Dear Member,
The US House of Representatives has voted overwhelmingly to approve an extensive package of reforms to US shipping law that are aimed primarily at the container shipping industry. The Ocean Shipping Reform Act (OSRA) of 2022 was passed by a vote of 369 to 42 and is expected to be signed into law by US President Joe Biden by the end of this week. Key elements of the new Act are as per below:
- The Federal Maritime Commission (FMC) will have greater authority to monitor container lines’ responsibility to load exports, as determined in a new required rulemaking.
- The burden of proof as to whether detention and demurrage charges (and the related billing practices) are reasonable will shift from the party being invoiced to the party assessing the charges (i.e. the container line or terminal).
- Ocean carriers will be required to submit quarterly reports to the FMC on total import / export tonnage and loaded and empty TEUs on their ships calling U.S. ports.
- The FMC will have new authorization to initiate investigations into carriers’ business practices and to apply enforcement measures.
- The FMC will have its funding levels increased from $32.9 million to $49.2 million between now and 2025 to help increase staff for its expanded oversight authorities.
It is worth noting that this version of the Bill is less aggressive than the House’s original legislation, which would have made it illegal for carriers to refuse equipment or service to exporters, and directed the FMC to set service level standards within service contracts (none of which is reflected in the final version of the legislation).
The text of the new legislation (indicating new and revised sections) can found at this LINK.
The World Shipping Council, which is the association that represents container line operators on a global basis, issued a statement following the Act’s passage expressing its willingness to engage in productive discussions with the FMC on implementing OSRA 2022 in a way that minimizes disruption in the supply chain. This being said, the WSC also noted that until the appropriate investments in landside infrastructure are made, OSRA 2022 will have a limited impact on the supply chain congestion that continues to impact all stakeholders:
Until the import congestion is remedied, export congestion will persist. The World Shipping Council will continue to wok with federal and state policymakers, as well as other parties, to pursue the necessary lasting solutions – such as investment in port infrastructure – that can have real impact in strengthening the intermodal transportation system that has supported the U.S. economy through the pandemic. Ocean carriers continue to move record volumes of cargo and have invested heavily in new capacity – America needs to make the same commitment and invest in its landside logistics infrastructure (WSC Statement).
The US legislation comes at a time when Canada is seeking to address is own supply chain challenges, most notably through the creation of a new Supply Chain Efficiency Task Force that is consulting with stakeholders on a wide range of issues, including infrastructure investment, digitization, regulatory modernization, labour reliability, rail capacity, and structural impediments to competitiveness. We will be engaging and / or communicating with the Task Force on all of these issues, beginning with an upcoming meeting on the challenges being faced by container carriers and the realities of that sector overall.
We will keep members apprised of developments related to the Task Force’s work and will be reaching out for input on specific topics / issues over the coming weeks. In the meantime, members should consult CL 11439 for additional information, as well as a list of preliminary questions on which the Task Force is seeking input.
Sincerely,
Karen Kancens
Vice President