This is a guest post by Harrison Clarke.

Recent changes in maritime law have ushered in a new era for those of you who import and export goods. The landscape of international trade is continually evolving, presenting challenges and opportunities. Understanding these legal shifts is essential for maintaining compliance and optimizing your operational strategies.

For importers and exporters, the stakes are high, as failing to adapt can lead to significant disruptions and financial penalties. This guide goes into the specifics of these changes, providing insights into how you can navigate these new regulations effectively. Hence, staying informed is not just beneficial—it’s imperative for your continued success in the global market.

Specific Legal Amendments Impacting Maritime Operations

In recent months, targeted legal amendments have been impacting maritime operations, specifically designed to address current challenges in international shipping. These changes include stricter regulations on ship emissions, enhanced protocols for ballast water management, more vigilance on ocean freight carriers, and increased security measures for vessels navigating international waters.

Each of these specific regulation types directly affects daily operations, demanding adjustments in how shipping companies and shippers manage fleets, documentation, and operation. For example, the new emissions standards require ships to use lower sulfur fuel or install emission-reducing equipment, a significant change that affects operational costs and planning. Similarly, the updated security measures necessitate rigorous checks and balances, adding layers of complexity to compliance efforts.

For importers and exporters, understanding these specific amendments is essential to maintaining efficient and legal operations.

Changes in Maritime Law Will Create Compliance Complications for Importers

Navigating the intricate web of new maritime laws has introduced significant compliance complications for importers. The recent legal changes necessitate a deeper understanding of documentation requirements and stringent cargo inspections.

Importers now face an expanded range of forms and permits, each reflecting heightened security and environmental standards. This increase in paperwork complicates routine operations and sets the stage for potential delays and increased scrutiny during port inspections. As an illustration, failure to meet the new documentation standards can result in costly hold-ups, affecting overall supply chain efficiency.

Importers must, therefore, stay vigilant and possibly seek expert legal guidance to avoid disruptions and ensure smooth customs clearance.

Export Challenges in the Wake of New Regulations

The landscape for exporters has shifted dramatically following the introduction of new maritime regulations. These updates have reshaped aspects such as export licensing and the implementation of advanced security protocols.

Exporters now must navigate more rigorous checks that can significantly prolong the process of getting goods to international markets. This increased scrutiny is designed to enhance global trade security but comes at the cost of potential delays and added operational complexities.

Moreover, changes to export licensing requirements mean businesses must obtain additional approvals and potentially restructure their logistics to comply with new legal standards. Adapting to these conditions is essential for exporters aiming to maintain market presence and avoid legal complications.

Increased Costs from Legal Adjustments

Adjusting to the recent changes in maritime law inevitably leads to increased operational costs for both importers and exporters. Compliance with these new regulations often entails additional fees, including those for updated licensing, enhanced cargo inspections, and environmental compliance measures.

Efficient storage solutions become essential here as businesses must manage larger inventories of compliant materials and documentation safely and accessibly. In this scenario, NYC Mini Storage offers an exemplary service for New York City residents. Known for their reliability and flexibility, they provide secure, scalable options ideal for businesses grappling with the need for additional space due to regulatory demands.

This strategic financial planning is important for mitigating the economic impact of these legal changes, ensuring businesses remain efficient and compliant.

Technological Solutions to Maritime Law Challenges

Technological solutions have emerged as vital tools for ensuring compliance and streamlining operations in response to the tightening of maritime laws.

Digital documentation systems, for example, simplify the management of the extensive paperwork now required under new regulations. These systems reduce the risk of human error and enhance the speed and security of data handling.

Similarly, real-time cargo tracking technologies provide exporters and importers with up-to-date information on their shipments, which is essential for managing schedules amidst stricter inspection protocols.

Investing in such technologies aids in adhering to new legal standards and offers long-term benefits by improving operational efficiency and reducing potential delays. Embracing these technological advancements is increasingly becoming necessary for businesses aiming to succeed.

Legal Resources and Support for Businesses

As the complexity of maritime law increases, accessing specialized legal resources and support becomes important for businesses involved in international trade.

Industry associations often offer up-to-date guidance and workshops on compliance with new regulations. Legal firms specializing in maritime law can provide tailored advice that addresses specific business needs and challenges. Also, government portals often have sections dedicated to recent legislative changes, offering official interpretations and procedural advice.

