The U.S. Federal Maritime Commission (FMC) issued a Supplemental Notice of Proposed Rulemaking (SNPRM) detailing how the FMC would implement the prohibition on common carriers unreasonably refusing available cargo space to shippers.

This SNPRM is a continuation of a rulemaking process mandated by the Ocean Shipping Reform Act of 2022. The Commission published a Notice of Proposed Rulemaking (NPRM) in September 2022, entitled Definition of Unreasonable Refusal to Deal or Negotiate with Respect to Vessel Space. In order to fully address issues raised during the public comment period for the NPRM, the Commission announced in January that it would issue an SNPRM with an additional public comment period, instead of moving forward with a Final Rule.

The SNPRM contains key changes from the NPRM issued last year, including:

• Adding language to establish the elements for a refusal of cargo space accommodations claim.
• Revising the definition of transportation factors to focus on vessel operation considerations.
• Revising the definition of the term “unreasonable” to include a general definition and a non-exhaustive list of unreasonable conduct scenarios.
• Clarifying that vessel space services are included in the definition of vessel space accommodations.
• Proposing a mandatory export policy documentation requirement as an alternative to the previously proposed voluntary export strategy.

Comments on the SNPRM are due July 31, 2023. For detailed comment submission instructions, see the Federal Register notice.

The U.S. Federal Maritime Commission (FMC) Chairman Daniel Maffei announced the hiring of Alex Chintella to serve as an Administrative Law Judge (ALJ) at the FMC starting in June 2023.

Judge Chintella joins the Commission from the Federal Railroad Administration (FRA) where he has served since 2017, as Assistant Chief Counsel, Deputy Assistant Chief Counsel, and Supervisory Attorney Advisor. He also served as an Administrative Hearing Officer throughout his tenure at the FRA. Prior to government service, he was in private practice for almost ten years at Douglas & Boykin, PLLC in Washington, DC.

“The caseload of our Office of the Administrative Law Judge has sharply increased over the past two years resulting from more parties seeking relief to shipping disputes by using the formal complaints process. Hiring a third Administrative Law Judge continues the many investments the Federal Maritime Commission is making in its enforcement and adjudication services. We are committed to enhancing our capacity to receive and resolve disputes related to the provision of ocean transportation services. Judge Chintella possesses excellent qualifications for the position he is assuming and he is valued addition to the Office of the Administrative Law Judges,” said Chairman Maffei.

Judge Chintella received his J.D. from Brooklyn Law School in 2006 and his B.A. from Temple University in 2002. He is a member of the New York State and District of Columbia bars.  He will serve with Chief Administrative Law Judge Erin M. Wirth and Judge Linda S. Crovella. Several cases have already been assigned to Judge Chinetella including Docket No. 23-01 – Samsung Electronics America, Inc. v. SM Line Corporation and Docket No. 23-04 – Ports America Chesapeake, LLC and Marine Terminals Corporation-East v. APS East Coast, Inc.

The U.S. Federal Maritime Commission (FMC) received two new formal complaints in June 2023 alleging violations of the U.S. Shipping Act and FMC regulations.

Unreasonable Practices & Various Other Shipping Act Violations – FMC Docket No. 23-04:  Ports America Chesapeake, LLC and Marine Terminals Corporation-East filed a formal complaint against APS East Coast, Inc., an auto processing business that also operates as a Marine Terminal Operator. The complaint alleges that APS violated various provisions of the U.S. Shipping Act by engaging in unreasonable practices, unreasonable refusal to deal, and unreasonable preference, prejudice or disadvantage.

Specifically, APS allegedly engaged in a series of schemes and efforts to unlawfully restrict stevedoring services provided by Ports America for vessels and cargo in the Port of Baltimore. As a result, Ports America alleges it was forced to pay APS in excess of $1.2 million in unlawfully assessed access fees.

The Complainants requests that the Commission order APS to pay reparations for the unlawful conduct, including interest, attorneys’ fees, and costs, and provide any other further relief that the FMC deems appropriate.

