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FMC establishes carrier audit programme

Dedicated team will “assess carrier compliance” with the FMC’s rule on detention and demurrage.

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FMC establishes carrier audit programme

The US Federal Maritime Commission has established a “Vessel-Operating Common Carrier Audit Program” this week at the direction of Chairman Daniel B. Maffei. The audit team has been “launched immediately”.


“The Audit Program will analyse the top nine carriers by market share for compliance with the Commission rule interpreting 46 USC 41102(c) as it applies to detention and demurrage practices in the United States. The Commission will work with companies to address their application of the rule and clarify any questions or ambiguities. Information supplied by carriers may be used to establish industry best practices.


“Other focus areas of the audit process may include practices of companies related to billing, appeals procedures, penalties assessed by the lines, and any other restrictive practices,” the FMC said.


Political pressure is mounting on the Biden Administration to do something to ease the plight of exporters that continue to complain they cannot access containers to export products to markets, even when lines are moving containers to the same destinations empty. The US Agricultural Transportation Coalition (AgTC) is currently working with two congressman and others to help draft legislation to amend the Shipping Act to “change practices that are stymying and burdening US exports (and imports).”


The proposed provisions “would require carriers to carry export cargo if it can be carried safely, if it arrives at the marine terminals timely to be loaded, and if it is being sent to a destination to which the carrier is already scheduled,” AgTC said.


AgTC also claims the FMC has been unable to enforce its own Interpretive Rules on detention and demurrage, and the process for getting the FMC to act when carriers do not follow the rules “simply doesn’t work.” There are still cases where importers are charged demurrage for import containers they are not able to collect, empties that cannot be returned and other unfair practices. AgTC and others want to see a mechanism that would give carriers the opportunity to “self police” their compliance, followed by a review procedure at the FMC where issues are not addressed.


The FMC is now expediting its own audit process. “The Federal Maritime Commission is committed to making certain the law is followed and that shippers do not suffer from unfair disadvantages. The work of the audit team will enable the Commission to monitor trends in demurrage and detention practices and revenue, as well as to establish ongoing dialog between staff and carriers on challenges facing the supply chain. Of course, if the audit team uncovers prohibited activities, the Commission will take appropriate action. Furthermore, the information gathered by the audit process might lead to changes in FMC regulations and industry guidance if warranted,” said Chairman Maffei.


The FMC Audit programme will begin with an “information request establishing a database of quarterly reports allowing the Commission to assess how detention and demurrage is administered. Responses will be followed by individual interviews with the carriers. Each of the nine largest carriers by market share will be audited irrespective of whether a formal or informal complaint has been filed at the Commission,” the FMC concluded.

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