Leveraging these resources helps businesses remain compliant and enhances their ability to anticipate and react to future legal shifts. Engaging with these support networks is essential for navigating the complexities of maritime law effectively and ensuring smooth operational transitions.

Strategic Adjustments for Long-Term Adaptation

With new maritime laws in place, strategic adjustments are imperative for long-term success in import-export activities.

One effective approach is diversifying supply chains to reduce dependence on single points of failure, which can be particularly vulnerable under stringent regulations. Reevaluating vendor contracts to include terms that reflect new legal realities is another important step, ensuring that all parties are aligned with current compliance requirements. Further, enhancing in-house compliance departments with expert staff and updated training programs can equip businesses with the resilience to handle future regulatory changes.

Emphasizing these proactive strategies helps businesses adapt to present conditions and positions them well for future shifts in the regulatory landscape.

Summary: Staying Afloat Amidst Maritime Law Changes

Navigating the recent changes in maritime law requires a diligent and informed approach. As the regulatory environment continues to evolve, staying updated on these changes is not just advantageous—it’s essential.

Utilizing legal resources, embracing technological solutions, and making strategic adjustments are key to maintaining compliance and operational efficiency. Hence, continuous engagement with industry experts and investment in compliance infrastructure are vital.

In short, proactively managing these legal shifts will ensure your business remains robust and competitive in the global marketplace.

This was a guest post by Harrison Clarke.

Author Bio

Harrison Clarke is a seasoned business strategist with over twenty years of experience in corporate leadership. Harrison is recognized for his pragmatic approach to solving complex challenges and his ability to guide companies toward sustained success in competitive markets. His leadership skills and innovative thinking make him a respected figure in the business community.

The post How Recent Changes in Maritime Law Affect Importers and Exporters appeared first on Universal Cargo.

The power of big data is driving a seismic shift in the logistics sector, which is the foundation of world trade. Logistics is embracing a data-driven future, releasing a wealth of insights to enhance operations and transform the supply chain. It is no longer limited to manual processes and segregated information.

This article analyzes how big data is revolutionizing logistics management by examining its uses, advantages, and potential long-term effects on the sector.

What is Big Data in Logistics?

The term “big data” in logistics describes the enormous amount, speed, and diversity of data produced across the supply chain. This data includes details about customer demand, market trends, warehousing, transportation, and inventory.

Numerous sources, such as Internet of Things sensors, GPS trackers, RFID tags, barcode scanners, consumer transactions, social media, and external databases, are used to gather this data. Big data is unique primarily because of its quantity and complexity, which call for sophisticated analytics methods in order to gain useful insights and facilitate well-informed decision-making.

“According to a McKinsey report, businesses that use big data analytics for demand forecasting can reduce inventory holding costs by up to 20% and increase forecast accuracy by 10%.”

The Transformative Power of Big Data Analytics

Big data empowers logistics companies in several key ways:

Route optimization: By combining weather forecasts, traffic statistics, and past delivery information, the most effective delivery routes can be dynamically planned, cutting down on both fuel use and delivery times.

Predictive maintenance: It is the process of foreseeing future maintenance requirements by analyzing sensor data from machinery and cars. This helps to keep costs down and ensures smooth operation.

Demand Forecasting: Accurate demand forecasting enables businesses to optimize inventory levels and prevent stock outs or overstocking by analyzing previous sales data and consumer trends.

Warehouse Management: By optimizing labor allocation, picking tactics, and warehouse layouts, big data can lower handling costs and expedite order fulfillment.

Risk management: You may anticipate any disruptions and take proactive steps to reduce risks by using real-time weather data and cargo monitoring.

Improved Consumer Experience: Logistics firms can personalize delivery options, offer real-time cargo tracking updates, and anticipate consumer needs by analyzing customer data. This results in a more fulfilling customer experience.

According to Unipart Group, 50–60% of companies that use big data have seen improvements in supply chain efficiency.

Big Data in Action: Real-World Applications

Here are some examples of how big data is transforming logistics in practice:

Amazon: Uses big data to tailor shipping options for its enormous customer base, optimize warehouse layouts, and forecast demand for millions of products.

FedEx: Uses big data analytics to predict changes in package volume, optimize delivery routes, and expedite the customs clearing procedure.

