FMC’s Ocean Carrier Audit Program and What It Means for US Shippers
Troubled waters in the shipping industry and around the world from COVID-19 have resulted in global port congestion that shows few signs of clearing up in the immediate future. Due to bottleneck issues at various ports in conjunction with a shortage of dockworkers and truck drivers, container shipping rates have continued to climb right alongside demurrage and detention fees.
The result of this huge mess is record-high shipping rates and many unhappy shippers having to pay exorbitant bills. Luckily, the Federal Maritime Commission (FMC) has made a move to help alleviate some of the financial pressure shipping companies are exerting on their customers. In July, the FMC established the Vessel-Operating Common Carrier Audit Program to protect shippers from unfair shipping fees and practices.
What is the Vessel-Operating Common Carrier Audit Program?
Per FMC’s announcement posted on July 20, the Vessel-Operating Common Carrier Audit Program’s goal is to analyze the top nine ocean carriers (based on total market share) for compliance with Commission rule interpreting 46 USC 41102(c) regarding its application to U.S. detention and demurrage practices.
Formally announced and launched simultaneously, the Vessel-Operating Common Carrier Audit Program is headed by Chairman Daniel B. Maffei. The Audit Program and new audit team will work alongside ocean carrier organizations to assess their current application of detention and demurrage practices.
The FMC will also assist carrier companies in furthering their understanding of Commission rules to ensure compliance with billing, appeals procedures, and fee related regulations. Chairman Maffei asserts that the FMC’s new audit program aims to ensure “that the law is followed and that shippers do not suffer from unfair disadvantages.”
Maffei also indicated that FMC regulations and industry guidance may be adjusted based on the findings of the Audit Program and the responses of the nine carrier companies who now find themselves under intense scrutiny given the current state of the shipping industry.
What Does the FMC Audit Program Mean for US Shippers?
The new Audit Program will hopefully bring an end to the outrageous demurrage and detention fees that have been all too common in the recent months, giving shippers some much needed financial relief. The FMC is also willing to modifying current regulations based on the findings of this audit, which should lead to improvements for shippers across the board.
However, the Vessel-Operating Common Carrier Audit Program has only just been created. The first stage of rolling out this new program is sending out information requests to the nine largest ocean carrier companies and establishing a database of quarterly reports. The gathered information will then be used to analyze the current state of carrier practices, eventually leading to individual interviews with those carriers.
Gathering all the necessary information, interviewing carrier companies, and analyzing the data will take some time, so shippers shouldn’t expect many changes in the immediate future. While no specifics have been given regarding disciplinary actions that may be taken, Chairman Maffei stated, “Of course, if the audit team uncovers prohibited activities, the Commission will take appropriate action.”
While the FMC’s new program is a step in the right direction, it might be awhile before any new guidelines can be implemented. In search of assistance, many businesses have reached out to third party logistics companies, like ClearFreight, for help navigating the troubled waters of today’s global supply chain. Contact our team today for more information on the FMC’s Ocean Carrier Audit program and to hear how ClearFreight’s supply chain solutions can make logistics easier for you.