The U.S. Federal Maritime Commission (FMC) is conducting an investigation into Korea’s local marine shipping companies HMM and SM Line, to check if the companies implemented surcharges lawfully at a time when the companies charged record-high container freight rates.
“The COVID-related spike in demand for imports has pushed cargo rates to record highs,” FMC Chairman Daniel Maffei said. “Now, we hear increasing reports of ocean carriers assessing new additional fees, such as congestion surcharges, with little notice or explanation.”
According to the industry, the FMC is set to investigate eight carriers ― HMM, SM Line, French CMA CGM, German Hapaq-Lloyd, U.S Matson, Swiss MSC, China’s OOCL and Israel’s ZIM ― that implemented congestion or congestion-related charges.
There has been an increase in delays in loading and unloading ships due to the COVID-19 pandemic, and the consigners are burdened with delay fees that could cost from $350 to $5,000 per container. Expenses rise based on how long a ship stays in dock, which affects the overall progress and cost of a voyage.
“The congestion is due mostly to the tremendous volume of traffic coming from ocean carriers and through ports to satisfy the record demand for imports. Far from being a sudden occurrence or isolated to a particular port or geographical area, congestion of the freight transportation system is everywhere and has been going on for many months. It seems to me that these factors would already have been included in the record-high rates charged by the carriers,” Maffei said.
“As chairman, I want to know the carriers’ justifications for additional fees and I strongly support close scrutiny by the FMC’s Bureau of Enforcement aimed at stopping any instance where these add-on fees may not fully comply with the law or regulations.”
Sea Intelligence’s recent release of the Global Liner Performance report has shown the average delay for late vessel arrivals stood at 6.41 days as of June this year, with six out of 10 vessels coming in later than scheduled.
The FMC’s investigation will focus on if the shipping companies informed the co-signers beforehand of the surcharges, and the decision and standard by which the price was set. If there proves to be a violation, the FMC will issue a fine to the shipping company.
“In reviewing ocean carrier responses, the commission will determine if surcharges were implemented following proper notice [30 days is required], if the purpose of the surcharge was clearly defined, if it is clear what event or condition triggers the surcharge, and is it clear what event or condition has been identified that would terminate the surcharge,” the FMC said.
The eight companies will need to submit detailed responses including explanations of the surcharges to the FMC’s Bureau of Enforcement (BOE) this week.
“We are preparing to submit the requested materials to the FMC, we plan to fully cooperate,” an HMM official said. “We have abided by FMC regulations. This is an investigation for all maritime shipping companies that operate in the U.S. It appears the FMC is looking into the industry practice of implementing surcharges.”
Source: Korea Times