Enforcement action

Recent FMC actions may provide a preview of how the new ruling on Detention & Demurrage will be enforced. The FMC Office of Enforcement filed a brief on April 4 asking mega-carrier MSC to pay a penalty of $63 million for violations of the U.S. Shipping Act, including charging unfair detention fees. It is a record penalty and to many represented ramping up of enforcement by the FMC.

Among the infractions, the brief calls out MSC’s “unreasonable and unjust actions” resulting in “overcharges to its customers, less free time, and more days of detention.”

MSC has subsequently said that it would fight the “excessive” penalty. [reported in AJOT.com Daily News]

FMC Chairman Daniel Maffei, speaking at the Coalition of New England Companies for Trade (CONECT) on April 10th in explaining the agency’s ramped up enforcement efforts said that the agency wasn’t “trying to stick it to anyone.” But rather the Commissioner saw the FMC’s role more like that of a referee whose regulatory obligation is to keep the game fair. But as Chairman Maffei pointed out the referee has to be ready to call a foul when there is an infraction of the rules.
And from a shippers’ perspective the game has seemingly been unfair for a long time and the Ocean Shipping Reform Act (OSRA) is in place to rebalance the relationship between carrier and shipper.

“Failing to fix the non-compliant practice, after being made aware, should be subject to forceful enforcement,” says Peter Friedman, executive director of the CONECT in reaction to this penalty. “Hopefully, all carriers will learn from this FMC enforcement initiative, and understand that their customers, the shippers, are consumers who deserve the well-established consumer protections.”

Friedman adds that this sizable penalty pales in comparison to the “billions of dollars of profits garnered by the carriers” during the recent supply chain crisis.

And as Chairman Maffei pointed out in his comments, when the FMC sees an infraction that undermines ocean shipping practices it will respond, “The answer is enforcement because we’ve come a long way and we still have a long way to go.”