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Signals™ Headlines - January 4, 2023

FMC Reviews Shipping Lines’ Anti-Retaliation Compliance


The U.S. Federal Maritime Commission (FMC) announced a new probe into the top 20 shipping lines calling the United States on December 15, 2022. The FMC has asked these shipping lines to provide information on how they are complying with the new prohibitions on retaliation established by the Ocean Shipping Reform Act of 2022 (OSRA-2022).

The Commission’s Vessel-Operating Common Carrier (VOCC) Audit Team is examining how ocean carriers are adapting to the increased prohibitions on retaliatory and discriminatory behavior. The Team’s focus is specifically on how companies are training personnel at all levels to act legally, and how those same employees are being made aware of the consequences for violating the law.

The examination began in mid-December 2022 via correspondence and all recipients will have until mid-January 2023 to provide their initial responses. Additionally, the VOCC Audit Team will discuss this topic in person and in deeper detail with the 11 largest carriers participating in the next round of meetings through the VOCC Audit Program.

The VOCC Audit Program was established in July 2021 by FMC Chairman Maffei with the initial mandate of assessing ocean carrier compliance with the FMC’s rule on demurrage and detention. In March 2022, Chairman Maffei ordered the program’s scope expanded to also evaluate how shipping lines serve U.S. exporters. The VOCC Audit Program allows the Commission to engage ocean carriers directly and frequently to raise and resolve issues of concern.

President Biden Renominates Rebecca Dye to be U.S. Federal Maritime Commissioner


U.S. President Joe Biden renominated Rebecca F. Dye to be a Federal Maritime Commissioner on January 3, 2023. If confirmed by the U.S. Senate, Commissioner Dye’s term will expire June 30, 2025. President Biden previously nominated Commissioner Dye for this term on March 11, 2022, but the nomination did not proceed to confirmation in the U.S. Senate and was not allowed to remain in pending status during the Senate’s holiday recess.

Commissioner Dye has served as a Federal Maritime Commissioner for over 20 years. She was first nominated and appointed to the FMC in 2002 by President George W. Bush. She is the only woman to serve as an FMC Commissioner since Ming Chen Hsu. Former Commissioner Hsu served from June 1990 to December 1999.

Commissioner Dye has led four fact-finding investigations during her time with the FMC. Most recently, Commissioner Dye led Fact Finding No. 29 to assist the Commission in addressing the impacts of Covid-19 on the ocean freight transportation sector.

Commissioner Dye began her federal career as a commissioned officer and attorney in the U.S. Coast Guard’s Office of the Chief Counsel, then served as a law instructor at the U.S. Coast Guard Academy. After two years as an attorney at the U.S. Maritime Administration, she joined the staff of the former Committee on Merchant Marine and Fisheries and served there as Minority Counsel from 1987 to 1995.

Commissioner Dye graduated from the University of North Carolina at Chapel Hill in 1974 and earned a law degree from the University of North Carolina at Chapel Hill in 1977.

FMC Receives Three New Formal Complaints


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

Unreasonable Cargo Practices, FMC Docket No. 22-33:  CCMA, LLC, a New York-based metal and alloy importer, 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, CCMA alleges that MSC failed to waive or negotiate demurrage applicable to containers held due to a customs examination. CCMA alleges that it contracted MSC to transport ten containers of ferrochrome from Albania to the Port of Seattle in late October 2021. U.S. Customs required an agricultural examination of one of the containers, but all ten were put on customs hold until the examination was completed in mid-December 2021. CCMA claims that it repeatedly reached out to MSC to extend free time and negotiate demurrage fees due to the customs hold, but MSC stated its policy is to assess full demurrage regardless of delays caused by U.S. Customs. As a result, CCMA paid $114,156 to MSC in demurrage fees following the containers’ release.

CCMA requests the Commission order MSC to pay CCMA reparations for its unlawful conduct including interests, attorneys’ fees and costs, and any other amounts that the Commission deems appropriate.

