Carriers refund over $700,000 in charges to US shippers
Shipping lines have refunded more than $700,000 of Demurrage and Detention billings in the US since June last year following complaints by shippers made to the Federal Maritime Commission (FMC) under OSRA 2022.
The FMC, the US regulator watching the liner shipping marketplace, held a meeting earlier this week with a discussion focus on implementation of the Ocean Shipping Reform Act of 2022 (OSRA 2022), as well as a briefing on economic and industry trends.
A major topic at the meeting was the wording on “Refusal to Deal” provisions that will be added to Federal statutes, per OSRA 2022. The process involves review of comments received by the FMC; after one round of comments, the agency is soliciting additional input from industry participants.
Another matter receiving considerable attention concerns “Charge Complaints”. concerning extra charges that common carriers have assessed on shippers, where language created per OSRA 2022 has already been added to the relevant Code of Federal Regulations (46 U.S.C. §§ 41310(a)-(b) and also 46 U.S.C. §§ 41104(a) or 41102). The FMC reported that: “More than 70 Charge Complaints met the threshold requirements for being referred to investigators. Commission staff reported that the Charge Complaint process is proving successful at promoting informal settlements as well as waivers of Demurrage and Detention billings. Staff estimate that more than $700,000 in charges have been refunded by carriers since June.”
Demurrage and Detention (D & D) issues figure prominently in complaints to the FMC. In one ongoing FMC proceeding (Docket 22-32), a shipper of plywood from Russia into a Pacific Northwest port points to 46 U.S.C. 41102 and 46 U.S.C. 41104, in a complaint directed against Mediterranean Shipping Corp (MSC) where some $260,000 of D and D -accrued over a four-month span prior to release of the cargo in early 2022 exceeded the underlying value of the cargo in the containers- according to the cargo shipper’s complaint. Legal “discovery” in this case will be occurring from late February through May, 2023, according to an FMC Scheduling Order.
On the economic front, the FMC noted that: “both container volumes and freight rates on inbound trades have returned to essentially pre-pandemic levels. Significant amounts of containerized imports have shifted to East and Gulf Coast ports” as noted in a recent Seatrade Maritime News article US supply chain congestion eases, carriers seek cargo
The agency also offered comments regarding one of the largest carriers, saying: “The market share of MSC has increased substantially in the US-Asia and US-Europe trades over the past two years. Both MSC and Maersk have substantial market shares and have been offering additional services outside their alliance.”
A day after the FMC announcement, these two carriers announced that they would not be renewing their 2M Alliance, a 10-year vessel sharing agreement launched in 2015, with some analysts pointing to attention from regulators (notably the FMC) as one driver for this decoupling.
Still, traditional economic forces are prevailing in the market, with FMC noting that: “The US trades are seeing the abandonment of the marketplace by new entrants that began calling during the height of the pandemic…with volumes and rates returning to more typical and traditional levels, there is no longer the incentive for these carriers to operate in what is not their usual markets.”
Another hint that liner shipping markets have returned to pre 2021 conditions came from wording in the agency’s announcement, which said that: “The Commission has completed its review of market conditions finding circumstances at this time do not warrant invoking Temporary Emergency Authority established under OSRA 2022 to require information sharing among supply chain participants.”
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