The United States Senate passed the Ocean Shipping Reform Act of 2022 – S.3580 on March 31, 2022. The bipartisan bill, which was introduced by Senator John Thune (R-S.D.) and Amy Klobuchar (D-Minn), seeks to strengthen the U.S. Federal Maritime Commission (FMC). A similar bill was passed by the U.S. House of Representatives in December 2021.
The Ocean Shipping Reform Act of 2022 includes provisions that would enhance the FMC’s ability to address complaints of U.S. shippers regarding congestion and detention and demurrage charges.
The bill establishes new rules for detention and demurrage billing. Ocean common carriers would be required to include detailed information on detention and demurrage invoices including free time allowed, free time start and end dates, and a statement that the common carrier’s performance did not cause or contribute to the charges. Ocean common carriers would also bear the burden of establishing the reasonableness of detention and demurrage fees in any complaint before the FMC. The Commission would also be required to annually publish all findings of false detention and demurrage information and related penalties.
To address congestion, the bill expands FMC’s mandate to study intermodal equipment, including chassis pools and container dwell times. Ocean common carriers also would be required to report to the FMC each calendar quarter on total import and export tonnage, as well as the total loaded and empty 20-foot equivalent units per vessel port call in the United States.
The Senate and the House bills differ in a number of ways, but the most significant difference is language prohibiting ocean carriers from unreasonably declining U.S. export cargo. The House bill would prohibit ocean carriers from unreasonably declining U.S. exports when such cargo could be loaded safely and carried on a vessel scheduled for the cargo’s destination. The Senate bill includes no such provision.
Congress must now form a conference committee to reconcile the differences between the House and Senate bills. If an agreement is reached, both the House and Senate must vote again to approve the reconciliation. Following reconciliation, the bill would be sent to the White House for President Joe Biden’s signature. The White House has indicated strong support for the bill. To view full text of the bills visit congress.gov.
The Federal Maritime Commission (FMC) has expanded the scope of its Vessel-Operating Common Carrier (VOCC) Audit Program to evaluate how shipping lines are serving U.S. exporters according to a press release issued by the Commission on March 21, 2022. The FMC plans to meet with 11 major carriers to discuss their export programs and services.
This new emphasis on carrier export performance and service was directed by FMC Chairman Daniel Maffei. “American exporters deserve access to ocean transportation to sell to international markets every bit as much as overseas sellers get access to U.S. markets. The FMC’s expanded ocean carrier Audit Program will provide better visibility into which ocean carriers work well with U.S. exporters, and more importantly, which ocean carriers can and should do more to support exporters. If the shipping companies continue the cooperative attitude they have by and large shown the Audit Team to date, I am confident we can make progress on some of the issues that have frustrated exporters. That said, the Commission is committed to an ocean transportation system that serves exporters as well as importers and I will not rule out any action within the bounds of the law that helps us achieve that goal,” said Chairman Maffei.
The VOCC Audit Program was established in July 2021 by Chairman Maffei and initially reviewed carriers’ detention and demurrage practices. Lucille Marvin, the Commission’s Managing Director, leads the VOCC Audit Program.
The FMC is increasing efforts to assist exporters. An exporter advocate is now assigned to the FMC’s Office of Consumer Affairs and Dispute Resolution Services (CADRS) and the FMC’s Bureau of Enforcement (BOE) is prioritizing cases involving exporters. BOE also plans to review five new independent carriers that have not traditionally served the U.S. ocean market. BOE has asked these carriers for detailed information regarding vessel voyages, including the number of loaded and empty containers carried on return sailings to Asia. BOE will assess responses to determine if further actions are warranted.
The Federal Maritime Commission (FMC) has provided an additional 30 days for public comment on the Advance Notice of Proposed Rulemaking (ANPRM) on Demurrage and Detention Billing Requirements. Interested parties now have until April 16, 2022 to file comments with the Commission.
The Commission initiated the ANPRM to gauge if a new rule governing demurrage and detention billing practices would benefit the trade.
As of April 1, the Commission has received 23 comments from the public. Most commenters are in support of the FMC working to improve detention and demurrage billing practices, however some are wary of additional regulations.
The full text of the ANPRM, which was published in the Federal Register on February 15, 2022, includes a list of questions along with detailed response instructions. Comments received will be used to inform the Commission’s decision to issue a new rule.
The Federal Maritime Commission (FMC) met to discuss enforcement activities and a new final rule expanding the rights of passengers to secure cruise refunds on March 16, 2022. The Commission met in open and closed sessions.
Personnel from the FMC’s Bureau of Enforcement (BOE) outlined how they are meeting direction from Chairman Daniel Maffei to prioritize enforcement efforts focused on ocean carrier behavior, particularly as related to U.S. exports and demurrage and detention practices.
BOE Director Benjamin Trogdon reported that BOE has received over 900 complaints from November 2020 to February 2, 2022 with most complaints being filed from July 2021 onward. Despite this high number of complaints, Director Trogdon reported that BOE only has 39 active matters and is often unable to move forward with complaints due to lack of evidence or shipper response. Chairman Maffei requested a detailed breakdown of complaints and commented that the evidentiary hurdles which shippers often face are being reviewed.
Commissioner Louis Sola presented the Final Report of Fact Finding 30 (FF 30), which studied the impacts of Covid-19 on the cruise industry. FF 30 culminated in a new FMC rule that provides more rights and protections to consumers seeking refunds for delayed or canceled cruise voyages. The new rule goes into effect April 16th.
The Commission has not yet announced the date of their next public meeting.
