July 2022 – Ocean Shipping Reform
Tip of the Month
This month is busy with a myriad of ongoing labor negotiations that have the potential to significantly impact ocean freight, especially in the U.S.
Consider alternative routings as necessary to avoid high-stress points to meet transit time requirements.
The experience of container shipping by sea in the past years has taken a remarkable turn with astronomical costs to do business via ocean transport. Carrier consolidations have changed the dynamic to disadvantage U.S. businesses to a degree never reached before.
Slap the pandemic on top of an already strained and changing industry, and we see core carriers move from million-dollar yearly deficits to unimaginable profits.
Port congestion rose to extremes during the pandemic, and U.S. exporters, especially farmers, couldn't get their products to the global market. We lived with unpredictable sailings, outlandish prices, and denial to accept export bookings. The mess experienced during every facet of the movement of goods from point A to B continues today.
In an effort to gain some control over the current situation, the U.S. government introduced the Ocean Shipping Reform Act. On June 13th, 2022, we saw the most widespread reform to U.S. shipping law since 1998. This act attempts to help U.S. businesses and protect them from being denied carriage and receiving excessive overcharges by sea carriers.
This new act will basically attempt the following:
- Improve the complaint/investigation process from the Federal Maritime Commission (FMC).
- FMC can now investigate any ocean carriers' practices and enforce new laws. Now allowed data collection and enforcement by results.
- Shift demurrage and detention burden of proof of freight hostage charges to the ocean carrier.
- Reporting of empty container movements.
- Supposed to stop international ocean carriers from declining U.S. goods for carriage in favor of transporting empties back to the origin country for hoarding.
- Allow collection of data for chassis dwell times, and study best practices for chassis management.
-Dockworker strike pending the outcome of wage negotiations with employers in key container hubs including Hamburg and Bremerhaven. Work stoppage planned from July 14-16th. Could impact container availability and delay exports from affected ports.
-Rail Labor Negotiations are ongoing between 115,000 workers at 30 railroads, if unresolved, workers may strike as soon as next week.
-Californian truckers are protesting the new AB5 regulation Read More
-Labor negotiations between West Coast employers and longshoremen are ongoing, following the contract expiration on July 1st. Both sides aim to continue working with minimal disruption to facilitate trade. Read More
-- Ports with High Vessel Wait Time:
-Long Beach: 9-12 days
-Los Angeles: 5-24 days
-Savannah: 10-15 days
Vancouver has high vessel wait time at 14-42 days attributed to high yard utilization.