New Initiatives to Help Supply Chain

FMC Press Release dated June 8, 2022 -- The Federal Maritime Commission (FMC) is establishing three new initiatives that will provide enhanced assistance to shippers, continue to improve legal and regulatory compliance of regulated entities, and focus on remedies to supply chain problems.

At the direction of Chairman Daniel Maffei, the Commission will:

• establish a new and permanent International Ocean Shipping Supply Chain Program,

• re-establish the Export Rapid Response Team, and

• take the steps necessary for carriers, marine terminal operators, and operating seaports to employ a designated FMC Compliance Officer.

Each of these was contained in the Final Recommendations made by Commissioner Rebecca Dye in the Fact Finding 29 Final Report she issued to the Commission in May and issued publicly earlier this month.

“U.S. export shippers have been particularly challenged by both supply chain disruptions and ocean carrier policies and practices that can sometimes make it difficult to meet deadlines to get cargoes aboard ships in a timely manner. As Commissioner Dye recommends, bringing back the FMC Export Rapid Response Team will provide a dedicated resource for shippers to use in resolving emergency commercial disputes,” said Chairman Maffei.

Many of the operational frustrations shippers have contended with since July 2020 are tied to historic and sustained cargo volumes overwhelming the capacity of U.S. domestic infrastructure. The need for a dedicated International Ocean Shipping Supply Chain Program grows out of the recognition that there are longstanding, systemic problems and shortcomings in the networks and facilities serving America’s ocean commerce. These legacy issues contribute to disruptions and exacerbate problems when shocks to the system occur. The International Ocean Shipping Supply Chain Program will allow the Commission to identify where issues exist in the supply chain and offer proposals for steps that can be taken to remedy impediments to the free flow of shipments.

One of the two most common complaints Commissioner Dye heard throughout her work leading Fact Finding 29 was the excessive amounts of demurrage and detention fees shippers and truckers were charged despite the Commission having issued a rule on this matter in March 2020. Compliance with Commission regulations and the statutes it administers is not voluntary or discretionary. Ocean carriers, marine terminal operators, and operating seaports designating an FMC Compliance Officer who reports directly to the senior-most U.S.-based executive will aid in ensuring industry-wide observance of legal and regulatory requirements.

FMC OKs $2M Hapag-Lloyd Settlement

FMC Press Release Dated June 8, 2022 - The Federal Maritime Commission approved a settlement agreement reached between its Bureau of Enforcement (BoE) and Hapag-Lloyd AG (Hapag-Lloyd) where the ocean carrier will pay a $2 million civil penalty to address alleged violations related to their detention and demurrage practices.

“To restore full confidence in our ocean freight system, vigorous enforcement of FMC rules is necessary. Specifically, we must ensure powerful ocean carriers obey the Shipping Act when dealing with American importers and exporters. The case that was concluded today is just part of an ongoing effort to investigate any conduct alleged to violate FMC rules – and in particular, the interpretive rule on detention and demurrage charges,” Chairman Daniel Maffei said.

This settlement agreement follows an April 22, 2022, Initial Decision issued by the Commission’s Administrative Law Judge (ALJ) finding Hapag-Lloyd violated the law by knowingly and willfully failing to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing or delivery property, by unreasonably refusing to waive detention charges, in violation of 46 USC 41102(c). The ALJ ordered an $822,220 civil penalty and for Hapag-Lloyd to cease and desist their violative actions. The case, Hapag-Lloyd, A.G. and Hapag-Lloyd (American) LLC—Possible Violations 46 USC 41102(c) (Docket No. 21-09), was initiated by the Commission on November 10, 2021, at the request of BoE and following their investigative work.

The $2 million civil penalty will be paid to the U.S. Department of the Treasury and will be deposited into the General Fund.

New Monitoring Requirements Give FMC More Insight

FMC Press Release dated May 5, 2022 -- The three global ocean carrier alliances (2M, OCEAN, and THE) and each of their member companies will now be required to provide enhanced pricing and capacity information, providing the Federal Maritime Commission with uniform data to use in assessing ocean carrier behavior and marketplace competitiveness.

The newly mandated information will provide the Commission’s Bureau of Trade Analysis (BTA) with insight into pricing of individual trade lanes and by container and service type. It will also provide more immediate information regarding capacity management decisions of ocean carriers and alliances.

The changes are the result of a year-long examination by BTA to determine the data needed to properly analyze carrier behavior and marketplace trends. Under the new requirements, carriers participating in an alliance will need to submit pricing information about cargo they move on the major trade lanes, and both carriers and alliances will be mandated to submit comprehensive information related to capacity management.

One of the key responsibilities of the Commission, through BTA, is to continuously monitor compliance with agreement authorities and to determine if agreements have an anticompetitive impact on the marketplace.

The three ocean carrier alliances are already subject to the most frequent and stringent monitoring requirements of any type of agreement on file at the Commission. Information already collected includes detailed operational data, minutes from meetings among agreement principals, and regularly scheduled meetings with agreement parties where Commission staff address issues of concern.

The Commission assesses its reporting requirements on a continuous basis and adjusts the information it requires ocean carriers and alliances to file as circumstances and business practices change. Additional changes to requirements will be issued as warranted.