The Federal Maritime Commission (FMC) recently entered into compromise agreements with one vessel-operating common carrier and two non-vessel-operating common carriers (NVOCC). The compromise agreements recovered a total of $2.3 million in civil penalties and resulted in commitments by each company to reform specific business practices. The agreements are the result of investigations by the Commission’s Bureau of Enforcement, Investigations, and Compliance (BEIC). The parties settled and agreed to penalties but did not admit to violations of the Shipping Act or Commission regulations. Details as released by FMC are as follows:

CMA-CGM, S.A. (CMA-CGM), a vessel-operating ocean common carrier, paid $1,975,000 to resolve allegations that it overbroadly defined and applied its definition of merchant in a bill of lading to demand payment from a third party who should not have been billed. CMA-CGM has terminated this practice and ensured future compliance by amending its U.S. tariff rules to limit the definition of merchant in its bills of lading to shippers, consignees, and persons with a beneficial interest in the cargo as defined by Commission regulations at 46 C.F.R. § 515.2(b). CMA-CGM agreed that, in addition to paying civil penalties, it will also furnish restitution to impacted third parties in the form of refunds and waivers. The agreement included CMA-CGM’s stated commitment to comply with the Demurrage and Detention Billing Rule (46 C.F.R. Part 541) upon the rule’s effective date of May 28, 2024.

Vanguard Logistics Services (USA), Inc. (Vanguard), a US-based FMC-licensed NVOCC, paid $175,000 to resolve allegations that it knowingly and willfully accepted cargo from, or transported cargo for, the accounts of NVOCCs or ocean freight forwarders (OFFs) that did not have bonds, insurance, or other sureties as required by law. Vanguard agreed to undertake an audit of its internal practices and procedures and provide quarterly updates to BEIC on the progress of the audit as well as a report of remedial actions it takes in response to the audit’s findings.

Shipco Transport, Inc. (Shipco), a US-based FMC-licensed NVOCC, paid $155,000 to resolve three allegations of misconduct. First, that it knowingly and willfully accepted cargo from or transported cargo for the accounts of NVOCCs or OFFs that did not have bonds, insurance, or other sureties as required by law. Second, that it allowed an unlicensed NVOCC or OFF to obtain transportation for property at less than the rates or charges that would otherwise be applicable. Third, that it allowed another NVOCC or OFF to obtain transportation for property at less than the rates or charges that would otherwise be applicable by providing access to service contracts of an ocean common carrier to which the NVOCC or OFF was not a signatory.

Both Vanguard and Shipco agreed in their respective compromise agreements to fully cooperate with BEIC in any future investigatory or enforcement efforts.

Penalty payments are deposited into the General Fund of the United States. The FMC receives no portion from any financial penalties collected.

Chairman Maffei was first nominated to serve on the Federal Maritime Commission (FMC) by President Barack Obama and confirmed by the United States Senate on June 29, 2016. He left the FMC on June 30, 2018 when the term he was serving expired. Shortly thereafter he was nominated by President Donald Trump and confirmed by the Senate and rejoined the Commission on January 15, 2019. He was designated as FMC Chairman on March 29, 2021 replacing Michael A. Khouri in the role of Chairman

As FMC Chairman, Maffei has overseen the FMC’s implementation of the Ocean Shipping Reform Act of 2022. This is the first expansion of FMC’s authorities since the Ocean Shipping Reform Act of 1998. Maffei has focused the agency’s efforts on meaningful regulatory enforcement to create a level playing field.

A native of Syracuse, New York, Chairman Maffei was a Member of the U.S. House of Representatives for two terms representing New York’s 25th congressional district from 2009 to 2011 and New York’s 24th congressional district from 2013 to 2015. His previous professional experience includes serving in the Department of Commerce during the Obama Administration, and earlier in his career serving as aide to Senator Daniel Patrick Moynihan of New York and Senator Bill Bradley of New Jersey. He earned a Bachelor of Arts degree from Brown University and master’s degrees from Columbia and Harvard Universities.

