The U.S. Federal Maritime Commission (FMC) received one new formal complaint in July 2024 alleging violations of the U.S. Shipping Act and FMC regulations.

Unreasonable Cargo Practices and Unlawful D&D – FMC Docket No. 24-24:  S.P.F. Logistics, Inc. filed a formal complaint against Hapag-Lloyd AG alleging various violations of the U.S. Shipping Act. S.P.F. is a California-based motor carrier.

According to the complaint, S.P.F. routinely picked up and returned overweight refrigerated containers from Hapag’s terminals at the Ports of Long Beach and Los Angeles. From September to November 2021, S.P.F. was often unable to return containers due to Hapag’s failure to provide adequate locations or appointments for container returns. In addition, Hapag often required dual transactions which prevented S.P.F. from returning containers. Due to these unreasonable practices, S.P.F. alleges it was forced to unload containers and stack them in storage. This resulted in storage, labor, and other chassis-related charges in addition to Hapag’s detention fees. S.P.F. further alleges that Hapag filed a lawsuit against S.P.F. to collect the unlawfully assessed detention fees.

S.P.F. claims damages of $127,200 in detention fees and at least $57,750 in storage and related charges due to Hapag’s unreasonable container return practices. Additionally, S.P.F. alleges other yet-to-be-determined damages from disruption to S.P.F.’s operations and S.P.F.’s defense of Hapag’s detention charge lawsuit.

S.P. F. requests the Commission order Hapag to cease and desist from these unlawful actions and put in place reasonable practices. Additionally, S.P.F. requests the Commission order Hapag to pay S.P.F. reparations and damages, interest and attorneys’ fees, as well as provide any other further relief that the Commission deems appropriate.

For more details visit the FMC’s online reading room. The FMC’s reading room provides access to FMC dockets, related documents, notices, and orders.

The U.S. Federal Maritime Commission (FMC) halted an agreement between Maersk and Hapag-Lloyd due to antitrust concerns. Maersk and Hapag-Lloyd are two of the world’s largest container shipping companies. The two carriers recently filed an agreement with the FMC to facilitate their Gemini Alliance.

The Gemini Cooperation Agreement (No. 20142) was supposed to take effect July 15, 2024. It would have allowed the carriers to share vessels in the U.S. ocean trade lanes. Carrier agreements become effective 45 days after filing unless the Commission requests more information. The FMC requested more information here to determine the agreement’s potential competitive impacts.

The Commission has 45 days from when it determines responses to its requests are complete to review the agreement before it becomes effective. The FMC will also open a 15-day public comment period once the request for information is officially published in the Federal Register.

The U.S. Federal Maritime Commission (FMC) issued a policy statement advising it may use existing administrative investigatory authorities when reviewing the competitive effects of cooperative carrier agreements. Such agreements are exempt from antitrust laws under the U.S. Shipping Act. The Commission reviews and monitors these agreements for any adverse anticompetitive effects.

Ocean carriers or marine terminal operators can work cooperatively if they have filed an agreement at the FMC. The Commission determines if a filed agreement is anticompetitive under the Shipping Act. If the Commission determines that an agreement is anticompetitive, the agency can seek injunctive relief from a U.S. District Court to halt the agreement’s operation, either temporarily or permanently.

Using its investigatory authorities the Commission may gather evidence via subpoenaing witnesses and documents, and by holding hearings. The FMC may then use this evidence to support its arguments in court proceedings if it seeks to enjoin an agreement from going into or remaining in effect.

Not all filed agreements will be reviewed using the Commission’s investigatory authorities. The Commission has the discretion to determine which agreements warrant more careful screening than others. The statement of policy was adopted by a vote of the Commission.

Just prior to announcing the intent to use its investigatory powers, the FMC halted an agreement between Maersk A/S and Hapag-Lloyd AG due to antitrust concerns. The two carriers recently filed an FMC Agreement meant to facilitate their Gemini Alliance, Gemini Cooperation Agreement (No. 20142). FMC requested more information from the parties to determine the potential competitive impacts of the arrangement.

On July 22, 2024, the U.S. Federal Maritime Commission (FMC) announced new regulations to define the unreasonable refusal to deal or negotiate with respect to vessel space accommodations. The new regulations apply to vessel-operating common carriers (VOCCs) and containerized cargo only. These rules establish the necessary elements for the Commission to apply to claims for refusals of cargo space vessel space accommodations.

Refusal of Cargo Space Accommodations – 46 U.S.C. 41104(a)(3)

A refusal of cargo space accommodation means a refusal of space which has been negotiated for or confirmed aboard a vessel. If a refusal takes place during the execution stage of a shipment, regulations for cargo space refusal will apply.

Refusal of Vessel Space Accommodations – 46 U.S.C. 41104(a)(10)

A refusal of vessel space accommodation means refusal of space available aboard a vessel. If a refusal takes place during the negotiation phase of a shipment, regulations for vessel space refusal will apply.

The Commission will decide claims for refusals on a case-by-case basis. The new regulations include examples of unreasonable VOCC behavior. For example, the Commission will consider quoting pricing far above the market to be unreasonable. Additionally, the Commission will consider a VOCC’s systematic exclusion of export cargo to be unreasonable. The Commission will also consider providing inaccurate or unreliable vessel information to be unreasonable.

Under the new regulations, VOCCs must file a confidential export policy annually with the Commission. The export policy must contain the VOCC’s pricing strategies, services offered, strategies for equipment provision, and descriptions of markets served.

The new rules take effect September 23, 2024. The requirements for VOCCs to file export policies with the Commission however are delayed. The FMC’s Office of Management and Budget is still reviewing this requirement. Nevertheless, the Commission is expected to publish the effective date for export policy filing shortly.

The U.S. Court of Appeals in Washington D.C. ruled against the U.S. Federal Maritime Commission (FMC) in a case over the application of detention and demurrage fees charged during port closures. The court found the FMC’s arguments “illogical” and its actions “arbitrary and capricious.”

In December 2022, the Commission ordered Evergreen Line to “cease and desist from imposing per diem charges when imposition of per diem charges does not serve its incentivizing purposes, such as when empty equipment cannot be returned on weekends, holidays, and port closures.” Evergreen had invoiced a trucking company for the late return of a container and chassis. The trucking company objected to the $510 in detention charges for the days when the port was closed. Evergreen refused to waive the charges.

The trucking company filed a small claims complaint with the Commission to contest the charges. An FMC small claims hearing officer found for the trucking company. The Commission reviewed the officer’s findings and also found for the trucking company. Commissioner Carl Bentzel however dissented from the Commission’s decision. He found that the charges complied with the Commission’s incentive principle. He reasoned that the port closures were well publicized, and that Evergreen had provided ample free time to return the equipment prior to the closures.

The U.S. Court of Appeals in Washington D.C. agreed with Commissioner Bentzel and found that the Commission failed to follow its own guidance regarding the incentive principle for detention and demurrage charges. Additionally, the court held that the FMC failed to offer a logical explanation of its reasoning. The court vacated the Commission’s decision in the matter and remanded the case back to the FMC for review.

Several leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective August 15, 2024, including CMA CGM, 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 2024 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 2000 per 40ft container for dry cargo, and USD 2000 per reefer container. 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, 2024, including CMA CGM, 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 2024 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 2000 per 40ft container for dry cargo, and USD 2000 per reefer container. GRI amounts for all other container sizes are as per formula.

Each carrier maintains its own tariffs and controls its own pricing.

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.