FMC starts audit of top 9 container carriers

The US Federal Maritime Commission (FMC) has established a new audit program and dedicated audit team to assess container carrier compliance with the agency’s rule on detention and demurrage.

The audit team will also provide additional information beneficial to the regular monitoring of the marketplace for ocean cargo services.

The “Vessel-Operating Common Carrier Audit Program” was created on 20 July at the direction of Chairman Daniel B. Maffei and launched immediately.

Specifically, the audit program will analyze 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 intends to 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, according to FMC.

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 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,” Maffei said.

“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.”

The audit program 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.

Earlier this month, the Biden administration issued a new executive order tackling the consolidation in the container shipping industry as well as anti-competitive pricing, among others.

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The move prompted the FMC to sign an interagency memorandum of understanding with the US Department of Justice to increase cooperation and communication and support the liner shipping sector.