Feds give shippers new power to dispute ocean carrier charges
New guidance issued by federal regulators aimed at fighting unreasonable ocean carrier charges is short on detail but long on historic importance, according to a U.S. exporter group.
The advisory enacts provisions of the Ocean Shipping Reform Act of 2022 (OSRA), signed into law last month, by providing a simplified process for container carrier customers who want the Federal Maritime Commission to investigate their complaints.
“Today is a landmark moment in the history of the Federal Maritime Commission and the U.S. shipping public,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), in a statement. “The provisions in OSRA calling for informal processes to facilitate effective FMC enforcement are perfectly implemented in the Commission’s Industry Advisory today.”
The one-page advisory outlines steps for filing charge complaints against the carriers. Among the steps are identifying the carrier and the alleged violation, submitting documentation, confirming that the disputed charge was incurred after the June 16 enactment of OSRA, and submitting all the materials in one email, if possible, to the FMC.
When the agency receives sufficient information, it “will promptly initiate an investigation, which could ultimately result in a civil penalty and order for a refund of charges paid,” the advisory states.
“That statement changes everything — it turns the FMC into an enforcement agency along the lines of the Securities and Exchange Commission and the Federal Trade Commission”. “Never before has the commission formally asked shippers to provide us their information so that we can initiate an investigation. It took OSRA and a group of commissioners who understand they work for U.S. taxpayers and the shipping public for this to happen.”
In an international trade alert posted by Venable, the law firm points out that while shippers must confirm that a contested charge was incurred after June 16, “this issue remains uncertain, given the statutory language of [OSRA], the legislative intent during the drafting process, and the adoption of the FMC’s ‘Interpretive Rule on Demurrage and Detention Under the Shipping Act.’” That rule was finalized by the FMC in April 2020.
“Furthermore, stakeholders will likely request additional clarity on this point from the FMC and from the members of Congress who were instrumental in drafting and passing [OSRA].”
Friedmann, whose association was instrumental in crafting the language of the legislation, asserts that the advisory along with other FMC enforcement initiatives over the past five years signals “an emerging new era” for U.S. shipper protections.
“For decades, an aggrieved shipper was, practically speaking, forced to hire attorneys to bring formal complaints to the commission,” he said. “Then the commission would stand by and let the lawyers duke it out before rendering a decision,” as shippers would wait at least three years while paying a minimum of $300,000 in lawyer fees.
“If this wasn’t sufficient to chill any interest in filing a complaint, the commission could require the losing party to pay the winning party’s legal fees, doubling the cost. No wonder so few complaints were filed.
“To the outsider this may appear to be simply a procedural change, but those more familiar recognize that the positive impact of today’s advisory, this shift of FMC enforcement posture, cannot be overestimated.”
by John Gallagher at Freightwaves