Industry News

The Ocean Shipping Reform Act has Been Signed Into Law—Now What?

 

American shippers are thrilled about the passing of the Ocean Shipping Reform Act of 2022 (OSRA) last month. This is a massive win in the battle against exuberant fees and unfair practices by ocean shippers. For those of you who aren’t familiar, here’s a summary of OSRA:

This bill revises requirements governing ocean shipping to increase the authority of the Federal Maritime Commission (FMC) to promote the growth and development of U.S. exports through an ocean transportation system that is competitive, efficient, and economical. For example, the bill requires the FMC to (1) investigate complaints about detention and demurrage charges (i.e., late fees) charged by common ocean carriers, (2) determine whether those charges are reasonable, and (3) order refunds for unreasonable charges. It also prohibits common ocean carriers, marine terminal operators, or ocean transportation intermediaries from unreasonably refusing cargo space when available or resorting to other unfair or unjustly discriminatory methods.

The OSRA looks great on paper—it addresses issues that have put importers and exporters in a callous place and even out of business. OSRA is a shiny shell and underneath is an utterly complex and turbulent supply chain industry. This brings us to our main point—how will the FMC enforce this bill and influence the change OSRA promises? As supply chain professionals, we love to see meaningful legislation but what we love even more is guidance (cough, USMCA).

According to an article from American Shipper, experts are urging swift action to comply with ocean shipping reform. In an opinion from the FMC’s general council, shippers themselves must take the initial steps to utilize OSRA to their advantage. Worth it? We think so. Should a shipper challenge an invoice related to a demurrage and detention invoice and the FMC finds this to be unlawful, carriers may need to issue refunds and even be subject to penalties.

Again, this sounds great, however, many experts are worried about the volume of complaints flooded into the FMC and how they’ll be able to manage them. While the commission did receive additional funds to hire staff, this could prove to be a long and complex journey to the finish line.

In the end, OSRA will not necessarily influence how ocean shippers operate, but it is a signal that their practices are on watch and businesses now have a bit more power when it comes to unfair charges. As we all know, the supply chain is a highly fragmented industry and nothing will be fixed overnight but seeing proactive legislation in Washington and beyond is welcomed with open arms.

M.E. Dey will continue to monitor any fresh guidance with regard to OSRA.

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