News & Insights

Tuesday, July 20, 2021

Federal Maritime Commission’s Ocean Carrier Audit Program

In keeping with its mission “to ensure a competitive and reliable international ocean transportation supply system that supports the U.S. economy and protects the public from unfair and deceptive practices,” and pursuant to shipper complaints of excessive detention and demurrage being charged by carriers, the Federal Maritime Commission (“FMC”) on July 20, 2021, established a new audit program that became immediately effective.

The “Vessel Operating Common Carrier Audit Program” has a dedicated audit team that will assess carrier compliance with the FMC’s rule on detention and demurrage and provide information it considers beneficial to monitoring the marketplace for ocean cargo services.

The audit program will begin with an information request to the top nine ocean carriers by market share to determine a data base for the FMC to assess how detention and demurrage is administered.  Responses will be followed by individual interviews with the carriers conducted by the audit team, initially comprised of existing FMC employees.  In addition to focusing on detention and demurrage practices, other areas the FMC will assess relate to billing, appeals procedures, penalties assessed by the lines and any other restrictive practices.  The FMC will work with the companies to address their application of the governing rule (46 USC 41102(c)) and to clarify questions or ambiguities that the carriers may have.  Information the carriers supply may be used to establish industry best practices.

FMC Chairman Daniel B. Maffei said, “The Federal Maritime Commission is committed to making certain the law is followed and that shippers do not suffer from unfair disadvantages.  The work of the audit team will enable the Commission to monitor trends in demurrage and detention practices and revenue, as well as to establish ongoing dialog between staff and carriers on challenges facing the supply chain.  Of course, if the audit team uncovers prohibited activities, the Commission will take appropriate action.  Furthermore, the information gathered by the audit process might lead to changes in FMC regulations and industry guidance if warranted.”

Please contact Melissa Proctor (melissa@millerproctorlaw.com) or Peggy Chaplin Louie (peggy@millerproctorlaw.com) should you have any questions about these recent developments or other international trade issues.