November 21, 2025 • 32 mins
Big policy moves rarely arrive one at a time. We dig into a trio of shifts changing how shippers, carriers, and NVOCCs plan: the FMC’s latest civil penalty settlements, early signs of a safer Suez Canal, and a targeted court decision that trims—but doesn’t topple—the detention and demurrage billing rule. Each story stands on its own, but together they point to a strategic truth: regulatory literacy is becoming a real advantage.
We start with the $1.35M in FMC civil penalties and why that matters beyond headlines. These compromise agreements—without admissions—highlight where enforcement is focused: operating in line with published tariffs and making sure rates and charges are actually on the books. We also clarify a crucial detail that shapes incentives: penalty money goes to the U.S. general fund, not to the FMC. That keeps enforcement about standards, not collections, and it nudges everyone toward cleaner documentation, clearer contracts, and fewer “exceptions” that don’t survive scrutiny.
From there, we pivot to routing strategy. After years of detours around the Horn of Africa, some carriers are testing a return to the Suez Canal. The upside is real—shorter transit times, better schedule reliability, improved equipment balance—but risk remains dynamic. We walk through how to scenario-plan Suez vs. Cape, protect mariner safety, and reset inventory buffers without overpromising to customers.
We also break down the pause on Section 301 China port fees. Even with limited pass-through to shippers, the policy signaled that vessel build origin and control can carry costs on U.S. trades. That’s already influencing fleet allocation and future order books. Treat the pause as a lever that can move again. Build contracts that define surcharge handling, give yourself alternatives, and keep a live read on carrier exposure.
Finally, we unpack the DC Circuit’s narrow ruling on the FMC billing rule. The court vacated the “who may be billed” section for lack of clarity, but left the rest intact: the 20 data fields, timing rules, and documentation guardrails still apply. The result is better invoices, simpler disputes, and fewer black-box charges—if you use the framework. We outline what to validate before paying, how to challenge errors, and where the FMC may go next.
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Episode Transcript
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SPEAKER_00 (00:00):
Ready to go.
You're listening to By Land andBy Sea, powered by the Maritime
Professor.
Talk about carriers finallyeyeing a return to the Suez
(00:23):
Canal.
That's good news.
A pause in the section 301 Chinaport fees.
We're going to talk about whatpeople are saying about that.
And a major court decision.
It's kind of shaking updetention and demurrage.
I want you to pay attention.
It's not, it didn't get releasedthis week, but I don't know.
We got to talk about it.
Look, are we just getting usedto this faster pace?
It's all coming so rapid fire,right?
(00:46):
Look, stick around here.
Let me break a few things downfor you plainly, clearly, and
with an eye toward what it allmeans next.
Hi, welcome back to By Land andBy Sea, an attorney breaking
down the weekend supply chain,presented by the Maritime
Professor.
Me.
I'm Lauren Beegan, founder ofthe Maritime Professor, former
FMC International AffairsAttorney and founder of Squall
(01:06):
Strategies.
And I'm your favorite maritimeattorney, right?
By land and by sea is your go-toresource for navigating the
regulatory side of global oceanshipping.
As always, this podcast is foreducational purposes only and
should not be considered legaladvice.
There is no attorney clientprivilege created by this video
or this podcast.
If you need an attorney, contactan attorney.
(01:27):
So let's get into it because asyou know, ocean shipping moves
the world.
All right.
Well, the first story, let'sjust start out on the regulatory
front.
The Federal Maritime Commissionmade an announcement this week
that it has secured$1.35 millionin civil penalty settlements.
Those came from Hyundai Globusand Olympiad Line for Shipping
Act violations.
(01:48):
Now, I wanted to raise thisbecause this is an interesting
trend that we've seen from theFMC in recent years.
And what is that, three to fiveto maybe even seven years?
That the FMC has been announcingthese quite significant civil
penalties.
Previously, they they theycertainly had civil penalties,
but I think that they now aregetting into a world of it feels
(02:12):
like the civil penalties arehelping to, well, they're
cracking down, right?
That that's that's essentiallywhat it comes down to.
But they're the civil penaltiesare also helping to encourage
compliance because of the thesize of these civil penalties.
Plus, I mean, just theeverything, right?
Everything is more expensive.
So it's all kind of moving alittle bit faster.
(02:33):
But these agreements werereached with a VOCC and an N
VOCC.
So I'm gonna read off of whatthe FMC actually said in their
announcement and then kind ofbreak it down from there because
I wanted it to be accurate andprecise to what the FMC is
saying here.
So these were compromiseagreements.
I want to make sure that thesewere compromise agreements that
ended up in this$1.35 million incivil penalties.
(02:57):
So the first compromiseagreement was reached with
Hyundai Globus.
This is a VOCC headquartered inSeoul, South Korea.
It operates in the U.S.
foreign trades and globally.
The compromise agreementresolved allegation that Hyundai
Globus violated the shipping actthrough activities that
included, and the FMC liststhese out, providing service in
the liner trade that was not inaccordance with the rates,
charges, classifications, rules,and practices contained in the
(03:20):
tariff.
So I want to point that outbecause that is if you put it in
the tariff, you have to workwithin the guidelines of your
tariff, right?
Providing service in the linertrade that was not in accordance
with the rates, charges,classification, rules, and
practices.
So I'm I'm highlighting thiscivil penalties case so that you
can see what the FMC is goingafter, right?
(03:41):
Or prioritizing or putting aspart of their compliance.
Um, and then two, they also hadproviding services as a common
carrier without publishing theappropriate tariff showing all
of its active rates and charges.
So FMC staffed alleged thatthese practices persisted for
over a year and involvednumerous shipments.
And Hyundai Globus made apayment of$1.3 million in
(04:03):
compromise of these allegations.
And I, yeah, so this is the 1.3of the 1.35.
So the second compromiseagreement, so that was Hyundai
Globus.
The second compromise agreementwas reached with NBOCC, Olympiad
Line, for allegations thatOlympiad violated the shipping
act by providing service in theline of trade that was not in
accordance with their rates,charges, classification, rules,
(04:24):
and practices contained in theirpublished tariff.
It says Olympiad made a paymentof$50,000 in compromise of these
allegations.
Now, this is the part that Ireally wanted to point out.
The parties compromised andagreed to the payment of civil
penalties, but did not admit tothe violations of the shipping
act or commission regulations.
So even though the FMC isannouncing this in their
(04:45):
announcement, what they werebeing accused of, it remains
accused of, and that theseagreements are compromise
agreements for civil penaltypayments, but does not admit
fault.
And I think that that's animportant piece that the FMC put
in this because when you readit, you just kind of say, oh my
gosh, they didn't do thesethings.
It's not an admission of guilt.
It's not saying that they didn'tdo these things.
(05:06):
But there's obviously somethinggoing on that they were able to
make a compromise agreement.
But but it's not clear exactlywhat that was.
And the compromise agreement isnot this is what the FMC is
putting out.
The second part on the very endof this announcement on this new
on this press release is thatthe FMC is starting, I've been
noticing that they're startingto be very clear in the end when
(05:29):
they do collect these penaltiesto let the public know that
these penalties are not actuallyenjoyed, I guess I could say, or
or collected by the FMC for theFMC.
So these penalty payments, andthis is what they say, penalty
payments are deposited into theU.S.
general fund of the UnitedStates.
