Some help may be on the horizon for US shippers in their fight against unfair ocean carrier billing practices. Surges in blank sailings, skyrocketing shipping rates, and unfair demurrage and detention charges have drawn the attention of US lawmakers from both sides of the aisle in recent months.
According to Container Xchange’s Demurrage & Detention Benchmark 2021 report, average demurrage and detention charges across the globe have more than doubled from 2020’s numbers, lurching past $1200 per container. The Ports of Long Beach and Los Angeles take the top two spots on the list of the world’s highest average demurrage and detention charges, with a two-week delay costing shippers about $2600 in these ports.
Luckily, shippers from across the United States may finally be able to heave a sigh of relief in the coming months thanks to a new bill draft dubbed the Ocean Shipping Reform Act of 2021.
What Is the Ocean Shipping Reform Act of 2021?
According to language from the bill itself, the draft bill is intended “to support the growth and development of United States Exports.” In broad strokes, the new bill being drafted aims to reverse the longstanding trend of deregulation in the shipping industry by empowering the Federal Maritime Commission (FMC) in their oversight role.
The bill also seeks to “address the unreasonableness of ocean common carriers prioritizing the shipment of empty containers while excluding, limiting, or otherwise reducing the shipment of full, loaded containers when such containers are readily available…” This particular language could put a stop to increased blank sailing resulting from carriers deciding to ship empty containers instead of waiting to take on more cargo before departing.
Furthermore, the Ocean Shipping Reform Act of 2021 provides protections for shippers against unfair demurrage and detention charges when “obstacles to cargo retrieval or return of equipment are…beyond the control of the invoiced or contracting party.”
This bill could help US shippers more easily export their goods while also protecting them from unfair demurrage and detention charges. However, the container shipping industry and FMC leadership are of the opinion that the current state of the industry is primarily a result of the once-in-a-lifetime advent of COVID-19. As such, this bill is likely to be met with a lot of opposition from the industry at large.
FMC Believes They Already Have Enough Power
While it may seem odd, the FMC seems largely opposed to these changes that would give them more power to oversee ocean carrier operations. FMC commissioner Rebecca Dye feels the FMC already has the tools it needs to properly regulate the industry. The FMC released their Interpretive Rule on Demurrage and Detention Under the Shipping Act in May of last year which was aimed at fighting back against unfair demurrage and detention practices
However, the recent surge in demurrage and detention fees that US shippers are experiencing seems to indicate that the FMC’s ruling from last year didn’t go far enough. Whether this draft bill will ultimately be put into effect is left to be seen, but there is a glimmer of hope in the distance for shippers currently experiencing these difficult times.
While this bill could possibly lead to some much-needed relief in the future, there are still many issues shippers face today. Third party logistics companies, like ClearFreight, are a great resource for businesses looking for help navigating the troubled waters of today’s global supply chain. Contact us today to hear how our supply chain solutions and expert advice can help make shipping easier for you.