Ocean Shipping Reform Act’s critical provisions — and their deadlines

Container ship docked at the Port of Los Angeles

Congress will soon schedule a vote — as early as next week — on the Ocean Shipping Reform Act of 2022. With bipartisan support in both the House and Senate, the bill is likely to pass.

The largest overhaul of shipping regulations since 1998, the legislation broadens the regulatory powers of the Federal Maritime Commission with the goal of promoting U.S. exports while reining in ocean carrier market power that has strengthened over the last 25 years, primarily through the rise of vessel alliances.

The U.S. House of Representatives will consider the Senate’s version of the legislation, which contains deadlines for key provisions, including rulemakings, studies and reports. Below is a summary of those provisions, their corresponding deadlines and why they matter.

Shipping Exchange Registry

Summary: The FMC shall issue regulations that set standards for registered national shipping exchanges.

Why it matters: A shipping exchange platform (digital, over-the-counter or otherwise) connecting shippers with carriers for the purpose of entering into underlying transportation contracts will not be able to operate without first being registered with the FMC.

Deadline: Not later than three years after the date of enactment.

Demurrage/detention rulemaking

Summary: The FMC shall initiate a rulemaking further defining prohibited practices by common carriers, marine terminal operators, shippers and ocean transportation intermediaries regarding the assessment of demurrage or detention charges.

Why it matters: The rulemaking (which the FMC has actually already initiated) puts teeth into the FMC’s interpretive rule on demurrage and detention, which shippers have alleged had not been adhered to by the carriers.

Deadline: Not later than 45 days after the date of enactment, with a final rule not later than one year after the date of enactment.

Unfair/discriminatory methods rulemaking

Summary: The FMC shall initiate a rulemaking defining unfair or unjustly discriminatory methods used by carriers against their customers.

Why it matters: The provision seeks to address complaints of carrier service discrimination by exporters and small shippers.

Deadline: Not later than 60 days after the date of enactment, with a final rule not later than one year after enactment.

Rulemaking on refusing to deal

Summary: The FMC, consulting with the U.S. Coast Guard, shall initiate a rulemaking defining unreasonable refusal to deal or negotiate with respect to vessel space.

Why it matters: Related to unfair/discriminatory methods rulemaking, this provision addresses shipper complaints of carriers ignoring customers they deem unprofitable to their operations.

Deadlines: Not later than 30 days after the date of enactment, with a final rule not later than six months after the date of enactment.

Street dwell time statistics

Summary: Office of Management and Budget shall approve an information collection and publication of street dwell time for containers. OMB will also publish statistics relating to the dwell times used in intermodal transportation at the top 25 ports, including inland ports (subject to appropriations funding).

Why it matters: Street dwell times are linked to shipper detention costs and are a major factor in causing port and supply chain congestion.

Deadlines: Not later than 60 days after enactment for approving the information collection and not later than 240 days after enactment (and not less frequently than monthly thereafter) for publishing dwell time statistics. (Authority for this provision expires Dec. 31, 2026.)

Enhancing the FMC’s investigation capacity

Summary: The FMC chairperson shall staff within five of the agency’s divisions not fewer than seven total positions to assist in investigations and oversight, in addition to the positions already within those divisions on the date of enactment.

Why it matters: New oversight authority will require higher staffing levels.

Deadline: Not later than 18 months after the date of enactment.

Emergency authority to address supply chain congestion

Summary: The FMC shall issue an information request seeking public comment as to whether supply chain congestion has created an emergency situation of a magnitude to cause substantial, adverse effect on the competitiveness and reliability of the international ocean transportation supply system and whether a temporary emergency order would alleviate it. An emergency order could include requiring ocean carriers or marine terminals to share directly with shippers, railroads and motor carriers information relating to cargo throughput and availability to ensure the efficient transportation, loading and unloading of cargo.

Why it matters: Government emergency orders are considered a last resort in dealing with transportation issues.

Deadlines: Not later than 60 days after enactment, with emergency orders remaining in effect no longer than 60 days. (Authority under this provision expires 18 months after enactment.)

Chassis pool best practices

Summary: The FMC shall enter into an agreement with the Transportation Research Board under which the TRB shall carry out a study and develop best practices for on-terminal or near-terminal chassis pools that provide service to marine terminal operators, motor carriers, railroads and other stakeholders that use the chassis pools, with the goal of optimizing supply chain efficiency and effectiveness.

Why it matters: Intermodal companies, shippers and ocean carriers dispute the way chassis pools operate and the government is looking to shed more light on how to make them more efficient.

Deadlines: Not later than April 1, 2023, to enter into an agreement, and not later than April 1, 2024, to make publication of best practices available on the FMC website.

CDL licensing testing

Summary: The Federal Motor Carrier Safety Administration shall conduct a review of the discretionary waiver authority described in FMCSA’s Aug. 31, 2021, order for states concerning third-party CDL skills test examiners in response to the COVID-19 emergency.

Why it matters: There has been concern that allowing states to conduct third-party skills testing — with the goal of making it more efficient to certify truck drivers — can reduce safety.

Deadlines: Not later than 90 days after the date of enactment. If FMCSA finds no safety concerns after the review, the agency will revise motor carrier regulations 90 days after the review is completed to make discretionary waiver authority permanent.

Review of potential discrimination on hazmat transport

Summary: The U.S. comptroller general shall initiate a review of whether there have been any systemic decisions by ocean carriers to discriminate against transporting hazardous materials by denying vessel space or equipment.

Why it matters: Some shippers of cargo that qualify as hazardous materials have complained they have been unreasonably denied vessel space as demand for capacity has increased over the last two years.

Deadline: Not later than 90 days after the date of enactment.

Using inland ports to store and transfer containers

Summary: The U.S. Department of Transportation, consulting with the U.S. Maritime Administration and the FMC, shall convene a meeting of representatives of ports, export terminals, ocean carriers, railroads, trucking companies and port labor to discuss strategies for identifying federal and nonfederal land, including inland ports, for the purposes of storing and transfer of cargo containers due to port congestion.

Why it matters: With excess real estate within port areas a premium or nonexistent, the focus is turning farther inland as alternative storage space for containers.

Deadline: Not later than 90 days after the date of enactment.

Report on adoption of technology at U.S. ports

Summary: The comptroller general shall submit to Congress a report describing the adoption of technology at U.S. ports as compared with foreign ports. The report will consider general capabilities, an assessment of whether technology at U.S. ports could lower cargo handling costs, regulatory barriers and the effect on labor.

Why it matters: Adopting technology — including higher levels of automation — is a major consideration by the freight industry in addressing increasing demand for container capacity at U.S. ports.

Deadline: Not later than one year after the date of enactment.

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