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Signals™ Headlines - July 5, 2022

President Biden Signs Ocean Shipping Reform Act of 2022

U.S. President Joe Biden signed the Ocean Shipping Reform Act of 2022 (OSRA-22) into law on June 16, 2022. The Ocean Shipping Reform Act of 2022 includes provisions that enhance the FMC’s ability to address complaints of U.S. shippers regarding congestion and detention and demurrage charges.

Many of the law’s provisions direct the FMC or other agencies to take action before going into effect, however some of the law’s provisions went into effect immediately upon signing. Read on for a summary of the law’s important provisions and their timeline for enactment following signing.

Effective Immediately Upon Signing
1. Detention and Demurrage (D&D) Invoicing:  The FMC General Counsel clarified in an Industry Advisory and opinion memo issued on June 24, 2022 that OSRA-22’s detention and demurrage provisions went into effect as soon as the law was signed. Invoices for detention and demurrage must now include detailed information, including the charges’ start and end dates, as well as certifications that the charges are compliant with FMC’s regulations and not caused or contributed to by the common carrier. If the FMC finds that an invoice for detention and demurrage is false or inaccurate, the issuing entity may be subject to Shipping Act penalties and required to refund the charges. Shippers may refuse to pay invoices that do not include required information as OSRA-22 eliminates their obligation to pay any invoice that does not contain the newly required details.

2. NVOCC Safe Harbor:  A safe harbor provision was included in OSRA-22 for non-vessel-operating common carriers (NVOCCs) that pass through detention and demurrage invoices from the underlying ocean carrier. Under the safe harbor provision, if NVOCCs pass on detention and demurrage invoices made by ocean carriers and are not otherwise found to be responsible for the charges by the FMC, any FMC penalties and demands for refunds will be directed to the ocean carrier that made the invoice.

3. Annual Public Disclosure:  The FMC must annually publish and update all findings of false detention and demurrage invoices by common carriers and all penalties imposed or assessed against common carriers.

4. Investigations of D&D:  Upon receipt of a complaint regarding detention and demurrage charges, the Commission shall promptly investigate. Ocean carriers will be provided an opportunity to submit additional information in response to a complaint, but bear the burden of establishing the reasonableness of any such charges.

5. Retaliation:  A common carrier, marine terminal operator, or ocean transportation intermediary may not retaliate against a shipper, an agent of a shipper, an ocean transportation intermediary, or a motor carrier by refusing, or threatening to refuse, an otherwise-available cargo space accommodation, or resort to any other unfair or unjustly discriminatory action as retaliation for patronizing another carrier,  filing a complaint, or any other reason.

6. Expansion of FMC’s Purpose:  FMC’s statutory purpose was enhanced by OSRA-22 to include promoting “the growth and development of U.S. exports through a competitive and efficient system for the carriage of goods by water in the foreign commerce of the United States, and by placing a greater reliance on the marketplace.”

7. Data Collection:  The FMC will publish on its website a calendar quarterly report on the total import and export tonnage and the total loaded and empty 20-foot equivalent units per vessel to/from the USA operated by each ocean common carrier.

8. Service Contracts:  For services under a service contract, ocean carriers may not give any undue or unreasonable preference or advantage, or impose any undue or unreasonable prejudice or disadvantage, against any commodity group or type of shipment.

9. Issue Refunds: OSRA-22 clarifies FMC’s ability to issue refunds in addition to, or in lieu of, civil penalties. Civil penalties assessed shall be decreased by any additional amounts included in the refund of money in excess of the actual injury.

Within 30 Days
Unreasonable Refusal to Deal:  The new law prohibits ocean carriers from unreasonably refusing cargo space accommodations when available. The FMC must initiate a rulemaking, in consultation with the Commandant of the United States Coast Guard, to define unreasonable refusal to deal or negotiate with respect to vessel space. The initial rulemaking is required within 30 days and a final rule must be issued by December 16, 2022.

Within 45 Days
Detention and Demurrage:  The FMC must initiate a rulemaking to define prohibited practices by common carriers, marine terminal operators, shippers, and ocean transportation intermediaries regarding the assessment of demurrage or detention charges, including which parties may be appropriately billed for any demurrage, detention, or other similar per container charges. The initial rulemaking is required within 45 days and a final rule must be issued no later than June 16, 2023.

