News / New FMC regulation rules out carrier 'lame excuses' for rolling cargo

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The days of “lame excuses” being offered by ocean carriers for refusing to carry contracted cargo may be over.

The US Federal Maritime Commission (FMC) has issued a new rule, all but prohibiting shipping lines from refusing space for booked containers, and also giving shippers more protection during negotiations.

Being implemented on 23 September, the rule hopes to address an issue that has popped up repeatedly in claims by shippers to the FMC of bad behaviour by carriers.

Sara Dandan, founder of maritime law consultant FourOneOne, told The Loadstar: “We saw a lot of cases during the pandemic where BCOs had contracts, but carriers refused to allocate contractual space and put them on the spot market, in order to profit.

“Of course we know that [was their reason], but they came up with other lame excuses,” added Ms Dandan, whose firm was set up to challenge disputes relating to the 2022 Ocean Shipping Reform Act.

The act encouraged shippers to bring claims against carriers for alleged breaches of contract during the pandemic – The Loadstar estimating that somewhere in the region of $70m in damages was being sought by aggrieved shippers.

Most claims focused on detention & demurrage (D&D) fee practices, but many included allocation allegations.

Under the new rule, shippers will be protected from a practice Ms Dandan said carriers used to “position themselves better” and gain leverage during negotiations by refusing to carry boxes.

Carriers have, unsurprisingly, proved hostile to the act and complain that the rule change is geared towards price regulation.

Supply chain market intelligence provider Freightwaves reported that the FMC had rejected this assertion and stressed it was “simply providing a comparison point between rates a carrier offers in negotiation, and rates that the rest of the market is charging for that space”.

Seemingly, the carrier complaints were not sufficient to dent the FMC’s aims, which have received positive support from a range of retail and shipper stakeholders.

And, in the new rule, the FMC has also included protection over the right to file complaints – Ms Dandan pointing to carrier tendencies to “retaliate by refusing to carry your cargo if you went to the FMC with a valid complaint”.