Important News and Regulatory Updates on East and Gulf Coast Port Closures: Key Information for NVOCCs
A period of potential prolonged disruption is looming large within the shipping industry, and we want to ensure our clients stay up-to-date with the latest key information on the port closures across the U.S. East and Gulf Coasts. Below, we’ve provided important updates from the Federal Maritime Commission, along with insights into the broader impact of the ongoing dockworker strike.
1. Federal Maritime Commission (fmc) Advisory: Your Rights and Remedies
The FMC has issued an advisory to all regulated entities, including NVOCCs, that statutes and regulations remain in full effect during port closures. If ports are closed due to work stoppages, the following regulations still apply:
Statutory Compliance
Common carriers (including VOCCs and NVOCCs) and Marine Terminal Operators (MTOs) are still required to comply with all tariff rules, service contracts, MTO schedules, and fees, including demurrage and detention charges.
Demurrage and Detention Charges
These charges must be reasonable, clearly defined, and serve the purpose of incentivizing the movement of cargo. The FMC will pay closer attention to these charges during port closures to ensure compliance. See our previous content on Demurrage and Detention Billing Requirements.
Invoicing Requirements
Under the Ocean Shipping Reform Act of 2022, invoices for demurrage or detention must include specific required information and be sent to the correct entity. Invoices that do not meet these standards will be deemed invalid.
If you encounter any unlawful charges or improper practices, the following remedies are available to you:
File a Complaint
You can file a formal complaint with the FMC’s Office of Administrative Law Judges for legal adjudication.
Submit a Charge Complaint
For quick resolution, you may submit a Charge Complaint requesting a refund or waiver of an erroneous or unlawful charge. See our previous content on FMC's New Interim Procedures for Charge Complaints.
Request Informal Assistance
The Office of Consumer Affairs and Dispute Resolution Services (CADRS) offers informal mediation to resolve disputes. This is a fast and voluntary process for settling disputes with carriers or MTOs.
Report Violations
Violations can be reported to the Bureau of Enforcement, Investigations, and Compliance. If necessary, the FMC may initiate formal investigations.
For the FMC’s Industry Advisory, Please Click on the Following Link:
2. Broader Industry Impact: What You Need to Know
On October 1, 2024, over 45,000 dockworkers from the International Longshoremen’s Association (ILA) initiated a strike that affects major ports along the U.S. East and Gulf Coasts. The dispute is centered around wage negotiations and the proposed automation of port operations, with longshoremen pushing back against what they see as inadequate pay raises and potential job losses due to automation. (NY Times, Politico)
Economic Impact
The strike could lead to delays, and increased shipping costs. JPMorgan estimates that the strike could cost the U.S. economy up to $5 billion per day. For each day the ports are shut down, the analysts said, it would take roughly six days to clear the backlog. These delays will likely increase the likelihood of detention and demurrage charges, among other charges. (NY Times, Politico)
Port Diversions
Many businesses have already begun rerouting shipments to West Coast ports like Los Angeles and Long Beach increasing container volumes by 40%. Some goods cannot be easily diverted, and West Coast ports may have already become congested, which further complicates the situation. (NY Times)
Looking Forward
As NVOCCs, it will be critical to monitor the situation closely as it evolves and expect delays in the supply chain. We recommend keeping in touch with the shipping lines and reroute shipments if necessary. Ensure that your business has reviewed its contracts, and understand FMC’s regulations and procedures in the event of unlawful practices to mitigate the impact of the port closures.
3. Conclusion
At Paramount Tariff Services, Inc., we are committed to keeping our clients informed during this uncertain period. We encourage you to review your options and take note of the remedies available through the FMC provided above.
Disclaimer
Not Legal Advice: The content provided by Paramount Tariff Services, Inc., including all text, graphics, images, and other material, is for informational purposes only and is not intended to be a substitute for professional legal advice. While we strive to provide accurate and up-to-date information, the material should not be considered as comprehensive legal advice or a guide for individual legal situations.
We strongly recommend consulting with a qualified attorney for specific legal advice tailored to your situation. The use of information contained in this newsletter does not create an attorney-client relationship, as Paramount Tariff Services is not a law firm. Paramount Tariff Services, Inc., along with its employees, agents, and representatives, expressly disclaims all liability in respect to actions taken or not taken based on any or all of the contents on this website.