MEDITERRANEAN Shipping Company will “vigorously defend” a US Federal Maritime Commission determination it should pay civil penalties of US$63.3 million for alleged breaches of the country’s Shipping Act.

The FMC’s enforcement, investigations and compliance bureau last week lodged an 81-page brief outlining what it claims was overcharging of customers and incorrect billing.

In a public summary document – with confidential submissions redacted – the FMC stated:

“This case is how the largest vessel-operating common-carriers (VOCC) in the world, assisted by its U.S. agent, violated the Shipping Act in pursuit of corporate profit. MSC knowingly and willfully employed unreasonable and unfair practices that did not promote or ‘ensure an efficient, competitive, and economical transportation system in the ocean commerce of the United States.’

“More specifically, MSC developed and employed unlawful practices targeting U.S. logistic chain service providers such as non-vessel operating common carriers, ocean freight forwarders, customs brokers, and truckers.

“For years, MSC used its market power and wielded heavy-handed tactics to define standard bill of lading terms such as “merchant” to justify billing nonconsenting and non-contracting third parties detention and demurrage. In this case, MSC invoiced third parties listed as “notify parties” found on its standard bill of lading, regardless of their contractual or beneficial cargo status,” the FMC claimed.

“Instead of working to bill the proper party, MSC had a policy of invoicing the notify party, which effectively turned many third parties into its unwilling and nonconsenting billing departments.

“Furthermore, in pursuit of higher profits, MSC failed to meet other basic Shipping Act requirements, such as, clearly publishing a non-operating reefer (NOR) rate in its U.S. tariff. For several years, MSC failed to publish NOR detention and demurrage rates and consistently failed to correct the mistake, calling the resulting overcharges a “billing error.”

“Only when confronted by its customers regarding these overcharges did MSC issue refunds. MSC never proactively undertook any action to return millions of dollars in overcharges.”

Bloomberg reported overnight that MSC has labelled the proposed penalties “excessive” and expressed its intention to fight them; they are believed to be the highest ever imposed by the FMC.

The enforcement bureau said “it was opportunistic for MSC to commit these violations at the height of the Covid pandemic amidst significant global shipping tension and competition.”

MSC has until May 3 to respond to the bureau which, I turn, has until May 18 to consider the carrier’s position.