Federal Maritime Commission and Federal Motor Carrier Safety Administration COVID-19 Update

Categories : Coronavirus

Types : Alerts

On both the federal and local level, US government agencies continue to recognize that the transportation, shipping, and logistics service providers are “essential businesses” and that these service providers are essential in battling against and recovering from the COVID-19 crisis that is hitting the world economy in unprecedented ways. Playing our part in this recovery effort, we are providing this update with links to helpful resources for those involved in the shipping industry. Please feel free to reach out to our team if you have any questions or concerns.

The Federal Maritime Commission (FMC) recently revoked the certificate of the passenger liner, French American Liner, for failing to satisfy (among a few other requirements) FMC inquiries and requests for information and for failing to maintain its financial responsibility qualification in accordance with the requirements of 46 C.F.R. Part 540. In essence, this carrier is now prohibited from conducting any new business in the US, whereas many cruise carriers have been suspending their respective operations and dealing with refund issues.

Even with the recent downgrade of the cargo shipping industry by certain financial institutions, we have yet to hear any news of a major service disruption or operational problems on the cargo carrier side – albeit many marine terminals are operating at limited capacity and some are operating on sporadic schedules subject to import/export volume. In part, this relatively stable shipping business may be the result of many carriers having already formed alliances with funds that continue to act as a hedge against the financial difficulties following the economic challenges affecting the shipping industry since early 2020.

Moreover, the container carrier industry has always displayed resilience and something of an immunity to the fluctuating market demands and trade volumes, which is expected to surge once the outbreak is under control. Somebody always needs goods somewhere, and as exports out of China start to rebound from the COVID-19 outbreak, the overall global trade volume should improve.

The Harbor Trucking Association has sent a formal letter to the FMC to monitor carriers’ strict practices of charging detention, demurrage, and chassis use despite the issues affected by the COVID-19. We have yet to see any notable violations or unfair/abusive business practices by the carriers or terminals that may impose potentially unfair financial burdens on the importers and the truckers.

While the FMC has not made any official announcement for the industry regarding COVID-19 and other related business issues, three of the five FMC Commissioners did recently issue separate statements addressing various important topics, including carriers’ blanket sailing, trucking, and terminal operation issues, as well as cruise liner issues. All Commissioners have reiterated that the FMC remains attentive to the disruptive situation in the supply chain caused by the COVID-19 crisis. Commissioner Maffei, for example, pointed out that “the Office of Consumer Affairs and Dispute Resolution Services (CADRS) is receiving consumer complaints and working to reach satisfactory resolutions or forwarding to the proper agency of jurisdiction. The Bureau of Trade Analysis and Bureau of Enforcement are participating in meetings with industry stakeholders in order to enable them to reach mutually agreeable solutions to manage the crisis conditions. [And that] the Commission is closely monitoring what’s going on in the industry and has the authority to gather more information if circumstances warrant.”

While each statement sets slightly different priorities for the shipping industry, the overall message is the same in that the FMC expects the shipping industry to continue to play a vital role in the nation’s recovery from the COVID-19 struggle by providing safe, secure, and good faith services. Their statements are good guides to all involved service providers when they face and handle various claims or complaints by Beneficial Cargo Owners (BCO) and truckers.

Please consider the following statements found on the FMC website:

Statement by Commissioner Maffei

Statement by Commissioner Bentzel

Statement by Commissioner Sola

Lastly, the Federal Motor Carrier Safety Administration (FMCSA) has exempted certain trucking service providers from compliance with Federal Hours of Service rules that limit drive time, at least until April 12, 2020 as part of the COVID-19 emergency relief efforts. The FMCSA has also put out various assistances on its website that are helpful to big and small haulers. It is worth noting that with the Expanded Emergency Declaration (dated March 18, 2020), the FMCSA will provide certain regulatory reliefs for commercial motor vehicle operations providing direct assistance in support of emergency relief efforts related to the COVID-19 outbreaks, including transportation to meet immediate needs (e.g., medical supplies and equipment related to the testing, diagnosis, and treatment of COVID-19) and supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19 (e.g., masks, gloves, hand sanitizer, soap, and disinfectants). Truckers are also encouraged to find and reach out to their local FMCSA office(s) for any additional support and guidance regarding needs or issues related to COVID-19.

The Expanded Emergency Declaration can be found here.

Montgomery McCracken attorneys are available to assist clients with numerous issues related to COVID-19. Visit the firm’s Coronavirus (COVID-19) Resource Center for more information and updates on this constantly evolving situation.