Shipping reform law is netting results

The federal agency charged with protecting the interests of U.S. businesses that rely on ocean transportation has received more than complaints since President Biden enacted a law to crack down on skyrocketing international ocean shipping costs

The Ocean Shipping Reform Act of 2022 (OSRA) was enacted in June 2022 to ease supply chain backlogs that had been raising prices for consumers and making it harder for U.S. farmers and other exporters to get their goods to the global market.

The US Federal Maritime Commission (FMC) has received more than 200 charge complaints since the Ocean Shipping Reform Act of 2022 (OSRA) was enacted in June 2022. More than 70 of those complaints met the FMC’s threshold requirements to be referred to investigators.

FMC staff reported at a January 25 meeting that the charge complaint process is proving successful at promoting informal settlements as well as waivers of demurrage and detention billings.

Staff estimates that more than $700,000 in charges had been refunded by carriers since June.

Commissioners were advised at the same meeting that both container volumes and freight rates on inbound trades have returned to essentially pre-pandemic levels. The cost to ship exports remains slightly elevated.

The FMC announced that it will issue a supplemental notice of proposed rulemaking to address issues commenters raised in response to the ‘Unreasonable Refusal to Deal or Negotiate with Respect to Vessel Space Accommodations’ proposed rule issued last September.

The commission received almost 30 comments in response to its notice of proposed rulemaking (NPRM) on Unreasonable Refusal to Deal or Negotiate.

The comments raised a multitude of substantive questions that demand appropriate time and further opportunity for comment to be given thorough consideration. The rule revisions will address those matters and provide the commission the opportunity to receive additional public comments.

“Consumers are tired of paying higher prices for everyday goods, and our farmers are tired of paying skyrocketing shipping costs. With President Biden’s signature, the Ocean Shipping Reform Act will level the playing field between big international shipping lines and agricultural exporters so all our products – from hay to apples – will no longer be stranded on the docks,” said U.S. Senator Maria Cantwell, chair of the Committee on Commerce, Science and Transportation, when Biden signed the measure, which was introduced by Sens. Amy Klobuchar and John Thune in February 2022.

The Senate unanimously passed the legislation on March 31 and it passed the House on June 13.

The Federal Maritime Commission (FMC) is charged with protecting the interests of U.S. businesses that rely on ocean transportation under the Shipping Act, which was last amended in 1998.  The bipartisan Ocean Shipping Reform Act of 2022 will level the playing field for American exporters and importers by providing the FMC the tools it needs for effective oversight of international ocean carriers. These oversight and enforcement tools will help the FMC eliminate unfair charges, prevent unreasonable denial of American exports, and crack down on other unfair practices harming American businesses and consumers.

The Ocean Shipping Reform Act promised to:

  • Stop international ocean carriers from unreasonably declining American cargo, as determined by the FMC in new required rulemaking.
  • Direct the FMC to self-initiate investigations of ocean carrier business practices and apply enforcement measures.
  • Shift the burden of proof regarding overcharging certain fees, called “demurrage and detention” charges, from the complainant to the international ocean carriers to help level the playing field and improve the FMC’s enforcement capacity.
  • Improve transparency of movement of U.S. agricultural and other exports by requiring international ocean carriers to report to the FMC regarding how many empty containers are being transported.
  • Stop retaliation by international shipping companies against exporters and importers.
  • Formally establish the FMC Office of Consumer Affairs and Dispute Resolution Services to improve the complaint and investigation process for American businesses seeking assistance from the FMC.
  • Improve management of chassis, the specialized trailer used to transport ocean containers over the road, by authorizing the Bureau of Transportation Statistics to collect data on dwell times for chassis; and initiate a National Academy of Sciences study on best practices of chassis management.
  • Provide the FMC with temporary emergency authority to collect data during times of emergency congestion, among other improvements.

Port congestion that began during the COVID-19 pandemic left exporters, including American farmers, struggling to get their products to global markets because of unpredictable sailings, ocean carriers denying American cargo, and skyrocketing freight costs. For example, shipping rates for a 40-foot container rose from $1,300 before the pandemic up to $11,000 by September 2021.  Shipping costs continue to increase. This week, shipping costs remain 41% higher globally compared to this time last year.

A one-page summary of the Ocean Shipping Reform Act and a list of bill supporters is available HERE. A section-by-section summary of the bill is available HERE. The bill text is available HERE.

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