Maersk: Makes use of big data to track shipments instantly, spot possible hold-ups, and get in touch with clients ahead of time.

Benefits of Big Data in Logistics

GPS tracking: Improved delivery transparency and route optimization are made possible by real-time cargo location tracking.

Improved Visibility: Big data gives supply chain operations real-time visibility, which improves risk management, decision-making, and responsiveness to shifting market conditions.

Enterprise Systems: Data on orders, inventory levels, and supplier details are generated by enterprise resource planning, or ERP, systems.

Personalized Service Options: Expedited order fulfillment and proactive communication are made possible by big data, which improves customer happiness and loyalty.

Data-Driven Insights: Big data analytics produces business intelligence and actionable insights that enable organizations to make data-driven decisions, spot optimization opportunities, and outperform the competition.

Sensor Networks: Real-time position, temperature, and other critical metrics data are provided by sensors installed in cars, warehouses, and containers.

Customer Interactions: Purchase histories and customer reviews provide a clear picture of demand trends.

Logistics firms can revolutionize their operations by extracting important insights by utilizing big data analytics.

Challenges and Considerations

Even if big data has many advantages, there are several things to keep in mind:

Data Integration: It might be difficult to combine data from many sources throughout the supply chain.

Data Security: Robust security protocols are necessary to prevent assaults on sensitive data.

Data Talent: Experts with the ability to evaluate and decipher large amounts of data are highly sought after.

Big Data’s Future in Logistics

Big data will be integrated much more thoroughly into logistics as data collecting and analytics capabilities advance. What to anticipate are:

Advanced Analytics: By allowing increasingly more complex optimization algorithms, machine learning and artificial intelligence will be able to extract deeper insights from large data.

Internet of Things: Richer insights will be possible due to the increasing volume and variety of data that will be made available as connected devices proliferate.

Collaboration and Transparency: Increased efficiency and transparency in the supply chain will result from data-driven collaboration between the different stakeholders.

Conclusion

Big data is changing the game in the logistics industry; it’s not just a catchphrase. Logistics organizations may achieve a competitive advantage, streamline their processes, and provide outstanding customer service in a data-driven and dynamic environment by using big data analytics. Big data will keep changing the supply chain as time goes on, opening the door for a logistical environment that is more effective, transparent, and focused on the needs of the consumer.

 This was a guest post by Charlotte Sanders.

Author Bio

Charlotte Sanders, having more than 15  years of experience, has served as the controller and department head of nVision Global. Her extensive experience in finance, coupled with her educational qualification has made her an expert in her field. She resides in McDonough, Georgia. In her spare time, she likes to workout, go fishing, and spend quality time with her family.

The post Big Data Transforms Logistics: Supply Chain Optimization in a Future of Data Driven Decisions appeared first on Universal Cargo.

Congestion at the Port of Singapore hit critical levels over these last couple weeks. Container ships are having to anchor and wait to dock, with wait-time estimates of up to seven days. This is as ships are already spread thin by having to reroute away from the Suez Canal because of Iran-backed, anti-Israel Houthi attacks in the Red Sea and Gulf and Aiden making it unsafe for them and their crews.

Shipping Watch reports that nearly half a million containers are waiting at the Port of Singapore.

Other major ports in China are also seeing significant congestion. Chinese exporters and U.S. importers from China are rushing to get goods moved through the ports before President Biden’s tariff increases hit, which adds to the congestion.

As is usually the case, the congestion at ports in China ripples through global supply chains. Availability of container ships and shipping containers is causing shortages and delays for shippers in other regions.

This is also adding even more upward pressure on freight rates that are already very high.

The international shipping industry was already stretched thin. Global supply chains are now likely to suffer serious disruption while shippers pay high freight rates for delayed imports and exports.

The post Shipper Alert! Critical Chinese Port Congestion Spreading Delays & Upping Freight Rates appeared first on Universal Cargo.

This surge in demand combined with current constraints on cargo has caused ocean freight spot rates to really increase, with some shipping reporters describing rates as skyrocketing. It’s not totally unsimilar to what we saw with freight rates during the pandemic’s shipping boom and the initial Houthi attacks in the Red Sea. But are we looking at a spike in freight rates or will they remain high for a longer period of time?

Let’s look at five factors affecting international shipping right now and see if we can make projections.

