Earlier this week, the U.S. House of Representatives approved the Ocean Shipping Reform Act of 2022 (OSRA 2022) in a 369-42 vote. OSRA 2022 is a bipartisan bill introduced by Senator Amy Klobuchar (D-MN) and Senator John Thune (R-SD) and drafted in response to alleged ocean carrier unfair practices and rising ocean shipping costs. It will equip the Federal Maritime Commission (FMC) with additional oversight and enforcement tools to cut down on exorbitant shipping costs and prejudice toward U.S. shippers, such as agricultural exporters. Time will determine whether these new powers granted to the FMC will be effective. On June 16, 2022, President Biden signed the bill into law.
OSRA 2022 marks a major overhaul of the Shipping Act of 1984, as amended ("the Shipping Act"), since 1998. These new changes include, but are not limited to, the following:
- Ensuring a competitive and efficient maritime transportation system
- New provisions for a National Shipping Exchange Registry, which would require shipping exchanges to register with the FMC, among other new requirements
- New provisions for data collection, which will require the FMC to publish new reports on regulated ocean common carriers
- New provisions for charge complaints, which allow persons to submit to the FMC complaints regarding charges assessed by a common carrier
- Expanded prohibited common carrier activities, to include unreasonable refusal of otherwise available cargo space, improperly assessed charges, and inaccurate/incomplete detention and demurrage invoicing
In addition to substantive revisions to the Shipping Act, the bill instructs the FMC to initiate new rulemakings on prohibited practices involving the assessment of detention and demurrage charges. OSRA 2022 will also result in new research, review, and reporting efforts (e.g., chassis management best practices, potential discrimination against transportation of qualified hazardous materials, etc.).
These changes are numerous and may enhance the regulatory oversight capacity of the FMC as the ocean shipping industry continues to work through challenges like the labor shortage and port congestion. We anticipate that the ocean shipping reform bill will prompt some changes. For example, ocean common carriers, marine terminal operators, and ocean transportation intermediaries will want to reassess their business practices with respect to the assessment and invoicing of detention and demurrage and U.S. exports. The importance of properly assessing charges is especially underscored in light of the FMC's recent enforcement action and settlement with Hapag-Lloyd for alleged violations related to its detention and demurrage practices.
We continue to monitor developments impacting the maritime trade sector.