Draft Bill to Prohibit Carriers From Charging Detention & Demurrage Fees

A draft bill, dubbed the Ocean Shipping Reform Act of 2021, proposes to prohibit carriers from collecting detention and demurrage fees in cases when “obstacles to cargo retrieval or return of equipment are ... beyond the control of the invoiced or contracting party,” according to Peter Tirschwell of The Journal of Commerce online.

The draft bill will also strengthen the oversight role of the Federal Maritime Commission (FMC) and put a heavy regulatory burden on ocean carriers, Mr. Tirschwell writes.

The draft bill by Rep. John Garamendi, D-Ca, is likely to be introduced before the August recess begins, sources told Mr. Tirschwell, and will overhaul the existing US shipping law.

JOC.com reports that under the draft bill, it would be much more difficult for container lines to refuse to carry export cargo or prioritize repositioning of empties at the expense of ports.

In addition, Mr. Tirschwell continues, it would go further than current law in barring unreasonable denial of service by a carrier, saying a carrier “may not ... fail to furnish or cause a contractor to fail to furnish the facilities and instrumentalities needed to perform the transportation services, including containers.”

New Senior Executive Staff Hired for Key FMC Leadership Roles

Three new Senior Executive Service career staff members have been hired in recent months for key management and leadership roles at the Federal Maritime Commission.

Lucille Marvin assumed the duties of Managing Director as of June 14, 2021. Ms. Marvin comes to the Commission from the Surface Transportation Board (STB) where she served as the Director of the Office of Public Assistance, Governmental Affairs, and Compliance. Ms. Marvin was previously on the staff of the Federal Maritime Commission before joining the STB in 2008. Ms. Marvin began her career in government working for Members of the U.S. House of Representatives. She earned her J.D. in 2002 from the Georgetown University Law Center.

Earlier this spring, Patrick Moore was hired to serve as Chief Financial Officer and Director of Enterprise Services; and Kristen Monaco to serve as Director of the Bureau of Trade Analysis. All three individuals were hired to fill vacancies created by retirements.

Mr. Moore joins the Commission from the Department of Homeland Security where he held a variety of positions over the past 18 years, including serving 13 years as the Chief Financial Officer of the Countering Weapons of Mass Destruction Office and its predecessor office. He also has 25 years of active duty and reserve service with the U.S. Coast Guard.

Ms. Monaco comes to the Commission from the Bureau of Labor Statistics. Earlier in her career she was on the faculty of the Economics Department at California State University Long Beach, where her teaching and research focused on transportation economics. She earned a Ph.D. in Economics from the University of Wisconsin—Milwaukee.

“The Commission is a small agency and yet we are fortunate to attract three leaders in their respective areas to serve in these key management functions. I have every confidence these senior executives will help the agency accomplish its mission,” said Chairman Daniel B. Maffei.

Commissioner Dye Pushes for a National Port Information System

A National Port Information System that was recommended back in 2017 is now in the spotlight again. FMC Commissioner Rebecca F. Dye, along with Chairman Daniel B. Maffei, testified last month before the Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation in Congress. She noted that the U.S. international ocean freight delivery system is unprepared to deal with growing volumes of cargo flowing through the major ports. "If we don’t change, we can’t grow. In 2017, our FMC Supply Chain Innovation Teams recommended a National Port Information System to provide end-to-end visibility in our international ocean freight delivery system. Now is the time to move forward with this recommendation, harmonize our supply chain, leap over existing problems, and boost American competitiveness and our economy," Commissioner Dye said. Chairman Maffei noted that the demand for imports will likely not diminish until 2022. "But the supply of space on ships has not increased enough to keep pace even though virtually every usable ship is in service." Chairman Maffei noted that because of the global nature of trade, the challenges throughout the supply chain, and the vast increase in demand for ocean transportation, the Federal government is limited in ways to help. "We can put in measures to improve the overall capacity of the system – increase the supply in the supply-demand chart – through infrastructure improvements and more data & information sharing. Shippers need more information than they currently get and providing it to them would greatly improve efficiency," he said. Chairman Maffei acknowledged that these are not immediate solutions. In the meantime, he said, the FMC will continue to help exporters and other U.S. shippers navigate the system and file complaints; will communicate with various stakeholders in the supply chain to help them work together to make the system more efficient and reliable; will keep in touch with other Federal agencies and Congress and stay open-minded to finding new ways of making the situation better; and will work hard to make sure nobody makes a profit from this current crisis in a way that violates the Shipping Act.

More Investigations Seen

Commissioner Dye identified three major obstacles to resolving major port congestion: the problems occur in every cargo “surge” or “peak season”; no supply chain actor alone, not ocean carriers or ports, can develop a solution without a coordinated approach; and the lack of mutual commitment between parties to freight delivery agreements keeps parties from achieving enforceable agreements. According to Commissioner Dye, FMC's Bureau of Enforcement staff are actively investigating cases of potential unreasonable demurrage and detention charges involving the most common situation affecting exporters, earliest return date. More investigations will follow, perhaps involving other potentially unreasonable practices.