1. Capacity Shortages

The Iran-backed Houthi attacks in the Red Sea and Gulf of Aiden have not ceased. In fact, reports say the Houthi rebels are only widening their range of attacks. That means a continuation of round-Africa services, which strains vessel capacity, even helping to create some capacity shortages. Unfortunately, there is still no end in sight to the Houthi attacks and vessel diversions.

Meanwhile, port congestion is slowing things at Asian and Western Mediterranean shipping hubs. The surge in demand exacerbates this issue, leading to longer waiting times for vessels. That further constrains capacity for ocean freight around the world, impacting webs of supply chains.

2. Carriers Adjust to Manage Capacity

Perhaps ocean freight carriers have more foresight than they’re given credit for. Leading up to this point in time, there has been an influx of ships and capacity into the industry. It was originally believed all that increase was going to create overcapacity in the ocean freight industry and possibly cause carriers to fall back into an unfavorable position where unhealthily low freight rates would force them to suffer high losses.

Instead, that capacity was greatly needed when drought caused constraints on ships crossing the Panama Canal and Houthi attacks forced carriers to divert around Africa instead of going through the Suez Canal.

Maybe there was luck involved with the arrival of that capacity, but carriers are also taking other strategies right now to manage capacity more effectively.

For example, ocean freight carriers are adjusting transpacific allocations. They’re reducing allocations to non-vessel-operating common carriers (NVOCCs) for fixed-rate bookings while also adjusting services.

For some specifics on the latter, here’s a quick list RS Logistics emailed to Universal Cargo of the Ocean Alliance’s revision of transpacific services and port rotations:

• HTW service (Asia to North America West Coast): Tacoma port call dropped, new rotation includes nine port calls starting with Yantian.
• HTW service will be operated by Evergreen (HTW), while CMA CGM (GEX), COSCO (AAS3), OOCL (PCS2) and ONE (CP4) will be slot charterers.
• There will be eight vessels deployed on the service, with an average vessel capacity of 13,000 TEU.
• The revised port rotation of the service will be as follows (9 port calls): Yantian – Los Angeles – Oakland – Kaohsiung – Port Klang – Cai Mep – Taipei – Kaohsiung – Yantian.
• ECX1/AWE4 service (Asia to North America East Coast): Adds Laem Chabang and Cai Mep, drops Cristobal, revised rotation includes nine port calls starting with Charleston.
• ECX1/AWE4 service will be operated by OOCL (ECX1) and COSCO (AWE4), while CMA CGM (SAX) and Evergreen (SAX) will be slot charterers.
• There will be thirteen vessels deployed on the service, with an average vessel capacity of 13,500 TEU.
• The revised port rotation of the service will be as follows (9 port calls): Charleston – Laem Chabang – Cai Mep – Hong Kong – Xiamen – Shanghai – New York – Savannah – Charleston.
• The changes aim to optimize service efficiency and address congestion issues.

Unfortunately, those aren’t the only kind of strategies ocean freight carriers are utilizing right now…

3. Carriers Implementing GRIs

Ocean freight carriers obviously want to make money and do what they can to increase and sustain higher freight rates for a healthy bottom line. As already mentioned, we’re seeing very high freights right now.

Lori Ann LaRocco, whose articles I’ve often quoted in Universal Cargo’s blog, wrote an excellent article this week about soaring freight rates for CNBC. One of its most eye-popping moments is:

A new round of general rate increases set for June 1 has Orient Star Group characterizing the additional $1,000 charge as carriers getting a bit “greedy” under the sudden increased demand.

MSC, the world’s largest ocean freight company, announced new rates of $8,000 to $10,000 for 40-foot containers to the U.S. West Coast, valid from May 15-May 31.

Wan Hai has said it will charge a premium for “space protection.”

Freight rate rises in April and May have been significant and sudden, catching many shippers by surprise, and there seem to be more to come. Shippers should brace themselves for an average general rate increase (GRI) of $1,000 across all carriers in the first week of June.

The additional “space protection” fees is something shippers should feel wary about. With capacity constraints and rising rates, shippers may also face limited booking options. That’s a situation some carriers appear ready to take advantage of.

4. Early Peak Season

I opened this post on the topic of the peak season starting a bit early this year. Here is a little more data to the point.

The National Retail Federation (NRF) projects that U.S. monthly ocean imports will surpass two million TEUs in May, peaking at 2.1 million in August. Often, the peak season peaks in September or October.