The Federal Maritime Commissionreceives no portion of these
(05:50):
payments.
That's true.
That's true.
I've said it a few times,probably not enough.
The FMC has such a lean budgetcomparatively, right?
The FMC in general is about the$30 to$40 million range for
their 100 to 130 employees thatthey have.
Most of that is salary based.
(06:11):
Most of that is salary that's inthat 34 to 30 to 40 million
dollar budget.
The amount of authority and thethings that the FMC is being
asked to do these days isgrowing exponentially.
And yet the budget of the FMC isnot quite matching that.
And so perhaps this could be anopportunity for the FMC to
(06:35):
actually have some additionalfunds coming into the FMC to
help support further complianceand further investigations and
further ensuring that there is afair and efficient movement of
the goods, right?
That's their mission, the fairand efficient movement of goods
for the benefit of the U.S.
importer, exporter, andconsumer.
I think that this is important,and that's why I'm spending a
(06:57):
little bit more time on it.
These penalty payments do not goto benefit the FMC.
On the flip side of that,though, it could also be said
that this makes the FMC evenmore independent and neutral in
their investigations becauseit's not a money grab for the
FMC.
It's not funds that they get to,like I said, enjoy.
(07:18):
It's money that goes toward theU.S.
general fund.
But the FMC, just through theirnatural, normal competition
regulatory investigativeauthority, is recouping these
fees, these civil penalties, aspart of their mission.
So I wanted to point that out.
So the 1.35 million, anothermulti or or partially
(07:40):
multi-million dollar civil incivil penalty case, but also to
let you know and to remind youthat these are not FMC funds
that are coming in.
And so while it might be seenthat they're being more active
and they certainly are bringingin more civil penalties these
days, but it doesn't go intotheir piggy bank.
It it goes into the generalfund.
And so, like I said, perhaps itcan be argued that that's making
(08:03):
them more neutral and moreindependent in their thought,
but there it is, until thatchanges.
All right, the story secondstory that I wanted to bring up
the Suez Canal.
It's been a while since it wasback in the news for anything
other than kind of some scarythings going on over there.
Uh, but there's some positivemovement in routing.
So we've recently seen thatthere's been a slow return to
(08:28):
the Suez.
And I almost don't even want tocall it a full return.
Uh well, or or a return in thecomplete sense.
We've seen a few new commercialvessels going through the Suez
Canal.
And I think that this is reallyencouraging.
We've saw CMACGM sending threedifferent vessels through the
canal recently, successfultransits.
(08:49):
It's being said that this ispart of, and I don't want to go
into geopolitics, right?
But but part of the ceasefirewith Gaza and Israel and
everything that's happeningthere is helping to reduce the
danger of going through the SuezCanal.
Obviously, the Houthi rebels,and there's been some sanctions
that have been renewed in thisarea.
But this is certainly anencouraging new step.
(09:11):
As you know, we have been goingaround the Suez for almost two
years now, I think.
I think it was January.
We've been going around the SuezCanal.
So most ocean carriers have beengoing around the Horn of Africa,
which has its own weatherchallenges.
It's a longer transit, you know,fuel and that sort of thing is
(09:32):
all part of it too.
Anytime you change routing,remember it's not just the
vessel moving around, but it'salso operational equipment,
where it's located, where it is,you know, how it kind of moves
around itself.
So all of those things have beenthings that the industry, the
the ocean carrier specifically,have had to kind of figure out
on the fly when this firsthappened.
(09:53):
Now we're seeing an intention ofa return to normal.
So 2025, the the Suez CanalAuthority is projecting$4.2
billion in revenue, which is upfrom their 2024 number, which is
about$3.9 billion.
To put that in 2023.
(10:13):
So 25 was is projected 4.2, 2024was 3.9.
2023 was about 10 billiondollars.
So they dropped to a third ofthat, which makes sense, right?
I mean, nobody was going throughthere for the most part.
Nobody was going through there.
So they're they're getting back.
There's also some operationalplans that have been announced
(10:34):
too.
Zim was talking aboutoperational planning to resume
container vessel transitsthrough the Suez Canal, just to
try to get that normalcy backin.
So we'll see, we'll see if thisholds.
I I love it.
I think this is fantastic,right?
We'll get back to these fastertransit times, you know, perhaps
vessel schedules andpredictability in there going
around the Sioux or excuse me,the the Horn of Africa.
(10:56):
Like I said, there's someweather considerations that are
in that area.
And it's not without its its uhchallenges going around Somalia
as well, right?
It's still kind of an unstablezone.
There's still some piracyhappening in there.
So yeah, this'll this will begreat to have if we can get back
to normal.
Aren't we seeking the the truenormal?
(11:18):
But we we've had to adapt towhat new normal is every every
few days, it feels like over thepast five-ish years of the ocean
carrier, ocean shipping world.
But this would be wonderful ifwe can get back to the Suez
Canal in a non-dangerous way,right?
Because I also want to point outit's the mariners who didn't
sign up for the military, thethe war risk.
(11:42):
You know, the mariners, they'rethey're doing their job, they're
they're sailing these vessels,and this shouldn't be one of the
considerations being shot atgoing through.
And that's why the oceancarriers, appropriately and
rightly, were so quick to not gothrough the Suez Canal.
They wanted to keep the marinerssafe.
I love that things are startingto feel safe enough that now
perhaps they can return into theSuez Canal.
(12:04):
All right, next story.
Let's talk about section 301.
So we talked about a list alittle bit, but what we've since
seen is an actual pause, right?
So this was agreed to that wewere going to be pausing with
that uh November 1st discussionbetween Presidents Trump and Xi,
China and the US.
(12:25):
This was on the table.
And if you listen to my podcast,I was talking about this a lot
in October, right?
We had the October 14th, theseport fees, these Section 301
China port fees went intoeffect.
And then all of a sudden, we sawmaybe 10 to two weeks later that
all of a sudden the China and USare going to be meeting and
they're going to be talking andthey're going to be discussing.
(12:45):
In October, we also saw Chinamirror the port fee proposal.
So they didn't elevate it, theydidn't step it up, they just
strictly mirrored, which Ithought also showed me that they
were willing to talk and thatthey wanted to maybe perhaps
work this out.
November 1st, we saw thatone-year pause intention, but it
(13:07):
still had to have a little bitof a notice and comment period.
And so that's what we saw.
It wasn't actually intended tostop until November 10th.
And so I had broken this downbefore that there wasn't a lot
that Chinese linked oceancarriers could do during that
time.
And so a November 1st toNovember 10th ended up being
(13:27):
just the U.S., I mean, you couldalmost say siphoning off money
from Chinese linked oceancarriers, because the ocean
carrier themselves, right?
Chinese linked, so Chineseoperated or Chinese built
vessels were being charged aport fee at a higher rate than
if it was just simply Chinesebuilt.
(13:48):
So Chinese operated had a higherrate than just simply Chinese
built, which is quite a few,right?
A significant portion of allvessels out there are Chinese
built.
And so you were hitting the thenow the vessel build is an
important factor in where you goand secure your vessels from.
I want to be clear though,because it's mixing thoughts,
(14:11):
because you can't just go buy avessel off the shelf and put it
into service a year later or amonth later or a day later,
right?
You can't just go buy it and youdrive it off the lot.
