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January 2 2023

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68 Journal of Commerce | J anuar y 2, 2023 Government Generational reform OSRA-22 leaves indelible mark on ocean regulatory landscape By Eric Johnson transportation legs like trucking and intermodal rail. "Make no mistake, the FMC's authority does not stop at the water's edge," Maffei said during the Journal of Commerce's Inland Dis- tribution Conference in Chicago. A new normal: The historic spike in container volume from late 2020 through mid-2022 and the result- ing disruption have fundamentally changed the US maritime regulatory environment. Although born from shipper frustration at steep, simul- taneous increases in ocean freight costs and transit times, many of the changes contained within OSRA-22 aim to address fundamental problems that existed long before the pandemic. Now that import volumes and freight rates are normalizing, the increased documentation requirements on carriers and terminals when billing for detention and demurrage will be the lasting regulatory legacy of 2022. JOC email: twitter: @LogTechEric carriers and terminals calculate and convey detention and demur- rage charges is still yet to be seen, as inaccurate invoices continue to plague shippers. But a larger unknown surrounds rulemaking requiring shipping lines to provide capacity and equipment to exporters. Shippers say an October draft of the rule left carriers with a wide loophole that would allow them to refuse export shipments, particularly perishables, due to factors such as profitability. Perhaps more importantly, industry analysts have questioned whether adherence to such a rule might induce carriers to shutter services upon which US exporters rely, especially as demand on the headhaul eastbound trans- Pacific trade shrinks. FMC Chair Daniel Maffei in September also indi - cated an intention to expand the agen- cy's purview to include downstream A look back: US President Joe Biden in June signed the Ocean Shipping Reform Act of 2022 (OSRA-22), which targeted two causes of shipper pain: opaque billing practices for container storage and usage charges and uneven service for US exporters. Even before the first major update to the US Shipping Act since 1998 became law, the FMC had taken a more active role in resolving systemic service issues during the COVID-19 pandemic, including a December 2021 request for shippers to file more formal complaints with the commission. Under OSRA-22, the FMC is offering shippers a fast-track option to file such complaints, which yielded a sharp uptick in filings in the second half of 2022. Just before the law's enactment, container carrier Hapag-Lloyd settled a dispute with a drayage provider for $2 million for overcharging on detention when it did not provide appointments to return empty containers. The case was indicative of both the FMC's increased emphasis on holding carriers accountable and its limited means in penalizing carriers. A look ahead: Whether OSRA-22 — and increased FMC scrutiny — will produce tangible changes in how The big picture: The first significant reform of US shipping law in nearly a quarter century has created an environ- ment of heightened regulatory scrutiny around detention and demurrage billing practices and "unreasonable" denial of service to US exporters. The US Federal Maritime Commission (FMC) will be keeping a close watch on these longstanding areas of shipper grievance with container lines and terminals, which netted massive profits during the COVID-19 pandemic, even as sliding demand eases capacity constraints. OSRA-22 targeted two longstanding shipper grievances: container storage and usage fees and US export service. "Make no mistake, the FMC's authority does not stop at the water's edge." ANNUAL REVIEW & OUTLOOK 2023

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