Within 60 Days
1. Emergency Order Authority:  Within 60 days, the FMC must seek public comment on:
(A) whether congestion of the carriage of goods has created an emergency situation of a magnitude such that there exists a substantial, adverse effect on the competitiveness and reliability of the international ocean transportation supply system;
(B) whether an emergency order under this section would alleviate such an emergency situation; and
(C) the appropriate scope of such an emergency order, if applicable.

If the FMC determines an emergency order is required by a unanimous vote of the Commissioners, it would be allowed to issue an emergency order requiring any common carrier or marine terminal operator to share directly with relevant shippers, rail carriers, or motor carriers information relating to cargo throughput and availability, in order to ensure the efficient transportation, loading, and unloading of cargo to or from:  (1) any inland destination or point of origin; (2) any vessel; or (3) any point on a wharf or terminal.

The order may only remain in effect for 60 days. This authority sunsets 1.5 years after enactment of OSRA-22.

2. Unfair, Discriminatory Methods:  OSRA-22 prohibits ocean common carriers from resorting to unfair or unjustly discrimination against any commodity or type of shipment, or in the matter of rates, charges or vessel space accommodations. The FMC must initiate a rulemaking within 60 days to define unfair or unjustly discriminatory methods, and must enact a final rule no later than June 16, 2023.

Within 90 Days
1. HazMat Discrimination:  Within 90 days the Comptroller General of the United States must initiate a review of whether there have been any systemic decisions by ocean common carriers to discriminate against maritime transport of qualified hazardous materials by unreasonably denying vessel space accommodations, equipment, or other instrumentalities needed to transport such materials, taking into account any applicable safety and pollution regulations.

2. Storage and Transfer of Dwelling Containers:  Within 90 days, the Assistant Secretary for Transportation Policy, in consultation with the Administrator of the Maritime Administration and the Chairperson of the FMC, will convene a meeting to discuss the feasibility of, and strategies for, identifying Federal and non-Federal land, including inland ports, for the purposes of storage and transfer of cargo containers due to port congestion.

3. CDL Skills Testing Waiver:  Within 90 days, the Federal Motor Carrier Safety Administration will conduct a review of the discretionary waiver authority for safety concerns.

Within 240 Days
Dwell Time Statistics:  Each port, marine terminal operator, and chassis owner or provider with a fleet of over 50 chassis that supply chassis for a fee will submit required data to the FMC to publish statistics relating to the dwell time of equipment used in intermodal transportation at the top 25 ports, including inland ports, by 20-foot equivalent unit, including:  (1) total street dwell time, from all causes, of marine containers and marine container chassis; and (2) the average out of service percentage, which shall not be identifiable with any particular port, marine terminal operator, or chassis provider. Reporting is required within 240 days, subject to the availability of appropriations, and not less frequently than monthly thereafter.

Within 1 Year
Adoption of Technology at U.S. Ports:  Within one year, the Comptroller General of the United States will submit to Congress a report describing the adoption of technology at United States ports, as compared to that adoption at foreign ports, including:
(1) the technological capabilities of United States ports, as compared to foreign ports;
(2) an assessment of whether the adoption of technology at United States ports could lower the costs of cargo handling;
(3) an assessment of regulatory and other barriers to the adoption of technology at United States ports; and
(4) an assessment of technology and the workforce.

Within 1.5 Years
Hire Additional Staff for Enforcement:  Within one and a half years, the FMC must hire no fewer than seven total positions to assist in investigations and oversight.

Within 1 Year & 9.5 Months
Chassis Pool Best Practices:  Not later than April 1, 2024, the FMC and Transportation Research Board of the National Academies of Sciences, Engineering, and Medicine must carry out a study and develop best practices for on-terminal or near-terminal chassis pools that provide service to marine terminal operators, motor carriers, railroads, and other stakeholders that use the chassis pools. The FMC will publish the best practices on a publicly available website.

Within 3 Years
Shipping Exchange Registry:  All shipping exchanges that involve ocean transportation must be registered and regulated by the FMC. The FMC must enact regulations no later than June 16, 2025.

Read the complete text of OSRA-22 here.

