Provisions of The Ocean Shipping Reform Act of 2021

Michael Ford

Michael Ford

Vice President, Government and Industry Affairs

In my last blog,  I reviewed the issues that shippers in the ocean industry have experienced for the past year, including port congestion, equipment availability, demurrage, and detention increases, to name a few. In March of 2021, The Federal Maritime Commission (FMC) initiated a team of shippers to review and study some of these issues, then share the research and findings back to the FMC. As a result, there is now a new bipartisan bill that has been authored by congressmen John Garamendi (D-CA) and Dusty Johnson (R-SD), known as the Ocean Shipping Reform Act of 2021.  I would like to outline some of the important provisions that are being put forth to amend U.S. Code Title 46 – Shipping.  

Title 46 is the portion of the Code of Federal Regulations that governs shipping within the United States for the United States Coast Guard, the United States Maritime Administration, and the United States Maritime Commission.

Shippers in the United States have been impacted on many different fronts when it comes to the movement of inbound or outbound containers in 2020 and 2021. Port congestion in certain locations has led to increased costs for container detention or demurrage and has also impacted the availability of equipment (both containers and trailers) throughout the US. 

Some of the most important provisions listed call out and establish a clear and uniform definition when charges at the port are being assessed and mandate FMC rulemaking to set forth reasonable carrier and terminal practices, including:

  • Prohibiting demurrage/detention charges when the container is unavailable to the shipper, such as when terminal access is not available.
  • Limiting carriers from invoicing 3rd parties (truckers, customs brokers) for demurrage/detention
  • Requiring carriers to provide notice of cargo availability, container return locations, and adequate notice of dates when the export container must arrive at the terminal.
  • Requiring carriers to provide the shipper with specific information to support each demurrage/detention charge, provide a reasonable dispute resolution process, and certify compliance with FMC regulation.

One of the amendments calls out that “the carriers may not restrict access to containers or chassis or other equipment.” This particular provision could prove to be problematic, for many ocean carriers may not be in full control of the equipment as many rely on third-party operators to manage these assets on their behalf.  

This bill puts forth several important and reasonable rules and practices for moving your goods into or out of the United States. In the coming weeks, we should expect several different positions taken in the shipping industry, some favoring these changes while others may state that the industry will fall into further troubles.

We can all appreciate and recognize that shippers are balancing many different challenges at the moment. No one necessarily likes to see more regulations issued, sometimes they are necessary to keep up with the changes in the modern world - and this is most certainly one of those times where changes are needed.