July 21, 2021

FMC to Assess Whether Container Lines are Abusing Market Power

The Federal Maritime Commission plans to audit nine of the largest container carriers operating in U.S. markets to find out if they are using their market power to overcharge shippers on detention and demurrage fees.

The Vessel-Operating Common Carrier Audit Program, launched on Monday by FMC Chairman Daniel Maffei, will also “provide additional information beneficial to the regular monitoring of the marketplace for ocean cargo services,” according to the agency.

The top nine carriers by market share included in the audit are Maersk, MSC, CMA CGM, COSCO Group, Hapag-Lloyd, ONE, Evergreen, HMM and Yang Ming.

“The Federal Maritime Commission is committed to making certain the law is followed and that shippers do not suffer from unfair disadvantages,” Maffei commented, noting that his audit team will work to enhance dialogue with carriers on supply chain challenges.

“Of course, if the audit team uncovers prohibited activities, the Commission will take appropriate action. Furthermore, the information gathered by the audit process might lead to changes in FMC regulations and industry guidance if warranted,” Maffei said.

The audit program comes just a week after the FMC announced an agreement with the Department of Justice to boost the economic oversight of foreign carriers serving in the U.S. international container trades, following an executive order issued by the White House aimed at reining in what it considers to be excessive market power by the ocean carriers.

The carriers involved in the audit will be analyzed for compliance with FMC regulations as they apply to detention and demurrage practices in the U.S. Each will be audited “irrespective of whether a formal or informal complaint has been filed at the Commission,” FMC stated. “The Commission will work with companies to address their application of the rule and clarify any questions or ambiguities. Information supplied by carriers may be used to establish industry best practices.”

FMC Managing Director Lucille Marvin will lead the audit program, the agency noted, which will be made up initially of current FMC employees. The audit will begin with an information request establishing a database of quarterly reports allowing the Commission to assess how detention and demurrage is administered. Responses will be followed by individual interviews with the carriers.

Aside from detention and demurrage, the audit may include carrier practices related to billing, appeals procedures, penalties assessed and any other restrictive practices, according to the FMC.

(Source: American Shipper)