The U.S. Senate confirmed FMC Commissioner Rebecca F. Dye’s reappointment to be a Federal Maritime Commissioner on May 14, 2024. Her term will expire June 30, 2025.

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.

The Federal Maritime Commission (FMC) launched an investigation to determine if pending Canadian regulations governing ballast water management systems of ships in the U.S.-Canada Great Lakes trade have a disparate effect on U.S. flagged vessels and constitute a Foreign Shipping Practices violation under 46 U.S.C. Chapter 423.

U.S.-based companies operating ships in the U.S.-Canada Great Lakes trade maintain that Canadian regulations taking effect as to some vessels in September 2024 impose a severe burden on their operations and put American companies and vessels at a disadvantage relative to their Canadian competitors.

The Commission is authorized by Title 46, Chapter 423 of the U.S. Code to investigate whether the laws, rules, regulations, policies or practices of another nation result in conditions that adversely affect the operations of United States carriers in the United States ocean borne trade.

The Commission has determined that sufficient facts exist related to the Canadian ballast water regulations to warrant initiating a Foreign Shipping Practices investigation. The investigation will be led by the Commission’s General Counsel, who will prepare and present a report to the Commission containing his findings and recommendations for Commission action within 120 days, unless an extension is approved.

Interested members of the public are invited to comment on the matters that have triggered this investigation.  Comments should be submitted via the Federal eRulemaking Portal by June 21, 2024.

There are significant potential consequences for Canadian-flagged vessels calling at U.S. ports if the Commission determines there has been a violation of the Foreign Shipping Practices provisions. Options for offsetting sanctions include limiting Canadian-flagged vessels from calling at U.S. ports and assessing significant fees on Canadian-flagged vessels.

This investigation continues the FMC’s ongoing examination of Canadian government policies and regulations impacting U.S. flagged Great Lakes operators. A petition filed by the Lake Carriers’ Association (Petition P1-20), a trade association representing U.S. flagged operators in the Great Lakes, originally directed the Commission’s attention to this matter in March 2020. Subsequently, the Commission initiated an Investigation of Regulations Affecting Shipping in Foreign Trade using its authority under 46 U.S.C. Chapter 421.

The Federal Maritime Commission (FMC) received four new formal complaints in May 2024 alleging violations of the U.S. Shipping Act and FMC regulations.

Unreasonable Cargo Practices and Unlawful D&D – FMC Docket No. 24-19:  Peloton Interactive, Inc., a New York-based exercise equipment company, filed a formal complaint against Flexport International LLC, a San Francisco-based non-vessel-operating common carrier (NVOCC) alleging violations of the U.S. Shipping Act and FMC’s detention and demurrage regulations.

Specifically, Peloton alleges that starting in 2020 and continuing through 2023 Flexport regularly failed to perform its obligations for inland transportation for store door moves. Peloton further alleges that Flexport improperly issued detention and demurrage invoices in violation of the U.S. Shipping Act. As a result of Flexport’s actions, Peloton alleges it incurred substantial injuries and monetary damages, including but not limited to paying improper charges for detention and demurrage charges.

Peloton requests the Commission to order Flexport to pay Peloton reparations for their unlawful conduct, along with attorney fees and costs, and to provide any other relief the Commission deems proper.

Unreasonable Cargo Practices and Unlawful D&D – FMC Docket No. 24-20:  International Express Trucking, Inc. (IXT), a Kansas-based trucking company filed a formal complaint against COSCO Shipping Lines Co., Ltd. and COSCO Shipping (North America) Inc. alleging various violations of the U.S. Shipping Act and FMC’s detention and demurrage regulations.

According to IXT, between 2022 and 2023 COSCO issued per diem invoices totaling $75,725 to IXT that did not comply with the minimum content requirements of the Shipping Act of 2022. IXT further alleges the invoices included detention and demurrage charges that violated the FMC’s incentive principal. These invoices were issued for situations involving lack of chassis availability, unavailable return appointments, and congestion. Additionally, IXT claims that COSCO refused to waive the charges and threatened to discontinue service for IXT.

