FMC to Investigate ONE’s Business Practices Related to Fees Charged
The U.S. Federal Maritime Commission filed a second notice regarding investigations into the business practices and fees charged by a larger ocean carrier. The latest action calls into question Singapore headquartered Ocean Network Express (ONE) and its U.S. offices for a business practice related to which companies ONE can charge fees for a shipment that sat at the terminal for more than two months. This action comes as the FMC also ordered an investigation into the fees being charged by Taiwanese carrier Wan Hai.
The FMC said repeatedly in 2020 and 2021 that it was looking at the charges being leveled by the large ocean carriers in response to repeated complaints of unfair business practices and exorbitant fees from a broad range of American shippers. President Joe Biden also asked if the business practices of the large carriers were contributing to the problems at the ports and the complaints from American businesses. Importers have complained about the disruptions to the supply chain while exports complained that the carriers were making it difficult if not impossible to send their goods to foreign markets. In December 2021, the secretaries from the U.S. Department of Transportation and the U.S. Department of Agriculture sent a joint letter to the major carriers.
In the new filing, the FMC reports that it is proceeding with an investigation into ONE looking for possible violations of the Shipping Act and unfair business practices. They have ordered that a hearing be conducted before an administrative law judge including oral testimony and cross-examination if the judge deems it appropriate. The hearing looks to resolve a dispute between ONE and Greatway Logistics Group based in Florida and how ONE is interpreting the definition of “merchant” in its Bill of Lading contracts. Violations could lead to civil penalties as well as an order to cease certain business practices.
The case stems from a 2018 shipment that arrived at the Port of Houston in November 2018 but was not picked up until January 2019, accruing charges owned to ONE. In May 2020, ONE filed suit against Gateway in the U.S. District Court for the Southern District of Texas for payment of the charges.
Gateway responded that it was not shown as the shipper or consignee on the documents. On one Bill of Lading it was included they said as the party to be notified and not identified at all on the other container’s documents. Greatway contends it did not consent to the terms and conditions of the Bill of Lading. Greatway says that its role was limited to arranging for customs clearance by a licensed customs broker for the consignee or serving as the notify party.
Greatway argues that it was not a party to the Bill of Lading. Pacific Lumber Resources was the intended destination of the shipment. Further, they argue that a commercial dispute not involving Greatway caused the shipment to dwell on the dock for those two months.
The FMC hearing will be exploring how ONE defines “merchant” as part of the contract and which companies it seeks to bill fees to as part of the contract.
The current actions against ONE and Wan Hai are part of the commission's efforts to take an active role in exploring the operation of the entire supply chain. They have been looking to identify issues that could be enhanced to improve the current flow of goods and improve supply chain operations for the long term.