Industry groups ready responses to FMC’s ocean carrier pricing review

U.S. Federal Maritime Commission

Freight transportation industry and shipper groups say they are preparing detailed responses to the U.S. Federal Maritime Commission (FMC) review of ocean carrier pricing practices.

The FMC, which announced the notice of inquiry on Wednesday, said it is seeking information from the container-shipping public on alleged attempts by ocean carriers to hold companies financially responsible for transportation services that they did not contract for and may not legally be required to pay.

The FMC said it received comments for its earlier Docket No. 19-05, Interpretative Rule on Detention and Demurrage under the Shipping Act, which raised concerns about these billing practices. The agency finalized the interpretative rule in April.

Specifically, the industry allegations point to ocean carriers defining “merchant” in their bills of lading to include persons or entities with no beneficial interest in the cargo and have not consented to be bound by the terms in the bill of lading, the agency said.

Entities being tied to merchant obligations in ocean carrier bills of lading may include non-vessel-operating common carriers, freight forwarders and truckers.

Separately, the FMC’s Bureau of Enforcement will seek specific billing information from certain ocean carriers serving U.S. international container trades.

“It’s encouraging that the FMC is taking its responsibility seriously when it comes to detention and demurrage charges,” said Peter Friedmann, executive director of the Washington-based Agriculture Transportation Coalition and an outspoken critic of how these charges are accessed by the ocean carriers against U.S. exporters.

The New York-New Jersey Foreign Freight Forwarders and Brokers Association has pointed out through the FMC’s interpretative rule on detention and demurrage practices that ocean carriers define the term ‘‘merchant’’ in their bill of lading too broadly, resulting in parties being billed for demurrage and detention ‘‘regardless of whether they are truly in control of the cargo when the charges were incurred.’’

Demurrage pertains to the time an import container sits at a container terminal, with carriers responsible for collecting penalties on behalf of the marine terminals. Detention relates to shippers holding containers for too long outside the marine terminals.

For years, shippers have complained to the FMC about the unfair imposition of these fees whenever container equipment cannot be returned or picked up during the free period for reasons out of their control.

The Washington-based World Shipping Council, which represents 95% of the global container industry by volume, told American Shipper that it is reviewing the inquiry and will share its views through the FMC’s comment process.

Comments related to the inquiry must be submitted to the FMC by no later than Nov. 6.

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Click for more FreightWaves/American Shipper articles by Chris Gillis.