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FMC seeks to limit ocean carriers’ leverage on container space

Burden of proof over available container space would shift from shippers to ocean carriers

New rule could help shippers secure container space on ocean vessels. (Photo: Jim Allen/FreightWaves)

The Federal Maritime Commission is proposing a rule aimed at preventing ocean carriers from locking out customers from the carriers’ available vessel space.

The notice of proposed rulemaking (NPRM), expected to be published this week in the Federal Register, will give the public 30 days to comment on a provision included in the Ocean Shipping Reform Act of 2022 that prohibits ocean carriers from unreasonably refusing to deal or negotiate with respect to vessel space accommodations.

“The NPRM outlines the elements which would be necessary to establish a violation and the criteria the [FMC] would consider in assessing reasonableness if the NPRM is finalized,” the document states. “The NPRM proposes a burden-shifting regime that would allow ocean common carriers to establish why it was not unreasonable to refuse vessel space to a particular complainant.”

The proposal stems from numerous complaints by shippers as well as trends over the past two years revealing dramatic changes in the U.S. import-export balance, particularly between the U.S. and Asia. Shippers have alleged — and the FMC has documented — that carriers have been taking advantage of more lucrative import rates at the expense of reasonable rates and service provided to exporters.

“While some export markets have been affected by trade shocks, such as China’s ban on solid waste imports and other items, these trade shocks do not fully explain the drop in total exports carried, neither do safety concerns over ship loading,” the FMC states in the proposal.

“Largely these changes can be explained by carrier operational decisions based on equipment availability and differential revenues from import and export transportation. [Ocean carriers] should offer service in both directions within the trade lanes in which they operate in common carriage, regardless of trade lane, length of time active in the trade, or vessel size.”

The proposed rule would provide a way for ocean carriers to justify their vessel space allocations through certification.

“Certification in this context means that an appropriate U.S.-based representative of the ocean common carrier attests that the decision and supporting evidence is correct and complete,” the FMC states. “An appropriate representative can include the ocean common carrier’s U.S.-based compliance officer.”

Although the proposal does not require a certification, the FMC stated it is considering whether to make certification by a U.S.-based compliance officer mandatory.

Click for more FreightWaves articles by John Gallagher.

One Comment

  1. Stephen Webster

    remember 4 yrs ago when a number of ships were financial trouble and rates were 3000 to $4000 us a number of contractors suggested a min rate on certain lanes of $5000 with new rules coming into effect
    if the gov does this with a rate range with a min and maximum rates of twice the min. the same needs to happen with air freight and certain types of truck freight and this shortage will never happen again

Comments are closed.

John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.