There is a longer-term planninghere.
But what I'm also seeing is thatthis may or may not go away.
I think that this is somethingthat's interesting because it's
(14:34):
reshifting, it's it's it'sre-jiggering all of the vessels
that were Chinese built out ofUS service.
And I went into length a fewepisodes back on this.
Those vessels, I don't see themcoming back into U.S.
service because it takes a lotof operational disruption, blank
sailings, you know, all of that,to move vessel and swap vessels
(14:57):
in and out of US service.
And so by having the U theChinese built vessels now,
perhaps doing the European toAsia service instead of doing US
to Asia service, we're not goingto see that likely come back.
I think that it's also going tobe part of the well, maybe as
I'm ordering other vessels, thevessel owners, maybe as I'm
(15:19):
ordering new vessels, maybe Iwill try to go for a non-China
built just in case, right?
Maybe in the short term it willenter into it, might not be an
absolute, I'm only buyingnon-Chinese.
I think that we probably willstill continue to see a
Chinese-built vessel orderbooks.
But I think that we're alsogoing to see some of these
non-Chinese built, you know,allies of the United States.
(15:41):
And hopefully, you know, at somepoint and hopefully sooner
rather than later, perhaps theUS will be a US shipbuilding
entity that you could buy largecommercial vessels in in a kind
of a quicker fashion from.
And so that's kind of what thisis.
It's I think I see it as ashort-term.
(16:02):
Okay, we we reprioritize vesselbuild origins.
And then we start to maybeimpact how the new order books
are done.
And then, right, there's agraduated element to it.
Maybe when the US is ready to betaking large-scale commercial
(16:24):
ocean going supply chain vesselsorders, then maybe the intention
comes over here and it'll remainwith our allies.
But that's kind of what I see.
So November 10th came and went.
We did see that the pauseactually went into effect.
Now you might have beensurprised to see that there was
(16:45):
actually some messaging in thetrades that people were upset
about that.
A lot of a lot of retailers andand you know, beneficial cargo
owners that cargo ownersthemselves were saying, you
know, they they they enjoyed,they applauded the pause to the
Section 301 because it was justanother fee that it hadn't been
passed down to the shipper yet,but it wasn't, it was, it was
(17:06):
feared to potentially be passeddown to the shipper.
Fortunately, we didn't see, Ihadn't heard of anybody
receiving actually apass-through charge.
The ocean carriers kind ofcollectively across the board,
both China-linked and non-Chinalinked, said that they weren't
going to be passing it through.
The shippers that I've talked toand associations that I've
talked to have also kind ofconfirmed that, that it didn't
(17:28):
get actually passed down intothe pockets of any of the
shippers.
So I think that this is, it was,it could be potentially
surprising that people wereactually upset that it did get
paused, but I want to break thatdown a little bit.
Look, there was a lot of promisethat these China port fees would
go to fund shipbuilding in theU.S.
(17:48):
and the shipbuildingrevitalization and the maritime
industrial development.
We still got a lot of money.
We still got a lot of money inthis short time frame.
And like I said, when it thepause went announced November
1st, but then went to November10th, there wasn't a lot that
ocean carriers that were Chinaoperated could do.
They weren't going to be leavingthe U.S.
trades.
(18:09):
They weren't going to be passingit through to the shippers
because nobody else had been andnobody else was planning on
doing that.
And they also were just kind of,you had to wait until November
10th.
So from that November 1st, wewill be pausing to November
10th.
We were still collecting moneyfor this.
We were still collecting moneyin these China port fees.
Perhaps a few, maybe slow steamso that they arrive November
(18:31):
11th, right after, who knows?
But the it was still a like a10-day window that money and
fees were being collected.
So I say that to kind ofemphasize we still got a lot of
money.
Tens of millions of dollars wascoming in off of this, maybe
even higher than that.
I haven't even seen a finalnumber, but we still got a lot
of money in this China portfees, Section 301, then I think
(18:57):
that we can get started withthat, right?
And so we are, I think thatthose who said, look, this was
supposed to fund.
I also don't think that thispause is a guaranteed to be
pause for an entire year.
That's the intention, and Ithink that is the full intention
and the honest intention, but Ialso think that it might be the
first lever pulled shouldsomething start to go awry with
(19:22):
any negotiated deal that camefrom that November 1st deal.
And I say that because we didn'tsee a lot of impact to these
shippers.
We didn't see a lot ofpass-through charges, and yet
the impact and the the effect onChina specifically, right,
through their ocean carriers,but but to the Chinese
government, because these oceancarriers are kind of owned and
(19:45):
run by the Chinese governmentthere, right?
They're part of the controlledcarriers that the FMC designates
on their controlled carrierslist.
I think that this is all it'simportant to watch because it
can be fluid.
I think it's you can rely on itfor a quite a while, but I also
think that you should keep aclose eye on the Section 301
(20:06):
China port fees because Iwouldn't be surprised if that
was one of the first leverspulled.
So I think it's a pause, not aretreat.
I think it still lingers as athreat.
And I think that we're paused.
We are paused.
We've been paused for about 11days now, right?
So, so it it paused on November10th.
(20:28):
And I think that we just uh keepwatching this one.
I just have a feeling that thatwe should keep watching this
one, particularly maybe in thespring or the summer, when some
of those ag promises are arekind of starting to come to
light.
And even some of the ag promisesthat were supposed to be for
some of the crops from 2025.
I'll be interested to see howthat all plays out.
But all this to say, watch,watch, stay tuned here.
(20:52):
I will continue to watch this.
I think that this is China portfees is a very interesting
corrective action, but also withlarger geopolitical
implications.
All right.
The the last story that I wantto cover here today has to do
with detention and demurrage.
Oh, detention and demurrage.
But it's the FMC's billing rule.
(21:12):
So we've talked about thisbilling rule quite a bit.
I think I even might havementioned previously, but I
wanted to bring it up.
The U.S.
Court of Appeals for the DCCircuit issued a decision
vacating a piece of that finalrule.
So we've talked about the FMCissued this rule in February of
(21:33):
2024.
It went into effect May 28th,2024, right shortly after the
final rule was issued, or kindof right around that same time.
I think it was actually April,the World Shipping Council, a
trade association for vesseloperating common carriers, and
this is the FMC, is kind of, I'mreading off their recap of what
happened, filed an appeal withthe U.S.
(21:54):
Court of Appeals for the DCCircuit, seeking to have a few
different pieces overturned.
And so one of those pieces, andkind of just explaining it now,
one of those pieces was directcontractual relationship with
the billing party.
And this is where we talkedabout this quite a bit.
It was a party, the FMC hadlimited billing to either a
party with direct contractualrelationship or the consignee,
(22:17):
but not both, and nobody else.
And one of the things that wasreally at issue here was motor
carriers because the WorldShipping Council was saying,
look, sometimes there's a directcontractual relationship with
motor carriers.
And the FMC said, nope, motorcarriers are out.
And I'm paraphrasing this wholething, obviously.
And so what the court basicallysaid was, you know, they went
(22:38):
through the whole process oflitigation and this appeal in
the DC circuit in the uh U.S.
Court of Appeals for the DCCircuit.
And they basically said, look,FMC, we kind of get what you're
saying, but you didn't reallysay it well.
It's it's actually kind ofconfusing.
