A rare bipartisan effort is bringing much-needed reform to U.S. shipping to level the playing field through a new regulatory authority that will impact ocean carriers, marine terminal operators, shippers, motor carriers and others throughout the supply chain.
The Ocean Shipping Reform Act is on its way to President Biden’s desk after it passed the House Monday night. These are the first major revisions to the Shipping Act of 1984 in more than two decades.
The bill revises requirements governing shipping to increase the authority of the Federal Maritime Commission (FMC) to address the many challenges that U.S. shippers have faced in recent years. For example, the bill requires the CMF to:
- investigate complaints about detention and demurrage charges (i.e. late fees) charged by common carriers;
- determine whether such fees are reasonable; and
- seek refunds for unreasonable charges.
It also prohibits common ocean carriers, marine terminal operators or shipping intermediaries from unreasonably denying cargo space when available or using other unfair or unjustly discriminatory methods.
Key points to remember
Detention and demurrage: The law provides a list of information that must be included on detention and demurrage invoices and directs the FMC to begin developing rules to more specifically define prohibited practices by common carriers, marine terminal operators and intermediaries. of maritime transport concerning the assessment of detention and demurrage costs.
Fee Claims and Assessment of Refunds: A person can file complaints with the FMC about charges imposed by a common carrier, after which the FMC will promptly investigate the compliance charge and provide the common carrier with the opportunity to submit additional information. The common carrier will be responsible for establishing the reasonableness of any demurrage or detention charges. If the load does not comply, the FMC orders reimbursement and civil penalties.
Public Disclosure: The FMC will annually publish on its website all findings of false detention and false information on demurrage bills by common carriers and all penalties imposed or imposed on common carriers.
Data gathering: The FMC will publish quarterly reports outlining the total import and export tonnage and the total number of loaded and empty 20-foot equivalent units per vessel (carrying to the United States) operated by each ocean-going common carrier. The common maritime carriers must provide all the information necessary for this report.
Service contracts: The law leaves the door open for the FMC to add to the list of “other essential terms” in service contracts between common ocean carriers and shippers that the FMC may deem necessary or appropriate in future rulemaking.
Register of maritime exchanges: As of the date of the development of the corresponding FMC rules, a person may not operate a shipping exchange (platform connecting shippers with common carriers) involving shipping in the foreign trade of the United States unless such stock exchange is registered with the FMC. The law provides an exception for maritime exchanges which are subject to comparable supervision and regulation by the foreign authorities where the exchange is headquartered.
What does that mean?
The law requires the FMC to begin the process of developing rules on these changes in the coming months. While the intent of the bill is to provide transparency and private sector enforcement of detention and demurrage charges, as well as to provide U.S. exporters with needed relief on cargo space, it It remains to be seen how these laws will ultimately be implemented through the new FMC regulator. . Shipping carriers, shippers and other industry players should stay tuned for updates on FMC’s proposed regulations.