President Biden Nominates Maffei to Continue as U.S. Federal Maritime Commissioner


U.S. President Joe Biden nominated Daniel B. Maffei to continue on as a Federal Maritime Commissioner for a second term ending on June 30, 2027 on June 8, 2022.

Chairman Maffei was first nominated to serve on the Federal Maritime Commission (FMC) by President Barack Obama and confirmed by the United States Senate on June 29, 2016. He left the FMC on June 30, 2018 when the term he was serving expired. Shortly thereafter he was nominated by President Donald Trump and confirmed by the Senate and rejoined the Commission on January 15, 2019. He was designated as FMC Chairman on March 29, 2021 replacing Michael A. Khouri in the role of Chairman

As FMC Chairman, Maffei will oversee the FMC’s implementation of the Ocean Shipping Reform Act of 2022. This is the first expansion of FMC’s authorities since the Ocean Shipping Reform Act of 1998. Whether the FMC will capitalize on this expansion of authority and budget to meaningfully enforce regulations and assist the shipping public will be in large part up to Chairman Maffei.

A native of Syracuse, New York, Chairman Maffei was a Member of the U.S. House of Representatives for two terms representing New York’s 25th congressional district from 2009 to 2011 and New York’s 24th congressional district from 2013 to 2015. His previous professional experience includes serving in the Department of Commerce during the Obama Administration, and earlier in his career serving as aide to Senator Daniel Patrick Moynihan of New York and Senator Bill Bradley of New Jersey. He earned a Bachelor of Arts degree from Brown University and master’s degrees from Columbia and Harvard Universities.

FMC Announces Initiatives to Assist Shippers & Improve Supply Chain Performance


The Federal Maritime Commission (FMC) announced the establishment of three new initiatives to provide enhanced assistance to shippers, continue to improve legal and regulatory compliance of regulated entities, and focus on remedies to supply chain problems.

The Commission will:
– establish a new and permanent International Ocean Shipping Supply Chain Program,
– re-establish the Export Rapid Response Team, and
– take the steps necessary for carriers, marine terminal operators, and operating seaports to employ a designated FMC Compliance Officer.

These three initiatives were included as recommendations in Commissioner Rebecca F. Dye’s Fact Finding 29 (FF 29) Final Report. The FMC initiated FF 29 in March 2020 to study the impacts of Covid-19 on the ocean freight transportation sector. Commissioner Dye presented her twelve final recommendations in May.

In the press release announcing these initiatives, the Commission stated that the  “International Ocean Shipping Supply Chain Program will allow the Commission to identify where issues exist in the supply chain and offer proposals for steps that can be taken to remedy impediments to the free flow of shipments.”  The Export Rapid Response Team will provide a dedicated resource for shippers to use in resolving emergency commercial disputes. Lastly, the Commission hopes that the requirement for ocean carriers, marine terminal operators, and operating seaports to employ a designated FMC Compliance Officer that reports to the senior-most U.S.-based executive will aid in ensuring industry-wide observance of legal and regulatory requirements.

FMC Receives Two New Formal Complaints


The U.S. Federal Maritime Commission (FMC) received two new formal complaints in June 2022 alleging violations of the U.S. Shipping Act and FMC regulations. 

Service Contract Violations:  MSRF, Inc., a U.S.-based specialty foods importer, filed a formal complaint against HMM Company Limited and Yang Ming Marine Transport Corporation, alleging that both violated the U.S. Shipping Act by failing to honor their service contracts. MSRF alleges the carriers “unjustly and unreasonably exploited customers, vastly increasing their profitability at the expense of shippers and the U.S. public generally, which bears increased freight cost in the form of inflation” through various means including blank sailings. MSRF requested the FMC investigate both carriers, find them in violation of the Shipping Act, and issue MSRF reparations for alleged damages of at least $2.2 million.

Failure to Maintain FMC Bond:  Pro Transport Charleston, Inc. (Pro Transport) a Florida-based motor carrier, filed a formal complaint against Allround Midwest Forwarding, Inc. (Allround), alleging that Allround is an ocean freight forwarder that violated the U.S. Shipping Act by failing to maintain a surety bond. Pro Transport requested the FMC investigate the matter, rescind Allround’s ocean freight forwarder license, issue penalties as appropriate, and award Pro Transport reparations in the form of monies owed and attorneys’ fees and costs.

