A California law aiming to clean up detention and demurrage practices at California ports will go into effect on January 1, 2023. Assembly Bill 2406 (AB 2406) significantly limits the ability of marine container providers and terminal operators to impose certain charges and fees on motor carriers, cargo owners, or other transportation-related intermediaries for failure to either pick up or return containers within allotted free time periods.

AB 2406 identifies ten scenarios in which container providers or terminal operators may not commence or continue free time or impose detention and demurrage or similar charges on motor carriers or cargo owners due to circumstances ostensibly beyond those parties’ control. These prohibitions apply in the following ten scenarios.

• When the intermodal marine or terminal truck gate is closed during posted normal working hours. No per diem, detention, or demurrage charges shall be imposed on a holiday, or during a labor disruption period, or during any other period involving an act of God or any other planned or unplanned action that closes the truck gate.
• When the container provider diverts equipment from its original location without 48 hours’ notice to the motor carrier.
• When a loaded container is not available for pick-up upon the motor carrier’s arrival at the terminal.
• When the terminal is too congested to accept a container and turns the motor carrier away.
• When a motor carrier documents unsuccessful attempts to make appointments for loaded or empty container transactions.
• When the delay in return or delivery of a container occurs because of receiving date changes for the booked vessel.
• When the intermodal marine terminal is assessed a fine pursuant to Section 40720 of the Health and Safety Code, which is designed to prevent idling trucks.
• When the intermodal chassis is out of compliance pursuant to Section 34505.9 of the Vehicle Code or the equipment is placed out of service in such a manner as to result in a per diem, detention, or demurrage charge.
• When an intermodal marine container provider or intermodal marine terminal has unilaterally imposed transaction restrictions, such as single or dual transaction, chassis matching, or empty container requirements that prevent a transaction and failed to provide a return location or other conditions that impede the motor carrier’s ability to pick up or terminate intermodal marine containers.
• When the obstacle to the cargo retrieval or return of equipment is within the scope of responsibility of the carrier or their agent and beyond the control of the invoiced or contracting party.

AB 2406 also prohibits intermodal marine container providers from taking the following seven actions.

The U.S. Federal Maritime Commission (FMC) announced that Phillip C. “Chris” Hughey was hired as the General Counsel of the Federal Maritime Commission and appointed to be a member of the Senior Executive Service.

In his capacity as General Counsel to the Commission, Hughey will provide legal advice and recommendations to the Chairman and Commissioners on regulatory and policy matters. He will serve as a member of the agency’s senior management team and will also be responsible for supervising the work of attorneys assigned to the Office of the General Counsel.

Hughey’s career in public service began in 1997 when he first served as an attorney in the Office of the General Counsel at the FMC, and later served as the Commission’s Deputy General Counsel. In 2007, he joined the Federal Election Commission (FEC) as its Deputy General Counsel and was designated as the FEC’s Acting General Counsel from August 2010 to September 2011. Hughey assumes his new role at the FMC following a ten-year career in the U.S. Department of State as a Foreign Service Officer, where his postings included Brazil, Kuwait, and Madagascar.

Hughey possesses extensive experience as a litigator, having argued cases before the Supreme Court of the United States, the U.S. Courts of Appeals for the District of Columbia and Fourth Circuits, and the U.S. District Court for the Central District of California.

Hughey earned J.D. and LL.M. degrees from Cornell University in 1996, an MPA from Harvard University in 2007, and a B.A. from the University of North Carolina at Wilmington in 1993.  He is admitted to the bars of the State of New York, the U.S. Supreme Court, the U.S. Court of Appeals for the District of Columbia Circuit, and the U.S. Court of Appeals for the Fourth Circuit.

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

Unlawful Detention & Demurrage Fees & Unreasonable Cargo Practices, FMC Docket No. 22-32:  Doka U.S.A Ltd., a New Jersey-based formwork and construction company, filed a formal complaint against MSC Mediterranean Shipping Company (USA) Inc., alleging that MSC violated the U.S. Shipping Act by failing to establish, observe, and enforce just and reasonable practices related to the receiving, handling, storing, and delivering of cargo.

