On Friday July 9th the White House announced a series of 72 initiatives spanning virtually every federal jurisdiction and intended to address anti-competitive practices in industries from telecommunications to prescription drugs.
Among these initiatives is an order encouraging the Federal Maritime Commission (FMC) to ensure enforcement of its standards in respect of “exorbitant” carrier charges for detention and demurrage:
In maritime shipping, the global marketplace has rapidly consolidated. In 2000, the largest 10 shipping companies [sic] controlled 12% of the market. Today, it is more than 80%, leaving domestic manufacturers who need to export goods at these large foreign companies’ mercy. This has let powerful container shippers [sic] charge exporters exorbitant fees for time their freight was sitting waiting to be loaded or unloaded. These fees, called “detention and demurrage charges,” can add up to hundreds of thousands of dollars.
[Note: in spite of the unfortunate use of the words ‘shipping companies’ and ‘shippers’, it is clear that the White House means to protect American exporters from unfair conduct the large global carriers, and not the conduct of large shippers.]
This reinforces the FMC’s May 2020 Interpretive Rule on Detention and Demurrage (previously discussed here). In February 2021 the FMC issued an information request to the terminals of Los Angeles, Long Beach, and New York/New Jersey, as well as the carrier alliances serving those ports, in order to determine whether the new interpretive rule is being respected. In a response statement FMC Chairman Daniel B. Maffei said:
“With regard to detention and demurrage charges, it remains a top priority of the agency to identify and take action against those who flout the Commission’s recent interpretive rule on reasonable regulations and practices. The President’s action today reinforces these efforts and indicates his prioritization of a fair and reliable supply-chain.”
It remains to be seen whether this announcement, or indeed the 2020 interpretive rule, will have any concrete impact on carrier practices. So far, shippers have not seen substantial changes in carrier practices, and the “Box Club” retains anti-trust protection under US law, which permits them to meet and to set voluntary price guidelines, but not to fix rates.
Nonetheless, with encouragement from the White House, shippers and exporters may be cautiously optimistic that the FMC will increase and toughen its enforcement of the interpretive rule.
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