Lawmakers call out container practices in letters to FMC, say ocean carriers reject exports for revenue

Date: Friday, March 5, 2021
Source: Supply Chain Dive

  • Lawmakers have written to the Federal Maritime Commission in recent days voicing concern about the current state of the ocean shipping market that has resulted in U.S. exporters having a difficult time obtaining containers.
  • So far, three letters were sent to the FMC. One by Rep. Kim Schrier, D-Wash., another by Senators Roger Wicker, R-Miss. and John Boozman, R-Ark., and a third by Senators John Thune, R-S.D., and Amy Klobuchar, D-Minn.
  • "From what I am hearing from Washington state exporters, the current lack of container availability cannot be attributed to pandemic-related disruptions alone," Schrier wrote in her letter to the FMC. "Ocean carriers seem to be making a revenue-based decision to reject U.S. exports."

he letters to the FMC — all sent between Feb. 25 and March 2 — come as the commission is investigating ocean carriers' detention and demurrage practices, container returns, and container availability for exporters as part of its work on Fact Finding 29, which examines the pandemic's effects on the market.

"I've become more and more concerned about compliance with our rules on demurrage, and detention, and so we're going to begin an enforcement process," FMC Commissioner Rebecca Dye, who is leading that investigation, told Supply Chain Dive last month.

FMC Commissioner Daniel Maffei noted that one of the letters from Congress used the term "unreasonable" to refer to the alleged actions of vessel operators, which is important since the Shipping Act focuses on ensuring reasonable practices by carriers.

"If the reports are true, such practices would be unreasonable and would hurt millions of producers across the nation by preventing them from competing in overseas markets," reads the letter from Thune and Klobuchar that was signed by 22 other senators.

The FMC recently said it will issue an information demand requiring ocean carriers and terminal operators to provide details on their detention and demurrage practices, container returns, and container availability for exporters. Agricultural and trucking associations that had been lobbying for FMC action on ocean market issues praised the move.

The FMC is finalizing its information demand for carriers, which is expected to be issued "very soon," a spokesperson for the agency said Wednesday, adding that a timeline for responses will be included in the release.

All three letters noted that members of Congress would look to the FMC's investigation for guidance on how to move forward on the issue.

"If you find that current regulations do not adequately equip the Commission with enforcement capability, I am happy to work with my colleagues to pursue legislative language to grant you that authority," Schrier wrote in her letter.

Maffei also said legislation could be necessary for helping to modernize the Shipping Act.

"I don't necessarily know if any of the other commissioners would agree with me," Maffei said in an interview Wednesday. "But I do think that we need to look towards legislation if we really don't want this to ever happen again. Because, again, it's not a flaw in the legislation, it is that the legislation couldn't possibly have anticipated things like the unprecedented import boom."

When Hapag-Lloyd CEO Rolf Habben Jansen was asked at the recent TPM 2021 conference about regulatory investigations, he said the regulators are doing their job and that the carrier was spending "hundreds of millions of dollars in order to try and ease the situation."

"To me, it is very good in a way and normal that we get a lot of questions from the regulators in this period," Jansen said. "Because it is a very unusual period. And I do believe that we are doing everything within our ability to keep containers flowing and that's also why we talk a lot to regulators and try to explain to them what the situation is."



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