Specifically, Doka engaged MSC for shipment of six containers containing plywood from St. Petersburg, Russia to Seattle, WA in June 2021. In October 2021, all six containers were held by U.S. Customs due to bill of lading irregularities. Although MSC had issued the BLs, it failed to respond to Doka’s request to correct the BLs. As a result, all six shipments were ultimately moved to Custom’s General Order. Customs finally released the shipments in February 2022 after Doka paid $6,000 in General Order fees, but MSC issued Doka a $260,000 bill for detention, demurrage, and dwell fees. Doka alleges that this amount far exceeds the value of the cargo and has made it commercially unfeasible for Doka to retrieve the cargo. Doka alleges that MSC’s inaction was the cause of these container holds, and MSC’s charges do not serve the primary purpose of encouraging prompt retrieval of cargo. Doka claims that MSC continues to hold the six containers, damaging Doka’s ability to operate its business.

Doka requests the Commission order MSC to answer the charges made in their complaint, cease and desist from violation of the Shipping Act; put in place lawful and reasonable practices, and pay Doka reparations for the unlawful conduct including consequential damages, with interest and attorneys’ fees and any other sum the Commission deems proper.

Unreasonable Cargo Practices & Refusal to Deal, FMC Docket No. 22-31:  Thompson Pipe Group, Inc. (TPG), a Texas-based pipe importer, filed a formal complaint against Omni Logistics LLC (f/k/a Epic Freight Service), a Texas-based non-vessel-operating common carrier., alleging that Omni violated the U.S. Shipping Act by failing to establish, observe, and enforce just and reasonable practices related to the receiving, handling, storing, and delivering of cargo and unreasonably refusing to deal or negotiate with TPG.

In 2021, TPG contracted Omni to provide carriage of containers from ports outside the United States to ports in the United States or to TPG’s job sites located in the US. In November 2021, Omni began issuing invoices to TPG that included demurrage charges. TPG alleges the invoices were excessive, incomplete, inaccurate, and issued up to nine months after the shipments were delivered. Under objection TPG paid in excess of $860,000 for demurrage and other additional charges to obtain release of its cargo from Omni. TPG claims that Omni is presently demanding an additional $362,123.94 for alleged services and costs, which it has refused to substantiate. As a result of Omni’s actions, TPG alleges it suffered damages or at least $1,222,123.

TPG requests that the Commission find Omni in violation of the U.S. Shipping Act, and order Omni to cease and desist from violation of the Shipping Act, put in place lawful and reasonable practices, and pay TPG reparations for the unlawful conduct with interest and attorneys’ fees and any other sum the Commission deems proper.

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

Several carriers serving the East Asia/USA trade lanes (U.S. Imports) have adjusted fuel surcharges effective January 1 through March 31, 2023.  Details are as follows.

Here is a table of BAF amounts posted by carriers:

NOTE 1:  CMA CGM calls the above surcharge the Bunker Adjustment Factor Surcharge (BAF03), Tariff Rule No. 010.08. Low Sulphur Surcharge IMO2020 (LSS20) is not applicable at this time.

NOTE 2:  COSCO calls the above surcharge the Bunker Charge (BUC), Tariff Rule No. 010-003.

NOTE 3:  HMM calls the above surcharge the Bunker Charge, Tariff Rule No. 2-63. HMM also filed in its FMC Tariff Rule No. 2-95, Environmental Compliance Charge (ECC), effective January 1, 2023.  The ECC amounts are USD320/356/401/451 per 20/40/40HC/45ft, respectively, for destination USWC/USWC Local/IPI/MLB; and USD540/601/676/760 per 20/40/40HC/45ft, respectively, for destination USEC (all water)/USGC/RIPI.

