In 2020, the onset of the global pandemic rocked the already unstable supply chain, which further highlighted the need for reform in the shipping industry. During the height of that supply chain chaos, ocean carriers responded by unfairly denying cargo space to shippers and charging hefty detention and demurrage fees, among other questionable practices.
Those disruptions and the fact that federal regulations hadn’t been updated in over twenty years created the catalyst for the Ocean Shipping Reform Act of 2022.
On June 16, 2022, President Biden signed the Ocean Shipping Reform Act, a bill aimed at mitigating some of those supply chain challenges. This amendment to the 1998 Shipping Act was designed to establish best practices in the shipping industry, providing the Federal Maritime Commission (FMC) with more oversight over ocean carrier practices and unfair shipping fees.
This bill pays special attention to the complications associated with detention and demurrage. Under this bill, ocean carriers must now provide specific information in detention and demurrage invoices, and the burden of proof has shifted over to the ocean carriers when issuing such charges. Further, the FMC has the power to investigate detention and demurrage charges, refuse and refund those deemed unreasonable, and even impose civil penalties on the ocean carriers.
This reform also prohibits ocean carriers from denying cargo space to shippers when space is available and prevents them from engaging in discriminatory and retaliatory practices. If a shipper experiences threats or denials from the ocean carrier, they can file a complaint with the FMC. Moreover, ocean carriers must now report how many empty carriers they’re transporting to the FMC, helping to improve transparency.
Additionally, the Ocean Shipping Reform Act promotes data collection to improve chassis management and address emergency congestion. With these changes, the FMC hopes to foster a more fair shipping environment.
To learn more about the shipping industry and Falvey Insurance Group insurance solutions, contact us today.