And the court even was saying,look, you kind of disagreed with
(22:59):
yourself, and we just want alittle bit more clarity.
And so, in the absence ofprecise clarity here, again,
paraphrasing this whole thing, Iwant to be fair, but I also want
to be kind of plain languageabout this.
I said, in the absence of moreclarity and just kind of why
aren't motor carriers who aresometimes directly contracting
with ocean carriers, why aren'tthey included?
(23:21):
Because your rule says directcontractual relationship.
So isn't that isn't that isn'tthat one of the categories?
That's kind of what the courtsaid.
Look, we it doesn't quite squareoff.
And so because it doesn't, we'regonna vacate this.
So I bring up the language thatthe FMC announced on this, and I
think that I want, I'm gonnaread part of it because I think
(23:42):
it's important the way that theycouch it and the way that they
put it out there.
They said sure.
So it was section CF 46 CFR541.4.
They set aside just that one,which had specified who a
demerge or detention invoice maybe sent to.
That section of the rule hadlimited invoicing to either the
person for whose account thebilling party provided ocean
transportation or storage ofcargo, and who contracted with
(24:05):
the billing party for the oceantransportation or storage of
cargo, that's that directcontraction relationship, or the
consignee.
I always add in, but not both,and nobody else.
But that's that's the kind ofthe rest of that rule.
The FMC says it's important forthe shipping public to be aware
that apart from this specificsection 541.4, the rest of the
rule remains in effect.
(24:26):
And I'm gonna echo that.
The court only vacated, whichmeans they only got rid of one
little part.
It's this direct contractualrelationship, who you can send
the bill to.
Everything else, so like the 20invoice requirements, the the
you know, the 3030-30, all ofthose other parameters, all
those other guardrails that theFMC had put in place, remain
(24:49):
fully applicable.
So the DD rule did not getoverturned.
Just a section, just a smalllittle piece, because the court
agreed with the World ShippingCouncil that it didn't totally
make sense and it was a littledifficult to apply.
Here's what I want to note fromwhat the FMC said here.
It said the FMC notes that thecourt's decision does not
(25:10):
preclude the commission fromaddressing who may be invoiced
for demerge or detention in afuture rulemaking.
Instead, the court noted thatthe FMC might elect to maintain
the same policy concerning whomay be invoiced, so long as it
provides a fuller explanation ofits reasons supporting that
policy.
And then they the FMC goes on tosay these matters may be
(25:32):
addressed in a futurerulemaking.
So I've had the questionrecently: do I think that this
is going to come back up in arulemaking in the short term?
I do think that the FMC isprobably watching detention
diverge and its kind of adoptionand application within the real
world, the Wild West out there.
You know, I think that they'vebeen watching closely how well
(25:52):
or not well this detentiondiverge rule has been received,
feedback on how it's going, howit's not going.
But also I want to make noteunder the Trump administration
in the first term, they had afor every one new agency action,
two actions had to be repealed.
That was elevated to for everyone new agency action, 10
(26:14):
actions had to be repealed.
The FMC, as we've often talkedabout, remains kind of in more
of a guardrails approach to theindustry.
They tend to take a morehands-off approach.
They have case law determine thespecifics, but when it comes to
regulations, they prefer to be alittle less lighter touch to the
(26:35):
industry.
And so to say that the FMC needsto repeal 10 industry actions,
uh, excuse me, uh 10 agencyactions, I should say, is a lot.
It's a lot for the FMCspecifically.
And so I say I don't know if DDis going to come up.
I just don't think it's going tocome up this year.
That's my gut.
(26:55):
We'll see.
It's my hunch.
I don't think it's going to becoming up in 26 because we still
have charge complaints hangingin the wings.
We still have an interim processfor how charge complaints are
supposed to be handled.
And charge complaints werebrought about by the OSEA
Shipping Reform Act of 2022.
It's now 25.
It'll be 26.
But they still have to do that.
(27:17):
They still have to do that finalrule.
Because one of the questions iswhat's the scope of a charge in
a charge complaint, right?
For the most part, it's beendetention and demurrage, but
could it also be for othersuperfluous or or controversial
charges?
Former FMC Chairman Dan Mafey,way back when, had said he
thought that it could be more,but but that was one
(27:41):
commissioner, right?
That was one commissioner of thefive saying he thought that
maybe it could be applied toother charges, but that it would
have to be determined and putthrough a whole formal
rulemaking process.
We haven't had that yet.
So I see that as a priority.
I don't know if it's thepriority, but a priority.
And they got to get that done.
There's no time limitnecessarily that I know of, but
(28:01):
they got to get that done in theshort term.
We also have a few advisorycommittees possibly popping up
with the FMC reauthorizationplan, excuse me, the
reauthorization, basicallybudget.
They are going to likely have aports advisory committee and an
ocean carrier advisorycommittee.
So those are also things thatthe FMC has on its docket.
(28:22):
Those don't necessarily playinto that one to 10 ratio.
It really is more of theserulemakings, but this is a
long-winded way of basicallysaying, do I think we're going
to see another DD rulemaking orrevision?
I don't think we're going to seeit soon.
I think we will see it.
I think it's guaranteed to beseen at some point.
I think the FMC is making thesenotes and making these
(28:43):
adjustments.
Perhaps they could do acorrective rule action that
wouldn't trigger a one to 10,but I'm not exactly sure.
And I'm interested to see whereit goes.
But all this to say, keepwatching.
Keep watching all of this.
I think that this is reallyinteresting.
I think it unfortunately nowthis kind of kicks us back into
(29:06):
a little bit of gray area on whocan be invoiced.
But don't worry.
I say don't worry because one ofthe 20 invoice requirements is
also who's being built, listingout who the invoice is being
sent to.
And so you'll get a little bitmore clarity on who actually has
received that invoice.
Whereas before, right, the Wild,Wild West, before, where it was,
(29:28):
I used to say you could have a$5,000 written on a bar napkin,
you slide it across the table,and and this is kind of how we
how so what's this form?
Demerge.
Okay, what container?
When?
What are the what's the timeframe?
Like this just says$5,000.
So this is your demerge bill,right?
We've moved past that.
We are now in a cleanerinvoicing world for detention
(29:53):
demerge, thanks to this finalrule.
So while the specific who may bebilled might still Be worked
out.
I think we do have a, we've comea long way from where we were.
We've come a long way from wherewe were just a few years ago.
So look, I think we'll keepwatching this.
I think that the FMC, I thinkyou should all pay attention to
(30:16):
the 20 invoice requirements,right?
The intention really was to makethe process less chaotic,
simpler, more perhaps routine,so that if you are receiving a
bill, you can check the work,right?
It's linking what rule, whattariff, what rate, so that you
can actually go back and say,okay, this container was there
from this period.
Okay, we're using that rate.
Oh, they did some math wrong.
(30:37):
You right?
It's to intend checking yourwork opportunities.
And so I'm gonna keep watchingthis.
I think that this is a big deal,but I don't think that it erases
the whole work that's been doneon this detention and demerge
rule.
I also think that there's moreto do.
Don't get me wrong, this is notthe end all be all, but it is a
great, great step for theindustry to get some clarity.
(31:00):
We'll see.
All right.
Well, this week and the the pastfew weeks, right?
This has been wild.
This has been each end of eachstory, has been important.
