Recently, the U. S. Senate finally passed the new shipping reform law by a large vote, the Senate approved the bill will be sent directly to the White House to sign into force.Once the bill goes into effect, it will soon have a noticeable impact on ports, docks and shipping companies.

The passage of the new shipping reform bill by Congress marks the end of a rapid process by which the legislature passes tools to law enforcement, which is empowered by the Federal Maritime Commission of the United States, we will intensify law enforcement and supervision of maritime transport enterprises.

     For a long time, the Federal Maritime Commission, as the government's regulator of shipping companies, did not take effective and substantive management of the regulatory targets, one of the reasons is the lack of a certain legal basis. In America. For a long time. It is a well-established rule that government agencies, under maritime law, should not interfere with the operation of the shipping market or regulate the operation of shipping companies. It appears that the Federal Maritime Commission function is subject only to tariff book registration and Alliance Agreements Between Shipping Intermediaries and terminal operators, and has never been vocal about the fees and tariff adjustments of shipping companies and terminal operators. Even if many customers complain that shipping companies and terminals charge unreasonable fees, the Federal Maritime Commission will only hold symposiums, conduct fact-finding investigations and give some principled legislative guidance. The complaints and disputes between the shipping companies and the terminals about the overcharging and demurrage charges have been going on for years and have not been properly resolved and the Federal Maritime Commission have not been able to take effective measures. Even in the face of such ambiguity, shipowners' associations, which represent shipowners' interests, have repeatedly stressed in their submissions or speeches that the Federal Maritime Commission, as a government regulatory body, the operation of the shipping market should not be interfered with.

     The Federal Maritime Commission of the Shipping Reform Act, just passed by the US Congress, is a clear answer to the question of whether a government agency can oversee the operations of shipping companies! It should! And we should do more! The just-passed 2022 Shipping Reform Bill, S. 3580, is a bipartisan bill introduced by Senators John Thune (r-south Dakota) and Amy Klobuchar (d-minn.) , the purpose of the bill is to strengthen enforcement and regulation by the US Federal Maritime Commission Corporation (FMC) .

      Since the Biden Administration took office, it has faced a severe combination of a global pandemic and a sudden surge in freight demand, two major changes that have disrupted the U.S. freight supply chain. The Federal Maritime Commission has been monitoring the response policies and operational practices of shipping companies and terminals. The Federal Maritime Commission found that there had been increasing complaints from importers and exporters during the outbreak, with consignees reporting higher and higher transport costs and no improvement in the quality of services received. Looking back at shipping companies' annual reports during the global pandemic, the past two years have seen soaring profits, record freight rates and a bonanza for every shipping company.

     What the Hell is going on here? The surge of sea freight price and the increase of various surcharge, especially the charge of demurrage and demurrage, have completely changed the original purpose of the charge. Where demurrage and demurrage charges were originally intended to encourage the consignee to quickly pick up and return the heavy/empty containers, they have now become a steady and non-negligible source of revenue for shipping companies and terminals. The fee for holding a container has also increased from a few tens of dollars to an average of about $150; the charging time has changed from a more relaxed way of calculating to a strict four-day free period, these changes have greatly enriched shipping lines and docks' wallets, but left thonds of shippers groaning. Complaints were filed with the Federal Maritime Commission. But since the US is a country that emphasises the rule of law, there is nothing the Federal Maritime Commission can do about it without a legal mandate. At the initial stage, the Federal Maritime Commission simply conducted research and listened to the views of all parties.

      After a period of work, Congress decided it was necessary to give some Federal Maritime Commission support at the legislative level. The United States Congress is a legislative body, which must take timely measures to give the regulatory body certain powers to regulate and supervise fair competition among maritime industry participants, to provide international ocean transportation services to U. S. importers and exporters in a reasonable manner to ensure the implementation of U. S. International Trade Policies and regulations. Congress is backing a reform of existing maritime laws that would give Federal Maritime Commission more authority under the Law to exercise law enforcement oversight over terminal operators and shipping companies.

    The Marine Transportation Reform Act of 2022 was born against this background.The most obvious modification of the new law is to expand the power of the US Federal Maritime Commission (FMC) to handle U. S. shippers' complaints about congestion, demurrage fees and demurrage fees. 

    The Maritime Transport Reform Act of 2022 empowers the Federal Maritime Commission to set out the necessary clear new rules for dealing with terminal demurrage and container demurrage. Congress passed the Shipping Reform Act, which empowers the Federal Maritime Commission to supervise shipping companies and docks, and requires shipping companies and docks to provide Federal Maritime Commission with detailed information about the calculation of demurrage and demurrage invoices, these include the allowable free time, the start and end dates of the free time, and a statement that the operation of the public carrier did not result in or incur the charge. In dealing with any complaints to US Federal Maritime Commission, the Shipping Company will also be responsible for presenting evidence that demurrage and container demurrage charges are justified.

