Date: Thursday, April 8th, 2021
Source: Freight Waves
The Federal Maritime Commission (FMC) is investigating alleged excessive tariff fees that ocean carriers charge shippers. The outcome could lead to new tariff regulations.
An Advance Notice of Proposed Rulemaking (ANPRM) looking into the matter, scheduled to be published in the Federal Register on Thursday, is the latest action by the FMC on container carrier billing practices, including an investigation into charges for services that may not have been part of the shipping contract.
“The commission observes that carriers are charging widely varying fees and imposing varying minimum requirements for access to common carrier tariffs,” according to the notice. “The commission seeks information regarding the impact of such fees and minimum requirements on public access to common carrier rules, rates, practices and charges in published tariffs and whether existing fees or requirements are unreasonable.”
The ability for shipper customers to gain access to tariffs is particularly important during periods of transportation rate volatility — as is the case currently in container shipping — to ensure that shippers are aware of the most current applicable rates, the FMC’s notice points out. “Some tariff access fees may be so high that they effectively prevent tariff users from reviewing certain carrier tariffs, particularly those with substantial minimum charges, such as $1,000 or $1,500,” the ANPRM states.
“This can be an issue, not only for shippers who primarily ship cargo under tariff rates, but also for shippers using service contracts. Once the shipper’s minimum quantity commitment under the service contract has been fulfilled, the carrier often rates subsequent shipments under its tariff rates. For this reason, shippers may have a need to access tariffs to determine the applicable rate for their cargo once the volume commitment for their service contract has been fulfilled.”
The FMC said it is also concerned with “widely varying” interpretations and inappropriate application of “pass-through” charges to shippers without markup (not to exceed the charge the common carrier incurs) in connection with shipments moving under common carrier tariffs. It is particularly the case for non-vessel-operating common carriers (NVOCCs — which perform all the services of an ocean carrier except without operating the vessels), the agency notes.
“The practice of some carriers to incorrectly pass-through charges could deny the shipper full transparency regarding the total freight charges that will apply to a shipment, as well as deprive the shipper of advance notice of any increase in those charges,” according to the notice.
The FMC is seeking comments regarding pass-through charges on six specific questions:
- For an ocean common carrier (VOCC), what are the typical charges that are not under its control and for which the ocean common carrier merely acts as a collection agent?
- For an ocean common carrier, how does its tariff specify or address those charges for which it merely acts as a collection agent?
- For an NVOCC, what are the typical charges that are not under its control and for which the NVOCC merely acts as a collection agent?
- For an NVOCC, how does its tariff specify or address those charges for which it merely acts as a collection agent?
- How do common carriers communicate to shippers that the so-called pass-through charges are for the account of shippers?
- How can shippers be assured that common carriers collect pass-through charges without adding any markup?
Comments are due 60 days after publication in the Federal Register.