FMC Members Predict Enforcement Action Over Carriers' Container Rules

After a fact-finding visit to the Port of New York and New Jersy (PNYNJ) last week, Federal Maritime Commissioner Carl Bentzel predicted that the FMC will likely begin looking at enforcement action to ensure that ocean carriers are complying with their legal obligations under the U.S. Shipping Act. Truckers have been complaining for more than a year about excessive demurrage and detention fees for containers - particularly when terminals do not provide appointments for pickup or dropoff, making the fees effectively unavoidable. In addition, shippers have called for assistance in forcing carriers to provide empty containers for U.S. exports; record-setting head-haul rates and equipment shortages make it more profitable for carriers to ship empties back to China for immediate loading and turnaround.

"Today, I heard further from shippers about the existing challenges in securing shipment of essential cargo, and I am continuing to closely evaluate information about potential Shipping Act violations," said Commissioner Bentzel. “The Federal Maritime Commission is continuing to collect information through Fact Finding 29, and I anticipate that we will be transitioning to the agency’s mandated oversight and enforcement obligations. The stakeholders have spoken this past year and have said that this has not been business as usual, there is a need for regulatory action and accountability.”

Bentzel and FMC Chairman Dan Maffei visited PNYNJ to hear from port stakeholders about cargo handling operations, COVID-19 impacts, the challenges of record-setting cargo volumes and the effects of ocean carrier policies. PNYNJ is on track to handle eight million TEU this year, and its port and terminal leaders told FMC that record volumes will continue through this summer and fall.

"The Port Authority and industry stakeholders in this region are doing an exemplary job working together to find ways to keep the supply chain moving despite the unprecedented influx of cargo," said Maffei. "With such high demand for ocean shipping, much congestion can’t be avoided, particularly at the nation’s third-largest port. However, on this trip, we heard too many complaints about unfair detention and demurrage charges and refusals to receive empty containers, both of which warrant further examination."

The global containerized supply chain is under tremendous stress, with freight volumes (and rates) driven to record levels by high consumer demand. As Western economies emerge from the COVID-19 pandemic, consumption has taken off, driven up by stimulus policies and low interest rates. According to CBRE, American retail spending was up 14 percent in the first quarter of the year. This pattern has created a record-busting $70 billion-per-month trade deficit for the U.S. economy, along with serious congestion at gateway ports in China and the United States.