Freightwaves: FMC rejects carrier request for shorter notice on ocean rate hikes

The Federal Maritime Commission has rejected a request by ocean carriers to shorten the notice period for rate hikes.

The Shipping Act and commission regulations requires 30 days’ notice before an increase in rates and charges become effective. Carriers can request that the commission shorten this time period, but 

Chairman Laura DiBella in a written decision said that the liners had failed to demonstrate “good cause” for the exception.

CMA CGM, Hapag-Lloyd, Maersk and Zim had requested special permission for shorter notice, for higher rates and other charges stemming from the effects of the war in Iran and Strait of Hormuz.

“There are certainly circumstances that warrant granting special permission requests,” DiBella wrote. “Sudden shocks to the supply chain can be difficult for both carriers and shippers to absorb. At the same time, granting an exception to the way the Shipping Act allocates risk between shippers and carriers is a significant matter, requiring careful deliberation.” 

DiBella said that while there are increased costs and uncertainties for both carriers and shippers, the liners had not shown good cause.

“In my view, when a carrier seeks special permission to reduce the 30 days’ notice period for a surcharge, the carrier should demonstrate how its increased costs are linked to the dollar amount of the proposed surcharge,” DiBella said. “An assertion that there are increased costs, without any data on what those costs are, how long they may last, and what steps the carrier is taking to mitigate them, is insufficient in demonstrating good cause.”

This transparency, she said, “would assure shippers that surcharges are being used solely to adjust to unpredicted circumstances. This approach … will better balance the risks borne by shippers and carriers, and will increase shipper confidence that carriers are calculating surcharges reasonably.”