FMC to Consider Requiring Mandatory Compliance Officers, Launching Carrier Tariff Investigation

The Federal Maritime Commission should require all ocean carriers and marine terminals to hire dedicated compliance officers, establish a clearer process for returning containers and launch a new investigation into carrier charges assessed through tariffs, Commissioner Rebecca Dye said. Dye, delivering a new set of recommendations during a May 18 FMC meeting, also said the commission should create a carrier-focused advisory committee and do more to support U.S. agricultural exports.

The recommendation came about 10 months after Dye’s previous set of suggestions, which stemmed from an FMC fact-finding investigation of issues in the international freight delivery system that have been exacerbated due to the COVID-19 pandemic (see 2107290021). Several of those recommendations have been implemented (see 2109150035), including more guidance to shippers seeking to obtain reparations for violations of the Shipping Act and a rule that proposed new demurrage and detention billing regulations (see 2203250028).

In her latest recommendations, Dye said the FMC should require compliance officers for all ocean carriers, seaports and marine terminals. Those officers should report directly to CEOs instead of the general counsel, Dye said, and should not “reside in the general counsel's office.”

She also said the FMC should “establish coherent processes” for carriers and terminal operators surrounding two issues: empty container returns and earliest return dates. Exporters have asked the FMC to require that detention and demurrage invoices include the earliest return dates that containers are allowed at the terminal (see 2204180040).

“Most of you have heard me say that the problems we have experienced during the pandemic are not new,” Dye said. “And these are two poster children for that assertion.” Dye said the FMC has already held discussions on both issues with its Supply Chain Innovation team. “I believe that we're ready to move forward,” she said.

The FMC should also launch an investigation into charges assessed through tariffs, Dye said. The commission is still accepting comments on potential changes to its rules for Carrier Automated Tariffs, including whether the tariffs should be available “free of charge” and if the definition of co-loading should be revised to apply only to “less than container loads” (see 2205090006).

“I heard many complaints about the multitude and the variety of new charges assessed by carriers and marine terminals during the pandemic,” Dye said, “and I would like to see the Commission have more tools rather than our very limited authority to analyze these new charges.”

The commission should also stand up a new advisory committee that pulls from the experiences and recommendations of ocean carriers and terminal operators, Dye said. The FMC has a National Shipper Advisory Committee (see 2005200012) composed of exporters and importers (see 2111020004), but should also have a National Seaport and International Ocean Carrier Advisory Committee, Dye said. The new committee would “work directly” with the existing shipper advisory committee.

Several commissioners applauded this idea, including Carl Bentzel, who said he is “very enthusiastic” about another committee to assist the NSAC, which has made “a lot” of progress. “Clearly, we need to do something with marine terminal operators and ocean carriers going forward,” Bentzel said. “There's a lot of discussion that they could have that would benefit the shipping industry.”

Dye also hopes to revitalize the FMC’s “rapid response program” to specifically focus on issues raised by explorers. She said she has received commitments from “each alliance carrier” operating in the U.S. that they would participate in the program.

She also said the FMC should work more closely with its new export expert, established by Dye’s 2021 recommendations, to collaborate on agricultural export issues. She said the commission should discuss with the USDA “ways we can improve the agricultural export international supply chain.” Shippers have said carriers continue to send empty containers back overseas rather than filling them with exports because the carriers can charge higher rates for imports (see 2104280031).

Other recommendations included a new FMC outreach initiative to provide more information to the public about service contracts and other topics; a new rule to define merchant haulage and ocean carrier haulage; and an innovation team to address blank sailings and “other matters.”

The recommendations were mostly praised by the other commissioners. “It's a Herculean effort that we have here,” Commissioner Louis Sola said, “and it outlines a lot of the supply chain challenges that we've had.” FMC Chair Daniel Maffei said he hopes the commission can vote on the recommendations “early next week.”