FMC Settlements: Hapag-Lloyd, Wan Hai, and ONE


The U.S. Federal Maritime Commission’s (FMC) Bureau of Enforcement recently proposed three settlement agreements for various alleged violations of the U.S. Shipping Act and FMC regulations in May and June 2022. 

Hapag-Lloyd Settlement – Approved:  Hapag-Lloyd (Hapag) entered into a $2 million settlement with FMC’s Bureau of Enforcement (BOE) on June 8, 2022 for alleged detention and demurrage regulation violations occurring from May 18, 2020 to May 18, 2022. The settlement, which was unanimously approved by the FMC Commissioners, requires Hapag to post locations for container returns daily by 4 PM and includes specific timing and details required for detention and demurrage waiver requests.

Hapag and BOE negotiated the settlement following an FMC Administrative Law Judge’s Initial Decision in which Hapag was found in violation of the U.S. Shipping Act, assessed civil penalties of $822,220, and ordered to cease and desist from future violations, including imposing demurrage or detention when there are insufficient return appointments available.

Wan Hai Settlement – Denied:  Wan Hai Lines, Ltd. (Wan Hai) and the FMC’s Bureau of Enforcement (BOE) requested approval on May 2, 2022 for an $850,000 settlement for alleged detention and demurrage regulation violations occurring from April 18, 2020 to April 22, 2022. The settlement requires Wan Hai to post locations for container returns daily by 4 PM and includes specific timing and details required for detention and demurrage waiver requests. While this settlement is nearly identical to the recently approved Hapag-Lloyd settlement, it was denied by the FMC’s Administrative Law Judge due to concerns of confusion regarding waiver request requirements. The parties are appealing the denial.

ONE Settlement – Pending Review:  Ocean Network Express Pte. Ltd. (ONE) and the FMC’s Bureau of Enforcement (BOE) obtained an Initial Decision from an FMC Administrative Law Judge (ALJ) approving a fully confidential settlement of ONE’s alleged overly broad use of the term merchant. ONE allegedly used the term merchant contained in its Bills of Lading to seek payment for charges from parties that ONE was not in contractual privity with. The terms of the settlement, including any amounts paid by ONE, are confidential. FMC’s rules require the full text of all settlements to be made public, however the ALJ approved this confidential agreement citing “unique circumstances.” The ALJ’s Initial Decision, which was issued on June 28, 2022, is subject to Commission review. The Commission has 30 days to review the Initial Decision. 

Transpacific Eastbound Carriers File GRIs Effective July 15, 2022, & August 1, 2022

Several leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective July 15, 2022, including COSCO, 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 July 15th GRIs will be the fourteenth GRI of 2022 for the East Asia/USA trade lane.

TRANSPACIFIC EASTBOUND (Asia to USA)
GENERAL RATE INCREASE (GRI)
Effective  July 15, 2022
Carrier
in USD, per 40ft ctr
COSCO (note 1) 1000
Evergreen (note 2) 1000 / 2000
HMM (note 3) 1000 / 2000
ONE 1000
Yang Ming (note 4) 1000 / 2000
ZIM 1000

NOTE 1:  COSCO GRIs apply on all cargo moving under service contracts only. The GRIs previously effective 01Jul2022 were postponed to effective 15Jul2022.

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.

NOTE 3:  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 4:  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.

Some carriers also updated their tariffs to include new General Rate Increases (GRIs) effective August 1, 2022, including COSCO, 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 August 1st GRIs will be the fifteenth GRI of 2022 for the East Asia/USA trade lane.

TRANSPACIFIC EASTBOUND (Asia to USA)
GENERAL RATE INCREASE (GRI)
Effective August 1, 2022
Carrier
in USD, per 40ft ctr
COSCO (note 1) 1000
Evergreen (note 2) 1000 / 2000
HMM (note 3) 1000 / 2000
ONE 1000
Yang Ming (note 4) 1000 / 2000
ZIM 1000

NOTE 1:  COSCO GRIs apply on all cargo moving under service contracts only.

 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.

NOTE 3:  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 4:  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.

The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.

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