FMC Proposes Changes to Help Shippers Seek Damages From Carriers

The FMC has been investigating container supply chain disruption, including carrier policies on container availability, detention and demurrage charges and container return time allowances. In a commission hearing last week, Federal Maritime Commissioner Rebecca Dye proposed asking Congress to amend the law (46 USC Chapter 411) in order to make it easier for all parties - truckers, forwarders and shippers - to file their own complaints and seek damages from ocean carriers.

"Despite criticism of carrier and terminal practices . . . few private parties have filed complaints seeking reparations. While there may be many reasons for the apparent disconnect, it appears that shipper (and trucker) concerns about retaliation, litigation costs (both in time and money), and attorney fee liability are important disincentives [for individual firms to file suit]," the commissioner wrote.

The current law forbids carrier retaliation against shippers, but it does not protect non-shippers like truckers or agents who work on behalf of shippers. The proposed text would amend the law to protect motor carriers and agents, preventing carriers or terminal operators from retaliating against them for filing a complaint. Exporters in particular have expressed concern regarding the possibility for retribution from carriers if they complain, she said. 

Dye also proposed to allow for double damages for demurrage and detention infractions, giving stakeholders a way to cover attorney costs and other expenses related to bringing a case. 

In addition, she recommended that the FMC should make clear that it will use its enforcement powers to penalize carriers if they retaliate against anyone who participates in an FMC investigation. To give shippers and truckers an incentive to help FMC's investigators, she also proposed asking Congress to give FMC the authority to demand rewards for investigation participants (where warranted) when it takes enforcement action against carriers.

The National Industrial Transportation League (NITL) has also called for revising the law in order to provide better protection for shippers.

“While ocean transportation costs are rising to unprecedented levels, we have seen a substantial deterioration in service by the ocean carriers,” said NITL Director and Ocean Committee Chair Lori Fellmer. “The lack of timely access to marine equipment and vessel sailings has caused adverse ripple effects throughout U.S. companies’ supply chains leading to material shortages, empty store shelves, and business interruption.”

NITL's proposal goes further than Commissioner Dye's plan: it calls for Congress to regulate the allocations of equipment and space on vessels and expand the FMC’s authority to act on complaints filed against ocean carriers. "While the League strongly commends the regulatory efforts in recent years initiated by the FMC, we believe the agency and shipping industry would benefit greatly from these proposed reforms that are targeted to address present-day challenges," said Fellmer

Under direction from the White House, the FMC has also been moving towards enforcement action. Last month, it signed an MOU with the Department of Justice's Antitrust Division, signaling a willingness to step up scrutiny of carrier practices and expand the scope of its inquiry into anticompetitive behavior.