MSC Assessed $22.67M in Civil Penalties by FMC for Shipping Act Violations
MSC Mediterranean Shipping Company was fined a total of $22.67 million in civil penalties for a series of Shipping Act violations, the Federal Maritime Commission reported. It is part of the FMC’s increased efforts at enforcement and a wave of new complaints it has received after the surge in shipping volumes during and after the COVID-19 pandemic, and the Shipping Act was updated by the U.S. Congress.
The Commission’s Bureau of Enforcement, Investigations, and Compliance (BEIC), through its Offices of Investigation and Enforcement, investigated and prosecuted the matter. The investigations began in August 2023, with the notices being filed earlier this month and upheld or revised by the FMC in three matters relating to fees charged to shippers.
The largest portion of the fine came from a decision that said MSC had overcharged its customers demurrage and detention (D&D) fees as it related to non-operational reefers. The investigation found the practice was in place for all of 2021, leading the Commission to conclude it was an “unreasonable practice” as opposed to a mistake in the billing system. The Commission held that MSC overcharged customers in about 23 percent of all the bills related to non-operating reefers in 2021. It assessed a penalty of $5,000 per violation, which totaled $13,145,000.
A second violation was also related to non-operating reefers. The FMC said MSC failed to include in its published tariffs from 2021 to 2023 the fees related to these boxes. The Commission agreed with the Administrative Law Judge’s initial finding that the omission started in 2021 and amended the finding, calling the practice “knowing and willful violations” from March 2022 to 2023. The total civil penalty for these violations was $9,460,000.
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A third violation occurred from 2018 to 2020 related to MSC’s billing of customs agents as “notify parties” for demurrage and detention charges (late fees) through the “merchant clause” found in its bills of lading, even though such parties were not involved in moving the cargo. The Commission affirmed the initial decision of the Administrative Law Judge that MSC’s use of its “merchant clause” with assessed civil penalties for these violations totaled $65,000.
The FMC reports it has experienced a significant increase in the number and complexity of cases filed with its Administrative Law Judges, with many involving disputes emanating from the pandemic-era supply chain disruption. As of January 26, the FMC reported it has added on a temporary basis two additional Administrative Law Judges, who will work for the FMC through the end of the fiscal year (September 2026). Judge Jamie Mendelson and Judge Debra Tesh have been detailed from the U.S. Department of Health and Human Services to the Federal Maritime Commission’s Office of Administrative Law Judges to help in addressing the increased case load the office is managing.