Unreasonable Cargo Practices & Unlawful Detention and Demurrage Charges – FMC Docket No. 23-05:  Rahal International, Inc., a U.S.-based fruit juice importer, filed a formal complaint against Hapag-Lloyd AG, Hapag-Lloyd (America) LLC, and Hapag-Lloyd USA, LLC. Rahal alleges that Hapag violated various provisions of the U.S. Shipping Act by engaging in unreasonable practices and assessing unlawful detention and demurrage charges. Specifically, Rahal alleges in 2021 and 2022, Hapag created logistical paralysis at the Ports of New York and New Jersey by failing to secure sufficient port facilities or engage sweeper vessels to handle its empty containers. As a result, Rahal’s shipments incurred significant additional fees and suffered cargo damage.

Due to Hapag’s actions, Rahal alleges it suffered damages of at least $715,631.83. Rahal requests that the Commission order Hapag to pay Rahal reparations for the unlawful conduct, including interest, attorneys’ fees, and costs, order Hapag to cease and desist from the unlawful conduct, and provide any other further relief that the FMC deems appropriate.

This is the fourth formal complaint brought by shippers against Hapag for alleged Shipping Act violations during the COVID-19 pandemic. Two of the complaints were confidentially settled, but one remains outstanding – Docket No. 22-35 – M.E. DEY & CO., Inc. v. Hapag-Lloyd AG and Hapag-Lloyd (America) LLC. In June 2022, Hapag-Lloyd AG also agreed to pay the FMC $2 million in civil penalties to resolve allegations it wrongly assessed detention charges in violation of the U.S. Shipping Act.

For more details visit 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) closed out two complaints in June 2023 by issuing Notices Not to Review.

Notice Not to Review – 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., in November 2022. Doka alleged 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 a 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 alleged that this amount far exceeded the value of the cargo and made it commercially unfeasible for Doka to retrieve the cargo. Doka alleged that MSC’s inaction was the cause of these container holds. Doka claimed that MSC continued to hold the six containers, damaging Doka’s ability to operate its business.

Doka requested 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 deemed proper.

In April 2023, the parties requested and received approval for a confidential settlement. The Commission declined to review the settlement approval on June 15, 2023, and the settlement is now administratively final.

Notice Not to Review – 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. in December 2022. CCMA alleged 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 alleged that MSC failed to waive or negotiate demurrage applicable to containers held due to a customs examination. CCMA alleged 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 claimed 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 requested 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 deemed appropriate.

In May 2023, the parties requested and received approval for a confidential settlement. The Commission declined to review the settlement approval on June 27, 2023, and the settlement is now administratively final.

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 leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective July 15, 2023, including CMA CGM, COSCO, Evergreen, Hapag Lloyd, HMM Company Limited, Ocean Network Express (ONE), and ZIM. See table below for GRI amounts per 40ft container. GRI amounts for all other container sizes are as per formula. The July 15th GRIs will be the fourteenth GRI of 2023 for the East Asia/USA trade lane.

NOTE 1:  CMA CGM GRIs will be USD 1000 per 40ft container for dry cargo, and USD 1125 per 40ft container for reefer cargo. GRI amounts for all other container sizes are as per formula.

NOTE 2:  COSCO GRIs apply on all cargo moving under service contracts only.

Some carriers also updated their tariffs to include new General Rate Increases (GRIs) effective August 1, 2023, including CMA CGM, COSCO, Evergreen, Hapag Lloyd, HMM Company Limited, Ocean Network Express (ONE), and ZIM. See table below for GRI amounts per 40ft container. GRI amounts for all other container sizes are as per formula. The August 1st GRIs will be the fifteenth GRI of 2023 for the East Asia/USA trade lane.

NOTE 1:  CMA CGM GRIs will be USD 1000 per 40ft container for dry cargo, and USD 1125 per 40ft container for reefer cargo. GRI amounts for all other container sizes are as per formula.

NOTE 2:  COSCO GRIs apply on all cargo moving under service contracts only.

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.