It has been widely reported that ocean carriers have yielded outrageous and unprecedented demands on many U.S. importers. The pandemic highlighted just how bad and unbalanced things have gotten when it comes to the contractual relationships between carriers and importers. RILA’s membership includes 9 of the 15 largest importers in the U.S. so it’s very important FMC understands the “lived experience” retailers have as they finalize rules that will hopefully address some of the current problems.
Throughout the last 2.5 years many U.S. importers were met with new and onerous requirements for service contracts, such as multi-year terms, highly punitive and one-sided liquidated damages provisions, or conditioning the provision of ocean freight service on acceptance of broader, end-to-end contracts including services, such as customs clearance, that historically were available on an “a la carte” basis or provided by third-party service providers. Other U.S. importers found themselves, for the first time, unable to negotiate or procure new service contracts sufficient to cover their ocean freight needs even after contacting numerous carriers, including carriers with which they had long-standing commercial relationships, forcing them once again to turn to the astronomically high-priced “spot market” or into service arrangements with non-vessel-operating common carriers (NVOCCs).
The Ocean Shipping Reform Act was passed with the express purpose to provide not only the FMC itself, but also aggrieved shippers, with avenues of legal recourse for unreasonable conduct by VOCCs. In our comments, RILA urges the FMC to make it explicit that the law applies to common carrier conduct at any point in the parties’ dealings with each other and amend its final rule to strengthen its proposed burden-shifting framework for complaints about charges assessed by common carriers.
These changes will address more directly the experiences and concerns of U.S. importers regarding the provision of ocean freight services.
The full comment letter here. For more information, please contact RILA Director of Government Affairs Sarah Gilmore.
Transportation and Infrastructure