And look, we bring it alltogether to show the maritime
supply chain, it's evolvingfast.
Regulatory literacy is honestlybecoming a competitive
advantage.
And when you understand therules, you make better
(31:21):
decisions, don't you?
Look, if you like this episode,be sure to follow, subscribe,
and leave a review.
Want to go deeper on thesetopics or bring this kind of
insight to your team, visitthemaritimeprofessor.com.
We do corporate trainings,tailored briefings, on-demand
webinars, all designed to makethese complex regulations
practical and easier tounderstand.
And if your organization needshelp navigating the legal or
(31:42):
strategic side of ocean shippingregulations, have a squall
strategies.
That's where I provideconsulting services, regulatory
guidance.
It's my law firm, policy supportfor clients.
This podcast is for educationalpurposes only and should not be
considered legal advice.
Look, if you need an attorney,contact an attorney.
And until next time, this isLauren Beegan.
I'm the Maritime Professor, andyou've just listened to By Land
(32:02):
and By Sea.
See you next time.
Ready to go.
You're listening to By Land andBy Sea, powered by the Maritime
Professor.
Talk about carriers finallyeyeing a return to the Suez
(00:23):
Canal.
That's good news.
A pause in the section 301 Chinaport fees.
We're going to talk about whatpeople are saying about that.
And a major court decision.
It's kind of shaking updetention and demurrage.
I want you to pay attention.
It's not, it didn't get releasedthis week, but I don't know.
We got to talk about it.
Look, are we just getting usedto this faster pace?
It's all coming so rapid fire,right?
(00:46):
Look, stick around here.
Let me break a few things downfor you plainly, clearly, and
with an eye toward what it allmeans next.
Hi, welcome back to By Land andBy Sea, an attorney breaking
down the weekend supply chain,presented by the Maritime
Professor.
Me.
I'm Lauren Beegan, founder ofthe Maritime Professor, former
FMC International AffairsAttorney and founder of Squall
(01:06):
Strategies.
And I'm your favorite maritimeattorney, right?
By land and by sea is your go-toresource for navigating the
regulatory side of global oceanshipping.
As always, this podcast is foreducational purposes only and
should not be considered legaladvice.
There is no attorney clientprivilege created by this video
or this podcast.
If you need an attorney, contactan attorney.
(01:27):
So let's get into it because asyou know, ocean shipping moves
the world.
All right.
Well, the first story, let'sjust start out on the regulatory
front.
The Federal Maritime Commissionmade an announcement this week
that it has secured$1.35 millionin civil penalty settlements.
Those came from Hyundai Globusand Olympiad Line for Shipping
Act violations.
(01:48):
Now, I wanted to raise thisbecause this is an interesting
trend that we've seen from theFMC in recent years.
And what is that, three to fiveto maybe even seven years?
That the FMC has been announcingthese quite significant civil
penalties.
Previously, they they theycertainly had civil penalties,
but I think that they now aregetting into a world of it feels
(02:12):
like the civil penalties arehelping to, well, they're
cracking down, right?
That that's that's essentiallywhat it comes down to.
But they're the civil penaltiesare also helping to encourage
compliance because of the thesize of these civil penalties.
Plus, I mean, just theeverything, right?
Everything is more expensive.
So it's all kind of moving alittle bit faster.
(02:33):
But these agreements werereached with a VOCC and an N
VOCC.
So I'm gonna read off of whatthe FMC actually said in their
announcement and then kind ofbreak it down from there because
I wanted it to be accurate andprecise to what the FMC is
saying here.
So these were compromiseagreements.
I want to make sure that thesewere compromise agreements that
ended up in this$1.35 million incivil penalties.
(02:57):
So the first compromiseagreement was reached with
Hyundai Globus.
This is a VOCC headquartered inSeoul, South Korea.
It operates in the U.S.
foreign trades and globally.
The compromise agreementresolved allegation that Hyundai
Globus violated the shipping actthrough activities that
included, and the FMC liststhese out, providing service in
the liner trade that was not inaccordance with the rates,
charges, classifications, rules,and practices contained in the
(03:20):
tariff.
So I want to point that outbecause that is if you put it in
the tariff, you have to workwithin the guidelines of your
tariff, right?
Providing service in the linertrade that was not in accordance
with the rates, charges,classification, rules, and
practices.
So I'm I'm highlighting thiscivil penalties case so that you
can see what the FMC is goingafter, right?
(03:41):
Or prioritizing or putting aspart of their compliance.
Um, and then two, they also hadproviding services as a common
carrier without publishing theappropriate tariff showing all
of its active rates and charges.
So FMC staffed alleged thatthese practices persisted for
over a year and involvednumerous shipments.
And Hyundai Globus made apayment of$1.3 million in
(04:03):
compromise of these allegations.
And I, yeah, so this is the 1.3of the 1.35.
So the second compromiseagreement, so that was Hyundai
Globus.
The second compromise agreementwas reached with NBOCC, Olympiad
Line, for allegations thatOlympiad violated the shipping
act by providing service in theline of trade that was not in
accordance with their rates,charges, classification, rules,
(04:24):
and practices contained in theirpublished tariff.
It says Olympiad made a paymentof$50,000 in compromise of these
allegations.
Now, this is the part that Ireally wanted to point out.
The parties compromised andagreed to the payment of civil
penalties, but did not admit tothe violations of the shipping
act or commission regulations.
So even though the FMC isannouncing this in their
(04:45):
announcement, what they werebeing accused of, it remains
accused of, and that theseagreements are compromise
agreements for civil penaltypayments, but does not admit
fault.
And I think that that's animportant piece that the FMC put
in this because when you readit, you just kind of say, oh my
gosh, they didn't do thesethings.
It's not an admission of guilt.
It's not saying that they didn'tdo these things.
(05:06):
But there's obviously somethinggoing on that they were able to
make a compromise agreement.
But but it's not clear exactlywhat that was.
And the compromise agreement isnot this is what the FMC is
putting out.
The second part on the very endof this announcement on this new
on this press release is thatthe FMC is starting, I've been
noticing that they're startingto be very clear in the end when
(05:29):
they do collect these penaltiesto let the public know that
these penalties are not actuallyenjoyed, I guess I could say, or
or collected by the FMC for theFMC.
So these penalty payments, andthis is what they say, penalty
payments are deposited into theU.S.
general fund of the UnitedStates.
The Federal Maritime Commissionreceives no portion of these
(05:50):
payments.
That's true.
That's true.
I've said it a few times,probably not enough.
The FMC has such a lean budgetcomparatively, right?
The FMC in general is about the$30 to$40 million range for
their 100 to 130 employees thatthey have.
Most of that is salary based.
(06:11):
Most of that is salary that's inthat 34 to 30 to 40 million
dollar budget.
The amount of authority and thethings that the FMC is being
asked to do these days isgrowing exponentially.
And yet the budget of the FMC isnot quite matching that.
And so perhaps this could be anopportunity for the FMC to
(06:35):
actually have some additionalfunds coming into the FMC to
help support further complianceand further investigations and
further ensuring that there is afair and efficient movement of
the goods, right?
That's their mission, the fairand efficient movement of goods
for the benefit of the U.S.
importer, exporter, andconsumer.
I think that this is important,and that's why I'm spending a
(06:57):
little bit more time on it.
