The Federal Maritime Commission on Tuesday updated its policies to make it easier for cargo owners to file complaints against ocean carriers over alleged unfair and unreasonable business practices that result in financial or operational harm.
The new guidelines clarify that trade associations and shipping cooperatives can bring actions to protect individual companies from potential retaliation, parties that bring unsuccessful complaints aren’t automatically required to pay the other side’s attorney’s fees if the filing was made in good faith, and that the FMC will broadly interpret anti-retaliation prohibitions in the law.
The FMC said the new guidelines remove disincentives for shippers to file actions against liner companies. Exporters have told the agency that they are reluctant to complain about excessive cargo fees or canceled contracts for fear of retribution.
The independent agency has ramped up scrutiny of the container shipping industry this year due to widespread congestion at ports, which many stakeholders say is made worse by carrier policies, such as return dates for containers not aligning with vessel arrivals.
The updated guidance reiterates that transportation purchasing groups and trade associations may inform the FMC about alleged violations of shipping laws as a way to insulate members from potential retaliation, such as not loading containers for delivery.
“The Commission recognizes … that litigation has costs in terms of time, attention, money, and relationships. And there may be instances where an individual’s or single company’s cost-benefit analysis weighs against bringing an otherwise valid, or potentially valid, claim. This may especially be true if the amount of potential recovery is small compared to the cost of litigation or if the potential complainant has fewer resources, experience, or other leverage as compared to the entity against whom the claim would be brought,” it said in a policy statement.
In another guidance document, the FMC summarized the rules on petitions for awarding attorney fees to the prevailing party in a dispute, and stressed that there is no presumption that a party will be reimbursed for its legal costs. The latest statement is designed to assuage shippers, who have expressed concerns that liability for opponents’ attorney fees might deter them from filing complaints.
“Complainants who raise non-frivolous claims in good faith, who litigate zealously but within the rules and for proper purposes, and who comply with Commission orders are at little risk of attorney fee liability if they are unsuccessful, absent unusual circumstances,” the agency said.
Only once since 2014 has the FMC required an unsuccessful shipper complainant to pay for a respondent’s attorney fees.
The FMC issued a third statement emphasizing that it broadly defines who can bring a retaliation complaint, as well as the types of shipper activity that are protected under the existing retaliation prohibitions.
Purchasers of ocean transportation services and their logistics vendors have expressed frustration this year with carrier alliances that make it difficult to return containers to the same terminal where they were picked up, which would allow truckers to make dual exchanges for import loads and reduce costs. Other pain points include inflexible return policies or unwillingness to accept empty containers, and high surcharges for late container pickup and returns when terminals are restricting appointments and drop-offs.
The FMC is currently auditing nine major container lines to determine if they are taking advantage of tight market conditions to overcharge shippers on so-called detention and demurrage.
The U.S. House recently passed legislation that would increase enforcement of the container shipping industry. Key provisions would impose minimum requirements on ocean carrier service contracts, shift the burden of proof in regulatory proceedings from shippers to the container lines and mandate carriers accept export cargo if it can be safely loaded in a reasonable time.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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