A new Ocean Shipping Reform Act that will increase the powers of the Federal Maritime Commission (FMC) and make it illegal for carriers to unreasonably refuse US exports was passed by Congress on June 13. US lawmakers overwhelmingly voted in favour of the Act, which followed months of criticism of high carrier ges by President Biden.
The World Shipping Council, representing carrier interests, said it would work with the FMC to implement the new act to minimize disruption. But it strongly criticised the ‘misacterization’ of the industry in the run-up to the act. “We are concerned about the disconnect between the hard data and inflammatory rhetoric,” said the council. Indeed, a two-year investigation by the FMC itself recently concluded that there had been no collusion by carriers during the pandemic. The FMC found competition was ‘vigorous’ on the major trade lanes, and high prices were the result of the supply/demand mismatch.
The new Act will bring several significant changes, and:
1· give the FMC the authority to investigate the business practices of carriers; 2· require carriers to report details of import/exports on a quarterly basis; 3· make it illegal for carriers to unreasonably refuse to take US exports.
On the latter, US agricultural export cargoes may be the most significant issue, and it seems likely carriers will need to offer a strong justification to refuse exports of these products.
The reformed Act will also allow persons to submit complaints to the FMC regarding carrier ges. Meanwhile, the FMC will initiate new rulemakings on prohibited practices relating to detention and demurrage ges. Failure to comply with the principle of the detention and demurrage rules was one of only two significant issues raised in the recent FMC investigation, the other being a lack of regulatory tools for the FMC to deal with tariffs.
The reform represents the first overhaul of the US Shipping Act since 1998. Following its passing by Congress, the bill was signed into law by President Biden on June 16.
