Amazing! Another large shipper complained to FMC: protesting the shipping company’s nearly 10,000 unreasonable charges！
South Korean tech giant Samsung Electronics America (SEA) has filed a complaint with the U.S. Federal Maritime Commission (FMC) against Israeli operator ZIM Integrated Shipping Services. The U.S. Federal Maritime Commission has instituted stricter rules for collecting demurrage and detention (D&D) charges. SEA, the U.S. subsidiary of Samsung Electronics, South Korea’s largest electronics company, recently filed charges with the U.S. FMC, arguing that ZIM charged “unreasonable” D&D charges. The world’s largest mobile phone maker claims it doubled D&D charges without giving a reason. SEA has also become the largest, most high-profile, and latest major shipper to file a protest with the U.S. Federal Maritime Commission (FMC) to date.
Beginning in early 2020, SEA entered into a shipping agreement with ZIM to ship products to the United States, with ZIM responsible for the ocean and related inland shipping services. However, starting from the end of 2020, the inland container supply chain in the United States has been strained, and SEA’s containers have been forced to stay at inland pickup points for a long time. In this context, ZIM issued about 2,000 demurrage and 7,000 detention invoices to SEA. SEA expresses strong dissatisfaction with this fee and believes that ZIM should also be responsible for this situation. Generally speaking, if a container is not picked up from the terminal in a timely manner, the carrier, not the shipper, should be responsible for the cost, SEA said. Moreover, port and terminal congestion issues are the same, which are neither within the control of SEA nor under SEA’s door-to-door terms of service. SEA also alleges that ZIM threatened “with refusal to release the cargo” when it disputed the practice. SEA believes this violates the “no retaliation” provisions of the Ocean Shipping Reform Act (OSRA). Ports involved in the dispute include Baltimore, Charleston, Houston, Jacksonville, New Orleans, New York/New Jersey, and Savannah, according to media reports. This suggests that the container transportation service is likely to be ZIM’s Asia-North America e-commerce route through the Panama Canal.
In the two years after the outbreak of Covid-19, the volume of US imports surged, but due to the tight supply chain, D&D increased significantly. According to FMC statistics, from 2020 to the beginning of October this year, the largest nine carriers serving the U.S. container shipping market collected a total of about $8.9 billion in D&D. In fact, there has always been a dispute over D&D fees. Previously, many US shippers sued the shipping company to FMC, questioning the reasonableness of the charge. This also directly contributed to the US’s formal passage of the Ocean Shipping Reform Act in June of this year, giving FMC greater powers to investigate the “unfair business practices” of shipping companies and terminal operators. It also means that shipping companies will face stricter regulations in the United States.
At the beginning of October, FMC just proposed a new rule for the controversial D&D, requiring shipping companies, Non-Vessel Operating Common Carrier(NVOCC), and terminal operators to issue D&D invoices only to parties with which they have a contractual relationship, clarifying the details of the expenses, designed to improve the transparency and accuracy of charges. In addition, the content of the invoice must comply with the requirements of the OSRA and be issued within 30 days of the accrual of charges, together with a 30-day dispute resolution time and clear information on how the dispute will be resolved. FMC also emphasized that it will further define the prohibited practices in the fee, clarify which parties may be required to pay D&D and establish billing practices that must be followed. The new rules mean that shipping companies, NVOCC, and terminal operators will face stricter requirements and restrictions when collecting D&D.
