FMC Commissioner Releases Final Report on Ocean Supply Chain Issues

Commissioner Rebeccca Dye of the Federal Maritime Commission this week released the final report stemming from a two-year investigation of the effects of the COVID-19 pandemic on the international ocean freight delivery system, which includes a dozen new recommendations to address supply chain and maritime logistics issues. The report, previewed by Dye last month (see 2205180056), has recommendations for mandatory FMC compliance officers, a clearer process for returning containers and a new investigation into carrier charges assessed through tariffs.

In her report, Dye said she is concerned that some ocean carriers still aren’t complying with the FMC’s 2020 rule on detention and demurrage (see 2004290037 and 2009140045), and that the FMC lacks “regulatory tools” to address unfair charges imposed against U.S. shippers and truckers. Dye said some ocean transportation prices are “disturbingly high” and have been exacerbated by the pandemic, the unexpected surge in consumer spending and supply chain congestion.

The most “productive path forward” for both shippers and ocean carriers is to enter into “mutually enforceable and binding service contracts,” Dye said. Many contracts negotiated by U.S. importers and exporters “lack this mutuality of undertaking and obligation and are not enforceable,” she said. “Without enforceable contracts, shippers are unable to protect themselves from volatile shipping rates and ocean carriers have few forecasting tools to provide the shipping capacity necessary to serve their customers.”

The FMC should adopt several new recommendations to help “alleviate pressing problems” in the international ocean supply chain, the report said, including new rules to bring “coherence and consistency” to empty container return practices and earliest return dates. Dye said shippers and drayage operators are often frustrated with the “lack of consistency” across the U.S. when returning empties, and it isn’t always clear who is responsible for communicating return locations. Similarly, shippers are sometimes confused about “where to locate reliable information” on earliest return dates and who is responsible for determining those dates.

Other recommendations would require marine terminal operators and ocean carriers to employ an FMC compliance officer; would call on the FMC to establish a new industry outreach initiative; would create a new FMC supply chain program to study and address emerging issues; and would lead to a new rule to define merchant haulage and carrier haulage.

Dye also notably called for a commission investigation into tariff surcharges and other fees imposed by carriers, MTOs and seaports. The FMC 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).

Some recommendations are specifically aimed at addressing export issues, including one that suggests the FMC work closer with USDA to help agricultural exporters gain better access to ocean shipping containers. The report called container availability a “chronic challenge” for U.S. agricultural exports, and said the USDA’s “experience and expertise in handling the needs of exporters could be of great value.”

Dye said she looks forward to the FMC implementing the recommendations, which “will provide badly needed clarity and consistency in certain port and supply chain operations.” FMC Chair Daniel Maffei said he is “eager to work with her and our colleagues to implement the Final Recommendations which will guide the FMC in keeping big players in the ocean shipping industry accountable.”

The World Shipping Council, which represents many of the world’s major carriers, didn’t immediately comment.