NOTE 4:  ONE calls the above surcharge the ONE Bunker Surcharge (OBS). Any reference to Bunker Adjustment Factor (BAF) or Fuel Adjustment Factor (FAF) within a duly filed service contract shall be construed as referencing the same surcharge as ONE Bunker Surcharge (OBS) as detailed within Tariff Rule No. 102.001, whether as an exception or as a reference to this charge.

NOTE 5:  OOCL calls the above surcharge the Fuel Cost Recovery Charge (T-62). The Fuel Cost Recovery Charge will not apply to shipments when Bunker Surcharge and/or Low Sulphur Fuel Surcharge and/or Low Sulphur Adjustment Charge are already applied or included in the base rate. These Bunker amounts are effective December 1, 2022 until further notice.

NOTE 6:  ZIM calls the above surcharge the New Bunker Factor – Far East (NBF), Rule No. 010-NB. Service contract cargoes subject to Carrier’s published BAF and/or EBS shall not be subject to NBF.

NOTE 7:  Subject to Low Sulphur Fuel Charge (LSF or LSS).

NOTE 8:  Updated on a monthly basis.

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

Several leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective December 15, 2022, 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 December 15^th GRIs will be the twenty-fourth GRI of 2022 for the East Asia/USA trade lane.

NOTE 1:  CMA CGM GRIs filed in tariff CMDU 043, FAR EAST/AUSTRALIA-N.Z. TO US, PR/VI, & CANADA, Rule 105.194.

NOTE 2:  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 January 1, 2023, 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 January 1st GRIs will be the first GRI of 2023 for the East Asia/USA trade lane.

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

NOTE 2:  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.

Several carriers serving the USA/East Asia trade lanes (U.S. Exports) have adjusted their fuel surcharges for the January to March 2023 quarter. Here is a table of carriers that have posted BAF amounts:

NOTE 1:  CMA CGM calls the above surcharge the Bunker Adjustment Factor Surcharge (BAF-03), Tariff Rule No. 010.4.  Low Sulphur Surcharge IMO2020 (LSS20) is not applicable at this time.

NOTE 2:  COSCO calls the above surcharge the Bunker Surcharge (BUC), Tariff Rule No. 010-001.

NOTE 3:  HMM calls the above surcharge the Bunker Surcharge (BUC) Rule No. 10-02A. It has been in effect in the FMC tariff since July 1, 2022. HMM also filed in its FMC Tariff Rule No. 10-02F, Environmental Compliance Charge (ECC), effective since July 1, 2022. The ECC since July 1, 2022 amounts are USD 63/125/125/125 per 20/40/40HC/45ft, respectively, for dry cargo moving via West Coast; and USD 50/101/101/101 per 20/40/40HC/45ft, respectively, for dry cargo moving via East Coast, Gulf.

NOTE 4:  ONE calls the above surcharge the ONE Bunker Surcharge (OBS). Any reference to Bunker Adjustment Factor (BAF) or Fuel Adjustment Factor (FAF) within a duly filed service contract shall be construed as referencing the same surcharge as ONE Bunker Surcharge (OBS) as detailed within Tariff Rule No. 102.001, whether as an exception or as a reference to this charge.

NOTE 5:  OOCL calls the surcharge the Fuel Cost Recovery Charge (T-62). The Fuel Cost Recovery Charge will not apply to shipments when Bunker Surcharge and/or Low Sulphur Fuel Surcharge and/or Low Sulphur Adjustment Charge are already applied or included in the base rate. These Bunker amounts are effective December 1, 2022 until further notice.

NOTE 6:  Yang Ming calls the above surcharge the New Bunker Charge, Tariff Rule No. 10-AH.

NOTE 7:  ZIM calls the above surcharge the New Bunker Factor – Far East (NBF), Tariff Rule No. 010-NB.

NOTE 8:  Subject to Low Sulphur Fuel Charge (LSF or LSS).

NOTE 9:  Updated on a monthly basis.

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.