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On 10 August, US Congress representatives John Garamendi (Democrat, California) and Dusty Johnson (Republican, South-Dakota) introduced a bipartisan bill aiming to reform the US Shipping Act to address yearlong complaints against carriers by their customers alleging service failures and unfair pricing. A major catalyst for this effort has been the difficulty for US exporters to secure empty containers because carriers have sent them directly back to Asia, where outbound freight per box is at record levels.

The ‘Ocean Shipping Reform Act of 2021’ marks the first proposed update of the country’s shipping act since 1998. It would impose minimum requirements on ocean carrier service contracts and shifts the burden of proof in regulatory proceedings from shippers to the container lines. It also establishes reciprocal trade as part of the FMC’s mission – including mandating that ocean carriers cannot decline export cargo if the containers can be loaded safely and within a reasonable time frame.

Among other new powers given to the FMC in overseeing the ocean carriers, the legislation:

• Updates requirements on ocean common carriers to incorporate best practices in the shipping industry.
• Requires ocean common carriers or marine terminal operators to certify that any demurrage or detention charge complies with FMC regulations or face penalties.
• Limits exemption for marine terminal operators for any terminal detention or demurrage charges if such charges are based on public port tariffs set under state law.
• Effectively codifies the FMC’s Interpretive Rule on Demurrage and Detention Under the Shipping Act and obligates ocean carriers to adhere to minimum service standards that meet the public interest, determined by the FMC in new required rulemaking.
• Requires ocean carriers or marine terminal operators to maintain all records regarding invoiced demurrage or detention charges for at least five years and provide such records to the FMC or invoiced party on request.

In addition, the legislation allows third parties to challenge anti-competitive agreements in FMC complaints and establishes a new process for addressing demurrage and detention complaints, giving the FMC a more active role in investigating them.

The bill is welcomed by the country's exporters, especially in agriculture, where the Agriculture Transportation Coalition says in a statement that ‘provisions addressing unreasonable ocean carrier practices should be expeditiously enacted, so that US agriculture will remain competitive in global markets.’ On the other hand, the World Shipping Council stated that the proposed reform would undermine ‘the efforts from all participants of the maritime supply chain to work collaboratively to find operational solutions to increase efficiency and cargo velocity.’

Source: American Shipper, ShippingWatch