ASF Logistics

WASHINGTON — A new rule requiring ocean carriers to refund importers and exporters for illegal overcharges and potentially for other violations of the U.S. Shipping Act will go into effect next month.

The changes, set out in a final rule scheduled to be published by the Federal Maritime Commission on Monday, are in the form of amendments to the FMC’s Rules of Practice and Procedure governing the assessment and collection of civil penalties. They codify provisions included in the Ocean Shipping Reform Act (OSRA) of 2022. FMC’s rule explains that before OSRA 2022, any person violating the Shipping Act — or a regulation or order of the FMC issued under that law — is liable for a civil penalty.

OSRA 2022, however, changed the language in the Shipping Act governing potential liability of a violator by adding the phrase “or, in addition to or in lieu of a civil penalty, is liable for the refund of a charge.”

Accordingly, the rule states that “the commission may now order that a person is liable for ‘a civil penalty or, in addition to or in lieu of a civil penalty, is liable for the refund of a charge’ for any violation of the Shipping Act, commission regulations, or commission order.”

Customer refunds are also included in a new provision enacted by OSRA 2022 — section 4130 — that addresses the issue of charge complaints, such as inappropriately charging or overcharging for demurrage and detention.

“That provision specifies, among other things, that upon a finding by the commission that a carrier’s charges do not comply with the Shipping Act, the commission shall promptly order the refund of those charges paid,” the rule states.

Carriers now risk having to pay refunds to customers not only if invoices contain inaccurate information, but also if they do not include the following minimum information, as determined by the FMC:

Date that container is made available.
Port of discharge.
Container number.
Earliest return date (for export containers).
Number of allowed free-time days for holding containers.
Free time start and end dates.
Applicable detention or demurrage rule on which the daily rate is based.
Applicable rate or rates per the applicable rule.
Total amount due.
Contact information for questions or requests for mitigation of fees.
Statement that the charges are consistent with any of FMC rules with respect to detention and demurrage.
Statement that the common carrier’s performance did not cause or contribute to the underlying invoiced charges.

According to OSRA 2022, in determining the amount of a civil penalty or money refund to be paid by the carrier, the FMC will consider:

The nature, circumstances, extent and gravity of the violation committed.

The degree of culpability, history of prior offenses and the ability to pay.

The amount of any additional money to be paid by the carrier as ordered by the FMC.

The ongoing dispute between the union representing dockworkers and the UK’s major ports will shift to Liverpool with Unite the Union scheduling a strike at the port for the last two weeks of September. While only about a fourth of the size of Felixstowe, the strike is still expected to place further strains on the supply chain and may also be a harbinger of additional disruptions targeting Felixstowe in the coming weeks.

The contract dispute mostly centers on the union’s demands for pay increases that keep pace with the current 12 percent rate of retail inflation in the UK. While the ports are offering significant increases of between 7 and 9 percent, Unite continues to say that represents an effective pay cut due to inflation. The strikes at the ports are only part of a larger union effort across the UK demanding pay increases that keep pace with inflation as well as improved working conditions.

Workers at the Port of Felixstowe, who have launched an ongoing strike over wages from 21 August, have not come to an agreement with CK Hutchison, the Hong Kong-based port owner.

General secretary of the British trade union Unite, which represents the workers in the dispute, Sharon Graham pointed out that the strike could continue until the end of the year, if Felixstowe Dock and Railway Company, the port operator owned by Hutchison Ports UK Ltd, does not improve its offer.

During negotiations on 8 August, the port operator offered a 7% pay rise and a single payment of £500 (around €600 or US$600), but the union rejected the company’s settlement.

In an announcement on 23 August, Graham noted, "The Port of Felixstowe is the epitome of an economy that doesn’t work for workers. In 2021 the company accounts show profits that are the highest in recent company history, along with bumper dividends. So there’s a bonanza for the shareholders and a pay cut for the workers."

Meanwhile, the strike, which is the first one at Felixstowe port since 1989, continues to delay vessels and wreak havoc with supply chains. According to the latest report by the global information technology company, IQAX, 18 vessels have been delayed by the strike so far, while American business news channel CNBC reported that it could take around two months to clear the backlog.

Danish container carrier Maersk has also announced that the strike has affected logistics operations in and out of the United Kingdom. "Our contingency measures are in place to combat the circumstances at Felixstowe, including making changes to our vessel line-up to maximise available labour at the immediate conclusion of the strike," said Maersk.

Copenhagen-based box line added, "Once normal service resumes at the end of the strike, we anticipate demand for carrier haulage to be at very high levels and therefore encourage customers to book early."

Maersk vessel departing Savannah GA Dec 2021