As early as next week Congress will schedule to vote on the Ocean Shipping Reform Act of 2022. With support from the Senate and House the bill is likely to be passed. Here is what you need to know.
Demurrage/detention rulemaking
The FMC will set a standard to further define prohibited practices by common carriers, marine terminal operators, shippers, and ocean transportation intermediaries about the evaluation of demurrage or detention charges. (Note that FMC has already initiated) This is important because it puts teeth into the FMC’s rules of demurrage and detention, which shippers claimed had not been adhered to by the carriers. The deadline is no later than 45 days after the date of enactment, with a final rule not later than one year after the date of enactment.
Unfair/discriminatory methods rulemaking
The FMC will likely initiate a set guideline defining unfair or unjustly discriminatory methods used by carriers against their customers. This is important because the provision wants to address complaints of carrier service discrimination by exporters and small shippers. The deadline is no later than 60 days after the date of enactment, with a final rule not later than one year after enactment.
Rulemaking on refusing to deal
The FMC and the U.S. Coast Guard shall create guidelines defining unreasonable refusal to deal or negotiate with respect to vessel space. This is important because it relates to unfair/discriminatory methods, this provision will address shipper’s complaints of carriers ignoring customers they consider unprofitable for their operation. The deadline is no later than 30 days after the date of enactment, with a final rule not later than six months after the date of enactment.
Shipping Exchange Registry
The FMC will issue regulations that set standards for registered national shipping exchanges. This is important because shipping exchange platforms connecting shippers with carriers for the purpose of entering into underlying transportation contracts will now be required to register with the FMC, otherwise they will not be able to operate. The deadline is no later than three years after the date of enactment.
Street dwell time statistics
Any information collection and publications of street dwell time for containers must first be approved by Office of Management and Budge. OMB will also publish statistics relating to dwell times used in intermodal transportation at the top 25 ports, including inland ports. This is important because street dwell times are linked to shipper detention costs and are a major factor in causing port and supply chain congestion. The deadline is no later than 60 days after enactment for approving the information collection and no later than 240 days after enactment (and not less frequently than monthly thereafter) for publishing dwell time statistics. (Authority for this provision expires Dec. 31, 2026.)
Enhancing the FMC’s investigation capacity
The FMC representative will staff within five of the agency’s divisions not fewer than seven total positions to assist in investigations and oversight, in addition to the positions already within those divisions on the date of enactment. This is important because new oversight authority will require higher staffing levels. The deadline is no later than 18 months after the date of enactment.
Emergency authority to address supply chain congestion
The FMC shall issue an information request searching for public comments to whether supply chain congestion has created an emergency of a magnitude to cause substantial effect on the competitiveness and reliability of the ocean transportation supply system and if a temporary Act would help. This is important because typically government emergency orders are considered a last resort in dealing with transportation issues. The deadline is no later than 60 days after enactment, with emergency orders remaining in effect no longer than 60 days. (Authority under this provision expires 18 months after enactment.)
Chassis pool best practices
The FMC shall enter into an agreement with the Transportation Research Board under which the TRB shall carry out a study and develop best practices for on-terminal or near-terminal chassis pools that provide service to marine terminal operators, motor carriers, railroads and other stakeholders that use the chassis pools, with the goal of optimizing supply chain efficiency and effectiveness. The deadline is no than April 1, 2023, to enter into an agreement, and not later than April 1, 2024, to make publication of best practices available on the FMC website.
CDL licensing testing
A review of the discretionary waiver authority described in FMCSA’s Aug. 31, 2021, will be conducted by the Federal Motor Carrier Safety Administration for states concerning third-party CDL skills test examiners in response to the COVID-19 emergency. This is important because there has been recent concern that if states are allowed to conduct third-party skills testing (with the goal of making it more efficient to certify truck drivers) safety will be reduced. The deadline is no later than 90 days after the date of enactment. If FMCSA finds no safety concerns after the review, the agency will revise motor carrier regulations 90 days after the review is completed to make discretionary waiver authority permanent.
Review of potential discrimination on hazmat transport
The U.S. comptroller general shall begin review of if there have been any systemic decisions by ocean carriers to purposely discriminate against transporting hazardous materials by denying vessel space or equipment. This is important because some qualified shippers of hazardous materials have complained they have been unreasonably denied vessel space. The deadline is no later than 90 days after the date of enactment.
Using inland ports to store and transfer containers
The U.S. Department of Transportation, consulting with the U.S. Maritime Administration and the FMC, shall convene a meeting of representatives of ports, export terminals, ocean carriers, railroads, trucking companies and port labor to discuss strategies for identifying federal and nonfederal land, including inland ports, for the purposes of storing and transfer of cargo containers due to port congestion. This is important because excess real estate within port areas a premium or nonexistent, the focus is turning farther inland as alternative storage space for containers. The deadline is no later than 90 days after the date of enactment.
Report on adoption of technology at U.S. ports
A report will be submitted by the comptroller general to Congress describing the adoption of technology at U.S. ports. This report will consider general capabilities, an assessment of whether technology at U.S. ports would lower cargo handling costs, regulatory barriers, and the effect on labor. This is important because adopting technology including higher levels of automation is a major consideration by the freight industry and could be the solution to increasing demand for container capacity at U.S. ports. The deadline is no later than one year after the date of enactment.
Gallagher, John. “Congress Is Voting Soon to Overhaul the Shipping Industry. Here’s Everything You Need to Know.” FreightWaves, 10 June 2022, https://www.freightwaves.com/news/ocean-shipping-reform-acts-critical-provisions-and-their-deadlinesnbsp/amp.
If you have any questions, please contact your local Noatum Logistics representative.