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.

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.

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.

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.

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. 

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 15^th GRIs will be the sixteenth GRI of 2022 for the East Asia/USA trade lane.

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 1^st GRIs will be the seventeenth GRI of 2022 for the East Asia/USA trade lane.

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.