UPDATE: 6/17/2022—The OSRA 22 bill was signed into law by President Biden June, 16, 2022. “Ultimately, the Senate version passed and will benefit shippers and transportation intermediaries alike,” said Rich Roche, Senior Vice President.
On June 14, the NCBFAA announced “The House of Representatives passed the Senate version (S.3580) of the Ocean Shipping Reform Act of 2022 (OSRA 22) by a vote of 369-42. This is the first significant change to the ORSA in 20 years.”
I have been leading the NVOCC Sub-Committee at NCBFAA to amend the OSRA bill (H.R. 4996) since it was first proposed in the House in August of 2021.
It was clear to me very early on that the co-sponsoring offices of Congressman John Garamendi (D-CA) and Congressman Dusty Johnson (R-SD) did not have a complete understanding that they were implicating NVOCCs as unintended targets of new regulations they were trying to impose on Ocean Carriers.
A companion bill (S. 3580) was introduced in the Senate with similar wording issues by Senator Amy Klobuchar (D-MN) and Senator John Thune (R-SD). Our team at NCBFAA worked with representatives from all four offices to correct the wording that prevented unintended application to over five-thousand concerned transportation intermediaries in the U.S. alone and countless other foreign-registered NVOCCs.
Had we not been successful, the administrative burden NVOCCs would have faced in certifying charges, vessel allocations, booking declinations, and annual volumes carried by ocean carriers—that they are tasked with under the proposed rules—would have been insurmountable, if not impossible to achieve.
In the end, we successfully modified the wording of the bill so it would ultimately pass in both houses.
The changes provided by this bill will benefit cargo owners, truckers, and NVOCCs with newly established guidelines and enhanced dispute resolution services among other enhancements.
We are told it will move to the president’s desk for quick signature this week.
What sparked this change?
With the onset of COVID-19, common carriage by ocean transporters changed radically. First, ocean carriers responded to shutdowns in China and the U.S. by voiding sailing schedules, canceling vessel strings, and laying up those ships. They quickly reversed this when U.S. employees returned to work—many as remote workers, who shifted their buying habits away from travel and entertainment in favor of home improvement, home office needs, and other significant retail buying changes.
Carriers responded by deploying virtually all functional containerships available for charter and began importing record volumes into the world’s consumer markets impacted by the same changes. The result of so much increased trade was severe congestion at ports, terminals, and warehouses around the world, exacerbated by labor shortages. At one point there were more than 100 containerships at anchor outside the Los Angeles and Long Beach ports, awaiting berths, but delayed because the infrastructure could not keep up with the record flow of cargo.
Equipment and vessel allocation became scarce in China, which resulted in escalated freight rates, increased demurrage and detention charges for importers, and a shut-out of export cargo—as carriers opted to take empty equipment back to the high-paying head-haul lane.
The Federal Maritime Commission (FMC) was inundated with complaints that spilled over to direct complaints to Congressional and Senate offices around the country. OSRA was first introduced in the House as a response to the complaints, with a companion bill introduced in the Senate – the latter ultimately passing both houses this week.
What OSRA22 accomplishes:
- Ensures a competitive and efficient maritime transportation system and places “greater reliance on the marketplace”
- Service contracts shall include new essential terms as determined by the FMC through a rulemaking process
- Shipping exchanges will be further defined and implemented
- Expands general prohibitions to include retaliation and other discriminatory actions by a common carrier, MTOs, or OTIs
- Prohibits common carriers from unreasonably refusing cargo space accommodations when available
- Prohibits unfair or unjust discriminatory practice against any commodity group or type of shipment
- Prohibits the inconsistent assessment of charges, and charging for detention and demurrage without the required information
- Provides a safe harbor for NVOCCs passing ocean carrier charges that if found improper, the ocean common carrier will be subject to refunds and penalties
- Eliminates the obligation of a charged party to pay the applicable detention and demurrage charge if the invoice lacks the required information
- Updates to parameters for hearings, civil penalties, and refunds
- Requires FMC to collect data and report on total import and export tonnage, and TEUs per vessel into the U.S.
- Describes the information that may be submitted to the FMC and parameters for any ensuing investigation
- Requires FMC to report on all false detention and demurrage invoice information by common carriers and penalties assessed against common carriers
- Establishes parameters for dwell time statistics
- Establishes new activities for FMC regarding website for complaints/dispute resolution and specific staffing requirements to assist with investigations and oversight
- Requires FMC to seek comment on emergencies and to take appropriate action in determining and responding to emergencies
- Requires FMC to study and develop best practices for on-terminal and near-terminal chassis pools
- Requires a review of whether ocean common carriers discriminate against maritime transport of qualified hazardous materials by unreasonably denying vessel space accommodations, equipment, etc.
- Requires the joint study to identify Federal and non-Federal land for cargo container storage due to port congestion
