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Refusal to carry, dump the cabinet? New rules introduced! strike hard on unreasonable behavior of shipping companies
Jul 25,2024
Recently, the US Federal Maritime Commission (FMC) issued a final rule against unreasonable refusal of booking by shipping companies, which will take effect on September 23, 2024. The new rules aim to prohibit shipping companies from ignoring contracts, refusing to carry passengers without reason, dumping containers at will and refusing to negotiate contract terms with customers on shipping space, thus providing more protection for cargo owners. According to the new regulations, different legal provisions will be applied to the rejection of shipping companies at different stages. If the refusal occurs during the "negotiation" phase of the transaction, 46 U.S.C. § 41104(a)(10) will apply; if the refusal occurs during the "execution" phase following the negotiation phase, 46 U.S.C. § 41104(a)(3) will apply. specific cases will be examined and adjudicated on a case-by-case basis in light of the actual situation and facts.
It is important to note that not all refusals by shipping companies are illegal. If the shipping company can prove that there is a reasonable basis for refusing to negotiate or carry the goods, its behavior will not be considered illegal. However, shipping companies are required to submit a confidential export policy document to the FMC each year, containing information on pricing strategies, services provided, equipment supply strategies, and a description of the markets they serve, so that the FMC can assess the reasonableness of its actions.
This new regulation is undoubtedly good news for shippers. During the epidemic, many cargo owners signed contracts, but shipping companies refused to allocate space under the contract and put it on the in stock market in order to make a profit, resulting in huge losses to cargo owners. Now, FMC's new regulations will effectively curb this unreasonable behavior and protect the rights and interests of cargo owners.
However, for shipping companies, the implementation of the new regulations will increase their operating costs and compliance difficulties. In particular, shipping companies are required to submit confidential export policy documents each year, which may expose their trade secrets and market competition strategies. Hapg-Lloth, the world's fifth-largest container liner company, expressed concern about this, saying it could put the company at a significant competitive disadvantage. But the FMC rejects this view, insisting that the export information required will help it determine whether the ocean carrier's actions were reasonable.
In general, the new regulations issued by FMC are of great significance for maintaining fair competition in the maritime market and the rights and interests of cargo owners. It will effectively curb the unreasonable refusal of shipping companies and promote the healthy development of the maritime market. At the same time, shipping companies also need to strengthen their compliance awareness and ensure that their behavior meets the requirements of the new regulations to avoid unnecessary legal risks and commercial losses.
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