Top 9 Container Lines Become the Target of FMC’s Audits
Among increased pressure from shippers, Congress, and the White House, the US Federal Maritime Commission (FMC) will begin auditing how they bill customers’ detention and demurrage charges. The audit targets the top nine container lines including Cosco Shipping Group, CMA CGM, Evergreen, Hapag-Lloyd, HMM, Maersk, Mediterranean Shipping Co., Ocean Network Express, and Yang Ming.
A letter to the container carriers details that the Vessel-Operating Common Carrier Audit program will determine whether carriers will face additional storage fees if they are unable to pick up or return containers. Lucille Marvin, managing director of the FMC, says in the letter that each carrier is required to encourage a managing director to respond to the FMC’s audit and provide regulators with monthly updates.
FMC Raises Questions in Fairness of Detention and Demurrage Fees
In spring 2020, the FMC questioned the fairness of detention and demurrage fees, bringing to light the question of whether or not they encourage carriers to retrieve import containers and return empty ones. Despite this, the underwhelming amount of formal complaints about detention and demurrage fees led to a lack of action. This, paired with President Biden’s executive orders that targeted container carrier practices, put pressure on the FMC to more strictly monitor any activity that could violate the Shipping Act of 1984.
On June 6, FMC Chairman Daniel Maffei and FMC Commissioner Rebecca Dye explained their goal to audit detention and demurrage billing, and Maffei acknowledged that the FMC might need more resources to do so. Jen Psaki, the White House’s press secretary, argued that carriers should not bill shippers while their goods wait at shipping ports.
Shippers and Container Lines Disagree on the Necessity of Fees
Shippers responded to the charges saying that they are responsible for paying the costly fees when congested ports prevent them from picking up containers and returning equipment. These fees are only becoming more expensive as Asian imports clog U.S. marine terminals, making it more difficult for truckers to pick up the containers and drop off equipment. In response to this rebuttal from shippers, carriers state that they must require fees as a way of encouraging the removal of cargo and the return of equipment in a timely manner.
Shippers have historically viewed detention and demurrage bills as unjust. The National Industrial Transportation League (NITL) and the Agricultural Transportation Coalition (AgTC) have sought changes to the placement of legal burdens, taking the position that detention and demurrage billing should fall on carriers rather than shippers. Meanwhile, the FMC is unsure how to respond to claims from shippers and truckers that some container lines use storage fees as a source of revenue. Rules created in response to a fact-finding inquiry in 2018 failed to end detention and demurrage billing practices that shippers deemed unfair. In response, the NITL and AgTC proposed changes to the Shipping Act.
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