There are a number of factors to explain why shippers are importing a little earlier this year. Delays because of the Suez Canal/Red Sea diversions that we’ve previously discussed are among them, but there are other factors too…

5. USMX and ILA Strike Threat at East & Gulf Coast Ports

We’ve dedicated several blog posts to the ILA strike threat:

• ILA Already Threatening Strike
• ILA Stance Is Worse Than Just Threatening Strike
• We Have to Talk About the ILA Strike Threat
• No One Knows What Will Happen with ILA Port Disruption
• How to Prepare for Potential ILA Port Disruption

In that last one, and as a strategy we’ve suggested before, we included the tactic of shipping early to avoid the potential port disruption that could happen when the ILA’s contract expires September 30th.

Both the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA) have shown commitment to avoiding port disruption during contract negotiations since the terrible port disruption that happened on the other side of the country during the 2014-15 ILWU contract negotiations. However, the threat of strike that the ILA has made regarding the negotiations for this next contract makes shippers rightfully nervous.

Failed or stalled negotiations could hamper East and Gulf Coast ports’ ability to handle cargo during a time when peak season is typically still going strong. With the early start to peak season, it may also slow earlier, making October, when the current ILA contract is expired, slower than normal. Perhaps that slowing may come even earlier, as the NRF projects imports to peak in August. However, a peak in August could still mean strong numbers for September.

Conclusion

In summary, international shipping, for U.S. shippers in particular, faces several challenges. Big increases in demand and freight rates early in the peak season could mean a weaker-than-normal end to the peak season. Shippers should absolutely expect freight rates to remain high in June. And if NRF’s projections are correct, in July and August too. Even with the early demand surge to the peak season and without NRF’s August peak projection, it would be surprising for July and August not to maintain peak season demand we’re now seeing.

September, on the other hand, will be interesting to watch. Many shippers may be trying to complete their shipments before September for fear of disruption from the ILA negotiations. However, there may be a last minute surge just before the master contract for the East and Gulf Coast dockworkers expires. There’s a possibility of downturn in September, but I believe that if the peak season fizzles out early, it will be with lower than normal importing activity in October.

Despite a high level of economic uncertainty, to put it nicely, retailers are still expecting fairly high spending from consumers. That may sustain demand beyond August and through the entirety of the typical peak season months. However, I expect a market share surge of imports, and probably exports too, for West Coast ports, dropping East and Gulf Coasts’ share, in October and probably November. September could see that market share adjustment too.

My best hypothesis for freight rates is that they’ll somewhat settle at these high rates for these next couple months, at least, but start coming down a little bit by October. Big drops are more likely in the last couple months of the year. However, if the ILA strikes, another freight rate surge could easily ensue, starting in October and carrying into the last two months of the year.

The post Early Peak Season, High Freight Rates, & 5 Factors Shaping Ocean Freight Shipping 2024 appeared first on Universal Cargo.

The Baltimore bridge collapse and the Taiwan earthquake are among the latest disruptions forcing businesses to adjust their management and tracking strategies. They’re an unwelcome addition to the continued Red Sea attacks plaguing commercial vessels. As exporting and importing goods become more complicated in the face of these unpredictable events, the digital and physical supply chain gap widens. How can brands close the gap?

Disruptions to Trade Routes Are Widening the Gap

In March, the Francis Scott Key Bridge — a structure that took nine years to plan and five to build — collapsed. U.S. Transportation Secretary Pete Buttigieg called the Baltimore bridge collapse a “major and protracted” issue for supply chains.

The Port of Baltimore is among the busiest in the country. It handled $80 billion worth of cargo in 2023, so its closure will cause millions in daily trade and tax revenue losses for the foreseeable future. Of course, no one could have predicted this incident would occur.

The more recent 7.2-magnitude earthquake in Taiwan — the largest in over two decades — further illustrates this point. The country is one of the leading global hubs of critical electronic components like display panels and semiconductors. Notably, it is home to Taiwan Semiconductor Manufacturing Co. (TSMC) — the world’s largest chipmaker.

For some time now, supply chains have been plagued by prolonged disruptions caused by geopolitical conflicts. For instance, Red Sea shipping attacks have lasted months. Yemen’s Houthi rebels have launched dozens of assaults since November 2023, sinking one vessel and seizing another.

