According to a U.S. exporter group, new guidelines given by federal regulators aimed at combating exorbitant ocean carrier prices are light on detail but heavy on historical significance.
The advisory puts into effect elements of the Ocean Shipping Reform Act of 2022 (OSRA), which was signed into law last month, by streamlining the process for container carrier customers who want the Federal Maritime Commission to investigate their concerns.
“A today is a watershed event in the history of the Federal Maritime Commission and the shipping public in the United States,” stated Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC). “The OSRA rules requiring informal processes to enable effective FMC enforcement are perfectly implemented in today’s Industry Advisory.”
The one-page document explains how to file charge complaints against carriers. Identifying the carrier and the alleged violation, submitting evidence, confirming that the disputed charge occurred after the June 16 implementation of OSRA, and submitting all papers to the FMC in one email, if possible, are among the processes.
The alert notes that once the agency gets adequate information, it “will promptly commence an inquiry, which could eventually result in a civil penalty and order for a refund of charges paid.”
“That remark changes everything; it transforms the FMC into an enforcement agency similar to the Securities and Exchange Commission and the Federal Trade Commission,” Friedmann told FreightWaves. “Never before has the commission formally requested information from shippers in order to launch an investigation.” It needed OSRA and a set of commissioners that understood they were working for US taxpayers and the shipping industry to make this happen.”
Venable notes in an international trade alert that while shippers must confirm that a contested charge was incurred after June 16, “this issue remains uncertain, given the statutory language of [OSRA], legislative intent during the drafting process, and the adoption of the FMC’s ‘Interpretive Rule on Demurrage and Detention Under the Shipping Act.'” The FMC finalized that rule in April 2020.
“Furthermore, stakeholders will almost certainly seek additional clarification on this subject from the FMC and the members of Congress who were active in writing and passing [OSRA].”
Friedmann, whose organization was important in developing the legislation’s text, claims that the advice, coupled with other FMC enforcement measures during the last five years, heralds a “coming new era” for shipper protections in the United States.
“For decades, an irate shipper was essentially forced to engage an attorney to file formal complaints with the commission,” he said. “The commission would then stand by and let the attorneys duke it out before making a ruling,” as shippers would have to wait at least three years and pay at least $300,000 in lawyer fees.
“If this wasn’t enough to deter anyone from submitting a complaint, the commission may order the losing party to pay the winning side’s legal fees, thus doubling the cost.” It’s no surprise that so few complaints were submitted.
“While to the untrained eye, this may appear to be only a procedural change, those in the know appreciate that the good impact of today’s guidance, this shift in FMC enforcement stance, cannot be overstated.”
