FMC Takes Steps to Aid Shippers and Ensure Carrier Compliance

The Federal Maritime Commission is quickly responding to the findings of its most recent fact finding that looked at the issues impacting the supply chain and the problems shippers were experiencing. A week after the release of the report, the Chairman of the FMC, Daniel Maffei, directed the immediate adoption of three of the recommendations saying that they will provide enhanced assistance to shippers, continue to improve legal and regulatory compliance of regulated entities, and focus on remedies to supply chain problems.

The two-year-long fact finding led by Commissions Rebecca Dye looked at the problems that had arisen in the supply chain and responded to shippers' complaints of obstacles especially impeding exports from the United States and the fees being imposed and the business practices of the major carriers in compliance with FMC regulations. The report called for increased efforts to ensure compliance while also providing additional tools to support the shipping community. They also concluded that better contracts and an improved working relationship was required between the carriers and shippers.

“U.S. export shippers have been particularly challenged by both supply chain disruptions and ocean carrier policies and practices that can sometimes make it difficult to meet deadlines to get cargoes aboard ships in a timely manner,” said Chairman Maffei.

The chairman directed that FMC to establish a new and permanent International Ocean Shipping Supply Chain Program as well as to re-establish the Export Rapid Response Team. He is also directing the commission to take the steps necessary for carriers, marine terminal operators, and operating seaports to employ a designated FMC Compliance Officer.

Each of these steps was contained in the report from Fact Finding 29. According to the report, many of the operational frustrations shippers have contended with since July 2020 are tied to historic and sustained cargo volumes overwhelming the capacity of U.S. domestic infrastructure.

Recognizing that there are longstanding, systemic problems and shortcomings in the networks and facilities serving America’s ocean commerce, the FMC will establish a dedicated International Ocean Shipping Supply Chain Program.  The International Ocean Shipping Supply Chain Program will allow the FMC to identify where issues exist in the supply chain and offer proposals for steps that can be taken to remedy impediments to the free flow of shipments. 

One of the two most common complaints Commissioner Dye heard throughout her work leading Fact Finding 29 was the excessive amounts of demurrage and detention fees shippers and truckers were charged. The FMC in March 2020 issued a rule regarding the charging of fees and has been very active on the issue as complaints mounted over the past two years. Although compliance with regulations and the statutes is not voluntary or discretionary, the FMC has pointed out issues with compliance and specific cases where it believed better training was necessary for employees to understand the FMC’s rules.

Bringing back the FMC Export Rapid Response Team will provide a dedicated resource for shippers to use in resolving emergency commercial disputes, said Commission Maffei.

In addition, to foster better understanding and compliance, the FMC will take steps to require the ocean carriers, marine terminal operators, and operating seaports to designate an FMC Compliance Officer. The FMC requires that the new position reports directly to the senior-most U.S.-based executive at each of these organizations. They believe establishing this responsibility will aid in ensuring industry-wide observance of legal and regulatory requirements established by the FMC.

The FMC’s response to the recommendations for the report comes as the U.S. House of Representatives is preparing to take the next step in the Ocean Shipping Reform Act that would also give the FMC new authority and responsibility in overseeing the shipping industry and ensure the flow of exports. The House in the next few days will vote to adopt the Senate’s version of the legislation clearing the way for the bill to proceed to President Biden who is expected to sign it into law as early as next week. The legislation is being called the most significant overhaul of the regulations on international shipping in a generation.