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Cargo Carriers Pressed in FMC’s Probe of ‘Illegal’ Retaliation

The Federal Maritime Commission (FMC) is turning up the heat on shipping lines as it looks to tamp down on retaliatory behavior against shippers who speak up against charges or file complaints. 

The FMC, armed with broader authority under the Ocean Shipping Reform Act of 2022 (OSRA), said this week it asked the 20 largest shipping lines with service to the U.S. to prove their compliance with the law’s anti-retaliation measures. 

That portion of OSRA prohibits companies dubbed as common carriers, marine terminal operators or ocean transportation intermediaries from “unfair or unjustly discriminatory action” in response to shippers who do business with another company, file a complaint or, as OSRA puts it, for “any other reason.” 

“The Ocean Shipping Reform Act made it clear that it is absolutely illegal for ocean carriers to discriminate or retaliate against a shipper for filing a complaint or challenging a charge,” FMC chair Daniel Maffei said, while underscoring the commission “will thoroughly investigate” any such charges.

The probe addresses long-running shipper complaints of retaliation from carriers and also carries out FMC’s obligations the under OSRA. The law’s refresh, which was signed into law in June, charges the FMC with ensuring competition in ocean shipping, while also granting it greater power to investigate shipper complaints against carriers.  

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“This is something that everyone in a company, from the newest sales associate to the CEO, must understand and that is why the [Vessel-Operating Common Carrier] Audit Team is carrying this message directly to ocean carriers serving the United States,” Maffei said. “Even a simple verbal threat to a shipper from an ocean carrier employee could undermine U.S. law and will not be tolerated.” 

The audit team was rolled out last July to investigate the nine largest carriers and ensure their compliance around detention and demurrage charges to shippers, how they bill, the procedure for shippers to make appeals and other policies.  

The 20 shipping lines were contacted this week and given a deadline of mid-January to send in supporting documentation of their compliance. The 11 largest carriers of that group will also meet in person with the audit team as an additional layer of the investigation. 

The review comes as a closely watched case related to shipper allegations of carrier retaliation continues to wind its way through the FMC. 

The legal complaint involves Florida-based furniture and household goods importer OJ Commerce LLC (OJC), which is accusing Hamburg Sud of “repeated and systemic violations” of the Shipping Act. 

OJC alleges Hamburg Sud, which is owned by Maersk, did not fulfill its capacity obligations under the contract between the two. When OJC pressed about those obligations, the carrier then refused to negotiate terms of a new contract or offer vessel space to offset the capacity shortfalls under the initial set of terms. OJC alleged in its complaint the retaliatory behavior forced it to resort to the pricey spot rate market in order to move its cargo. 

The case, originally filed in November of last year, saw new email documents revealed in court last month showing Maersk executives discussing the possibility of legal action and ultimately deciding it was best, in response, to refuse OJC ship space or engage in contract renewal discussions.