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Shippers Look to FMC to Address Complaints of Unfulfilled Contract Space

An increasing number of shippers are turning to the US Federal Maritime Commission (FMC) to address their disputes with various container carriers. According to the FMC, multiple shippers are claiming that certain carriers are refusing contract rates in lieu of higher spot market rates, which if true, would violate the US Shipping Act.

The latest complaints, which were all filed in March 2022, suggest a growing community of frustrated shippers who are fed up and are looking to regulators to resolve their disputes.

Formal Complaints

Since the start of the fact-finding crusade in March of 2020, the FMC has urged shippers to bring them evidence of illicit behavior, but fears of retaliation have held shippers back from filing formal complaints with the agency. However, one Pennsylvania based home goods importer finally had enough and the FMC received its first formal complaint in July 2021. The home goods importer accused two well-known carriers of working together to violate service contract terms to further take advantage of record setting spot rates and premiums.

Serving as a catalyst, the Pennsylvania based importer has since inspired other shippers to come forward and file formal complaints with the FMC. In a recent complaint filed on March 18th, a New Jersey based tire sales business accused another well-known carrier of foul play. In the complaint the shipper accuses the carrier of being deceitful, saying that there was no space available on ships bound for the US and then turning around to sell the space to non-vessel operators (NVOs) at a much higher rate than what was agreed upon in the tire sales company’s contract with the carrier.

In Houston, a cement importer filed a formal complaint to the FMC on March 8th, claiming that a well-known carrier with whom they had a service contract with, refused to honor bookings that fell under their contract rates and instead sold the capacity to the highest bidders. The contract, which was signed on May 11th, 2021, through April 30th, 2022, committed the cement company to move a minimum of 1,000 containers from Egypt to the US but the shipper claims the carrier stopped accepting bookings after 10 containers.

Looking to FMC for Help

The recent complaints are the first to be filed since January 19th and are reigniting the FMC’s drive to hold container carriers accountable and deliver justice to the shippers who were wronged.

The FMC’s mission is supported by even the highest levels of the US government. In early March, U.S. President Joe Biden said during his State of the Union address, “I’m a capitalist, but capitalism without competition isn't capitalism; it’s exploitation, and it drives up prices. When corporations do not have to compete, their profits go up, your prices go up, and small businesses and family farmers and ranchers go under. We see it happening with ocean carriers moving goods in and out of America. During the pandemic, these foreign-owned companies raised prices by as much as 1,000 percent and made record profits.”

In December of 2021, the FMC again urged shippers to submit complaints against carriers in an effort to regulate the ocean freight market, in which rates skyrocketed in 2021. Not long before this plea to shippers, the FMC agreed on a policy to stop carriers from retaliating against shippers that filed formal complaints.

The United States government is not the only one concerned with the way carriers have been operating since the start of the global pandemic. Recently, an international group of competition authorities joined forces to investigate and possibly prosecute suspected anticompetitive behavior and collusion within the global supply chain. Along with the United States of America, the “Five Eyes Nations” consist of the United Kingdom, Canada, Australia, and New Zealand.

Final Thoughts

Prior to the pandemic, for companies moving at least 1,000 containers a year, negotiating a service contract with a carrier directly was relatively common. However, with the demand for capacity so high and carriers looking to maximize their profitability for as long as this craziness lasts, it might be better for 1,000+ container shippers to join the more modest shippers and work with a reliable logistics partner such as ClearFreight.

Whether you ship 10 or 10,000 containers a year, ClearFreight is happy and ready to help you make your supply chain more efficient and cost effective. Contact one of our experts today to learn how our customized supply chain solutions can help make logistics easier for you.

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