FMC will seek additional comments on “Unreasonable Refusal to Deal” rulemakingWritten by Marine Log Staff
In a briefing this week, the Federal Maritime Commission (FMC) noted that since the signing into law of the Ocean Shipping Reform Act (OSRA), the public is continuing to take advantage of the act’s provision that created the ability to file Charge Complaints.
The Commission has received more than 200 filings since the law’s enactment in June 2022. More than 70 Charge Complaints met the threshold requirements for being referred to investigators. Commission staff reported that the Charge Complaint process is proving successful at promoting informal settlements as well as waivers of Demurrage and Detention billings. Staff estimate that more than $700,000 in charges have been refunded by carriers since June.
One major issue referred to by President Biden when he signed OSRA into law was, in his words, that “these foreign-owned carriers have also been refusing to carry American made products back to Asia.”
In its briefing, the Federal Maritime Commission said that “it will issue a Supplemental Notice of Proposed Rulemaking (SNPRM) that addresses issues commenters raised in response to the Unreasonable Refusal to Deal or Negotiate with Respect to Vessel Space Accommodations proposed (Docket 22-24) rule issued last September.”
The Commission has completed its review of market conditions finding circumstances at this time do not warrant invoking Temporary Emergency Authority established under OSRA to require information sharing among supply chain participants. The Commission issued a Request for Information as was directed by the legislation and considered as part of its analysis comments it received in response.
The OSRA implementation briefing was followed by an update on economic and competition issues that included a discussion of the Commission’s monitoring program.
Commissioners were advised that both container volumes and freight rates on inbound trades have returned to essentially pre-pandemic levels. Significant amounts of containerized imports have shifted to East and Gulf Coast ports. Exports off the Gulf Coast are not enjoying parallel growth, upsetting what has been the traditional model of fairly balanced import and export volumes. The cost to ship exports remains slightly elevated compared to pre-pandemic.
The market share of MSC has increased substantially in the U.S.-Asia and U.S.-Europe trades over the past two years. Both MSC and Maersk have substantial market shares and have been offering additional services outside their alliance. Despite growth of alliance carriers, non-alliance carrier market share has been consistent on the U.S.-Europe trade and trending upward somewhat on the U.S.-Asia trade.
The U.S. trades are seeing the abandonment of the marketplace by new entrants that began calling during the height of the pandemic. Those lines, typically smaller companies that operate in the Intra-Asia, Oceania, and Africa markets, redeployed ships to the transpacific trade lane when cargo was abundant and rates were historically high. With volumes and rates returning to more typical and traditional levels, there is no longer the incentive for these carriers to operate in what is not their usual markets. Despite the withdrawal of these carriers, more than sufficient capacity exists to serve U.S. shippers.