Liner industry titan MSC Mediterranean Shipping Company is facing a potential $63m fine for a possible violation of the US Shipping Act.
The move follows an investigation by the Federal Maritime Commission (FMC), which claims to have unearthed unfair billing practices.
The FMC’s Bureau of Enforcements, Investigation and Compliance is alleging that certain charges issued by MSC are “unreasonable and unjust actions and inactions” in violation of the 1984 Act.
It follows an investigation that the regulator initiated last August amid concerns over charges to bills of lading and non-operating reefer containers (NORs).
In a report submitted by the FMC’s Office of Enforcement on 3 April, the US regulator claims the world’s largest liner operator applied an overly broad definition of “merchant” in its bill of lading to inaccurately bill third parties.
It argues that MSC has incorrectly billed NORs as operating reefers, resulting in “overcharges to its customers, less free time, and more days of detention”.
MSC’s failure to publish NOR rates in its US tariff caused “obscurity, uncertainty, and the overcharges for the shipping public around MSC’s rates and charges”, it argues.
No mitigation
The FMC is seeking civil penalties of $63.2m and is also recommending a cease and desist order.
The report cites 18 violations of the use of a merchant clause, and 3,427 contraventions relating to non-operating refrigerated containers.
MSC “knowingly and willfully employed unreasonable and unfair practices that did not promote or “ensure an efficient, competitive, and economical transportation system in the ocean commerce of the United States”, it adds.
“For years, MSC used its market power and wielded heavy-handed tactics to define standard bill of lading terms such as ‘merchant’ to justify billing nonconsenting and non-contracting third parties’ detention and demurrage,” it notes.
The regulator claims that MSC consistently failed to correct the mistake, calling the resulting overcharges a “billing error”.
“Only when confronted by its customers regarding these overcharges, did MSC issue refunds. MSC never proactively undertook any action to return millions of dollars in overcharges,” the FMC claims.
MSC is expected to appeal against the claims.
“MSC is reviewing the Office of Enforcement’s brief and will vigorously defend itself against the allegations and the excessive penalties sought,” the company said.
