Carriers Opting to Settle Complaints Rather Than Draw FMC Scrutiny, Industry Officials Say
NEW ORLEANS -- Charge complaints before the Federal Maritime Commission are increasingly trending toward significant settlements or awards, industry officials said, urging shippers to file complaints if they believe they’re facing unfair carrier practices. Carriers are choosing to settle rather than draw the FMC’s attention, they said, especially for complaints involving demurrage or detention fees.
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“I suggest if you have a grievance, bring it,” Rich Roche, senior vice president of Mohawk Global Logistics and a member of the FMC’s National Shipper Advisory Committee, said during the National Customs Brokers & Forwarders Association of America’s annual conference this week. “What we're finding is, maybe you don't get 100% back, but some of these settlements have been enormous.”
The FMC established a new charge complaint process as part of the Ocean Shipping Reform Act of 2022 (see 2207140045) and last year ordered carriers to issue about $700,000 in total refunds (see 2303200063). The complaint process has proven to be a “big threat” to carriers, Roche said, adding that there's “no maximum money amount on it like there is on small claims.”
Roche said he has noticed more carriers opting to settle with shippers after they file complaints, leading to “upwards of 50%, 75%, 90%, sometimes 100%” of the original monetary dispute. “Many of these cases that are being brought settle,” he said, “and they settle for high settlement amounts.”
Gabe Rodriguez, president of A Customs Brokerage and an NSAC member, said he was recently able to secure a $6,700 settlement from Mediterranean Shipping Company after filing a complaint that disputed $8,000 worth of demurrage charges assessed by the shipping line. “The carriers are starting to pay attention. They don't want to get in trouble with the FMC, they don't want to be under the spotlight,” Rodriguez said during the conference. “Bring the complaints -- they're starting to gain some traction.”
Roche noted that even if a shipper and a carrier reach a settlement on a complaint filed with the FMC, the commission can still review the complaint and assess additional penalties on the carrier. He said the FMC reached out to him about multiple cases that resulted in settlements to discuss “the merits of going after them for more” money. The FMC ultimately didn’t pursue the cases further, Roche said, “but it was interesting that we were able to have that dialogue.”
Shippers also can take steps before filing a complaint to improve their chances of receiving a refund or settlement for unfairly assessed fees, Roche said. During conversations with carriers about a disputed charge, shippers should make sure they use several key words, he said, such as “charge complaint,” “violation of the Shipping Act,” "unreasonable practice,” and “violation of the interpretive rule,” referring to the FMC’s 2019 rule on reasonable detention and demurrage practices (see 1909130026).
“All of these things will show them that you know what you're talking about,” Roche said, “and you know what your rights are.”