Shipping Legislation Update – Ocean Shipping Reform Act (OSRA) and FMC Report

OSRA 22 Update – Congressional House Vote this week

The Ocean Shipping Reform Act of 2022 (OSRA22) will go to a House vote this week on the final version of the bill that passed in the Senate in early March.  If approved, the legislation will go to the President to sign into law. 

OSRA aims to address some of the ocean carrier policies that are negatively impacting US exports, imports, truckers and other parties in the supply chain.  In brief, the legislation will:

1. Expand the reach (and funding) of the Federal Maritime Commission (FMC), importantly allowing the agency to initiate investigations into container lines’ business practices without the requirement of a formal complaint from the industry.

2. Reform demurrage and detention rules, require a certification that any demurrage or detention charges under any tariff/contractual obligation comply with all FMC rules and regulations and establishes penalties for non-compliance. 

3. Expand oversight of the export activities of container lines, known as common carriage.  Some of the more restrictive language in the House bill on minimum service standards for carriers on exports and container availability has been removed. 

The current container supply chain crisis certainly pushed this bill forward and addressing the export refusals and unfair demurrage and detention practices would benefit our members who have had to constantly deal with these issues.

FMC Issues Final Recommendations in Fact Finding 29 Report

The final report from FMC Commissioner Rebecca Dye was made public this month.  The top two concerns the agency repeatedly heard from importers and exporters was about the high cost of shipping and unfair or excessive detention/demurrage charges.

Commissioner Dye stated, “The historically high freight rates experienced recently by U.S. exporters and importers have been devastating to many, but I want to emphasize that the Commission has done its job during the COVID-19 pandemic to enforce our competition authority.

Our markets are competitive and the high ocean freight rates have been determined by unprecedented consumer demand, primarily in the United States, that overwhelmed the supply of vessel capacity. Congestion further constrained available capacity.”

In the final report, the agency outlines twelve additional recommendations on top of the eight released last summer. Of note this new set includes the: 

1. creation of a new programs and task forces to investigate shipping practices
2. a new requirement for carriers, ports and terminals to employ a FMC Compliance officer
3. new rulemaking to provide clarity and consistency to empty container returns, earliest date return practices, merchant and carrier haulage 

Read the press release highlighting all twelve recommendations and a link to the full report on the FMC website here