FMC Issues Recommendations to Address Supply Chain, Port Issues

The Federal Maritime Commission this week issued a series of long-awaited recommendations to address issues in the international freight delivery system that have been exacerbated over the past year due to the COVID-19 pandemic. The recommendations, which resulted from Commissioner Rebecca Dye’s fact-finding mission that began in March 2020, aim to minimize barriers to Shipping Act enforcement and better allow the FMC to “facilitate prompt and fair dispute resolution,” Dye said July 28.

The fact-finding mission was sparked by a range of complaints from lawmakers and shippers, including allegations that ocean carries have been violating regulations on detention and demurrage fees (see 2011200024) and declining to carry certain U.S. exports (see 2103050014). Other industry groups have complained about the severe congestion at U.S. ports, which has led to equipment shortages, labor shortages and increasing container dwell times (see 2102020050 and 2102250039). FMC Chair Daniel Maffei suggested in May that the U.S. may need to revise its shipping regulations to fix those problems (see 2105050057).

Three of Dye's recommendations ask Congress to revise shipping statutes, including one request that would allow the FMC to authorize “double reparations” for shippers that successfully show that a carrier or marine terminal operator violated detention and demurrage rules. Without that change, the FMC said shippers will continue to be discouraged from filing a complaint against a carrier, because it doesn’t “make sense” for a shipper to “recover hundreds or thousands of dollars of unlawful demurrage or detention if it will cost significantly more to obtain a reparations award.”

Congress should also allow the FMC to issue “refunds or restitution” to parties injured by a shipping regulation violation. While the FMC can issue civil penalties to violators, it can’t award a refund to the injured party, Dye said. Not only would these refunds encourage parties to file complaints, but it also may also persuade them to assist the commission’s investigation, she said.

The final request to Congress would revise regulations to “better reflect” the types of supply-chain entities that may be subject to retaliation by carriers for complaining to the FMC. While U.S. regulations recognize that “shippers” may be subject to retaliation, they don’t list non-shippers, “such as truckers or others working on behalf of shippers,” Dye said. “[T]he statute should be aimed at also protecting the ability of shippers and others to complain to the Commission about potentially unlawful conduct free from retaliatory fears.”

Other recommendations said the FMC should provide more guidance on the current anti-retaliation prohibition and the standard for recovering attorney fees in private party complaints. The commission should also “reiterate” that any person can file a complaint alleging a Shipping Act violation” and revise the FMC website to “more clearly” explain the differences between private party complaints, the FMC’s Bureau of Enforcement investigation and enforcement, and a dispute resolution by the Consumer Affairs and Dispute Resolution Services (CADRS) office. The FMC should hold a webinar to help explain these differences, Dye added.

Dye also recommended that the FMC gather industry feedback on whether it should require carriers and terminal operators to include “certain minimum information” with their detention and demurrage billings and follow “certain practices” regarding the timing of those billings. Dye said the commission should issue an advance notice of proposed rulemaking to solicit public comments on this because of the numerous complaints it has received about detentions and demurrage billing practices.

The last recommendation calls for CADRS to designate dedicated staff to export-related issues, including an “Export Expert.” This would help CADRS “better handle” exporter problems and “keep other parts of the Commission apprised of issues particular to exports.”

Dye said she is working on two other related initiatives, including an “exciting” project with the Port of Los Angeles to explore how their collected data can help enforce demurrage and detention. Dye also said she plans to work with ocean carrier executives to revitalize a program from 2010 under which ocean carrier CEOs agreed to “personally intervene in emergency situations involving U.S. exporters.”