FMC to Make Policy Statement on Demurrage and Detention Issues

The Federal Maritime Commission has voted to move forward with two demurrage-and-detention related initiatives proposed by Commissioner Rebecca F. Dye as part of Fact Finding 29. Unlike Commissioner Dye’s other Interim Recommendations, these initiatives required formal Commission approval.

The first initiative is to issue a policy statement on issues that affect the ability of shippers, truckers, and others to obtain reparations for conduct that violates the Shipping Act, including conduct related to demurrage and detention. The policy statement will provide guidance on the scope of the prohibition against carrier retaliation, when attorney fees may be imposed on a non-prevailing party, and who may file a complaint with the Commission alleging unreasonable conduct.

Additionally, the Commission in due course will issue an Advance Notice of Proposed Rulemaking (ANPRM) that will solicit public comments on two questions: first, whether the Commission should require ocean common carriers and marine terminal operators (MTOs) to include certain minimum information on or with demurrage and detention billings; and second, whether the Commission should require carriers and marine terminal operators to adhere to certain practices regarding the timing of demurrage and detention billings.

The Commission has also moved forward with other recommendations from FF29, including hiring additional staff for CADRS, including one person who will be designated as the agency’s exporter advocate. The Commission will make announcements related to other recommendations as developments warrant.

Commissioner Carl W. Bentzel says he believes that "the Commission needs to provide clear and firm guidance on the assessment of demurrage and detention penalties in light of current levels of congestion, and growing shipping frustration. Additional clarity will also assist FMC enforcement of potential violations of the Shipping Act."

"I look forward to working with FMC staff, my fellow Commissioners, and considering comments submitted through the public review process. Demurrage and detention charges when properly utilized are intended to work to incent the movement of cargo by limiting the amount of time available for the pick-up of cargo, and the retrieval of cargo equipment in order to maintain traffic fluidity. Carriers and marine terminal operators should not be charging demurrage or detention caused as a result of their own operational challenges, but on the other hand, shippers also need to pick up cargo left on-dock on a timely basis. While this clearly a delicate balance, I believe that we should move forward to consider new standards for the imposition of demurrage and detention."

CMA CGM Stops All Spot Rate Increases Until Feb. 1, 2022

French container transportation and shipping company CMA CGM S.A. has decided to stop all spot rate increases effective immediately, from September 9, 2021, to February 1, 2022.

"The Group is prioritizing its long-term relationship with customers in the face of an unprecedented situation in the shipping industry," the company stated in a press release.

CMA CGM noted that since the beginning of 2021, container shipping spot freight rates have continued to rise due to port congestion and the major imbalance between demand and maritime container transport effective capacity.

"Although these market-driven rate increases are expected to continue in the coming months, the Group has decided to put any further increases in spot freight rates on hold for all services operated under its brands (CMA CGM, CNC, Containerships, Mercosul, ANL, APL)."

CMA CGM added that it is investing heavily to strengthen its service offering. "The Group has increased the capacity of its operated fleet by 11% since December 31, 2019, through the addition of new vessels and the purchase of second-hand vessels. Over the last 15 months, the Group has also increased its container fleet by 780,000 TEUs."

CMA CGM advises its clients to contact their usual CMA-CGM sales representative for more information.

EU, US and Chinese Regulators Discuss Shipping Competition Issues

Federal Maritime Commission Chairman Daniel B. Maffei joined his colleagues from the European Union and the People’s Republic of China for the fifth biennial meeting of the Global Regulatory Summit to discuss competition issues related to the shipping industry.

The meeting was hosted by the European Commission and held virtually on Tuesday, September 7, 2021.

Three broad agenda items were discussed during the meeting. First, sectoral developments since the start of the COVID-pandemic including an analysis of supply and demand and an identification of bottlenecks in the ocean-linked supply chain and the causes of service disruptions. Second, actions undertaken so far by relevant jurisdictions and authorities in response and their results. Finally, the way forward and possible actions to increase resilience and smooth operations in the sector.

The European Delegation was led by Henrik Mørch, the Director for Transport, Post, and Other Services, Directorate General for Competition. The Chinese delegation was led by Li Tianbi, Director General of the Water Transport Bureau, Ministry of Transportation, People’s Republic of China. Commissioners Rebecca F. Dye, Michael A. Khouri, and Carl W. Bentzel also attended the Summit on behalf of the FMC.

“The performance of ocean carriers in meeting historic demand for their services and the unusually high costs to move ocean containers are of interest and concern to regulators, legislators, and the public globally. Today’s session of the Global Regulatory Summit provided key competition authorities responsible for the oversight of the container shipping industry the opportunity to share information about what their respective monitoring and enforcement regimes are observing in the marketplace and compare conclusions about carrier behavior. I applaud my colleagues from the European Union for holding this meeting and providing a forum for an invaluable exchange of information,” said Chairman Maffei.

The delegations agreed to hold the next meeting of the Global Regulatory Summit in Beijing in 2023.

The first Global Regulatory Summit was held in December 2013 and hosted by the Federal Maritime Commission. Subsequent meetings were held in Belgium in 2015, China in 2017, and the United States in 2019.