar, and the Suez Canal. The FMC questions whether delays or restrictions at these areas (whether due to infrastructure limits, geopolitical tensions, or natural factors) have ripple effects on costs, schedules, and cargo movement into and out of the U.S.
The FMC’s investigation aims to better understand how these chokepoints affect U.S. trade and what can be done to build resilience in the face of growing global instability and capacity constraints. The FMC will also consider whether the actions of any foreign government or other maritime interests might contribute to these delays/restrictions and constitute anticompetitive behaviour that is prejudicial to U.S. shipping interests.
The FMC’s findings have not yet been announced. The situation is being closely monitored by maritime stakeholders.
Investigation into Flags of Convenience
The most recent investigation launched in May focuses on foreign flagging practices, often referred to as “flags of convenience.” The FMC is reviewing whether the laws, regulations, or behaviours of flags of convenience are creating unfair conditions for U.S.-related shipping. These concerns stem from what the FMC describes as the “’race to the bottom’ – a situation where countries compete [for flag registration] by lowering standards and easing compliance requirements to gain a potential competitive advantage.” [2] The investigation intends to assess if foreign-flagged vessels may be benefiting from looser standards, such as lower labour or safety requirements, that put U.S.-flagged or U.S.-serving carriers at a competitive disadvantage.
The FMC is inviting comments from the public and industry stakeholders during a 90-day window through 20 August 2025, encouraging input from those directly affected.
What This Means for the Industry
While both investigations are still in early stages, the FMC has underscored its authority to act if it finds that foreign practices are harming U.S. interests. Under existing U.S. law, the FMC has the power to impose measures such as limiting port calls, suspending service contracts, or directing U.S. Customs or the Coast Guard to deny entry or clearance to certain vessels in extreme cases. Notably, the FMC has not proposed or threatened any such measures. These investigations are informational only at this stage.
For members and other industry stakeholders, these investigations are important to monitor. They reflect a more proactive regulatory approach that could eventually lead to changes in how certain carriers operate in U.S. trades or how disruptions at chokepoints are addressed from a policy standpoint.
We will continue to follow developments and provide updates as the FMC’s findings emerge. In the meantime, stakeholders are encouraged to review the public notices and consider submitting comments, particularly if they have insights or experiences relevant to the issues under investigation.
[1] The Federal Register notice announcing the investigation is available here.
[2] A copy of the FMC’s Federal Register notice announcing the investigation is available at here.