The US Federal Maritime Commission has published new rules that establish when container carriers may legitimately refuse cargoes.
The regulations will prohibit “unreasonable” refusals of cargo space from liner operators or their refusal to negotiate with US exporters.
The rules will be implemented on 23 September after a litany of problems during the pandemic, when shippers were often unable to find vessel space.
The commission has dismissed objections from the liner sector in the wake of the enactment of the Ocean Shipping Reform Act in June 2022.
Among the top concerns raised by liner operators was the omission of “business decisions” from the regulatory text, FMC documentation shows.
MSC Mediterranean Shipping Company and the World Shipping Council argued that the text meant “business factors will no longer be considered in evaluating reasonableness”.
Hapag-Lloyd argued that business factors were necessary to ensure the safety of personnel and the operational success of a voyage.
The German company disagreed with the FMC’s reluctance to use profitability as a factor for determining “reasonableness”.
Hapag-Lloyd added that customers’ consistent fraudulent behaviour and non-payment for services could affect the company’s bottom line.
Business discretion
CMA CGM chipped in, saying that continued service to customers, as well as the viability of the supply chain, depended on carriers being able to exercise legitimate business discretion, FMC documentation shows.
The French line said it was not viable for carriers to offer services to customers that presented risks such as non-payment, mis-declared cargo or unfulfilled bookings.
Israeli liner operator Zim said the removal of “business decisions” was against FMC regulations and precedents.
Cosco affiliate Orient Overseas Container Line argued that business factors would always be part of any consideration — and should remain so in a free-market economy.
In its response, the commission said it would still consider any relevant factor in determining whether a refusal to deal or negotiate was unreasonable.
And that means it can still take business factors into consideration, the FMC said.
Despite the carriers’ concerns, the new rule will retain a provision that allows it to consider the quoted rate when assessing if a carrier made a good-faith effort to negotiate, analysts said.
Carriers argued that this exceeds the FMC’s brief as a non-rate-regulating body.
It will also retain a requirement that lines file an annual export policy that includes service and market descriptions, pricing strategies and container equipment, which industry representatives argue could put carriers at a competitive disadvantage.
