Company Fined $85,000 for Obtaining Transportation at Lower Rates

SWAT International, based in Jamaica, New York, entered into a compromise agreement with the Federal Maritime Commission and paid a penalty of $85,000, to settle the allegation that it knowingly and willfully obtained transportation at less than applicable rates and charges by unlawfully accessing service contracts to which they were not a party.

The FMC alleged that SWAT unlawfully accessed Kawasaki Kisen Kaisha, Ltd (K-Line) Service Contract No. SHA5071904 to which it was not a signatory or named affiliate.

Between June 5, 2015 and March 25, 2016, SWAT provided service that was not in accordance with the rates or charges contained in its published tariff or any non-tariff alternative authorized by the Commission’s regulations, the FMC noted.

Canada's Decision to Bar Cruise Vessels to Affect Alaska Business

FMC Commissioner Louis E. Sola urges Biden Administration and Congress to talk to Canada regarding its recent decision to bar all cruise vessels from their waters until February 2022.

On February 4, 2021, the Canadian Minister of Transport announced two new Interim Orders which prohibit pleasure craft in Canadian Arctic waters and cruise vessels in all Canadian waters until February 28, 2022. This action extends by one year what was a temporary ban scheduled to expire last month.

Commissioner Sola said this action by the Canadian government may very well result in the loss of a second season for a significant portion of the Alaska cruise business. Another lost season represents a potentially devastating blow to the livelihoods of thousands of Alaskans.

"[T]he cruise industry generates tens of thousands of direct and indirect jobs in Alaska annually. It is because of this that I encourage both the Biden administration and Congress to quickly review this issue and consider a limited exception to the PVSA while simultaneously engaging the Canadian government on the diplomatic front to address this particular problem."

"Finding a temporary solution to this dilemma that balances Canadian concerns with the urgent need of communities in Alaska to benefit from a 2021 cruise season should be an area where our respective governments can find common ground. However, absent such bilateral cooperation, I would hope that there is creative and cooperative thinking taking place here in Washington D.C. to determine how to remove this impediment to Alaska’s economic health," Commissioner Sola said.

FMC Demands Information on Detention & Demurrage Practices

While shippers and carriers continue to argue over detention and demurrage charges, Commissioner Rebecca F. Dye of the Federal Maritime Commission will issue information demand orders to ocean carriers and marine terminal operators (MTOs) to determine if legal obligations related to detention and demurrage practices are being met.

In a recent article from the American Shipper, the Agriculture Transportation Coalition took a swipe at ocean carriers for profiting hundreds of millions of dollars from demurrage and detention charges while importers and exporters have been pushed towards financial distress as port congestion worsens.

AgTC Executive Director Peter Friendmann was reacting to reports from a virtual press conference last month held in Germany by Hapag-Lloyd CEO Rolf Habben Jansen.

Mr. Jansen talked about the fairly extreme port congestion in ports of Los Angeles and Long Beach. He pointed to unprecedented demand for imports and COVID-19 outbreaks among longshore workers as major contributors to the the problem and further slowed the flow of goods.

Mr. Friedmann told American Shipper that the “lack of schedule integrity” as well as ocean carriers’ failure to provide reliable updates “has directly led to the demurrage and detention charges imposed on their customers.

Mr. Friedmann expressed doubt as to whether the carriers will take action to reduce the current service failures given that the current carrier, chassis and terminal dysfunction is so profitable for them.

The Information Demand orders are being issued under the authority Commissioner Dye has as the Fact Finding Officer for Fact Finding 29, “International Ocean Transportation Supply Chain Engagement”.

Targets of the orders will be ocean carriers operating in an alliance and calling the Port of Los Angeles, the Port of Long Beach, or the Port of New York & New Jersey. Marine terminal operators at those ports will also be subject to information demands.

Commissioner Carl W. Bentzel said he strongly supports the FMC moving forward on the information demand orders, noting reports that over 60 large ships lay at anchorage waiting for berth space at the LA/Long Beach port complex.

"In this time of operational duress, it is important that ocean carriers, marine terminal operators, and shippers honor their responsibilities in the legal obligations related to detention and demurrage. Detention and demurrage are intended to provide an incentive for the pickup of cargo, and the redelivery of equipment to ensure efficient operation, not to function as a separate revenue stream when operations break down," Commissioner Bentzel said.

The demand orders will also require carriers and MTOs to provide information on their policies and practices related to container returns and container availability for exporters.

Failure of carriers and MTOs to operate in a way consistent with the Interpretive Rule on Detention and Demurrage that became effective on May 18, 2020, might constitute a violation of 46 USC 41102(c) which prohibits unjust and unreasonable practices and regulations related to, or connected with, receiving, handling, storing, or delivering property.