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Commission Advisory Regarding Red Sea Surcharges

Posted January 12, 2024

The Commission recognizes that the threat to commercial shipping imposes costs on the maritime transportation industry. The FMC has announced a hearing to explore Red Sea shipping issues.

Under statutory authority, the Commission and its staff are closely monitoring rates, charges, and rules that common carriers have implemented as a result of the threats to commercial shipping in the Red Sea and Gulf of Aden regions.

Commission regulations at 46 CFR 520.8(a)(1&2) require common carriers to provide at least 30 days between the publication and effective date of a change to a tariff that results in an increased cost to shippers.  46 CFR 520.14(c) outlines a process through which a common carrier may submit a Special Permission (SP) request showing good cause to reduce this 30-day waiting period.  If the SP request is accepted, the SP approval will show the effective date permitted for the charge. Per 46 CFR 520.7(c), a tariff rate, charge, or rule must be in effect at the time the carrier or its agent receives cargo.

The Commission maintains a list of all common carrier tariff locations for Vessel-Operating Common Carrier and Non-Vessel-Operating Common Carrier.

Shippers are encouraged to access and review their common carrier’s tariff.

Ocean common carriers are responsible for ensuring that service contracts and their amendments are filed in a timely and accurate manner, and for compliance with the Shipping Act’s statutory prohibitions against unjustly discriminatory practices, unreasonable prejudices, and unreasonable refusals to deal. Parties should be familiar with the terms of their service contract. If a service contract incorporates all or a portion of a carrier’s published tariff, then the associated rates, charges, or rules must be applied based on their effective date at the time of cargo receipt. Shippers are reminded that under the Shipping Act, filing suit in a court of law is the exclusive remedy for any alleged breach of a service contract, unless parties agree to an alternative dispute resolution forum. (46 U.S.C. § 40502(f)).

Alleging breach of a contract (i.e., a failure to comply with agreed-upon terms) is different than alleging that a common carrier might have violated the Shipping Act’s guidelines.  The Commission may on complaint, or its own motion, investigate potential Shipping Act violations.  If Shipping Act violations are found, they may result in fines or damages being assessed against the common carrier violating the Act.

Shippers should contact the Bureau of Trade Analysis or request Consumer Affairs and Dispute Resolution Services if they are concerned that a carrier is rating shipments in a manner that does not comport with 46 CFR Part 520. A complaint may also be filed with the Commission.