The U.S. Federal Maritime Commission (FMC) on Monday, April 27, said it would temporarily allow service contracts to be filed up to 30 days after they take effect to provide relief to shippers and ocean container carriers impacted by the coronavirus pandemic.
According to the FMC order, the relief becomes effective immediately and will last through December 31, 2020.
The relief measure was identified by the Fact Finding 29 Supply Chain Innovation Teams, which includes more than 50 industry representatives who hold regular telephone meetings with FMC Commissioner Rebecca Dye to identify pain points in container shipping due to the COVID-19 pandemic. The spring is the period when most annual service contracts are concluded between ocean carriers and shippers.
The FMC has authority under the Shipping Act to make certain regulatory adjustments when necessary.
“Our prompt consideration and approval of a temporary amendment to how service contracts are filed at the FMC demonstrates our commitment to keeping America’s ocean supply chain functioning reliably and efficient,” said FMC Chairman Michael A. Khouri in a statement.
Under the Shipping Act, service contracts reached between ocean carriers and shippers must be filed within 30 days to the FMC for monitoring competition of U.S. container shipping.
The FMC said information provided by Fact Finding 29 Supply Chain Innovation Team members shows that service contract negotiations are currently being disrupted by the COVID-19 pandemic.
“In particular, many service contracts are expiring in the next 60 days and teleworking arrangements are complicating ongoing negotiations between carriers and shippers. Additionally, some businesses are technically challenged to file service contracts from locations other than their offices,” the FMC said. “Providing flexibility in service contract filing requirements permits industry to adapt to market conditions while still providing the commission information necessary to assure competition and integrity for America’s ocean supply chain.”
On March 31, the FMC authorized Fact Finding 29 to work with representatives from the container-shipping industry to identify “operational solutions to cargo delivery challenges” caused by the coronavirus pandemic.
“The quick identification by individual shippers and ocean carriers of relief from service contract filing and the commission’s rapid adoption of this measure are positive early developments for the teams’ work,” Dye said.
The Washington, D.C.-based World Shipping Council, which represents 95% of the global container carrier industry by volume, applauded the FMC’s order.
“This action will relieve regulatory burdens on all parties,” John Butler, president and CEO of the World Shipping Council, told American Shipper. “Even more important, it will allow carriers and shippers to have confidence that their commercial agreements can be implemented on the schedule that they have decided as a matter of contract, unimpeded by regulatory requirements that sometimes undermine the intent of the parties.”