The maritime shipping industry is struggling to find a short-term solution to the unprecedented congestion occurring at U.S. ports, which continues to impose large costs on traders and further clog the global supply chain, industry representatives said. Although work is being done by the Federal Maritime Commission and Congress to provide relief, they said many of those efforts will do little to ease port issues in the near future.
For weeks, dozens of container ships have dotted the waters of California's San Pedro Bay, waiting to unload at a port experiencing its highest level of congestion in years. With no space to drop their cargo, the ships sit in limbo, further slowing imports and exports and clogging a global trading system that some shippers view as broken.
The Federal Maritime Commission will begin investigating whether ocean carriers are violating regulations on detention and demurrage fees, container returns and container availability for U.S. exports, the agency said Nov. 20. The investigation, which will be led by FMC Commissioner Rebecca Dye, will look at ocean carriers operating in alliances at the Port of Long Beach, the Port of Los Angeles and the Port of New York and New Jersey to determine if their unfair fees and container practices are “amplifying the negative effect of bottlenecks” at the ports.
More than 40 trade groups urged the Federal Maritime Commission to suspend certain detention and demurrage charges they say are being unfairly imposed by ocean carriers and marine terminals, saying the charges violate guidelines issued by the FMC in May (see 2004290037). The groups said their members have paid more than $150 million in “unreasonable” fees at the ports of Los Angeles and Long Beach and the Port of New York and New Jersey due to “massive congestion created by record setting volumes” and a shortage of labor and available chassis.
The Federal Maritime Commission plans to discuss a rise in non-compliance with its May rule (see 2004290037) on detention and demurrage charges after industry complained that the rule is being ignored, Rebecca Dye, an FMC commissioner, said during a Nov. 10 session at the Coalition of New England Companies for Trade virtual conference. She said she will soon make “recommendations” to other commissioners to address the rule and other issues, including problems surrounding container returns.
The U.S. needs to increase engagement with China to convince it to limit restrictions on foreign companies and to end unfair government subsidies, former U.S. Trade Representative Michael Froman said. Although Froman said he is “hopeful” the U.S. can secure these concessions through more trade negotiations, he also said the U.S. may need to focus more on its own industrial policy to remain technologically competitive with China.
The Federal Maritime Commission said its May rule on detention and demurrage charges (see 2004290037) is helping to reduce unfair penalties imposed by carriers, but industry said the fees are continuing and the FMC’s guidance is not being followed. The rule “at first seemed to be a great victory,” said Rich Roche, vice president of international transportation at Mohawk Global Logistics, speaking during a virtual conference hosted by the National Customs Brokers & Forwarders Association of America Sept. 14. But Roche, who is also the chair for the NCBFAA’s Non-Vessel Operating Common Carrier Subcommittee, said some carriers increased their demurrage and detention fees the same week the rule was finalized.
The Trump administration issued an advisory for companies doing business with China’s Xinjiang region, which could expose companies to sanctions, export controls and forced labor risks. In a 19-page guidance issued July 1, the departments of State, Commerce, the Treasury and Homeland Security describe supply chain risks and possible sanctions exposure for companies trading with the region, and includes suggested due diligence practices. The guidance comes less than a month after President Donald Trump authorized sanctions against Chinese officials for human rights violations against the country’s Uighur population in the Xinjiang region (see 2006170064).
Mexican companies may struggle to comply with U.S.-Mexico-Canada Agreement provisions due to uncertainty caused by the COVID-19 pandemic and confusion about certificate of origin provisions, two former Mexican government officials said. Some Mexican businesses may opt to forgo the preferential treatment under USMCA, which takes effect July 1, and instead pay most favored nation rates on imports until they better understand the agreement’s provisions, the former officials said.
The Justice Department released an updated compliance program guidance urging industry to rely more on data, learn from past compliance penalties and improve compliance training. But the guidance, issued June 1, also introduces a “subtle” shift in how prosecutors will assess compliance programs, law firms said: More of an emphasis will be placed on determining whether programs are built to adapt to new compliance risks or whether they only rely on bare minimum measures.