IXT requests the Commission to order COSCO to pay IXT reparation for the unlawful conduct, along with attorneys’ costs and fees, and to provide any other relief the Commission deems proper.

Unreasonable Cargo Practices and Unlawful D&D – FMC Docket No. 24-21:  PKDC, LLC, a Colorado-based furniture importer, filed a formal complaint against CMA-CGM S.A alleging various violations of the U.S. Shipping Act and FMC’s detention and demurrage regulations.

Specifically, PKDC alleges that between 2021 and 2022 CMA-CGM consistently failed to meet its existing service and rate commitments. This failure forced PKDC to agree to pay higher fees or find alternative shipping arrangements. On several occasions PKDC contracted with other carriers at higher rates only to find the cargo was ultimately transported on CMA-CGM ships. PKDC also alleges CMA-CGM issued detention and demurrage invoices for charges in violation of the FMC’s incentive principal when containers could not be returned due to lack of space or appointments.

As a result of CMA-CGM’s actions, PKDC alleges that it suffered at least $14 million in damages. Additionally, PKDC claims it suffered significant financial harm as a result of delays in shipping time-sensitive merchandise resulting in lost sales and profits in an amount to be determined at trial.

PKDC requests the Commission to order CMA-CGM to cease and desist from violations of the Shipping Act and to put practices in place to prevent future violations, to pay PKDC reparations including interest, attorneys’ fees and costs, and to provide any other further relief that the FMC deems appropriate.

Unreasonable Cargo Practices and Unlawful D&D – FMC Docket No. 24-22:  Giti Tire (USA) Ltd., a California-based tire importer filed a formal complaint against Flexport International LLC, a San Francisco-based non-vessel-operating common carrier (NVOCC) alleging various violations of the U.S. Shipping Act.

Giti alleges that from 2021 to 2023 Flexport failed to issue detention and demurrage invoices in compliance with the U.S. Shipping Act’s minimum content requirements. Additionally, Flexport issued detention and demurrage charges for weekend and holidays during which the port or terminal was closed in violation of FMC’s incentive principal. According to Giti the invoices Flexport issued contained millions of dollars in charges for demurrage, detention, storage, and other accessorial charges that were often four to five times market rates. Giti further alleges that on multiple occasions Flexport issued duplicative invoices for charges that Flexport already had invoiced to other parties, such as a motor carrier, involved in the shipment. As a result of Flexport’s conduct, Giti claims to have suffered over $12,724,433 in damages.

Giti requests the Commission to order Flexport to refund or eliminate the obligation to pay the non-compliant invoices, to pay Giti reparation for its unlawful conduct, including interest and attorney’s fees and costs, and to provide any other relief the Commission deems proper.

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.

Several carriers serving the USA/East Asia trade lanes (U.S. Exports) have adjusted their fuel surcharges for the July to September 2024 quarter. Here is a table of carriers that have posted BAF amounts:

NOTE 1: CMA CGM calls the above Bunker 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 charge the Bunker Surcharge (BUC) Rule No. 10-2A. HMM also filed in its FMC tariff Rule 10-02F, Environmental Compliance Charge (ECC), effective July 1, 2024. The ECC amounts are USD 65/130/130/130 per 20/40/40HC/45ft, respectively, for dry cargo moving via West Coast; and USD 41/81/81/81 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 June 01, 2024 thru June 30, 2024.

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

NOTE 7:  ZIM calls the above Bunker Charge 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.

Several leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective June 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 June15th GRIs will be the twelfth 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 July 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 July 1st GRIs will be the thirteenth 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.

Several carriers serving the East Asia/USA trade lanes (U.S. Imports) have adjusted fuel surcharges effective July 1 through September 1, 2024.  Details are as follows.

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 2-95, Environmental Compliance Charge (ECC), effective July 1, 2024. The ECC amounts are USD 220/245/275/310 per 20/40/40HC/45ft, respectively, for destination USWC/USWC Local/IPI/MLB; and USD 396/440/495/558 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 June 1, 2024 thru June 30, 2024.

NOTE 6:  ZIM calls the above surcharge the New Bunker Factor – Far East (NBF), Tariff 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.

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.