FMC Seeks Public Comment While Examining Carrier Billing Practices

The public has until November 6, 2020, to comment on the allegations that Vessel Operating Common Carriers (VOCCs) may be attempting to hold companies financially responsible for transportation services that they did not contract for and may not legally be required to pay.

The Federal Maritime Commission issued a Notice of Inquiry (NOI) on October 7 related to the concerns raised about the billing practices of ocean carriers in the comments filed in Docket No. 19-05, Interpretative Rule on Detention and Demurrage Under the Shipping Act. A number of companies alleged that VOCCs have expansively defined “merchant” in their respective bills of lading to include persons or entities with no beneficial interest in the cargo and who had not consented to be bound by the terms of the underlying bill of lading.

The NOI seeks information related to how VOCCs apply the term “Merchant” in their bills of lading. For example, does the VOCC apply the term “Merchant” in a manner that subjects third parties that are not in a direct mutually agreed business relationship with the VOCC to liability?  The NOI also asks whether ocean carriers have sought to enforce the definition of “Merchant” against third parties that have not consented to be bound by, or otherwise accepted, the terms of the bill of lading.

At the same time, the FMC's Bureau of Enforcement will seek specific information from certain container shipping lines serving the United States foreign trades.

FMC Chairman Michael Khouri said, “We encourage ocean container stakeholders to share their experiences with bills of lading that contain these described “Merchant” clauses. Without public comment and involvement, it is difficult for the Commission to address alleged commercial abuse in this area.”