US FMC promises ‘new era of flexibility’ for service contract filing requirements

The US Federal Maritime Commission (FMC) announced this week a rule change that will go into effect on 2 June to give shippers and carriers more flexibility in meeting their service contract filing requirements.

Current regulations require that ocean carriers file original service contracts with the FMC on or before their effective date, while service contract amendments must be filed within 30 days after they go into effect. The new final rule will permit carriers to file original service contracts up to 30 days after the contract goes into effect.

The disruptions caused by Covid-19 led the FMC to grant a blanket temporary exemption on 27 April, 2020, allowing original service contracts to be filed up to 30 days after their effective date. That exemption was originally set to expire on 31 December, 2020, but the FMC extended it to 1 June, 2021.

Positive feedback from carriers and shippers, and the Commission’s experience that recent events show that, “in certain circumstances, requiring that service contracts be filed before they go into effect can potentially delay performance under the contract to the detriment of shippers,” prompted it to consider permanently amending its regulations.

The Commission issued a Notice of Proposed Rulemaking (NPRM) on January 19, and received eight comments from stakeholders. An unofficial copy of the rule notes that, “All but one of the commenters generally supported the proposal. Several expressed concerns about potential carrier abuse of the contracting process.” In response to comments, the FMC clarified “that failure to timely file a service contract or amendment will not affect the applicability of the contract or amendment to shipments received on or after the effective date, even if those shipments were received more than 30 days before the carrier files the contract or amendment.”

Further, “the Commission pledged to continue to monitor filed service contracts and observed that delayed filing would not negatively impact the Commission’s ability to investigate potential Shipping Act violations given the relatively short filing period being proposed.”

The final rule will be published in the Federal Register in the coming weeks.