Regulatory intelligence for US exporters

'Outdated' Shipping Regs Preventing FMC From Addressing Port Issues, FMC Chair Says

Shipping regulations should be revised to allow the Federal Maritime Commission to better address unfair detention and demurrage fees, agricultural export issues and a range of other shipping problems at U.S. ports, FMC Chair Daniel Maffei said. While he didn’t propose any concrete changes, he said he is “frustrated” with the situation at the nation’s ports and is speaking with Congress about potentially proposing regulatory changes. “I'm not prepared to go into any details now, but I do think that some things clearly need to be clarified,” Maffei said during a May 5 National Customs Brokers & Forwarders Association of America conference. “There are many, many areas where the law is vague or so outdated because it simply was written mostly in the time of tariffs, and now it's mostly contracts.”

In recent months, hundreds of agricultural groups and lawmakers have urged the FMC and other U.S. agencies to intervene amid reports that carriers are declining shipments of agricultural exports (see 2103050014, 2104280031 and 2103100027). Industry groups also have asked the FMC to penalize carriers that impose unfair demurrage and detention fees and that refuse to comply with guidelines issued by the agency last year (see 2004290037 and 2011170041).

Maffei said the FMC, led by Commissioner Rebecca Dye, is diligently investigating those reports (see 2102170060 and 2011200024). “Commissioner Dye does really want to get to the bottom of this,” Maffei said. “She is very well connected and knows what's going on, and has already gotten many reports.”

But he also said many of the issues -- including high container rates -- fall outside the FMC’s jurisdiction unless there is a clear violation of the Shipping Act. “I want to be candid with you about the limits of what the FMC can do both immediately and in the long term,” he said. “Congress has given us the capacity to guard against certain anticompetitive behavior. However, rising freight costs, no matter how high or how quickly they might have risen, are not in and of themselves indicators of manipulation of the marketplace.”

He also said it is Congress that should be closely looking at whether ocean carriers are declining to carry U.S. agricultural exports, because the FMC’s laws don’t “have anything in [them] that gives us tools to, per se, protect these exporters in a way other than just making sure that the Shipping Act is observed.” To address the problem, the FMC may need to consider expanded authorities, Maffei said, adding that he and other commissioners are having “private conversations” with lawmakers about those issues.

“I hope you've seen that I'm frustrated,” he said. “Rest assured, the investigation, supplemented by the other measures we have taken, is the Federal Maritime Commission’s No. 1 policy priority right now.”