FMC Needs More Cases, Evidence Around Predatory Pricing, Chairman Says

The Federal Maritime Commission needs cooperation from the trade and logistics community to engage in meaningful enforcement, FMC Chairman Daniel Maffei said. Speaking last week at the annual National Customs Brokers & Forwarders Association of America conference, Maffei said that he has been frustrated that "a lot of people expect the FMC to intervene on the side of small shippers" and don't understand the limits of the commission's authority.

The 1984 Shipping Act was "one of the most deregulatory pieces in an era of deregulation," Maffei said in an interview at the conference. The FMC receives numerous complaints about predatory behavior by big carriers but needs individual complainants to go on the record. “I would love to hit carriers on predatory rates if I had the evidence."

As increased U.S. consumer demand and buying power resulted in shortages throughout the supply chain, the bigger companies consolidated power by engaging in multiyear contracts and reinvesting gains into their own logistics services, Maffei said in an interview. Although he believes "enforcement should be targeted towards the big guys," FMC is aware that many smaller operations are fearful of going on the record for fear of retaliation. During his speech, Maffei encouraged them to use any means to bring to the FMC's attention potential violations, saying, "the more you can put on paper the better."

In a period of high demand, rates are going to go up naturally and "not all high rates are predatory." But, he said, detention and demurrage charges, even in a high-demand environment, "better be for the purpose of moving cargo and not just making money." Maffei said he would like the commission to give more power to small and medium-sized operations, but "as a federal regulator, [he is] worried about the unintended consequences" of overregulation. If "Congress goes too far," he warned, there's the possibility big carriers could curtail service to U.S. ports.

Brokers also face jurisdictional boundaries among the FMC, the Department of Transportation, and the Surface Transport Board, Maffei said in his speech. The FMC is willing to bring joint cases with the STB, but both agencies are worried about jurisdictional arguments as interpreted by the courts. "Any container coming out of or going to the ocean is under FMC jurisdiction in my opinion ... . There is nothing I’m not willing to try even if there is no precedent," but the FMC needs a test case to know for sure where the jurisdictional boundaries are. "It's something of a chicken-and-egg scenario," Maffei said. Only once such a case moves through the courts will complainants have a blueprint to file additional cases, he said.

Maffei told the attendees that passing the Ocean Shipping Reform Act (see 2108100011) is an immediate need. "When you have an exporter competing with the opportunity cost of an empty box, that seems to be a thing we can do something about," he said. "The OSRA bills going through Congress would make it clear that the FMC does have some jurisdiction there." Although the "implementation and interpretation can be a slow process," Maffei said in an interview. If the big carriers know Congress is serious, he said he is cautiously optimistic the industry might see rapid changes in rates because the "industry as a whole is very sensitive to regulatory risk" and even the big players would need to be cautious in the short term.