 

     With the legislative support provided by Congress, the Federal Maritime Commission has a legal basis for oversight and management of shipping companies and terminals. Under the new shipping reform law, Federal Maritime Commission have not only the enforcement tools handed over by congress through legislative channels, but also dedicated supply chain management teams to investigate supply chain disruptions. In the investigation and study, they get the most complaints is the cargo owners accuse the shipping company overcharging the demurrage fees and dock demurrage fees. Prior to the passage of the Maritime Transport Reform Law, the initial Federal Maritime Commission response to the issue was relatively mild, with a number of symposiums attended by a wide range of industry participants, in view of the shipping company's alliances, freight rates continue to record high, unreasonable collection of high fees and terminal demurrage charges to listen to the views of all parties. Despite a more hawkish response on behalf of shipowners' interests, the government has no right to interfere with the specific operation of shipping companies and terminals under existing maritime laws and should not interfere with the market. With the legislative support of the Congress, the Federal Maritime Commission, after numerous discussions and public consultation, considered that it was necessary to provide guidance through legislation and that it must determine the purpose of shipping companies and terminals to charge fees, what is the measure, and how it should be done, is in the public interest. In a word, the shipping company's charge must be reasonable. Reasonable standards are not general or vague and require the adoption of legal provisions specifying the standards of operation and burden of proof for carriers and terminals. Under the new maritime reform law, the burden of proof for reasonable charges falls on shipping companies and terminal operators.

     The new shipping reform bill, which begins with a reform of existing laws, is the result of years of fact-finding by law enforcement -- Federal Maritime Commission -- About supply chain disruptions, so it's not just timely, and more operational. In the 2021, the Federal Maritime Commission has completed the legal guide on the reasonable charging of demurrage and demurrage charges to shipping companies, and for the first time, raised the need for such charges to be reasonable. Since Congress began to amend the Maritime Law, the commission has stepped up its efforts to impose demurrage charges, container demurrage charges, unreasonable cancellations, and escalating freight charges on shipping companies, to fix global supply chain disruptions. Shipping companies are even required to declare monthly the capacity of each route and the actual number of containers carried, the voyage plan implementation report.

 

 

 

    After nearly two years of research, the Federal Maritime Commission found that the main concerns of US importers and exporters are: First, the extreme surge in shipping company freight rates, which continue to hit record highs; Second, the Shipping Company and the terminal over-charged demurrage and terminal demurrage charges.

    To this end, Federal Maritime Commission must take targeted measures to remedy the situation. This has many aspects of the work needs to be improved, and strengthening the management and supervision of shipping companies is itself a very important link, but also a very complex issue. Under the New Maritime Reform Bill, the Federal Maritime Commission is set to step up its oversight of shipping companies in the areas of institutional formation, staffing and new regulations.

    In terms of institution-building, the Federal Maritime Commission will be staffed with law enforcement officers to inspect shipping companies and terminal operators, who will report directly to the Chief Executive. The law enforcement officers directly supervise and inspect the major shipping companies on the relevant routes, and can deal with and correct the problems in a timely manner once they are found. In addition, the Maritime Committee intends to establish a national advisory committee for terminals and International Maritime Carriers, which will work in cooperation with the National Shippers Advisory Committee already established, this facilitates close communication between the shipper and the carrier. The Federal Maritime Commission will also create a full-time marine supply chain project department with resources to study issues and developments in shipping, ports, railways and roads. The committee also plans to strengthen and develop the supply chain rapid response team to identify and resolve problems in a timely manner.

 

    In terms of supervision and management, the Federal Maritime Commission will develop a number of carrier and Port operator operating rules as required by the new maritime transport reform law, this includes business processes relating to the date of return of empty containers and the earliest date of return of empty containers, the criteria for calculating the time for the collection of demurrage charges and terminal demurrage charges, the terms on which invoices must be presented, the requirement to issue a notice of arrival, and the ways in which disputes may be resolved between the parties, and requirements for shipping companies and terminal operators to report Federal Maritime Commission charges. The Federal Maritime Commission will also issue rules to determine the liability of shippers towing trucks and shipping companies towing trucks. In addition, the Federal Maritime Commission has set up a new audit team to examine the shipping companies' freight costs and charges, and to examine and investigate the fees charged by the shipping companies and terminals through the shipping companies' monthly filings. The Maritime Commission is strengthening its monitoring of the operations of shipping companies in the areas of conscientiously implementing service contracts, providing reasonable services to customers, ensuring the capacity and capacity for imports and exports, improving the quality of services and charging reasonable fees. So far, more than three shipping companies have been fined for unreasonable refl to provide shipping space and unreasonable collection of demurrage charges. Lloyd's Herbert was fined US $822,000 for unreasonably charging demurrage charges. The Federal Maritime Commission (FMC) Administrative Law judge found Lloyd's Herbert in breach of the Federal Maritime Commission Provisions on demurrage and demurrage charges, in the event that the consignee was unable to book the return of the container, the fact that Hebero shipping company had charged the container detention fee was a violation and should be treated as a violation of maritime law, with a civil fine of US $822,000. The scale of the fines and the speed of the trials are unprecedented. With the new maritime transport reform law in force, the Federal Maritime Commission will be even more aggressive.

     Under the new reform bill, Shipping Federal Maritime Commission will be required to report monthly capacity and actual carrying capacity, export carrying capacity, and voyage stop reports. These measures are unprecedented. These measures, in part, limit the channels through which shipping companies can raise prices by reducing capacity, and the source of their profits can be clearly exposed. The new law specifically forbids shipping companies from raising their profits by charging steep freight rates and high surcharges, such as late container and demurrage charges. Container delay fee and demurrage fee must not become the source of profits of shipping companies!

 

 

    The introduction of the new Shipping Reform Act in the United States marks the beginning of the increased supervision and management of the operation of shipping companies and terminals by the competent authorities of the government, it also indicates that the long-outstanding demurrage and container demurrage are expected to return to the normal and reasonable track, and it also provides some effective legal protection for solving the problem of international trade supply chain disruption.

(this episode was reprinted from Wechat Account Kenvic Training.)