FMC opens fact-finding on "flags of convenience" as members raise concerns about foreign-controlled carriers

The Federal Maritime Commission has opened a fact-finding inquiry into foreign vessel flagging practices — often called "flags of convenience" — to determine whether some open registries undermine U.S. commercial shipping and national security interests.

"Panama, Marshall Islands, Liberia. And they accept registrations from owners of vessels who are outside their residence," Commissioner Rebecca Dye said during a House subcommittee hearing explaining why the FMC launched the inquiry. She described the United States as a closed registry and said the commission is examining whether open registries provide lower oversight or costs that could undercut reliability and safety.

Why it matters: The inquiry seeks facts that could inform future enforcement or policy actions. Members pressed Dye on what remedies the FMC could pursue if the fact-finding shows harm to U.S.-flag vessels; Dye said fact-finding itself does not impose remedies but can build evidence for later proceedings and noted that, depending on findings, actions range from monetary penalties to prohibiting certain vessels from U.S. ports.

Evidence and concerns discussed

- Dye said the fact-finding process is flexible and intended to develop evidence for possible follow-up actions and to inform other agencies, including the Coast Guard and State Department.

- On the question of foreign carrier control, Commissioner Dye told the panel that the FMC has identified a set of large carriers that are "controlled" and that "5 of the 6 are Chinese" in terms of ownership or control. She said the agency is a competition regulator and will watch pricing and combinations among carriers continuously.

- Members asked what actions are available if unfair practices are found. Dye said remedies vary by case and include prohibiting ships from U.S. ports or assessing monetary penalties, and that in some extreme situations the executive branch could become involved.

Remaining oversight and follow up

Members asked for further detail on the scope and timetable of the fact-finding inquiry and on any immediate steps the FMC could take to protect U.S.-flag carriers. Dye said the investigations are intended to "get to the bottom of this" and to produce factual records that would be useful if the commission or other agencies pursue enforcement or policy changes.

Ending

The FMC has begun evidence-gathering into flagging practices and foreign carrier structure; the agency told the subcommittee it will coordinate findings with other federal agencies as appropriate and may use the evidence to support subsequent proceedings.