On Thursday June 16th 2022 President Biden signed into law the “Ocean Shipping Reform Act of 2022”, S. 3580 (the OSRA) [full text]. The OSRA is intended to improve efficiency and competitiveness in ocean carriage, and empowers the FMC to collect information and take action consistent with recent FMC fact-findings (discussed here and here).
The key changes introduced include:
Retaliation Prohibited: Carriers and Marine Terminal Operators may not retaliate against shippers, forwarders, or truckers by withholding freight services or otherwise discriminating against them because they have filed a complaint or for any other reason [emphasis added].
General Prohibition on Unreasonably Declining Cargo: While discrimination based on retaliation is specifically prohibited, there is also a general prohibition on refusing to take cargo when it can be safely loaded, or refusing to perform necessary transportation related services, including allocation of vessel space, that have the effect of denying access to carriage services. The OSRA requires and authorizes the FMC to make a specific rulemaking about unreasonableness within 90 days, and specifies that it must deal with the unreasonable practice of declining cargo to ship empties.
Rulemaking on Detention/Demurrage: The OSRA requires and authorizes the FMC to make a specific rulemaking in respect of carrier detention/demurrage practices within 120 days. The Rulemaking shall include:
(A) Establishing clear and uniform definitions for demurrage, detention, cargo availability for retrieval and associated free time, and other terminology used in the rule. The definition for cargo availability for retrieval shall account for government inspections.
(B) Establishing that demurrage and detention rules are not independent revenue sources but incentivize efficiencies in the ocean transportation network, including the retrieval of cargo and return of equipment.
(C) Prohibiting the consumption of free time or collection of demurrage and detention charges when obstacles to the cargo retrieval or return of equipment are within the scope of responsibility of the carrier or their agent and beyond the control of the invoiced or contracting party.
(D) Prohibiting the commencement or continuation of free time unless cargo is available for retrieval and timely notice of cargo availability has been provided.
(E) Prohibiting the consumption of free time or collection of demurrage charges when marine terminal appointments are not available during the free time period.
(F) Prohibiting the consumption of free time or collection of detention charges on containers when the marine terminal required for return is not open or available.
(G) Requiring common carriers to provide timely notice of (i) cargo availability after vessel discharge; (ii) container return locations; and (iii) advance notice for container early return dates.
(H) Establishing minimum billing requirements, including timeliness and supporting information that shall be included in or with invoices for demurrage and detention charges that will allow the invoiced party to validate the charges.
(I) Requiring common carriers and marine terminal operators to establish reasonable dispute resolution policies and practices.
(J) Establishing the responsibilities of shippers, receivers, and draymen with respect to cargo retrieval and equipment return.
(K) Clarifying rules for the invoicing of parties other than the shipper for any demurrage, detention, or other similar per container charges, including determining whether such parties should be billed at all.
Certification of Detention/Demurrage Charges: Carriers may not invoice for detention/demurrage without a certification confirming that all such charges conform with the FMC’s recent rulemaking on carrier charges. Further, the burden of proving the reasonableness of any such charges in any dispute before the commission is on the carrier imposing the charges.
Penalty for false certification: The FMC can impose penalties on carriers for false certifications.
National Association of Sciences Industry Study: The OSRA mandates that the Secretary of Transportation work with the NAS to establish a study on supply chain efficiency focusing on data sharing and analysis.
Emergency Information Sharing Powers: The OSRA directs the FMC to initiate a fact finding to determine if supply chain disruptions have resulted in a situation of emergency, and provides for emergency data collection powers in the event of emergency to enable the FMC to understand and address critical issues.