Ocean carriers: Shipping reform act ‘doomed to fail’

Container carrier representatives in Washington are pushing back hard against legislation introduced Tuesday aimed at addressing yearlong complaints against carriers by their customers alleging service failures and unfair pricing they say would have disastrous consequences for container markets.

The Ocean Shipping Reform Act of 2021, spearheaded by Reps. John Garamendi, D-Calif., and Dusty Johnson, R-S.D., imposes 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.

“An effective marketplace has to be fair and predictable. Unfortunately, foreign ocean carriers aren’t being fair and predictable, and it’s time to change that,” Johnson said during a briefing of the legislation. “This update is overdue. It’s been since 1998 that we’ve had major changes to this regulatory environment and a lot has changed since then.”

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.

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Source: Freight Waves