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Signals™ Headlines - August 2, 2022

Federal Maritime Commission Meeting – July 28, 2022

The U.S. Federal Maritime Commission (FMC) met on July 28, 2022 in open and closed session to discuss the Ocean Shipping Reform Act of 2022 (OSRA-2022). Commission staff reported that they are moving quickly and within the timelines provided by OSRA-2022 to implement the new law’s many provisions.

The Commission expects to release two rulemakings in the coming months. The first rulemaking will tackle the new law’s prohibition on unreasonable refusal of cargo space accommodations when available for exports. The second rulemaking will further define prohibited practices by common carriers, marine terminal operators, shippers, and ocean transportation intermediaries regarding the assessment of demurrage or detention charges, including which parties may be appropriately billed for any demurrage, detention, or other similar per container charges. 

The Commission appears aware that many ocean common carriers are not yet in compliance with the law’s detention and demurrage invoicing provisions and may be delaying detention and demurrage invoicing until they come into compliance. So far no penalties have been issued in connection with detention and demurrage invoicing under the new law.

Read the complete text of OSRA-22 here. The next Commission meeting has not yet been announced.

FMC Announces New Enforcement Structure


The U.S. Federal Maritime Commission (FMC) announced that it is reorganizing its investigative and prosecutorial functions by consolidating them into a newly created Bureau of Enforcement, Investigations, and Compliance (BEIC) effective July 29, 2022.

The newly established BEIC will be headed by an attorney in the Senior Executive Service with regulatory, prosecutorial, and investigatory experience. The Commission’s Managing Director, Lucille Marvin, will also serve as Acting Director until a permanent Director is hired.

“Robust enforcement of the Shipping Act is absolutely key to the effectiveness of the Federal Maritime Commission. This reorganization has the support of all five Commissioners and creates a structure better suited to meeting the mandate the President and Congress have given this agency to prioritize enforcement. Specifically, it enhances FMC’s capacity to closely scrutinize the conduct of the ocean carrier companies and marine terminal operators to ensure compliance with the law and fairness for American importers and exporters,” said FMC Chairman Daniel Maffei.

The BEIC will be divided into three sections:  the Office of Enforcement, the Office of Investigations, and the Office of Compliance. These offices will each be led by an Office Director. The BEIC Director will supervise and manage the activities of the three offices and will be supported by a Deputy Director who will assist with program management. The BEIC Director will report to the Managing Director.

As part of the reorganization, the Commission is converting the positions of Area Representatives to Investigators, placing them in the Office of Investigations. Additionally, the Commission will increase the number of investigators it has on staff. Investigators will now focus exclusively on enforcement activity and the public outreach function formerly handled by the Area Representative role will be handled by the Commission’s Office of Consumer Affairs and Dispute Resolution Services as part of their broader public assistance work.

FMC Issues Industry Advisory on Coercive Detention & Demurrage


The U.S. Federal Maritime Commission (FMC) issued an Industry Advisory stating that it will pursue enforcement action against any conduct perceived to establish open-ended obligations or include coercive tactics circumventing the clear direction of Congress as reflected in the Ocean Shipping Reform Act of 2022 (OSRA-2022). Specifically, the Advisory reminded vessel-operating common carriers (VOCCs) that they are required to comply with the demurrage and detention billing practices contained at 46 U.S.C. 41104(d), which went into effect on June 16, 2022 when President Biden signed the law into effect.

DPI has heard from numerous non-vessel-operating common carriers (NVOCCs) complaining of VOCCs withholding detention and demurrage bills with plans to issue the bills at a later undisclosed date . NVOCCs fear that these bills will come due when they have already released cargo to consignees and they will have little or no leverage to seek payment for these late invoices. The VOCCs, on the other hand, will likely continue to have leverage over most NVOCCs through ongoing shipments.

FMC Issues Guidance on Charge Complaints

The U.S. Federal Maritime Commission (FMC) issued an Industry Advisory to guide shippers seeking to dispute charges assessed that they believe may not comply with the Ocean Shipping Reform Act of 2022 (OSRA-2022). OSRA-2022 became law on June 16, 2022 and new invoicing requirements for detention and demurrage went into effect the same day. Invoices for detention and demurrage must now contain the following 13 details:

(A) Date that container is made available.

(B) The port of discharge.

(C) The container number or numbers.

(D) For exported shipments, the earliest return date.

(E) The allowed free time in days.

(F) The start date of free time.

(G) The end date of free time.

(H) The applicable detention or demurrage rule on which the daily rate is based.

(I) The applicable rate or rates per the applicable rule.

(J) The total amount due.

(K) The email, telephone number, or other appropriate contact information for questions or requests for mitigation of fees.

(L) A statement that the charges are consistent with any of the Federal Maritime Commission’s rules with respect to detention and demurrage.

(M) A statement that the common carrier’s performance did not cause or contribute to the underlying invoiced charges.

If invoices for detention and demurrage do not include the above information, the obligation to pay these charges is eliminated for the charged party. A shipper may also file a charge complaint with the FMC. To file a charge complaint with the Commission, shippers should:

  • Identify the common carrier
  • Identify the specific alleged violations of 46 U.S.C. §§ 41102 and/or 41104(a)
  • Gather and submit supporting documentation, as appropriate, including:
    • Invoices
    • Bill of Lading Numbers
    • Evidence of whether the charge(s) have been paid
  • Confirm that the disputed charge was incurred on or after June 16, 2022 – the enactment of OSRA-2022
  • Submit all relevant materials in one email (if possible) to chargecomplaints@fmc.gov

The Commission will initiate an investigation, which could ultimately result in a civil penalty and order for a refund of charges paid. The guidance clarifies that these investigations are for law enforcement purposes and do not constitute representation as attorney for the complainant or a guarantee of refunds.

