FMC Imposes Landmark $22.7 Million Penalty on MSC for Systemic Billing Abuses
In a significant enforcement action underscoring heightened regulatory scrutiny of ocean carriers, the Federal Maritime Commission (FMC) has ordered Mediterranean Shipping Company (MSC) to pay a $22.7 million civil penalty. The penalty resolves a lengthy investigation into widespread billing violations that improperly targeted freight intermediaries and overcharged customers.
The ruling, detailed in an 80-page order, identifies three core violations of the U.S. Shipping Act by the world's largest container line. The findings signal the FMC's aggressive posture following the 2022 Ocean Shipping Reform Act, which expanded the agency's authority to police carrier practices amid longstanding shipper complaints.
Wrongful Targeting of Intermediaries
Central to the case is MSC's use of a broadly defined "merchant clause" in its bills of lading to charge demurrage and detention (D&D) fees to companies like freight forwarders Alexander & Co. and John S. Connor, as well as customs broker Welke Customs Brokers USA. The FMC determined that from 2018 to 2020, MSC wrongly invoiced these parties—who often had no beneficial interest in or physical control over the containers—for late fees. The commission found this practice violated the Act's "just and reasonable" standard, as billing parties unable to influence container movement does not serve the fees' intended purpose of promoting cargo fluidity. A cease-and-desist order now bars MSC from charging such fees to non-shippers or cargo owners.
Tariff Transparency Failures
Separately, the FMC penalized MSC for failing to properly publish applicable rates for Non-Operating Reefers (NORs)—refrigerated containers used without cooling—in its publicly accessible tariffs from 2021 to March 2023. The commission found MSC was "knowingly and willfully" noncompliant, especially after acknowledging the need for updates but delaying action. This lack of transparency resulted in a $9.5 million penalty.
Systemic Overcharging Revealed
The largest portion of the fine, $13.1 million, stems from MSC repeatedly overcharging for NOR shipments. In 2021 alone, the carrier billed over 2,600 NOR containers at the higher operating reefer rate instead of the correct dry-container rate. While over $1.2 million was refunded after customer disputes, the FMC deemed the volume of errors—attributed by MSC to an internal system glitch—an unreasonable practice under the law.
Regulatory & Industry Context
This penalty arrives as the FMC flexes its strengthened enforcement muscles. The Ocean Shipping Reform Act of 2022 was a direct response to carrier practices during the pandemic-driven logistics crisis, when record profits coincided with shipper allegations of unfair treatment. The action also precedes leadership changes at the agency, with new Chair Laura DiBella sworn in this week.
Voices from the Industry
"This is a watershed moment for accountability," says Michael Chen, a logistics director at a midwestern apparel importer. "For years, these opaque fees were just a cost of doing business. The FMC is finally making good on its promise to level the playing field."
"The scale of the overcharges is staggering, but the penalty is just a rounding error for a giant like MSC," argues Sarah Fitzpatrick, a supply chain consultant and former forwarder. Her tone is sharper: "This wasn't a 'billing error'—it was a systemic cash grab targeting the least powerful links in the chain. Until executives face personal liability, these 'cost of doing business' fines won't change a thing."
David Ruiz, a maritime lawyer, offers a more measured view: "The detailed order provides crucial clarity on who can legitimately be charged D&D. It's a compliance roadmap for the entire industry, but carriers will need to overhaul their billing systems and contract language."