Under the auspices of the Shipping Act of 1984, 46 U.S.C. 40101, the Federal Maritime Commission (FMC) is responsible for regulating the U.S. international ocean transportation system that supports the transportation of goods by water in the foreign commerce of the United States – in other words, a Liner Service.
In response to many of the challenges faced by customers and complaints raised by them, the FMC convened teams of industry leaders to develop process innovations that would enhance supply chain reliability and resilience and address these industry concerns.
These teams comprise of various stakeholders from the industry such as port authorities, terminal operators, BCOs, OTIs, shipping lines, trucking companies, stevedores and rail/chassis service providers.
Based on the recent and current global events relating to the industry, the FMC felt they had a “clear and compelling responsibility to actively respond to current challenges impacting the global supply chain and the American economy“, said the FMC.
Based on this mandate, the FMC ordered Commissioner Rebecca F. Dye to
- engage with the above stake holders through public or non-public discussions to identify commercial solutions to certain unresolved supply chain issues that interfere with the smooth operation of the U.S. international supply chain;
- form one or more supply chain innovation teams, composed of leaders from all commercial sectors of the U.S. international supply chain, to develop commercial solutions to port congestion and related supply chain challenges;
- provide periodic updates to the Commission on the results of efforts undertaken by this Order;
Commissioner Rebecca has been given full authority under 46 C.F.R. §§ 502.281 to 502.291, to perform such duties as may be necessary in accordance with U.S. law and Commission regulations.
This is the background of this order called Fact Finding 29.
On the basis of these orders, on 17th of Feb 2021, the FMC has announced that Commissioner Rebecca F. Dye will issue information demand orders to ocean carriers and marine terminal operators (MTOs) to determine if legal obligations related to detention and demurrage practices are being met.
The orders are being issued under the authority Commissioner Dye has as the Fact Finding Officer for Fact Finding 29, “International Ocean Transportation Supply Chain Engagement”.
Stakeholder who will receive these orders will be shipping lines operating in alliances which call the Port of Los Angeles, Port of Long Beach, or the Port of New York & New Jersey. The Marine terminal operators at those ports will also be subject to these information demands by the Commissioner.
The demand orders requires the carriers and MTOs to provide information on their policies and practices related to container returns and container availability for exporters.
If any of the carriers of MTOs fail to operate in a way consistent with the Interpretive Rule on Detention and Demurrage that became effective on May 18, 2020, it might constitute a violation of 46 USC 41102(c) which prohibits unjust and unreasonable practices and regulations related to, or connected with, receiving, handling, storing, or delivering property.
The FMC said “Information received from parties receiving demands may be used as a basis for hearings, Commission enforcement action or further rulemaking.”
We seem to be heading in to a new and untested era of the industry holding shipping lines to account for what they deem as unjust and unfair market practices.
Only time will tell what will prevail.