Obtaining Transportation at Less Than Applicable Rates, Failing to Charge in Accordance with FMC Tariffs, and Unreasonable Cargo Practices, FMC Docket No. 22-34:  SeaFair USA, LLC, a Florida-based NVOCC, filed a formal complaint against Sterling Container Line Limited, a Hong Kong-based NVOCC and its parent company, Atlantic Forwarding Ltd., a Swiss-based freight forwarder. SeaFair alleges that Sterling violated the U.S. Shipping Act by obtaining or attempting to obtain ocean transportation at less than the charges that would otherwise apply, providing services that are not in accordance with its FMC tariff, and engaging in unreasonable practices related to the delivery of property.

Specifically, SeaFair alleges that in May 2021 Sterling hired it to act as its destination agent to handle document handover for shipments to the USA. SeaFair alleges that Sterling repeatedly failed to repay SeaFair for destination fees which it paid on behalf of Sterling’s shipments.

SeaFair requests that the Commission order Sterling and Atlantic to cease and desist from violating the U.S. Shipping Act, to pay SeaFair reparations of $335,953.52 for its unlawful conduct including interest, attorneys’ fees, and any other amounts that the Commission deems appropriate.

Unreasonable Cargo Practices, FMC Docket No. 22-35:  M.E. Dey & Co., Inc. (Dey), a Wisconsin-based NVOCC, filed a formal complaint against Hapag-Lloyd (America) LLC, alleging that Hapag violated the U.S. Shipping Act by failing to establish, observe, and enforce just and reasonable practices related to receiving, handling, storing, and delivering of cargo.

Specifically, Dey alleges that Hapag improperly assessed demurrage and storage fees on containers that Hapag’s subcontracted rail transportation provider, CSX Corporation, failed to timely make available for pickup. In August 2022, Dey contracted with Hapag for the carriage of 16 containers from Rotterdam to Nashville, Tennessee. The goods moved by ocean from Antwerp, Belgium to Charleston, South Carolina and then were transported by rail by Hapag’s subcontractor, CSX, from Charleston to CSX’ rail terminal in Nashville, Tennessee in mid-September 2021. While some containers were made available for pickup shortly after arrival, many of the containers were unavailable because they were not mounted on chassis. Dey repeatedly sought to resolve the issue, but the containers remained unavailable until early October 2021. As a result, Dey was invoiced $214,860 in demurrage fees by Hapag and $136,500 in storage fees by CSX. While Hapag eventually agreed to waive its demurrage fees, Dey was forced to pay CSX’ storage fees to obtain release of the containers.

Dey requests that the Commission order Hapag to pay Dey reparations for its unlawful conduct including interests, attorneys’ fees and costs, and any other amounts that the Commission deems appropriate.

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

Commission Closes Out Four FMC Complaints


The U.S. Federal Maritime Commission (FMC) closed out four complaints in December 2022 by declining to review three settlement approvals and issuing an Order Affirming an Initial Decision in a small claims suit.

Order Affirming the Initial Decision – FMC Docket No. 1966(I):  TCW, Inc. (TCW), a Tennessee-based motor carrier, filed a complaint against Evergreen Shipping Agency (America) Corporation and Evergreen Line Joint Service Agreement, alleging that Evergreen issued per diem charges in connection with a March 2020 inland delivery for days when the port was closed in violation of the FMC’s interpretive rule requiring D&D charges to incentivize the flow of cargo. TCW sought reparations and an order requiring Evergreen to invoice per diem charges directly to beneficial cargo owners (BCOs). In February 2021, the FMC’s Small Claims Officer (SCO) ordered Evergreen to cease and desist from levying per diem charges when the port was closed and awarded TCW $510 in returned per diem charges plus interest. The SCO however denied TCW’s request to order Evergreen to invoice only BCO’s for per diem charges.

