The U.S. Federal Maritime Commission (FMC) proposed a new rule for demurrage and detention billing practices of vessel operating common carriers (VOCCs), non-vessel-operating common carriers (NVOCCs), and marine terminal operators (MTOs). The new rule, issued as a Notice of Proposed Rulemaking on October 7, 2022, is intended as a clarification of the Commission’s current detention and demurrage rules. This clarification is mandated by the Ocean Shipping Reform Act of 2022 (OSRA-2022).

Under the proposed rule VOCCs, NVOCCs, and MTOs will all be required to issue bills for demurrage or detention only to parties that they have a contractual relationship with. The Commission’s proposed rule means that only the person that has contracted with the billing party for the carriage of goods or space to store cargo may be billed for detention and demurrage.  Under the new rule invoices must also be clear regarding the nature of the charges and must be invoiced no later than 30 days after the charges stop accruing. A 30-day dispute period must also be allowed. Each invoice must include clear information about how charges should be disputed.

Interested parties have until December 13, 2022 to submit comments. The Commission is specifically interested in receiving comments on whether it would be appropriate to include the consignee named on the bill of lading as another party who may receive a demurrage or detention invoice.

Comments may be submitted via regulations.gov using the online comment function for docket number FMC-2022-0066.

The U.S. Federal Maritime Commission (FMC) rejected and remanded a settlement agreement reached between Ocean Network Express Pte. Ltd. (ONE) and the FMC’s Bureau of Enforcement (BOE). The Commission found the agreement approval was lacking consideration of penalty factors and was improperly granted confidentiality.

ONE and the BOE obtained an Initial Decision from an FMC Administrative Law Judge (ALJ) approving a fully confidential settlement of ONE’s alleged overly broad use of the term merchant in June 2022. ONE allegedly used the term merchant contained in its Bills of Lading to seek payment for charges from parties that ONE was not in contractual privity with. The terms of the settlement, including any amounts paid by ONE, were confidential. FMC’s rules require that the full text of all settlements be made public, however the ALJ approved this confidential settlement citing “unique circumstances.”

The full Commission reviewed this decision and issued an Order Reversing the Initial Decision and Remanding on October 27, 2022. The Commission found that the parties did not properly address the determination of the penalty amount under the FMC’s Rules of Practice and Procedure. The FMC’s rules require that penalty determinations be issued after consideration of factors such as the nature, circumstances, extent and gravity of the violation committed, and the policies for deterrence. The Commission’s rule also requires the respondent’s degree of culpability, history of prior offenses, and ability to pay to be considered in any penalty determination.

Additionally, the Commission also found that the settlement, which was the result of an enforcement action, was improperly granted confidential treatment. Under the FMC’s own rules penalties resulting from enforcement actions must be made public to further the deterrence and encourage compliance.

The ALJ’s Initial Decision approving this confidential settlement, which was issued on June 28, 2022, is now under review again by the ALJ. An initial decision is due to be issued January 26, 2023. 

The U.S. Federal Maritime Commission (FMC) awarded a $500,000 contract to the National Academies of Science (NAS) to conduct a study examining intermodal chassis pools and provide recommendations on best practices for their management. The study was mandated by Section 19 of the Ocean Shipping Reform Act of 2022 (OSRA-2022).

Under this agreement, a committee of independent experts will study the different approaches for supplying the chassis used by motor carriers, railroads, marine terminal operators, and other stakeholders to transport intermodal ocean containers. The committee will use the findings from their research to determine which circumstances and models for provisioning chassis most support an efficiently functioning supply chain and will identify the best practices from each examined model that can further increase efficiency. The committee will identify the conditions necessary to implement each model, including practical obstacles to implementation and their possible solutions.

Committee members will serve without compensation. This committee will be appointed over the next several weeks and the public will be provided with an opportunity to comment on the makeup of the committee. Individuals interested in serving on the study committee, or in suggesting candidates, should contact Thomas Menzies and Mark Hutchins of the NAS Transportation Research Board.

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

Unlawful Detention & Demurrage Fees & Unreasonable Cargo Practices, FMC Docket No. 22-30:  Samsung Electronic America, Inc. (SEA) filed a formal complaint against  ZIM Integrated Shipping Service Ltd., alleging that ZIM 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, engaging in retaliation, refusing to deal, invoicing detention or demurrage without required information, and issuing unreasonable charges. Specifically, SEA alleges that it engaged ZIM for store door services for US imports. Starting in late 2020 and throughout 2021, ZIM failed to properly perform its inland transportation obligations. As a result, SEA was exposed to unreasonable costs, including detention and demurrage, delays, and other harms.

SEA requests the Commission order ZIM to pay SEA reparations for its unlawful conduct including attorneys’ fees and costs, to cease and desist from the unlawful conduct, and to pay any other amounts that the Commission deems appropriate.

Unreasonable Cargo Practices, FMC Docket No. 22-29:  MVM Logistics (MVM), a California-based corporation, 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, MVM alleges that MSC failed to provide adequate time for returning containers, failed to provide equipment for container movement, and frequently changed container return dates and vessel schedules resulting in delays and fees. MVM further alleges that MSC restricted its access to terminals when MVM disputed per diem charges. MVM claims that MSC’s actions resulted in a loss of 95 percent of its shipping business and excess charges of at least $380,000.

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

Unreasonable Cargo Practices, FMC Docket No. 22-28:  Way Interglobal Network, LLC (Way), an Indiana-based importer of recreational vehicle parts,  filed a formal complaint against Shenzhen Unifelix SCM Limited (Unifelix), a China-based non-vessel-operating common carrier alleging that Unifelix 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 and handling claims. Way also alleges Unifelix unlawfully disclosed Way’s financial information.

Specifically, Way alleges that Unifelix failed to properly support its invoices for transportation services, submitted exorbitant charges, and demanded payment of freight and other charges in advance, in violation of its transportation agreement with Way. Way also claims that Unifelix disclosed Way’s financial information to Way’s vendors and others by demanding the vendors pay Unifelix directly for freight charges. As a result of Unifelix’s actions Way claims it suffered damages of $1 million.

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

Unreasonable Cargo Practices, FMC Docket No. 22-27:  Globerunners, Incorporated, a Texas-based non-vessel-operating common carrier, filed a formal complaint against Hoyer Global (USA), Inc., also a Texas-based non-vessel-operating common carrier alleging that Hoyer 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, Globerunners alleges that after a shipment to Korea incurred demurrage in 2019, Hoyer failed to properly support its invoices for demurrage charges and attempted to charge more than it had paid to the destination port and terminal.

Globerunners requests the Commission to order Hoyer to cease a desist collection of demurrage, storage and/or wharfage exceeding the amount actual paid by Hoyer and cease and desist from refusing to provide proof of the actual amount of charges Hoyer paid for demurrage. Globerunners further requests the Commission investigate and find Hoyer in violation of the Shipping Act and issue any further relief as the FMC determines to be just and 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 leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective November 15, 2022, including 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-second GRI of 2022 for the East Asia/USA trade lane.

NOTE 1:  COSCO GRIs apply on all cargo moving under service contracts only. The GRIs previously effective 15Sep2022 were postponed to effective 01Oct2022 and then subsequently were postponed to effective 15Oct2022. Following the postponement, they were scheduled to be effective 01Nov2022, but are now postponed to effective 15Nov2022.

NOTE 2:  HMM 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.

NOTE 3:  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 December 1, 2022, including CMA CGM, 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 1st GRIs will be the twenty-third GRI of 2022 for the East Asia/USA trade lane. lane.

NOTE 1:  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.

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.