Update: White House focus on Shipping Reform Act 2022 moves to the next phase

Just two months after the Ocean Shipping Reform Act of 2022 was introduced into Congress (see our previous article here), the Federal Maritime Committee (FMC) Fact Finding Final Report #29, Effects of Covid-19 Pandemic on the U.S. International Ocean Supply Chain: Stakeholder Engagement and Possible Violations of 46 U.S.C. 41102©, was published at the end of May. The report, which summarized the investigation into the supply chain bottle necking at ports in the United States and sky rocketing costs of freight and demurrage during the pandemic.

The Fact Finding Officer summarized the cost of freight “are disturbingly high by historical measures, those prices are exacerbated by the pandemic, an unexpected and unpreceded surge in consumer spending particularly in the United States, and the supply chain congestion, and are the market force of supply and demand.”

Further the Fact Finding Officer “is concerned that certain ocean carriers, despite the actions of the new FMC Vessel-Operating Common Carrier Audit Program and recent compliance efforts are not in full compliance with the incentive principle of the Commission’s Rule on Demurrage and Detention. The interpretive rule describes a non-exclusive list of factors the Commission may consider when evaluating claims and complaints that come before the agency.”

The results of the investigation on detention and demurrage showed that there were clear operational issues when it came to handling equipment that needed to be improved process wise. The report also brought to light the need for ocean carriers to be clear on their billing practices. The Fact Finding Officer was also concerned that the commission lacked regulatory oversight for numerous new charges between ocean carriers to shippers and truckers.

The report has brought forth twelve additional recommendations

• A new Commission “International Ocean Shipping Supply Chain Program”
• A rulemaking to provide coherence and clarity on Empty Container Return practices
• A rulemaking to provide coherence and clarity on Earliest Return Date practices
• Continued Commission support for the new FMC “Ocean Carrier Compliance Program” including a new requirement for ocean common carriers, seaports, and marine terminals to employ an FMC Compliance Officer
• An FMC Outreach Initiative to provide more information to the shipping public about FMC competition enforcement, service contracts, forecasting, and shippers associations, among other topics
• Enhanced cooperation with the federal agency most experienced in agricultural export promotion, the Department of Agriculture, concerning container availability and other issues
• A Commission Investigation into practices relating to the numerous charges assessed by ocean common carriers and seaports and marine terminals through tariffs
• A rulemaking to provide coherence and clarity on merchant haulage and carrier haulage
• A new “National Seaport, Marine Terminal, and Ocean Carrier Advisory Committee” to work cooperatively with the Commission’s National Shipper Advisory Committee
• A revival of the Export Rapid Response Team program as agreed by all ocean carrier alliance CEOs
• An FMC Supply Chain Innovation Teams engagement to discuss blank sailing coordination and information availability
• A reinvigorated focus on the extreme supply chain equipment dislocations in Memphis railheads, other rail facilities, and other facilities around the country.

The Ocean Shipping Reform Act of 2022, which aims to level the playing field for American exporters and importers by providing the Federal Maritime Commission (FMC) the tools it needs to improve oversight over international ocean carriers, Congress has unanimously passed. Once signed in by the President, the Act will allow the FMC the regulatory oversight of these new changes to ocean shipping.

To view the full Federal Maritime Committee (FMC) Fact Finding Final Report #29, click here.