Commissioner Dye has served as a Federal Maritime Commissioner for nearly 20 years. She was first nominated and appointed to the FMC in 2002 by President George W. Bush. She is the only woman to serve as an FMC Commissioner since Ming Chen Hsu. Former Commissioner Hsu served from June 1990 to December 1999.
Commissioner Dye has led four fact-finding investigations during her time with the FMC. Most recently, Commissioner Dye led Fact Finding No. 29 to assist the Commission in addressing the impacts of Covid-19 on the ocean freight transportation sector.
Commissioner Dye began her federal career as a commissioned officer and attorney in the U.S. Coast Guard’s Office of the Chief Counsel, then served as a law instructor at the U.S. Coast Guard Academy. After two years as an attorney at the U.S. Maritime Administration, she joined the staff of the former Committee on Merchant Marine and Fisheries, and served there as Minority Counsel from 1987 to 1995.
Commissioner Dye graduated from the University of North Carolina at Chapel Hill in 1974, and earned a law degree from the University of North Carolina at Chapel Hill in 1977.
Commissioner Dye’s previous term expired on June 30, 2020, however FMC rules allowed her to continue serving during this lapse in appointment. FMC’s rules regarding Commissioner appointments were updated in 2015 to limit Commissioners to a maximum of two five-year terms and to limit lapses in appointment to one year. Carve-outs in the rules, however, allow Commissioners appointed before December 18, 2014 to serve unlimited terms and for unlimited time during a lapse in appointment. Of the five sitting FMC Commissioners, Commissioner Dye is the only appointee these carve-outs apply to.
On April 1, 2022, the Port of Los Angeles and Port of Long Beach began to collect a Clean Truck Fund rate (CTF) of USD 10 per twenty-foot equivalent (TEU) container and USD 20 for containers longer than 20 ft. The CTF rate applies for U.S. import and export cargo hauled by drayage trucks to or from container terminals at the Ports of Los Angeles and Long Beach.
The Ports’ tariffs indicate the collection of the CTF rate began April 1, 2022 and will end January 1, 2035. The Beneficial Cargo Owner (BCO) or its authorized Agent must pay the CTF rate. The Ports’ tariffs prohibit Drayage Truck Operators or truck drivers from paying the CTF rate. Containers hauled by zero-emission (ZE) trucks have lifetime exception from the CTF rate. For now, containers that are hauled by low-nitrogen oxide-emitting (low-NOx) trucks will be exempt from the CTF rate. The limited exemption varies by port.
At the Port of Los Angeles, low-NOx trucks registered in the Port Drayage Truck Registry (PDTR) and placed into service by December 31, 2022 will be exempt from the CTF rate through December 31, 2027.
At the Port of Long Beach, low-NOx trucks purchased by November 8, 2021 that remain with the original owner will be exempt from the CTF rate through December 31, 2034. Low-NOx trucks registered in the PDTR and placed in service by December 31, 2022, or purchased by July 31, 2022 and registered in the PDTR within 30 days of delivery from the manufacturer, will be exempt from the CTF rate through December 31, 2031.
The Clean Truck Fund is the second phase of the updated Clean Air Action Plan (CAAP) adopted by the Ports of Long Beach and Los Angeles in 2017. The first phase of the updated CAAP required that all new truck registrations in the Port Drayage Truck Registry (PDTR) after October 1, 2018 must be of trucks model year 2014 or newer. The intended purpose of the CTF rate is to help fund and incentivize use of cleaner trucks and accelerate the development of zero-emissions technology. The goal is to achieve 100 percent zero-emissions drayage trucking by 2035.
The original Clean Truck Programs began in 2008 with the ban on pre-1989 trucks, and after challenges from the Federal Maritime Commission, the Port Fee Services Agreement, FMC Agreement No. 201199, allowed the Ports to assess a Clean Truck Fee of USD 35 per TEU and USD 70 per FEU on trucks with an engine year of 2006 and older. The original Clean Truck Fee was effective from February 18, 2009 thru January 1, 2012.
Several leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective April 15, 2022, including COSCO, Evergreen, Ocean Network Express (ONE), and ZIM. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The April 15th GRIs will be the eighth GRI of 2022 for the East Asia/USA trade lane.
|TRANSPACIFIC EASTBOUND (Asia to USA)
|GENERAL RATE INCREASE (GRI)
Effective April 15, 2022
in USD, per 40ft ctr
COSCO (see note 1)
Evergreen (see note 2)
1000 / 2000
NOTE 1: COSCO GRIs apply on all cargo moving under service contracts only. The GRIs previously effective 15Feb2022 were postponed to effective 15Mar2022, and subsequently postponed to effective 15Apr2022.
NOTE 2: Evergreen GRIs will be USD 1000 per 40ft dry container for dry cargo, and USD 2000 per reefer container. GRI amounts for all other container sizes are as per formula.
Some carriers also updated their tariffs to include new General Rate Increases (GRIs) effective May 1, 2022, including Evergreen, HMM Company Limited, Ocean Network Express (ONE), Yang Ming, and ZIM. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The May 1st GRIs will be the ninth GRI of 2022 for the East Asia/USA trade lane.
|TRANSPACIFIC EASTBOUND (Asia to USA)
|GENERAL RATE INCREASE (GRI)
Effective May 1, 2022
in USD, per 40ft ctr
Evergreen (see note 1)
1000 / 2000
HMM (see note 2)
1000 / 2000
Yang Ming (see note 3)
1000 / 2000
NOTE 1: Evergreen GRIs will be USD 1000 per 40ft dry container for dry cargo, and USD 2000 per reefer container. GRI amounts for all other container sizes are as per formula.
NOTE 2: HMM GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.
NOTE 3: Yang Ming GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.