These penalty payments do not goto benefit the FMC.
On the flip side of that,though, it could also be said
that this makes the FMC evenmore independent and neutral in
their investigations becauseit's not a money grab for the
FMC.
It's not funds that they get to,like I said, enjoy.
(07:18):
It's money that goes toward theU.S.
general fund.
But the FMC, just through theirnatural, normal competition
regulatory investigativeauthority, is recouping these
fees, these civil penalties, aspart of their mission.
So I wanted to point that out.
So the 1.35 million, anothermulti or or partially
(07:40):
multi-million dollar civil incivil penalty case, but also to
let you know and to remind youthat these are not FMC funds
that are coming in.
And so while it might be seenthat they're being more active
and they certainly are bringingin more civil penalties these
days, but it doesn't go intotheir piggy bank.
It it goes into the generalfund.
And so, like I said, perhaps itcan be argued that that's making
(08:03):
them more neutral and moreindependent in their thought,
but there it is, until thatchanges.
All right, the story secondstory that I wanted to bring up
the Suez Canal.
It's been a while since it wasback in the news for anything
other than kind of some scarythings going on over there.
Uh, but there's some positivemovement in routing.
So we've recently seen thatthere's been a slow return to
(08:28):
the Suez.
And I almost don't even want tocall it a full return.
Uh well, or or a return in thecomplete sense.
We've seen a few new commercialvessels going through the Suez
Canal.
And I think that this is reallyencouraging.
We've saw CMACGM sending threedifferent vessels through the
canal recently, successfultransits.
(08:49):
It's being said that this ispart of, and I don't want to go
into geopolitics, right?
But but part of the ceasefirewith Gaza and Israel and
everything that's happeningthere is helping to reduce the
danger of going through the SuezCanal.
Obviously, the Houthi rebels,and there's been some sanctions
that have been renewed in thisarea.
But this is certainly anencouraging new step.
(09:11):
As you know, we have been goingaround the Suez for almost two
years now, I think.
I think it was January.
We've been going around the SuezCanal.
So most ocean carriers have beengoing around the Horn of Africa,
which has its own weatherchallenges.
It's a longer transit, you know,fuel and that sort of thing is
(09:32):
all part of it too.
Anytime you change routing,remember it's not just the
vessel moving around, but it'salso operational equipment,
where it's located, where it is,you know, how it kind of moves
around itself.
So all of those things have beenthings that the industry, the
the ocean carrier specifically,have had to kind of figure out
on the fly when this firsthappened.
(09:53):
Now we're seeing an intention ofa return to normal.
So 2025, the the Suez CanalAuthority is projecting$4.2
billion in revenue, which is upfrom their 2024 number, which is
about$3.9 billion.
To put that in 2023.
(10:13):
So 25 was is projected 4.2, 2024was 3.9.
2023 was about 10 billiondollars.
So they dropped to a third ofthat, which makes sense, right?
I mean, nobody was going throughthere for the most part.
Nobody was going through there.
So they're they're getting back.
There's also some operationalplans that have been announced
(10:34):
too.
Zim was talking aboutoperational planning to resume
container vessel transitsthrough the Suez Canal, just to
try to get that normalcy backin.
So we'll see, we'll see if thisholds.
I I love it.
I think this is fantastic,right?
We'll get back to these fastertransit times, you know, perhaps
vessel schedules andpredictability in there going
around the Sioux or excuse me,the the Horn of Africa.
(10:56):
Like I said, there's someweather considerations that are
in that area.
And it's not without its its uhchallenges going around Somalia
as well, right?
It's still kind of an unstablezone.
There's still some piracyhappening in there.
So yeah, this'll this will begreat to have if we can get back
to normal.
Aren't we seeking the the truenormal?
(11:18):
But we we've had to adapt towhat new normal is every every
few days, it feels like over thepast five-ish years of the ocean
carrier, ocean shipping world.
But this would be wonderful ifwe can get back to the Suez
Canal in a non-dangerous way,right?
Because I also want to point outit's the mariners who didn't
sign up for the military, thethe war risk.
(11:42):
You know, the mariners, they'rethey're doing their job, they're
they're sailing these vessels,and this shouldn't be one of the
considerations being shot atgoing through.
And that's why the oceancarriers, appropriately and
rightly, were so quick to not gothrough the Suez Canal.
They wanted to keep the marinerssafe.
I love that things are startingto feel safe enough that now
perhaps they can return into theSuez Canal.
(12:04):
All right, next story.
Let's talk about section 301.
So we talked about a list alittle bit, but what we've since
seen is an actual pause, right?
So this was agreed to that wewere going to be pausing with
that uh November 1st discussionbetween Presidents Trump and Xi,
China and the US.
(12:25):
This was on the table.
And if you listen to my podcast,I was talking about this a lot
in October, right?
We had the October 14th, theseport fees, these Section 301
China port fees went intoeffect.
And then all of a sudden, we sawmaybe 10 to two weeks later that
all of a sudden the China and USare going to be meeting and
they're going to be talking andthey're going to be discussing.
(12:45):
In October, we also saw Chinamirror the port fee proposal.
So they didn't elevate it, theydidn't step it up, they just
strictly mirrored, which Ithought also showed me that they
were willing to talk and thatthey wanted to maybe perhaps
work this out.
November 1st, we saw thatone-year pause intention, but it
(13:07):
still had to have a little bitof a notice and comment period.
And so that's what we saw.
It wasn't actually intended tostop until November 10th.
And so I had broken this downbefore that there wasn't a lot
that Chinese linked oceancarriers could do during that
time.
And so a November 1st toNovember 10th ended up being
(13:27):
just the U.S., I mean, you couldalmost say siphoning off money
from Chinese linked oceancarriers, because the ocean
carrier themselves, right?
Chinese linked, so Chineseoperated or Chinese built
vessels were being charged aport fee at a higher rate than
if it was just simply Chinesebuilt.
(13:48):
So Chinese operated had a higherrate than just simply Chinese
built, which is quite a few,right?
A significant portion of allvessels out there are Chinese
built.
And so you were hitting the thenow the vessel build is an
important factor in where you goand secure your vessels from.
I want to be clear though,because it's mixing thoughts,
(14:11):
because you can't just go buy avessel off the shelf and put it
into service a year later or amonth later or a day later,
right?
You can't just go buy it and youdrive it off the lot.
There is a longer-term planninghere.
But what I'm also seeing is thatthis may or may not go away.
I think that this is somethingthat's interesting because it's
(14:34):
reshifting, it's it's it'sre-jiggering all of the vessels
that were Chinese built out ofUS service.
And I went into length a fewepisodes back on this.
Those vessels, I don't see themcoming back into U.S.
service because it takes a lotof operational disruption, blank
sailings, you know, all of that,to move vessel and swap vessels
(14:57):
in and out of US service.
And so by having the U theChinese built vessels now,
perhaps doing the European toAsia service instead of doing US
to Asia service, we're not goingto see that likely come back.
I think that it's also going tobe part of the well, maybe as
I'm ordering other vessels, thevessel owners, maybe as I'm
(15:19):
ordering new vessels, maybe Iwill try to go for a non-China
built just in case, right?
Maybe in the short term it willenter into it, might not be an
absolute, I'm only buyingnon-Chinese.
I think that we probably willstill continue to see a
Chinese-built vessel orderbooks.
