03 June 2022

FMC PUBLISHES FACT FINDING 29’S FINAL REPORT

On 31st May, the US Federal Maritime Commission published the final report of the “Fact Finding Investigation 29” on the effects of the COVID-19 pandemic on the US international ocean transportation supply chain. The report concludes a two-year investigation led by Commissioner Rebecca F. Dye.

Importers and exporters highlighted two recurring pandemic-related concerns throughout the investigation: the high cost of shipping cargo, excessive demurrage and detention charges and disruption of information concerning blank sailings. After analysing the market conditions of ocean liner services, the FMC concluded that the Trans-Pacific trade is not concentrated, and the Trans-Atlantic trade is only minimally concentrated, noting that the “competition among the three major alliances and the members of each of these alliances is vigorous”.

Despite the adoption of the FMC’s Interpretive Rule on Demurrage and Detention in May 2020, providing shipping stakeholders with an enforceable principle used to assess the reasonableness of D&D practices, the report notes a lack of compliance around the issue of incentivising the flow of cargo through ports. In addition, Commissioner Dye expressed concerns on the FMC’s lack of regulatory tools to deal with the numerous new charges imposed on US shippers and truckers by carriers and terminals.

To address these concerns, the report proposes a series of 12 final recommendations, in addition to the 8 interim recommendations presented in July 2021. These request for action by the government includes, among others:

  • A rule to provide coherence and clarity on empty container return practices and earliest return date practices.
  • An FMC outreach Initiative to provide more information to the shipping public about competition enforcement, service contracts, shippers associations, among other topics.
  • A Commission investigation into practices relating to the numerous charges assessed by ocean common carriers and seaports and marine terminals through tariffs.
  • A rule to provide coherence and clarity on merchant haulage and carrier haulage.
  • An FMC Supply Chain Innovation Teams engagement to discuss blank sailing coordination and information availability;

In addition, the FMC believes there is a need to clarify the rules around making complaints and to extend existing laws that govern the complaints procedure, such as rules against retaliation by larger companies on smaller enterprises. The report suggests a simplification of the process of complaint that would allow shippers and forwarders to make small claims as well as settle more complex issues.

Source: FMC, The Loadstar