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Shippers push for revisions to US Shipping Act as ongoing congestion wreaks havoc

The National Industrial Transportation League (NITL), a US trade association representing industrial freight transportation shippers, is calling on Congress to revise the Shipping Act of 1984 after months of what it describes in a release as “ocean shipping turmoil” which has wreaked havoc on US exporters and importers. Ongoing congestion at US ports and disruption to the ocean shipping network is costing shippers “billions in higher shipping costs, demurrage and detention charges, and lost business,” said NITL in a statement.

Challenges resulting from shippers’ limited access to containers and chassis and to sufficient vessel bookings “have exposed gaps in the law governing ocean carrier services that warrant immediate action,” according to the association.

“NITL believes that the inability of exporters and importers to effectively address these challenges commercially means the time has come to update the Shipping Act to reflect current day circumstances,” said NITL Director and Ocean Committee Chair Lori Fellmer.

A proposal drafted by NITL offers four primary recommendations to modify The Shipping Act:

  • Codifying the industry guidance on demurrage and detention issued by the Federal Maritime Commission in 2020, and requiring that service providers prove that their practices are reasonable and comply with the rules when complaints arise.
  • Clarifying the obligations of common carriers with respect to equipment and vessel space allocations and contract performance, by requiring them to adhere to minimum service standards and develop contingency service plans to cover periods of port congestion.
  • Addressing unfair business practices related to access to, allocation of, and interchange of equipment, and any unreasonable allocations of vessel space by ocean common carriers considering foreseeable import and export demand.
  • Expanding the FMC’s authority to act upon complaints filed against anticompetitive agreements between ocean carriers that operate with antitrust immunity, such as alliances, and allowing third-party intervenors to participate in court proceedings initiated by the FMC against such agreements.

The World Shipping Council said the proposal is “unnecessary and unworkable” and blamed the disruptions to the ocean transport system on record-setting cargo demand in the US. “There is no legislative policy that can change the systemic physical challenges caused by the Covid cargo crunch,” said the organization. It also said the proposed changes would turn the Shipping Act into a “government-managed system that prevents private parties from managing their own commercial affairs.”

NITL executive director Jennifer Hedrick said in response, “Our hope is that our proposal encourages all stakeholders, including government officials, to work more aggressively and collaboratively to find workable, long-term solutions. Things cannot continue as they are for US importers and exporters.”

Revising the Shipping Act is being discussed in political circles. Federal Maritime Commission Chairman Daniel Maffei last week said in a webinar with the Port of Los Angeles that he has been “talking a lot to some of my former colleagues in Congress and some of them have asked, ‘Well, could we change the Shipping Act?’ And, of course, they can change the Shipping Act. And I will give them the best advice I can in terms of how they would or whether they should.”

Kim Biggar

Kim Biggar started writing in the supply chain sector in 2000, when she joined the Canadian Association of Supply Chain & Logistics Management. In 2004/2005, she was project manager for the Government of Canada-funded Canadian Logistics Skills Committee, which led to her 13-year role as communications manager of the Canadian Supply Chain Sector Council. A longtime freelance writer, Kim has contributed to publications including The Forwarder, 3PL Americas, The Shipper Advocate and Supply Chain Canada.
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