Ocean Transportation Costs Continue to Soar

The Federal Maritime Commission (FMC) to audit ocean carriers.
Under the Biden Administration, FMC Commissioner Rebecca Dye established an Ocean Carriers Audit Program to investigate the impact of current events on the supply chain. On July 28, 2021, Commissioner Dye announced in part: “Their mission is to ensure a competitive and reliable international ocean transportation supply system that supports the U.S. economy and protects the public from unfair and deceptive practices.” The audit was launched on July 20, 2021, at the direction of Chairman Maffei. The new audit program was quickly implemented with a dedicated audit team to assess carrier compliance with the agency’s role regarding detention and demurrage. Commissioner Dye is hopeful the team will provide additional information beneficial to the regular monitoring of the marketplace for ocean cargo services. The audit program is referred to as the “Vessel Operating Common Carrier Audit Program” and plans to analyze the top nine carriers by market share for compliance, as it applies to detention and demurrage practices within the U.S. The FMC Commission anticipates working with ocean carrier companies to address their application of the rule and to clarify questions or ambiguities. They are hopeful the information supplied will lead to best practices.

Commissioner Dye provided interim recommendations to address current conditions contributing to inefficiencies and congestion in the freight delivery system due to the impact associated with the ongoing COVID-19 pandemic. Dye provided eight recommendations aimed at minimizing barriers to private parties, as concern grows over escalating costs. The interim recommendations include:

1. Amending section 41104(a)(3) of title 46, U.S. Code, to broaden the anti-retaliation provision in the Shipping Act to respond to concerns raised by shippers and exporters.
2. Amending section 41305(c) of title 45, U.S. Code, to authorize the commission to order double reparations for violations of section 41102, with commission guidance focusing this provision on demurrage and detention violations and other types of cases or actions currently being experienced.
3. Issuing a commission policy statement regarding three areas related to private party complaints: retaliation, attorney fees, and representational complaints, including trade associations.
4. Revising the commission’s website to provide clarity regarding the commission’s existing processes to bring factual allegations to the commission for resolution.
5. Hold a webinar to explain commission processes.
6. Issue a rulemaking concerning information on demurrage and detention billings.
7. Amend sections 41109 and 41309 of title 46, U.S Code to authorize the commission to order relief in addition to civil penalties in enforcement proceedings.
8. Designating an export expert in the Consumer Affairs and Dispute Resolution Services office to bolster the ability of the office to facilitate fair and fast dispute resolution to minimize barriers to private parties.

Multi-faceted solutions are needed to provide immediate relief and to address the longer-term implications of supply chain congestion. Now is an excellent time to reach out to your elected officials to advocate for the FMC’s effort to create policies that can provide benefits to the trade, including legislation or regulations against extremely high detention and demurrage fees. In addition, solutions are sorely needed to ensure availability and access to containers in ports around the country. Industry groups and trade associations can be instrumental in supporting the FMC and its mission.

Please contact your Western Overseas representative with any questions.