MSC Challenges U.S. Maritime Compliance Allegations

Shipping Line Defends Against $63.3 Million Fine Proposal Amid Pandemic Fallout

MSC


MSC is gearing up to face the severe fine proposal from the United States Government. The situation arose when the Office of Enforcement, Investigations, and Compliance of the Federal Maritime Commission (FMC) issued an 81-page report concluding that the shipping line should pay civil penalties totaling $63.3 million for alleged surcharges to its customers and incorrect billing within the framework of the Shipping Act.

MSC, which reportedly recorded around $27 billion in revenue during the pandemic, deemed the potential sanction as “excessive” and announced its intention to defend itself, according to Bloomberg. To do this, the shipping line must submit its response by May 3, and the enforcement office will have until May 18 to respond. Subsequently, it could take months before an administrative law judge makes a decision, which could be subject to appeal.

In the case presented before FMC administrative law judge Alex Chintella, the Office of Compliance alleged that MSC employed unreasonable and unfair practices that did not promote an efficient and competitive mobilization system in U.S. maritime commerce.

It is detailed that MSC developed and employed illegal practices targeting U.S. logistics service providers, non-vessel operating common carriers (NVOCCs), freight forwarders, customs brokers, and trucking companies.

During the pandemic, many shipping lines faced criticism for their high spot freight rates and detention and demurrage fees. Some executives argued that they were responding to supply and demand forces, along with labor restrictions and trade imbalances.

The pandemic exacerbated existing challenges within the maritime industry, including congestion at ports, equipment shortages, and disruptions to supply chains. These challenges led to increased costs for shippers and heightened scrutiny of carrier practices.

MSC’s legal battle with the U.S. Government underscores the complexities of regulatory compliance in the maritime sector and highlights the importance of fair and transparent business practices. As the case unfolds, it will be closely monitored by industry stakeholders and regulatory authorities alike.

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