Fight head-on with the American FMC! A $63 million fine? MSC vows to defend its rights

WSC President John Butler pointed out that although Congress authorized the FMC to formulate new D&D rules, the new rules have major conflicts related to motor carrier billing, bringing chaos to the maritime industry. The rules, on the one hand, allow ocean carriers to invoice contract motor carriers, but on the other hand appear to prohibit it.

WSC has requested FMC to correct this contradiction, but to no avail so far. Therefore, WSC had to file a lawsuit in court to ensure that the relevant regulatory rules are clear and to safeguard the interests of shipping companies and their partners. 

The signed Shipping Reform Act of 2022 aims to strengthen the regulatory powers of the U.S. Federal Maritime Commission (FMC). Among them, the new rules issued by FMC for demurrage and demurrage (D&D) aim to clarify that D&D invoices can only be issued to the "contract party" or "consignee". This move has been widely adopted by the entire industry. Support, especially truck drivers, as they will no longer receive D&D invoices for non-contracts. 

However, John Butler, president of the World Shipping Council (WSC), pointed out that although the WSC has asked the FMC to resolve internal conflicts regarding motor carrier D&D billing in the new rules, they have not yet been resolved. Therefore, WSC had to file a lawsuit in court to ask the FMC to correct this inconsistency to ensure regulatory clarity.

Since the implementation of the Shipping Reform Act 2022, the FMC has received a large number of “unreasonable and unfair” complaints. As of October 2023, the FMC has handled 36 complaints against liner companies. Among them, Mediterranean Shipping Company (MSC) faced a fine of up to $63.2 million after being accused of "willfully" violating shipping laws during the supply chain crisis. This decision raised questions about the FMC's power to impose penalties.

Some people question whether the FMC has the authority to impose such a large civil penalty even if MSC's behavior is indeed illegal. The move is seen as an attempt by the FMC to set an example by punishing Mediterranean Shipping Company to deter global common carriers. However, this may also be criticized as "too unprofessional" and even become an international laughing stock, just like President Biden once said of "slapping shipping companies in the face."

According to reports, in the face of the accusations made by the FMC Enforcement Office, MSC firmly denied and believed that the fine amount was exaggerated, saying that it would actively review relevant documents and defend itself.

Previously, according to media reports, after investigating a series of complaints about MSC charging "unfair" D&D, the FMC first dismissed complaints against it charging "unreasonable" congestion surcharges in October 2023. This decision may It will become a precedent in the industry.

Under the leadership of current Chairman Daniel Maffei, the FMC has demonstrated extremely high professional standards as a regulator. Maffei noted that the FMC's new powers make it more like a referee than a judge. Since the 1980s, the FMC has been responsible for setting the rules of the game, allowing complaints after transactions. However, according to the Shipping Reform Act 2022, the FMC is now more like a referee on the court and can make immediate penalties. Although the FMC still has no legislative power, it has gained more tools and assumed more responsibilities in policy formulation and supervision. Maffei stressed that appeals are necessary when matters of principle are involved and the amount of money is almost irrelevant in such cases. Overall, the FMC plays an increasingly important role in maintaining fairness and regulation in the shipping industry.