Date: Wednesday, May 26th, 2021
A request by the nation’s oldest industrial shipper group to expand federal oversight of commercial contracts between ocean carriers and their customers was swiftly rejected by the organization representing most of the world’s ocean carriers.
Frustrated by an ongoing container shortage, service delays and added shipping costs, the National Industrial Transportation League (NITL) is calling on Congress to make changes to U.S. shipping laws, including shifting the burden of proof onto carriers to show that their practices are reasonable and that they are complying with the rules.
“The ongoing ocean shipping turmoil has wreaked havoc on US exporters and importers, costing them billions in higher shipping costs, demurrage and detention charges, and lost business, with still no clear end in sight,” stated NITL Executive Director Jennifer Hedrick in a press release issued on Wednesday.
NITL Director and Ocean Committee Chair Lori Fellmer stated, “NITL believes that the inability of exporters and importers to effectively address these challenges commercially means the time has come to update the Shipping Act to reflect current day circumstances.”
The shipper group proposes four main modifications to The Shipping Act of 1984, overseen by the U.S. Federal Maritime Commission (FMC), which include:
Prohibit common carriers and marine terminal operators from adopting and applying unjust and unreasonable demurrage and detention rules and practices.
Require carriers to adhere to minimum service standards with respect to equipment and vessel space allocations and contract performance, and require contingency service plans during periods of port congestion to mitigate supply chain disruptions.
Address unfair business practices that relate to access to, allocation of and interchange of equipment, as well as unreasonable allocations of vessel space by ocean common carriers considering foreseeable import and export demand.
Expand the FMC’s authority to act on complaints filed against anti-competitive agreements between ocean carriers that operate with antitrust immunity, such as alliances, and allow third parties to participate in court proceedings initiated by the FMC against such agreements.
In refuting the proposal, the World Shipping Council, which represents 90% of the world’s ocean carrier capacity, contended that legislative changes will not address the current disruptions in the container markets.
The carrier group asserted in a statement that the changes sought by NITL would in some cases amount to Congress “micro-managing the FMC.” In other cases, they would alter the maritime regulatory regime from relying primarily on market forces to a government-managed system. “It is hard to believe that this is really what shippers want.”
In response to WSC, Hedrick acknowledged that her group’s proposed changes would not be supported by all involved.
“However, our members are facing unprecedented challenges that they cannot resolve in negotiations with steamship lines,” she said. “Our hope is that our proposal encourages all stakeholders, including government officials, to work more aggressively and collaboratively to find workable, long-term solutions. Things cannot continue as they are for U.S. importers and exporters.”
Separately, the FMC voted on Wednesday to approve a new National Shipper Advisory Committee, to consist of 24 members evenly divided between exporters and importers. The committee, which was required by Congress as part of the national defense authorization bill, is meant to advise the agency on “policies relating to the competitiveness, reliability, integrity, and fairness of the international ocean freight delivery system.”
Shippers will be able to apply for a seat on the board after a formal notice is published in the Federal Register soliciting nominations.