But I think that we're alsogoing to see some of these
non-Chinese built, you know,allies of the United States.
(15:41):
And hopefully, you know, at somepoint and hopefully sooner
rather than later, perhaps theUS will be a US shipbuilding
entity that you could buy largecommercial vessels in in a kind
of a quicker fashion from.
And so that's kind of what thisis.
It's I think I see it as ashort-term.
(16:02):
Okay, we we reprioritize vesselbuild origins.
And then we start to maybeimpact how the new order books
are done.
And then, right, there's agraduated element to it.
Maybe when the US is ready to betaking large-scale commercial
(16:24):
ocean going supply chain vesselsorders, then maybe the intention
comes over here and it'll remainwith our allies.
But that's kind of what I see.
So November 10th came and went.
We did see that the pauseactually went into effect.
Now you might have beensurprised to see that there was
(16:45):
actually some messaging in thetrades that people were upset
about that.
A lot of a lot of retailers andand you know, beneficial cargo
owners that cargo ownersthemselves were saying, you
know, they they they enjoyed,they applauded the pause to the
Section 301 because it was justanother fee that it hadn't been
passed down to the shipper yet,but it wasn't, it was, it was
(17:06):
feared to potentially be passeddown to the shipper.
Fortunately, we didn't see, Ihadn't heard of anybody
receiving actually apass-through charge.
The ocean carriers kind ofcollectively across the board,
both China-linked and non-Chinalinked, said that they weren't
going to be passing it through.
The shippers that I've talked toand associations that I've
talked to have also kind ofconfirmed that, that it didn't
(17:28):
get actually passed down intothe pockets of any of the
shippers.
So I think that this is, it was,it could be potentially
surprising that people wereactually upset that it did get
paused, but I want to break thatdown a little bit.
Look, there was a lot of promisethat these China port fees would
go to fund shipbuilding in theU.S.
(17:48):
and the shipbuildingrevitalization and the maritime
industrial development.
We still got a lot of money.
We still got a lot of money inthis short time frame.
And like I said, when it thepause went announced November
1st, but then went to November10th, there wasn't a lot that
ocean carriers that were Chinaoperated could do.
They weren't going to be leavingthe U.S.
trades.
(18:09):
They weren't going to be passingit through to the shippers
because nobody else had been andnobody else was planning on
doing that.
And they also were just kind of,you had to wait until November
10th.
So from that November 1st, wewill be pausing to November
10th.
We were still collecting moneyfor this.
We were still collecting moneyin these China port fees.
Perhaps a few, maybe slow steamso that they arrive November
(18:31):
11th, right after, who knows?
But the it was still a like a10-day window that money and
fees were being collected.
So I say that to kind ofemphasize we still got a lot of
money.
Tens of millions of dollars wascoming in off of this, maybe
even higher than that.
I haven't even seen a finalnumber, but we still got a lot
of money in this China portfees, Section 301, then I think
(18:57):
that we can get started withthat, right?
And so we are, I think thatthose who said, look, this was
supposed to fund.
I also don't think that thispause is a guaranteed to be
pause for an entire year.
That's the intention, and Ithink that is the full intention
and the honest intention, but Ialso think that it might be the
first lever pulled shouldsomething start to go awry with
(19:22):
any negotiated deal that camefrom that November 1st deal.
And I say that because we didn'tsee a lot of impact to these
shippers.
We didn't see a lot ofpass-through charges, and yet
the impact and the the effect onChina specifically, right,
through their ocean carriers,but but to the Chinese
government, because these oceancarriers are kind of owned and
(19:45):
run by the Chinese governmentthere, right?
They're part of the controlledcarriers that the FMC designates
on their controlled carrierslist.
I think that this is all it'simportant to watch because it
can be fluid.
I think it's you can rely on itfor a quite a while, but I also
think that you should keep aclose eye on the Section 301
(20:06):
China port fees because Iwouldn't be surprised if that
was one of the first leverspulled.
So I think it's a pause, not aretreat.
I think it still lingers as athreat.
And I think that we're paused.
We are paused.
We've been paused for about 11days now, right?
So, so it it paused on November10th.
(20:28):
And I think that we just uh keepwatching this one.
I just have a feeling that thatwe should keep watching this
one, particularly maybe in thespring or the summer, when some
of those ag promises are arekind of starting to come to
light.
And even some of the ag promisesthat were supposed to be for
some of the crops from 2025.
I'll be interested to see howthat all plays out.
But all this to say, watch,watch, stay tuned here.
(20:52):
I will continue to watch this.
I think that this is China portfees is a very interesting
corrective action, but also withlarger geopolitical
implications.
All right.
The the last story that I wantto cover here today has to do
with detention and demurrage.
Oh, detention and demurrage.
But it's the FMC's billing rule.
(21:12):
So we've talked about thisbilling rule quite a bit.
I think I even might havementioned previously, but I
wanted to bring it up.
The U.S.
Court of Appeals for the DCCircuit issued a decision
vacating a piece of that finalrule.
So we've talked about the FMCissued this rule in February of
(21:33):
2024.
It went into effect May 28th,2024, right shortly after the
final rule was issued, or kindof right around that same time.
I think it was actually April,the World Shipping Council, a
trade association for vesseloperating common carriers, and
this is the FMC, is kind of, I'mreading off their recap of what
happened, filed an appeal withthe U.S.
(21:54):
Court of Appeals for the DCCircuit, seeking to have a few
different pieces overturned.
And so one of those pieces, andkind of just explaining it now,
one of those pieces was directcontractual relationship with
the billing party.
And this is where we talkedabout this quite a bit.
It was a party, the FMC hadlimited billing to either a
party with direct contractualrelationship or the consignee,
(22:17):
but not both, and nobody else.
And one of the things that wasreally at issue here was motor
carriers because the WorldShipping Council was saying,
look, sometimes there's a directcontractual relationship with
motor carriers.
And the FMC said, nope, motorcarriers are out.
And I'm paraphrasing this wholething, obviously.
And so what the court basicallysaid was, you know, they went
(22:38):
through the whole process oflitigation and this appeal in
the DC circuit in the uh U.S.
Court of Appeals for the DCCircuit.
And they basically said, look,FMC, we kind of get what you're
saying, but you didn't reallysay it well.
It's it's actually kind ofconfusing.
And the court even was saying,look, you kind of disagreed with
(22:59):
yourself, and we just want alittle bit more clarity.
And so, in the absence ofprecise clarity here, again,
paraphrasing this whole thing, Iwant to be fair, but I also want
to be kind of plain languageabout this.
I said, in the absence of moreclarity and just kind of why
aren't motor carriers who aresometimes directly contracting
with ocean carriers, why aren'tthey included?
(23:21):
Because your rule says directcontractual relationship.
So isn't that isn't that isn'tthat one of the categories?
That's kind of what the courtsaid.
Look, we it doesn't quite squareoff.
And so because it doesn't, we'regonna vacate this.
So I bring up the language thatthe FMC announced on this, and I
think that I want, I'm gonnaread part of it because I think
(23:42):
it's important the way that theycouch it and the way that they
put it out there.
They said sure.
So it was section CF 46 CFR541.4.
They set aside just that one,which had specified who a
demerge or detention invoice maybe sent to.
