MSC Fined $22.67 Million By FMC For Demurrage, Detention And Tariff Violations

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The U.S. Federal Maritime Commission (FMC) has imposed civil penalties totalling $22.67 million on MSC Mediterranean Shipping Company, S.A., bringing to an end an enforcement case linked to multiple violations of the Shipping Act.

The penalties were imposed under Docket No. 23-08, following an investigation by the Commission’s Bureau of Enforcement, Investigations, and Compliance (BEIC) through its Offices of Investigation and Enforcement.

The FMC found that MSC committed three separate types of violations over several years, mainly related to demurrage, detention and tariff requirements.

One set of violations occurred between 2018 and 2020, when MSC billed customs agents listed as “notify parties” for demurrage and detention charges using a merchant clause in its bills of lading.

The Commission determined that these parties were not involved in moving the cargo and should not have been charged.

Upholding the Administrative Law Judge’s decision, the FMC concluded that the practice was unreasonable under 46 U.S.C. § 41102(c). Penalties for this violation totalled $65,000.

Another violation involved MSC’s published tariff between 2021 and early 2023.

The BEIC investigation found that MSC failed to clearly state what fees applied to non-operating reefers (NORs), as required under 46 U.S.C. § 40501.

The Commission agreed that a violation had occurred during this period but ruled that it became knowing and willful only after MSC told the Commission in March 2022 that it would amend its tariff. Civil penalties for this breach amounted to $9.46 million.

The largest penalty related to MSC’s billing of demurrage and detention charges for NORs during 2021. The Commission found that customers were overcharged in about 23% of all NOR bills issued that year.

While this was initially considered a billing system error, the FMC concluded that the scale of the overcharging showed an unreasonable practice under 46 U.S.C. § 41102(c).

A penalty of $5,000 per violation was imposed, bringing the total for this violation to $13.145 million.

In total, the penalties assessed against MSC reached $22.67 million. The FMC stated that it does not receive any revenue from civil penalties, which are paid directly into the U.S. Treasury’s General Fund.

Reference: FMC

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