The Federal Maritime Commission (FMC) will have more power to regulate the ocean shipping industry now that President Biden has signed the Ocean Shipping Reformed Act (OSRA). OSRA grants the FMC power to look into carrier practices after two years of skyrocketing costs and disruption have caused massive congestion and inflation. Make no mistake – the lack of carrier choices on the transpacific sharing capacity through a handful of alliances that operate with antitrust immunity created a climate where vessel owners made more in a year (2021) than they had in the preceding decade. Sadly, those trends are continuing here in 2022 as we fight tooth-and-nail for allocations, equipment, space, and some sort of agreed-to level of service with those selfsame carriers.
One of the issues that the FMC is going to look at will be equipment imbalances caused by carriers refusing to load export containers with goods in favor of carrying empty boxes back to Asia. Empty containers can be turned around faster since they don’t need to be unloaded, returned, redeployed, filled and reloaded to return to the US. Another key issue is the application of fees for penalizing reasons and not incentivizing recovery – a standard that’s been under investigation due to some carriers charging detention and demurrage when shippers didn’t have an option to recover or return due to no fault of their own.
OSRA is an attempt to level a playing field that’s been topsy-turvy for a host of reasons since the pandemic started. In the beginning, carriers expected the supply chain to slow down due to shut downs, factory closures, manufacturing pauses, and service/entertainment industry haltings. As people transitioned to working from home, driving less and avoiding work lunch services that cater to commuters, carriers blanked sailings to meet their expectations of continued plunging demand. When the opposite happened and people decided to spend both stimulus payments and previously allocated entertainment and travel budgets shopping online and doing home improvement, the lack of capacity hit the market like the trucks that carried full containers to ports where vessels were only accepting empty boxes.
FMC Chairman Dan Maffei was quoted as saying that he hopes the bill helps to restore confidence in the supply chain. Reuters quoted President Biden as stating he expects the bill to “help lower shipping costs for consumers”. Carriers should be held accountable for their opportunism they’ve sold through the thinly-veiled claim of “free market pricing” and we continue to do our best to blunt their ongoing profiteering. RS Express is looking forward to a smoother supply chain, whenever that happens. Until then, it is our responsibility to make sure our readers know the current status of laws and regulations that apply to their cargo. If you have any questions if and how OSRA will impact your shipments, contact us today!