That section of the rule hadlimited invoicing to either the
person for whose account thebilling party provided ocean
transportation or storage ofcargo, and who contracted with
(24:05):
the billing party for the oceantransportation or storage of
cargo, that's that directcontraction relationship, or the
consignee.
I always add in, but not both,and nobody else.
But that's that's the kind ofthe rest of that rule.
The FMC says it's important forthe shipping public to be aware
that apart from this specificsection 541.4, the rest of the
rule remains in effect.
(24:26):
And I'm gonna echo that.
The court only vacated, whichmeans they only got rid of one
little part.
It's this direct contractualrelationship, who you can send
the bill to.
Everything else, so like the 20invoice requirements, the the
you know, the 3030-30, all ofthose other parameters, all
those other guardrails that theFMC had put in place, remain
(24:49):
fully applicable.
So the DD rule did not getoverturned.
Just a section, just a smalllittle piece, because the court
agreed with the World ShippingCouncil that it didn't totally
make sense and it was a littledifficult to apply.
Here's what I want to note fromwhat the FMC said here.
It said the FMC notes that thecourt's decision does not
(25:10):
preclude the commission fromaddressing who may be invoiced
for demerge or detention in afuture rulemaking.
Instead, the court noted thatthe FMC might elect to maintain
the same policy concerning whomay be invoiced, so long as it
provides a fuller explanation ofits reasons supporting that
policy.
And then they the FMC goes on tosay these matters may be
(25:32):
addressed in a futurerulemaking.
So I've had the questionrecently: do I think that this
is going to come back up in arulemaking in the short term?
I do think that the FMC isprobably watching detention
diverge and its kind of adoptionand application within the real
world, the Wild West out there.
You know, I think that they'vebeen watching closely how well
(25:52):
or not well this detentiondiverge rule has been received,
feedback on how it's going, howit's not going.
But also I want to make noteunder the Trump administration
in the first term, they had afor every one new agency action,
two actions had to be repealed.
That was elevated to for everyone new agency action, 10
(26:14):
actions had to be repealed.
The FMC, as we've often talkedabout, remains kind of in more
of a guardrails approach to theindustry.
They tend to take a morehands-off approach.
They have case law determine thespecifics, but when it comes to
regulations, they prefer to be alittle less lighter touch to the
(26:35):
industry.
And so to say that the FMC needsto repeal 10 industry actions,
uh, excuse me, uh 10 agencyactions, I should say, is a lot.
It's a lot for the FMCspecifically.
And so I say I don't know if DDis going to come up.
I just don't think it's going tocome up this year.
That's my gut.
(26:55):
We'll see.
It's my hunch.
I don't think it's going to becoming up in 26 because we still
have charge complaints hangingin the wings.
We still have an interim processfor how charge complaints are
supposed to be handled.
And charge complaints werebrought about by the OSEA
Shipping Reform Act of 2022.
It's now 25.
It'll be 26.
But they still have to do that.
(27:17):
They still have to do that finalrule.
Because one of the questions iswhat's the scope of a charge in
a charge complaint, right?
For the most part, it's beendetention and demurrage, but
could it also be for othersuperfluous or or controversial
charges?
Former FMC Chairman Dan Mafey,way back when, had said he
thought that it could be more,but but that was one
(27:41):
commissioner, right?
That was one commissioner of thefive saying he thought that
maybe it could be applied toother charges, but that it would
have to be determined and putthrough a whole formal
rulemaking process.
We haven't had that yet.
So I see that as a priority.
I don't know if it's thepriority, but a priority.
And they got to get that done.
There's no time limitnecessarily that I know of, but
(28:01):
they got to get that done in theshort term.
We also have a few advisorycommittees possibly popping up
with the FMC reauthorizationplan, excuse me, the
reauthorization, basicallybudget.
They are going to likely have aports advisory committee and an
ocean carrier advisorycommittee.
So those are also things thatthe FMC has on its docket.
(28:22):
Those don't necessarily playinto that one to 10 ratio.
It really is more of theserulemakings, but this is a
long-winded way of basicallysaying, do I think we're going
to see another DD rulemaking orrevision?
I don't think we're going to seeit soon.
I think we will see it.
I think it's guaranteed to beseen at some point.
I think the FMC is making thesenotes and making these
(28:43):
adjustments.
Perhaps they could do acorrective rule action that
wouldn't trigger a one to 10,but I'm not exactly sure.
And I'm interested to see whereit goes.
But all this to say, keepwatching.
Keep watching all of this.
I think that this is reallyinteresting.
I think it unfortunately nowthis kind of kicks us back into
(29:06):
a little bit of gray area on whocan be invoiced.
But don't worry.
I say don't worry because one ofthe 20 invoice requirements is
also who's being built, listingout who the invoice is being
sent to.
And so you'll get a little bitmore clarity on who actually has
received that invoice.
Whereas before, right, the Wild,Wild West, before, where it was,
(29:28):
I used to say you could have a$5,000 written on a bar napkin,
you slide it across the table,and and this is kind of how we
how so what's this form?
Demerge.
Okay, what container?
When?
What are the what's the timeframe?
Like this just says$5,000.
So this is your demerge bill,right?
We've moved past that.
We are now in a cleanerinvoicing world for detention
(29:53):
demerge, thanks to this finalrule.
So while the specific who may bebilled might still Be worked
out.
I think we do have a, we've comea long way from where we were.
We've come a long way from wherewe were just a few years ago.
So look, I think we'll keepwatching this.
I think that the FMC, I thinkyou should all pay attention to
(30:16):
the 20 invoice requirements,right?
The intention really was to makethe process less chaotic,
simpler, more perhaps routine,so that if you are receiving a
bill, you can check the work,right?
It's linking what rule, whattariff, what rate, so that you
can actually go back and say,okay, this container was there
from this period.
Okay, we're using that rate.
Oh, they did some math wrong.
(30:37):
You right?
It's to intend checking yourwork opportunities.
And so I'm gonna keep watchingthis.
I think that this is a big deal,but I don't think that it erases
the whole work that's been doneon this detention and demerge
rule.
I also think that there's moreto do.
Don't get me wrong, this is notthe end all be all, but it is a
great, great step for theindustry to get some clarity.
(31:00):
We'll see.
All right.
Well, this week and the the pastfew weeks, right?
This has been wild.
This has been each end of eachstory, has been important.
And look, we bring it alltogether to show the maritime
supply chain, it's evolvingfast.
Regulatory literacy is honestlybecoming a competitive
advantage.
And when you understand therules, you make better
(31:21):
decisions, don't you?
Look, if you like this episode,be sure to follow, subscribe,
and leave a review.
Want to go deeper on thesetopics or bring this kind of
insight to your team, visitthemaritimeprofessor.com.
We do corporate trainings,tailored briefings, on-demand
webinars, all designed to makethese complex regulations
practical and easier tounderstand.
And if your organization needshelp navigating the legal or
(31:42):
strategic side of ocean shippingregulations, have a squall
strategies.
That's where I provideconsulting services, regulatory
guidance.
It's my law firm, policy supportfor clients.
This podcast is for educationalpurposes only and should not be
considered legal advice.
Look, if you need an attorney,contact an attorney.
And until next time, this isLauren Beegan.
I'm the Maritime Professor, andyou've just listened to By Land
(32:02):
and By Sea.
See you next time.
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