Ocean Carriers’ U.S. Export Services Face Greater Scrutiny Under New FMC Directive

The top international cean carriers serving the U.S. market have been requested to begin sharing information with the Federal Maritime Commission about export services offered to U.S. shippers.

The FMC on Monday announced the expansion of its Vessel-Operating Common Carrier (VOCC) Audit Program to also include U.S. exports, as directed by FMC Chairman Daniel B. Maffei. The FMC has also announced inquiries into five “pop-up” shipping lines related to their service offerings.

The VOCC Audit Program, led by FMC’s Managing Director Lucille Marvin, was established in July 2021 to assess ocean carrier compliance with the FMC’s rule on demurrage and detention and to identify and gather additional information that could be beneficial to the regular monitoring of the international container shipping market.

Since its launch, the VOCC Audit Program has collected information on detention and demurrage policies from the nine largest ocean carriers by market share, provided briefings to ocean carriers on the FMC rule interpreting 46 USC 41102(c) as it applies to detention and demurrage practices, communicated best practices with ocean carriers, and continues to receive quarterly data on detention and demurrage metrics.

The scope of the program will now be expanding to also evaluate how shipping lines are serving U.S. export shippers.

The audit will involve meetings with 11 carriers to discuss their export programs. The FMC says responses will provide better insight into not only market trends and performance, but where opportunities exist for individual lines to improve or increase access to service offerings.

“American exporters deserve access to ocean transportation to sell to international markets every bit as much as overseas sellers get access to U.S. markets,” said said Chairman Maffei. “The FMC’s expanded ocean carrier Audit Program will provide better visibility into which ocean carriers work well with U.S. exporters, and more importantly, which ocean carriers can and should do more to support exporters. If the shipping companies continue the cooperative attitude they have by and large shown the Audit Team to date, I am confident we can make progress on some of the issues that have frustrated exporters. That said, the Commission is committed to an ocean transportation system that serves exporters as well as importers and I will not rule out any action within the bounds of the law that helps us achieve that goal.”

Monday’s announcement comes as exports through the nation’s top container ports continue to slide. Loaded exports through the Port of Los Angeles in February fell 5.7% year-over-year to 95,441 TEUs, marking monthly declines in 36 of the last 40 months in Los Angeles.

Today’s announcement is part of an ongoing effort by Chairman Maffei and FMC to assist exporters whenever possible. The Chairman has already assigned an advocate to the Office of Consumer Affairs and Dispute Resolution Services (CADRS) to assist export shippers. He has also directed the prosecutorial arm of the FMC, the Bureau of Enforcement (BoE), and CADRS to prioritize any cases involving exporters.

Also this week, the FMC said the BoE is initiating an examination of the conduct of five independent “pop-up” ocean carriers in terms of the service those companies offer American exporters. The FMC said the shipping companies being questione do not traditionally operate in U.S. trade lanes, but entered the marketplace in response to record high freight rates for imported cargo to the United States.

“All ocean carriers calling the United States have an equal obligation to conduct themselves in accordance with the law. New entrants to the market—including the so-called pop-up carriers—have all the same responsibilities as companies that have served the U.S. trades for decades. We are especially interested in how the identified companies plan to serve the U.S. export market and how those business models comply with requirements under statute,” said Chairman Maffei.

The companies in question will provide specific information related to vessel calls they have made to the U.S. since June 2021, including the number of loaded and empty containers carried on a ship’s return journey to Asia. BoE will assess responses to determine if further actions are warranted, the FMC said.

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