Chairman Maffei Emphasizes Importance of Communication With Brokers & Forwarders

Federal Maritime Commission Chairman Daniel B. Maffei addressed the annual Government Affairs Conference of the National Customs Brokers & Forwarders Association of America, Inc., discussing conditions in the trade, Commission actions and initiatives in response to events of the past year, and possible priorities for the agency moving forward.

The remarks were delivered in person on September 20, in Washington, DC.

Demand for containerized ocean transportation services globally, but particularly serving the United States, has led to more than one-year of historic volumes of freight entering the American supply chain. While freight is moving from origin to destination at record rates, the supply chain has been stressed to accommodate the sheer number of containers in transit. Congestion, inefficiencies in the system, and insufficient assets across the system have had an operational impact contributing to higher freight rates.

Chairman Maffei highlighted that the Commission has undertaken several initiatives to ensure that the marketplace is free of anticompetitive behavior including increasing reporting requirements on the three carrier alliances, consulting with other competition regimes, engaging senior carrier executives directly, and adding a formal investigatory function to Fact Finding 29. He also reported on the recently launched Vessel-Operating Common Carrier Audit Program, established at his direction, which is assessing the nine largest ocean carriers by market share in the U.S. for compliance with the agency’s rule on detention and demurrage.

“We are taking many steps to assure reasonable practices, including beefing up our enforcement and consumer affairs bureaus and looking at ways to address disincentives that have kept many shippers and NVOCCs from filing cases of their own against carriers or large terminal operators,” said Chairman Maffei.

One area of particular interest to Chairman Maffei is devoting more attention and resources to the practice of charging fees and surcharges beyond the work the FMC has done on detention and demurrage. The Chairman cited an enforcement investigation launched by the Commission in August examining certain announced or implemented congestion surcharges as an example of the sort increased scrutiny of fees that might need to be more frequently initiated.

“Many of the fees shippers are being charged seem unfair. Surcharges are justified by special circumstances that affect a particular port and they should be short in duration. Closer examination of carriers’ justifications for additional fees broadly is likely warranted. We should stop any instance where these add-on fees may not fully comply with the law or regulation,” said Chairman Maffei.

Throughout his remarks, Chairman Maffei underscored the importance of communication between industry and the Commission.

“The Federal Maritime Commission has a longstanding and strong working relationship with NCBFAA. Custom brokers, freight forwarders and other ocean transportation intermediaries play a vital role in keeping cargo moving. I am always appreciative of opportunities to engage with NCBFAA and its members. Robust communications between our two organizations serves both our interests and benefits the shared goal of the efficient movement of ocean freight.”

Furniture Company Settles With COSCO; Pursues Complaint Against MSC

MCS Industries, Inc. -- a furniture and home furnishing company based in Pennsylvania that earlier accused COSCO Shipping Lines Co., Ltd., and MSC Mediterranean Shipping Company S.A. of colluding with other carriers to drive up freight rates -- has entered into a settlement agreement with COSCO.

The details of the settlement, however, is confidential and filed under seal.

Chief Administrative Law Judge Erin M. Wirth approved the settlement agreement between MCS Industries and COSCO. Judge Wirth also dismissed with prejudice MCS's claims against COSCO.

Meanwhile, MCS is pursuing its complaint against MSC and Judge Wirth has issued a scheduling order wherein the parties will undergo discovery. January 27, 2022 is the target date to close the discovery. The parties will be required to file a joint status report in January to propose a schedule for briefing the merits of the proceeding.

In its complaint, MCS alleged that since the beginning of the COVID-19 pandemic, global ocean carriers including COSCO and MSC have unjustly and unreasonably exploited customers, vastly increasing their profitability at the expense of shippers and the U.S. public generally, which bears increased freight cost in the form of inflation.

COSCO and MSC both denied the allegations.

Documents related to the proceeding -- 21-05 - MCS Industries, Inc. v. COSCO Shipping Lines Co., Ltd. and MSC Mediterranean Shipping Company SA -- can be viewed here.

