The U.S. Federal Maritime Commission has established a new audit program and dedicated audit team to assess carrier compliance with the agency’s rule on detention and demurrage, as well as to provide additional information beneficial to the regular monitoring of the marketplace for ocean cargo services.
The Vessel-Operating Common Carrier Audit Program was established Monday, July 19, at the direction of FMC Chairman Daniel B. Maffei and launched immediately. The Audit Program will analyze the top nine carriers by market share for compliance with the commission rule interpreting 46 USC 41102(c) as it applies to detention and demurrage practices in the U.S. The commission said it will work with companies to address their application of the rule and clarify any questions or ambiguities. Information supplied by carriers may be used to establish industry best practices, FMC said.
Other focus areas of the audit process may include practices of companies related to billing, appeals procedures, penalties assessed by the lines, and any other restrictive practices. “The work of the audit team will enable the commission to monitor trends in demurrage and detention practices and revenue, as well as to establish ongoing dialog between staff and carriers on challenges facing the supply chain,” Maffei said in a statement. “Of course, if the audit team uncovers prohibited activities, the commission will take appropriate action. Furthermore, the information gathered by the audit process might lead to changes in FMC regulations and industry guidance if warranted,” he added.
The Audit Program will begin with an information request establishing a database of quarterly reports allowing the commission to assess how detention and demurrage is administered. Responses will be followed by individual interviews with the carriers. Each of the nine largest carriers by market share will be audited irrespective of whether a formal or informal complaint has been filed at the commission.
Lucille Marvin, the FMC’s managing director, will lead both the audit program and the audit team, which will initially be comprised of existing commission employees, the agency said.