U.S. exporters should not fear payback from container lines if they complain to the Federal Maritime Commission (FMC) about excessive cargo fees or canceled contracts, according to the carriers’ representative in Washington.
“I categorically reject the idea that shippers are being threatened with retaliation for bringing complaints — I don’t buy that,” John Butler, president and CEO of the World Shipping Council, which represents most of the world’s container ship fleet, told lawmakers.
Testifying at hearing before the House Transportation & Infrastructure Committee on Tuesday, Butler was responding to members of the Federal Maritime Commission who recounted reports from exporters of threatened retribution by the carriers.
Earlier during the hearing, FMC Commissioner Rebecca Dye said her agency had been self-initiating complaints against carriers due in part to a lack of complaints filed directly from exporters.
“We didn’t get as many complaints as we wanted, because our exporters are concerned about retaliation,” Dye told the committee. “I can assure you that that is a violation of the Shipping Act. And we would take prompt and decisive action if we heard about any carrier actually retaliating against any exporter or any other supply chain actor for coming to the FMC with a complaint.”
FMC Chairman Daniel Maffei, also testifying at the hearing, concurred. “There’s a fear of retaliation that is keeping individual shippers from filing their own complaints,” he said. “They don’t have to wait for us [to initiate a complaint], but they’re not doing it.”
Detention and demurrage are charges used by ocean carriers and container terminals to ensure customers promptly pick up their cargo and return empty containers quickly so the equipment can be used by the next customer.
However, Alexis Jacobson, testifying on behalf of the U.S. exporter group Agriculture Transportation Coalition, said that carriers and terminals have been routinely imposing excessive demurrage and detention charges of $175 to $750 per container per day despite updated guidance issued by the FMC last year cracking down on unfair charges.
“When the carrier imposes such a charge, the burden falls on the shipper to submit penalty waiver requests to that carrier, explaining why the charge is unreasonable, even though the relevant information (location of the vessel, vessel schedule and notices, cargo cut times, terminal hours, etc.), is the carrier’s own operations information,” Jacobson stated.
Maffei said he was “very concerned” when was asked by Rep. Salud Carbajal, D-Calif., to respond to reports received by his office of carriers refusing to carry cargoes, and whether that violates the Shipping Act.
“Particularly if a carrier is refusing to offer a container at any price to an exporter — that to me is refusing to deal” in violation of the Shipping Act, Maffei said, emphasizing that that may not be the opinion of other commissioners.
Reps. John Garamendi, D-Calif., and Dusty Johnson, R-S.D., revealed during the hearing they were drafting legislation that would require ocean carriers to accept all U.S. export container bookings.
Pressed about the FMC’s ability to adjudicate whether contracts between carriers and shippers have been broken, Maffei stated that the Shipping Act currently does not allow for that. However, “I do believe that the commission should maybe have a bigger role in reviewing contracts for clauses that are violations of the Shipping Act,” he said.
Butler opposes the idea of giving regulators more power over commercial contracts.
“There are millions of containers and thousands of service contracts in this market,” he said at the hearing. “There’s no way to have visibility into them all at once. I understand that’s frustrating, but the fact is, if you’re going to examine a commercial relationship and whether both sides are keeping up their end, you have to look at that relationship on a transactional basis.”