Shipping Reform Act Offers ‘Limited Window’ for Action, FIATA Warns

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FIATA has called for decisive action from its freight forwarder members during the “limited time window” offered by the US Ocean Shipping Reform Act (OSRA 2022), to participate in regulatory discussions for a fairer supply chain, reports the Loadstar.

A position paper issued by the group details the benefits of OSRA for forwarders, in particular the “de-fanging” of carriers in respect of demurrage and detention (D&D) charges.

Strengthening supply chain

FIATA notes in particular that retaliatory D&D charges are “clearly prohibited”, including that refusal of space, or even just a threat of retaliation, is an offence.

OSRA gives freight forwarders “…an ideal yet limited time window to strengthen their position in the supply chain”, says FIATA in the paper today.

FIATA also highlights that, under OSRA 2022, there is “no obligation” to pay D&D fees where invoices do not clearly feature dates of container availability, return date, time allowed in free days, start and end dates, and the applicable Federal Maritime Commission (FMC) demurrage and detention rule on which the daily rate was based.

The FMC has determined that shippers can file complaints over charges without paying a filing fee or requiring assistance from an attorney.

Punitive D&D fees

Last May, Container xChange reported that average fees for D&D had doubled, year on year, and more recently, they have reverted to less shocking levels, but remain 12% higher than before the pandemic. It has been suggested that increasing shipping costs, which necessarily include D&D charges, are a key driver of inflation.

In the wake of OSRA’s introduction, carriers have maintained that punitive D&D fees are a symptom of the poor shape of American hinterland infrastructure.

As long as America’s ports, railyards and warehouses remain overloaded and unable to cope with the increased trade levels, vessels will remain stuck outside ports, to the detriment of importers as well as exporters,” said the World Shipping Council (WSC) last month.

According to the WSC, shipping lines are moving record freight volumes and have invested heavily in new capacity. “America needs to make the same commitment and invest in its landside logistics infrastructure,” added the carrier association.

Time limit for carriers

Meanwhile, FIATA said there was a time limit for carriers to make themselves heard.

The scope for redefining the relationship between freight forwarders and carriers is limited and, therefore, there is a need to engage significantly now to produce worthwhile results,” says the paper.

FIATA seeks to help the forwarding industry understand this law and make the most of the opportunity it affords customers of ocean carriers to negotiate fair terms in the ‘new normal’.”

The forwarder organisation says it is ready to aid its members with representations to regulators and to discuss solutions, such as enforceable contracts with ocean carriers, as recommended by the FMC.

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Source: The Loadstar

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