After review and request for supplemental briefings, the Commission affirmed the SCO’s decision on December 29, 2022. The Commission upheld the SCO’s decision to prohibit Evergreen from levying per diem charges on days when the motor carrier was unable to return equipment due to port closures. The Commission also affirmed the SCO’s decision to deny TCW’s request that Evergreen be ordered to only invoice BCOs for per diem charges. The Commission agreed with the SCO’s finding that TCW had agreed to be billed for per diem charges under a Preferred Trucker Agreement that it signed with Evergreen and even made profit from marking up the per diem charges.

FMC Commissioner Carl Bentzel dissented from the Commission’s approval of the SCO’s decision to prohibit per diem charges on days when the motor carrier was unable to return equipment due to port closure. In his dissent, he stated that the Commission should have focused on the reasonableness of the charges at hand. Commissioner Bentzel found that it was not unreasonable for Evergreen to assess per diem charges after free time expired because the port closures were not unplanned or unannounced and TCW had 21 days of free time in which it could have returned the equipment prior to per diem charges accruing.

Notice Not to Review – FMC Docket No. 22-07:  In March 2022, Acme Freight Services Corp., a California-based corporation, filed a formal complaint against Total Terminals International, LLC, a Long Beach-based marine terminal operator (MTO) for unreasonable demurrage practices. Acme sought reparations of at least $185,000 for unlawful demurrage fees. The parties reached a confidential settlement in October 2022 which was promptly approved by the FMC’s Administrative Law Judge (ALJ). The Commission declined to review the agreement and the ALJ’s approval became final on December 12, 2022.

Notice Not to Review – FMC Docket No. 22-11:  In April 2022, Aeneas Exporting LLC, a U.S.-based car exporter, filed a formal complaint against Honeybee International Inc. and All America Shipping, alleging that the two entities violated the U.S. Shipping Act by raising ocean freight rates after receipt of cargo, charging fees that were not quoted, and coercing payment of storage fees by holding shipments. As a result, Aeneas alleged it was forced to pay over $10,000 in additional shipping and storage costs. The parties reached a settlement with the help of an FMC mediator in October 2022. According to the agreement Honeybee International Inc. and All America Shipping will pay Aeneas $4500 in exchange for dismissal of the matter with prejudice. The settlement was approved by the FMC’s ALJ. The Commission declined to review the agreement and the ALJ’s approval became final on December 20, 2022.

Notice Not to Review – FMC Docket No. 22-03:  In January 2022, One Banana North America Corp., a Florida-based importer, filed a formal complaint against Hapag-Lloyd AG and Hapag-Lloyd (America) LLC for unreasonable detention and demurrage practices. One Banana sought reparations of at least $773,000 for unlawful detention and demurrage fees, spoilt cargo, and attorneys’ fees. The parties reached a confidential settlement in October 2022 which was promptly approved by the FMC’s ALJ. The Commission declined to review the agreement and the ALJ’s approval became final on December 20, 2022.

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

Transpacific Eastbound Carriers File GRIs Effective January 15, 2023 and February 1, 2023

Several leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective January 15, 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 15th GRIs will be the second GRI of 2023 for the East Asia/USA trade lane.

TRANSPACIFIC EASTBOUND (Asia to USA)
GENERAL RATE INCREASE (GRI)
Effective January 15, 2023
Carrier
in USD, per 40ft ctr
CMA CGM1000
COSCO (note 1)1000
Evergreen1000
Hapag Lloyd1500
HMM2000
ONE1000
Yang Ming (note 2)1000 / 2000
ZIM1000

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.

Some carriers also updated their tariffs to include new General Rate Increases (GRIs) effective February 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 February 1st GRIs will be the third GRI of 2023 for the East Asia/USA trade lane.

TRANSPACIFIC EASTBOUND (Asia to USA)
GENERAL RATE INCREASE (GRI)
Effective February 1, 2023
Carrier
in USD, per 40ft ctr
CMA CGM1000
COSCO (see note 1)1000
Evergreen1000
Hapag Lloyd1500
HMM2000
ONE1000
Yang Ming (note 2)1000 / 2000
ZIM1000

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.

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.

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