NCBFAA Mulling Organizing Class-Action Suit on Carriers Refusing Service Contracts
CHANDLER, Ariz. -- The National Customs Brokers & Forwarders Association of America could help organize a class-action lawsuit against ocean carriers if enough of its members and other non-vessel operating common carriers (NVOCC) say they're unfairly being refused service contracts, industry officials said at the NCBFAA’s annual meeting.
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Rich Roche, senior vice president for Mohawk Global Logistics and the chair of the NCBFAA NVOCC subcommittee, noted that the Federal Maritime Commission in January indicated it would entertain a class-action complaint (see 2501020036). The FMC said the class-action option could benefit parties that believe pursuing litigation on their own would be too expensive or could invite carrier retaliation.
Roche, speaking during an April 7 conference panel, said he heard last year from some non-vessel operating carriers, especially smaller businesses, that they couldn't get service contracts from certain ocean carriers. He said he would "classify that as refusal to deal" -- referring to FMC regulations designed to address ocean carriers that unfairly refuse vessel or cargo space to shippers (see 2407220019).
“We’ve had some of our members pretty vocal on this," Roche said. "We’re now in the midst of another contracting period, and it would be a good time to give scrutiny to the responses that you’re getting from carriers and maybe bring them forward as examples if you’re interested" in a possible class-action suit.
"If we find that there’s enough interest in going forward with the class-action suit," Roche said, NCBFAA "would do an analysis on that," including by discussing who the participants would be. "And then we would potentially bring that forward as an organization, even to help wrangle the participants," he said. "But the class-action suit would proceed on its own merit."
Brandon Carroll, vice president of global transportation for Mallory Alexander International Logistics and NCBFAA NVOCC subcommittee vice-chair, said NCBFAA representatives recently spoke with the FMC about this, and the commission’s “underlying message was, whatever you want to come forward with, you got to bring evidence."
Carroll said he understands that some companies and shippers may not want to be involved because they fear retaliation from ocean carriers. "If we do have enough interest and can move forward as a class action, yes, you’ll still be named on the suit, but there’s a little bit more of a protection there," he said. "A strength in numbers sort of thing."
The panel also discussed the downstream effects of a proposed rule to levy significant port fees ranging from $500,000 to $1.5 million on Chinese-built vessels (see 2502240006). Such a fee could penalize smaller vessels that might be carrying lower-value cargo, according to Roche. Other downstream effects include reducing volume at smaller ports, such as Wilmington, North Carolina, while potentially straining capacity at bigger ports, such as Savannah, Georgia.
The trade association provided some alternative fee suggestions in comments on the rule, such as a "per TEU type of a fee," referring to a twenty-foot equivalent unit, or container, "or even an ad valorem fee, much the way a harbor maintenance fee is levied with your customs clearances, based on the value of the cargo," Roche said. He also said vessels could pass along the fines to their "service contract holders."
In January 2024, the FMC finalized several changes to its rules for carrier automated tariffs, including some that aim to increase transparency around certain “pass-through” charges assessed to shippers (see 2312290033).