Friday, April 1, 2022

US Senate Agrees Detention and Demurrage of Shipping Containers Needs Looking Into

Bipartisan Act Initially Passed
Shipping News Feature

US – Whilst the transport industry and the politicians in Britain mull over the consequences of the P&O debacle it seems the administrators in America are more capable of action when something is viewed as unbalanced.

There have been cries of anguish globally in the past few months as the ocean carriers have acted, almost as one, to levy detention and demurrage charges on container shipments, with many at the heart of the trade imploring the authorities for action. Not least of these has been the British International Freight Association (BIFA) whose Director General, Robert Keen has led the charge in the UK.

His letter to the Department for Transport earlier this year saw the initiation of an inquiry by the UK Competition and Markets Authority (CMA) in collaboration with regulatory authorities from Australia, Canada, New Zealand and the US. Whilst much was made initially about what might happen, very little seems to have actually occurred.

Except it seems in the US, for now the Ocean Shipping Reform Act, S. 3580, having been introduced by Senators Amy Klobuchar and John Thune has been whistled through the Senate and represents what is being hailed as ‘the first major update for laws governing US maritime port operations in more than 20 years’.

Whilst such as FIATA have laid down eminently sensible procedures which aim to speed containers through the system and prevent irrelevant prevarication by shippers and consignees in the past, there are no hard and fast rules it seems. This has left the major ocean carriers in a position whereby their charges, rightly or wrongly, can be set by them and levied, no matter how hotly they are disputed.

The latest US legislation is designed to end ‘abusive practices’ imposed on American trucking companies at US maritime ports by ocean carriers (most of which are foreign-owned). Specifically, the trucking industry seeks relief from excessive detention and demurrage charges, what it considers unfair fees levied on motor carriers by ocean carriers and marine terminal operators

The US view is that when shipping containers are not moved on schedule, these delays are often the result of factors entirely outside truckers’ control and often the result of inefficiencies caused by the ocean carriers themselves. The legislation mandates a new rulemaking by the Federal Maritime Commission to prohibit unjust and unreasonable detention and demurrage practices, including an examination of the appropriate billing parties for those charges.

The American Trucking Associations (ATA) immediately reacted to the initial passing of the Act by voice vote on 31 March with ATA President and CEO Chris Spear making his operation’s position clear saying:

“For too long, foreign-owned ocean carriers have been fleecing American truckers and consumers to the tune of billions of dollars. These malign business practices have allowed foreign companies to reap record profits while slowing the movement of freight through the US supply chain. We thank Senators Klobuchar and Thune for their bipartisan leadership, and we urge House and Senate negotiators to quickly reconcile their versions of this critical legislation so that the President can sign it into law.”

He was supported by Jon Eisen, director of ATA’s Intermodal Motor Carriers Conference who said that enforcing fair practice at the ports was critical to ensure goods get from docks to warehouses and thence to store shelves, and that the Ocean Shipping Reform Act was a badly needed step to modernise the law governing ocean freight and help restore a fair marketplace for motor carriers.

Alongside the CMA investigation come rumours and speculation from all the territories involved. Container shipping rates have been soaring, the carriers reporting record profits and laying money off to buy their way into other facets of the supply chain, from freight forwarding and general logistics to port management. The talk under the breath, and often on it, even had the dreaded ‘C’ word mentioned (cartel) by some.

Certainly with unconfirmed reports such as Maersk being subpoenaed by the Department of Justice in the ‘states and a flood of anger as the lines struggle to deal with the post pandemic backlash the market needs more solid best practice at the moment.