What’s In the Ocean Shipping Reform Act of 2021?
What is it? Recently passed by the House early December, H.R. 4996, also known as the Ocean Shipping Reform Act of 2021, introduces a new set of rules and regulations with the hopes of gaining a better understanding of supply chain inefficiencies and disruptions through a deeper look into the data behind international trade operations. Global trade and supply chain issues have plagued maritime trade in recent years and this the OSRA aims to provide agencies such as The Federal Maritime Commission (FMC), the Secretary of Transportation and the National Academy of Sciences (NAS) with increased authority to collect more in-depth supply chain information and develop new regulations aimed at balancing some of the powers many carriers maintain over ocean freight.
Demurrage and Detention. Surges in container volumes matched with shortages of containers, chassis, and laborers worldwide continue to boost dwell times at rails and ports. Once seen as an incentive to pick up cargo in a timely manner, the aforementioned variables have made this even more troublesome and costly for importers and exporters. However, despite the increasing number of complaints, detention and demurrage timeframes and penalties have remained the same and in some cases at rails and ports, have become harder to work with. The OSRA of 2021 aims to grant the FMC increased capabilities to determine what it and isn’t fair in regards to free time and demurrage collection, increase the ease of dispute processes, and providing further communication and clarification on cargo availability, free time notifications and certification from carriers justifying any demurrage and detention. Additionally, this Act will prohibit carriers and marine terminal operators from the creation or adoption of “unjust and unreasonable demurrage and detention rules” outside of the FMC’s rulemaking proceeding window.
Data Collection. With the OSRA of 2021 the NAS will utilize data collection methods from agencies at every level of the ocean shipping life cycle. Common carriers, forwarders, brokers, rail/road carriers, chassis providers, etc. will be analyzed by the NAS to determine bottlenecks, inefficiencies, and inconsistencies to work toward a more fluid ocean supply chain. Fortunately this data will not just be collected and stored for no one to see. According to this Act the data collected will be shared through multiple government committees but also made available to the public.
Summary. This Act seems to aim to bring further refinement and regulation to an industry that seems to have been ruled by a number of common carriers and terminal operators. While some are wary of bringing new regulations into the maritime industry, many seem to be looking forward to a change of pace in the extremely demanding business ocean freight has become.
Full details on OSRA 2021
- CIFFA: Critical Issues in Transportation Affecting Canada’s Recovery As our economy recovers and trade volumes climb, there is an opportunity to craft much improved regional strategies to increase the efficiency of our trade corridors. These corridors are a combination of private and public facilities, suggesting the need for increased collaboration among the various participants.
- Merchandise trade volume declined in Q3 while trade values continued to rise: The volume of world merchandise trade fell 0.8% in the third quarter of 2021 after four consecutive quarters of strong expansion, as supply chain disruptions, shortages of production inputs and rising COVID-19 cases weighed on trade growth.
- Government of Canada invests in four projects to increase efficiency of cargo handling in the Lower Mainland: The Government of Canada is committed to strengthening Canada’s trade corridors, which support our supply chains, help grow our economy, ensure its recovery, as well as create good, middle-class jobs.
- Memorandum D13-4-5 Transaction value method for related persons: The D memorandum has been revised.
- Rising costs of ocean freight, expectations of returning to normal, and continuing inflation.
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