If a shipper would like to pursue and control their own legal case, including with the assistance of their own attorney, if so desired, they may do so by filing a formal or informal complaint with the Commission. Shippers may also seek alternative dispute resolution services by contacting the Office of Consumer Affairs and Dispute Resolution.

FMC Receives Two New Formal Complaints


The U.S. Federal Maritime Commission (FMC) received two new formal complaints in July 2022 alleging violations of the U.S. Shipping Act and FMC regulations. 

Unlawful Fees:  Goforth & Marti (GM), a California-based importer, filed a formal complaint against HSIN Silk Road Shipping Limited (HSIN), a Hong Kong-based non-vessel operating common carrier, alleging that HSIN violated the U.S. Shipping Act and FMC regulations by failing to establish, observe, and enforce just and reasonable practices related to receiving, handling, storing, and delivering property. Specifically, GM alleges that it was forced to pay US$ 74,000 in berthing and terminal-related storage fees to obtain shipments after the vessel carrying them was delayed at the Port of Los Angeles due to congestion.

GM requested that the FMC order HSIN to pay reparations with interest and attorney fees along with any other relief that the Commission deems proper.

Unlawful Detention & Demurrage:  Bakerly, LLC, a New York-based importer of refrigerated foods, filed a formal complaint against Seafrigo USA (Seafrigo), a New Jersey-based non-vessel operating common carrier, alleging that Seafrigo violated the U.S. Shipping Act and FMC regulations by charging detention and demurrage for door shipments and issuing faulty and duplicative invoices. Specifically, Bakerly alleges that Seafrigo issued detention and demurrage invoices totaling at least US$ 2,973,475 for door shipments for which Seafrigo was responsible for timely container retrieval and return. Bakerly also alleges that Seafrigo issued multiple and inaccurate invoices for detention and demurrage charges which prevented Bakerly from verifying and paying accurate charges. 

Bakerly requested that the FMC order Seafrigo to cease collection of detention and demurrage fees from Bakerly and refund Bakerly for all detention and demurrage charges paid for the door shipments at issue. Additionally, Bakerly requested that Seafrigo pay reasonable attorney fees along with any other relief that the Commission deems proper, including reparations not to exceed twice the amount of the actual injury pursuant to 46 U.S.C. § 41305.

FMC to Review ONE Settlement


The U.S. Federal Maritime Commission (FMC) announced that it will review a recent settlement agreement reached between Ocean Network Express Pte. Ltd. (ONE) and the FMC’s Bureau of Enforcement (BOE). 

ONE and the BOE obtained an Initial Decision from an FMC Administrative Law Judge (ALJ) approving a fully confidential settlement of ONE’s alleged overly broad use of the term merchant. ONE allegedly used the term merchant contained in its Bills of Lading to seek payment for charges from parties that ONE was not in contractual privity with. The terms of the settlement, including any amounts paid by ONE, are confidential. FMC’s rules require that the full text of all settlements be made public, however the ALJ approved this confidential settlement citing “unique circumstances.”

The full Commission issued a Notice of Commission Determination to Review on July 15, 2022. The ALJ’s Initial Decision approving this confidential settlement, which was issued on June 28, 2022, is now under review by all five FMC Commissioners. 

Transpacific Eastbound Carriers File GRIs Effective August 15, 2022 & September 1, 2022

Several leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective August 15, 2022, including COSCO, Evergreen, Hapag Lloyd, HMM Company Limited, Ocean Network Express (ONE), Yang Ming, and ZIM. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The August 15th GRIs will be the sixteenth GRI of 2022 for the East Asia/USA trade lane.

TRANSPACIFIC EASTBOUND (Asia to USA)
GENERAL RATE INCREASE (GRI)
Effective  August 15, 2022
Carrier
in USD, per 40ft ctr
COSCO (note 1) 1000
Evergreen (note 2) 1000 / 2000
Hapag Lloyd 1500
HMM (note 3) 1000 / 2000
ONE 1000
Yang Ming (note 4) 1000 / 2000
ZIM 1000

NOTE 1:  COSCO GRIs apply on all cargo moving under service contracts only.

NOTE 2:  Evergreen GRIs will be USD 1000 per 40ft dry container for dry cargo, and USD 2000 per reefer container. GRI amounts for all other container sizes are as per formula.

NOTE 3:  HMM GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.

NOTE 4:  Yang Ming GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.

Some carriers also updated their tariffs to include new General Rate Increases (GRIs) effective September 1, 2022, including COSCO, Evergreen, Hapag Lloyd, HMM Company Limited, Ocean Network Express (ONE), Yang Ming, and ZIM. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The September 1st GRIs will be the seventeenth GRI of 2022 for the East Asia/USA trade lane.

TRANSPACIFIC EASTBOUND (Asia to USA)
GENERAL RATE INCREASE (GRI)
Effective  September 1, 2022
Carrier
in USD, per 40ft ctr
COSCO (note 1) 1000
Evergreen (note 2) 1000 / 2000
Hapag Lloyd 1500
HMM (note 3) 1000 / 2000
ONE 1000
Yang Ming (note 4) 1000 / 2000
ZIM 1000

NOTE 1:  COSCO GRIs apply on all cargo moving under service contracts only.

 NOTE 2:  Evergreen GRIs will be USD 1000 per 40ft dry container for dry cargo, and USD 2000 per reefer container. GRI amounts for all other container sizes are as per formula.

NOTE 3:  HMM GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.

NOTE 4:  Yang Ming GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.

The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.

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