24-Member National Shipper Advisory Committee Disclosed

The Federal Maritime Commission disclosed last month the members of its newly formed National Shipper Advisory Committee. The Committee is comprised of 24 members, evenly divided between those who export cargo from and those who import cargo to the United States, that will advise the Commission on policies relating to the competitiveness, reliability, integrity, and fairness of the international ocean freight delivery system. “The current freight transportation challenges have illustrated how prescient my colleague Rebecca Dye was in recommending to Congress that it establish this Shipper Advisory Committee at the FMC.  I and the other Commissioners need rapid access to the perspectives of importers and exporters on the ground dealing with the realities of ocean shipping every day.  We also need them to meet and help guide our efforts and those outside the FMC to improve the system and make it easier, fairer, and more efficient to American shippers.  I am truly grateful to all of those who volunteered to serve on what I know will be an invaluable committee,” said FMC Chairman Daniel B. Maffei. Committee members will serve until December 31, 2024.

1. Michael Brock, Walmart

2. Brian Bumpass, Brenntag North America, Inc.

3. Justin Cauley, CHS, Inc.

4. Robert Connor, Mallory Alexander International Logistics, LLC

5. Chris Crutchfield, American Commodity Company

6. Rick DiMaio, Office Depot

7. John Esborn, Wayfair, LLC

8. Scott Fremont, Target

9. Sean Healy, The Scoular Company

10. Steven Hughes, MEMA/Auto Care Association

11. Alexis Jacobson, BOSSCO Trading LLC

12. Fernando Lagonell, DuPont

13. Alison Leavitt, Wine and Spirts Shippers Association

14. Daniel Miller, Cargill Incorporated

15. Debb Minskey, IKEA

16. Jennifer Morrissey, Ocean Spray Cranberries, Inc.

17. Kenneth O’Brien, Gemini Shippers Group

18. Adnan Qadri, Amazon

19. Richard Roche, Mohawk Global Logistics

20. Gabriel Rodriguez, A Customs Brokerage, Inc.

21. Randy Strait, Tyson Foods

22. Michael Symonanis, Louis Dreyfus

23. Joshua Woods, Blue Diamond Growers

24. Colin Yankee, Tractor Supply Company

In a press release, Mohawk Global Vice President Rich Roche said: "I am humbled to accept this appointment to serve in pursuit of betterment across the complex aspects of our Nation's supply chain, while representing the voice of Mohawk Global and more than one thousand members of the NCBFAA."

In a joint statement, MEMA President & CEO Bill Long and Auto Care President & CEO Bill Hanvey said, “Automotive vehicle suppliers represented by MEMA and Auto Care imported $76.4 billion through U.S. ports during 2019. Many of these goods were subject to further value-added manufacturing in this country. Furthermore, exports through the nation’s ports in 2019 totaled $21 billion. The ability of our ports to function is essential to our nation’s economy. Mr. Hughes’ representation on this committee is vital to our industry and the future of manufacturing in the U.S.”

Agriculture Coalition Seeks Help from President Biden

The Agriculture Transportation Coalition (AgTC), an organization with more than 70 agriculture associations, wrote a letter to President Biden noting that they are hopeful that the newly constituted National Shipper Advisory Committee, will promptly generate specific near-term solutions. The coalition recognized the positive initiatives made by the FMC and supports the Commission’s proposals to expand its authorities to effectively address unreasonable ocean carrier practices.

"However, despite these positive steps, the problem not only persists, but is becoming even more dire. Carriers are increasingly declining or cancelling export cargo bookings, while frequent ship delays and cancellations with little or no notice to our exporters, is delaying shipments by weeks or even months. The resulting inability of shippers to deliver their products on schedule affects the reliability of American exports, and subsequently decreases export values and market share. The cost to ship a container has increased between 300 and 500 percent in the past 2 years; U.S. producers are losing from 10-40 percent of their export value to these added costs; an informal survey suggests that U.S. agriculture exporters’ inability to perform is leading to a loss of 22% of their sales."

"We realize that the challenges our agriculture exporters face will not change overnight. But with the holiday import surges soon upon us, the challenge is growing. Regulatory action and enforcement steps take time to be implemented, and while those important processes need to move ahead, we call on you and your administration to take effective steps to gain immediate relief. Recognizing that relief may be incremental, it must begin very soon."

A copy of AgTC's letter can be viewed here.

A senator from New Hampshire also made a similar request in a letter addressed to FMC Chairman Daniel Maffei.

U.S. Senator Jeanne Shaheen (D-NH) urged the FMC to address the surge in costs to import goods that threatens the operations and economic recovery of businesses across New Hampshire. Shaheen noted the existential threat facing small businesses who cannot afford container rates whose costs, in some cases, have increased by over 1,000 percent, and requested that the Commission take action to protect businesses from these unsustainable freight rates.