FMC ruling targets demurrage, detention, and tariff breaches amid heightened carrier oversight
The US Federal Maritime Commission (FMC) has concluded an enforcement proceeding against Mediterranean Shipping Company (MSC), imposing civil penalties totalling $22.67 million for multiple violations of the Shipping Act.
The decision followed an investigation and prosecution by the FMC’s Bureau of Enforcement, Investigations, and Compliance through its Offices of Investigation and Enforcement. The commission’s ruling addressed three distinct categories of violations spanning several years.
According to the FMC, the first violation occurred between 2018 and 2020, when MSC billed customs agents listed as “notify parties” for demurrage and detention charges through the “merchant clause” in its bills of lading, despite those parties having no role in moving the cargo. Civil penalties for these violations amounted to $65 000.
The second violation related to MSC’s failure to include a statement of applicable fees for non-operating reefers (NORs) in its published tariff between 2021 and early 2023. While the commission upheld the Administrative Law Judge’s (ALJ’s) finding that a violation had occurred, it modified the ruling on wilfulness.
The FMC determined that knowing and wilful violations began only after MSC’s March 2022 statement to the commission in which it indicated it would amend its tariff. Penalties for this category totalled $9 460 000.
The third and most significant violation involved MSC overcharging customers demurrage and detention fees associated with NORs. The commission overturned the ALJ’s conclusion that the issue resulted from a simple “billing system” error. Instead, it found evidence of overcharging in approximately 23% of all NOR bills throughout 2021.
The FMC concluded that “MSC’s billing was not merely the result of a mistake but rather that it constituted an unreasonable practice within the meaning of section 41102(c).”
A penalty of $5 000 per violation was imposed, resulting in $13 145 000 in civil penalties for this conduct.
In total, penalties assessed against MSC reached $22.67 million. The FMC noted that it does not retain revenue from civil penalties, with all funds paid directly into the General Fund of the US Treasury.
The case forms part of the FMC’s broader enforcement push amid increased scrutiny of ocean carrier billing practices following global supply chain disruptions and legislative updates to the Shipping Act.