The Federal Maritime Commission (FMC) has imposed civil penalties on MSC Mediterranean Shipping Company totaling 22.67 million dollars for a series of violations of the Maritime Transportation Act. The decision is part of the increase in FMC enforcement actions and a wave of new complaints received following the increase in transportation volumes during and after the COVID-19 pandemic, a period in which the United States Congress updated the Maritime Transportation Act.
The Compliance, Investigations, and Enforcement Bureau (BEIC) of the Commission, through its Offices of Investigation and Compliance, investigated and processed the matter. Investigations began in August 2023, with notifications submitted earlier this month and confirmed or reviewed by the FMC in three matters related to the fees charged to shippers.
Most of the fine comes from a resolution determining that MSC had overcharged its customers fees for storage and retention of containers related to non-operational refrigerated equipment. The investigation established that this practice was in effect throughout 2021, leading the Commission to conclude that it was an "unreasonable practice" rather than a mistake in the billing system. The Commission determined that MSC overcharged customers in approximately 23% of all bills related to non-operational refrigerated containers in 2021. A penalty of 5,000 dollars was applied for each violation, totaling 13,145,000 dollars.
A second violation was also related to non-operational refrigerated containers. The FMC noted that MSC did not include fees related to this equipment in its published rates between 2021 and 2023. The Commission agreed with the initial conclusion of the Administrative Judge that the omission started in 2021 and modified the resolution, qualifying the practice as "conscious and intentional violations" from March 2022 to 2023. The total civil penalty for these infractions reached 9,460,000 dollars.
A third violation occurred between 2018 and 2020 related to MSC's billing to customs agents designated as notified parties for charges related to storage and retention of containers through the commercial clause included in its bills of lading, despite these parties not being involved in the movement of the cargo. The Commission confirmed the initial decision of the Administrative Judge regarding MSC's use of this clause, with civil penalties totaling 65,000 dollars for these violations.
The FMC has experienced a significant increase in the number and complexity of cases presented before its Administrative Judges, many of them related to disputes arising from supply chain disruptions during the pandemic era. As reported by the FMC on January 26, it has temporarily added two additional Administrative Judges, who will work for the Commission until the end of the fiscal year, in September 2026. Judge Jamie Mendelson and Judge Debra Tesh have been detailed from the United States Department of Health and Human Services to the Office of Administrative Judges of the Federal Maritime Commission to help manage the increased caseload that the office is handling.
The documented violations reflect practices spanning a five-year period and affecting multiple aspects of the shipping company's billing operations. The case of non-operational refrigerated containers represents the majority of the penalties, with the Commission determining that the overcharging practice was systematic during 2021 and that the lack of transparency in fee publication continued until 2023.
The regulatory context has undergone significant changes since the pandemic, with the U.S. Congress updating the Maritime Transportation Act to address concerns related to shipping companies' practices during the period of port congestion. The FMC has intensified its law enforcement activities, responding to a growing volume of complaints from shippers and other supply chain stakeholders.