FMC Expands Investigation of Ocean Carrier Alliance Practices in U.S. Ports

Transportation Update

Date: November 25, 2020

On November 19, the Federal Maritime Commission (FMC) issued a supplemental order in its Fact Finding Investigation No. 29, International Ocean Transportation Supply Chain Engagement – Possible Violations of 46 U.S.C. § 41102(C), authorizing Commissioner Rebecca Dye to investigate whether ocean carrier alliances operating in the ports of New York and New Jersey, Long Beach and Los Angeles employ unjust or unreasonable practices and regulations relating to receiving, handling, storing or delivering property. Specifically, the FMC plans to investigate practices related to demurrage and detention, empty container return and U.S. exports.

Fact Finding Investigation No. 29 was initially launched on March 31 to identify operational solutions to cargo delivery system challenges related to recent global events. During the investigation, the FMC discovered that common carriers in alliances who call on the Port of New York and New Jersey, the Port of Long Beach and the Port of Los Angeles may be employing unjust and unreasonable practices that violate 46 U.S.C. § 41102(c). On November 16, a coalition of trade associations sent a letter to the FMC requesting the suspension of unreasonable detention and demurrage charges in these ports. The coalition explained that its members paid more than $150 million in unreasonable detention and demurrage charges in 2020 due to massive congestion coupled with a shortage of skilled labor and available chassis. In their November 20 statements concerning the investigation, several FMC Commissioners stated that they believe they need to address the increasing problems involving our nation’s seaports, including assessing practices and policies concerning detention and demurrage that possibly violate the FMC’s recent interpretative rule and the availability of chassis, containers and skilled labor.

Stating that these stakeholder concerns warrant an investigation of “the practices and regulations that are having an unprecedented negative impact on congestion, amplifying bottlenecks at these ports and other points in the Nations’ supply chain,” the FMC ordered Commissioner Dye to investigate these allegations under her full authority, including the ability to issue a notice of inquiry and/or compulsory information demands.

FOR MORE INFORMATION

For more information, please contact:

Karyn A. Booth
202.263.4108
Karyn.Booth@ThompsonHine.com

Jason D. Tutrone
202.263.4143
Jason.Tutrone@ThompsonHine.com

Kerem Bilge*
202.263.4104
Kerem.Bilge@ThompsonHine.com

*Not admitted in the District of Columbia; practice is supervised by principals of the firm.

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