While navigating geopolitical-based disruptions has proven challenging and led to significant delays and price hikes, these issues are more predictable. For instance, the Houthi rebels stated they’ll continue to carry out their operations until Israel leaves Gaza alone. On the other hand, freak accidents are impossible to forecast.

Since businesses cannot anticipate supply chain disruptions like these, they must be able to recover as quickly as possible. However, many cannot because the digital and physical supply chain gap leaves them with inadequate visibility and avenues for response.

The Gap Between the Digital and Physical Supply Chain

The gap between the digital and physical supply chain is an imbalance in how a business stores, transports and tracks physical goods, and manages their flow of supply-chain-related data. It can manifest as a failure to utilize data, a lack of visibility, inefficient vendor collaboration or poor insight extraction.

Many companies overlook valuable opportunities at smaller scales. Take manufacturers’ air compressors, for example, which can power several separate equipment simultaneously. By integrating digital monitoring systems, decision-makers can better understand their suppliers’ production rates, making inventory tracking more accurate.

Despite the emergence of modern product tracking and vendor management technologies, many enterprises fail to connect their digital supply chain to its physical counterpart. According to one survey, less than three in 10 organizations are data-driven. In an age where supply chain disruptions are becoming increasingly common, data reliability is critical for success.

Why Businesses Must Work to Close the Gap

When data on warehouse inventory levels and product locations doesn’t reflect its real-world counterpart, brands suffer from process inefficiencies. Consequently, reacting to market changes, supply chain disruptions and shifts in consumer demand become more challenging. As a result, they may struggle to keep up with their competitors. 

Productivity loss is another one of the most significant byproducts of such discrepancies. Equipment failure — which is often addressed with reactive maintenance programs — accounts for 50% of unplanned downtime, amounting to billions of dollars in annual losses.

If businesses cannot rely on their data, the collaboration between manufacturers, suppliers and logistics fulfillment falls apart. How are third parties — many based in different countries — supposed to work in tandem when the foundation for their efforts is inaccurate or outdated?

More often than not, the gap between the digital and physical supply chain is artificial — an unintentional byproduct of mismanagement. Many enterprises underutilize their data, resulting in missed opportunities and wasted resources. In fact, nearly 80% of firms report they struggle to take action on insights extracted from real-time information collection.

Closing the Gap By Leveraging Technology 

When disruptions impact trade routes, organizations that rely on a cohesive digital and physical supply chain will emerge composed and collected. They can also outperform their competitors and leave those struggling with the widening gap behind. Decision-makers who recognize a discrepancy between their digital and physical supply chains should consider leveraging automation, decentralized ledger and Internet of Things (IoT) technologies to close the gap.

The goal is to enhance visibility and traceability by improving the accuracy of management and tracking technologies to eliminate discrepancies between the digital and physical supply chains. In this context, automation technology like artificial intelligence or robot process automation can fill the gaps where real-time data is unavailable or unnecessary, streamlining administrative tasks.

With decentralized ledger technology — namely, the blockchain — companies and their vendors can log an immutable record each time products change hands or move locations. This real-time information enables them to respond dynamically to any sudden market changes or supply chain disruptions, as it ensures their data always reflects its real-world counterpart.

In some cases, businesses can use technology for predictive analytics applications to enhance their demand forecasting. This would allow them to anticipate shifts in consumer demand or potential delays, and adjust their inventory levels or shipping routes accordingly.

Digital transformation or optimization is vital for closing the gap. Brands can proactively adjust to unforeseen changes while securing a positive return on investment.

The Importance of Strategic Digital Transformation

Many organizations have discovered their current technological solutions are inadequate in the face of natural disasters and freak accidents. As they struggle to apply their data in decision-making processes or integrate their equipment in meaningful ways, they lose their competitive edge to those who have already closed the gap.

In short, businesses must consider strategic digital transformation or optimization to ensure they can meaningfully extract and apply data-driven insights. Simply utilizing modern technologies or collecting real-time information isn’t enough anymore — they must strive to ensure their digital supply chain accurately reflects its physical counterpart.

This was a guest post by Ellie Gabel.

Author Bio

Ellie is a freelance writer who loves exploring the latest advancements in tech and science and how they’re impacting the world we live and work in. She’s also the associate editor of Revolutionized.com.

The post Closing the Gap Between the Digital and Physical Supply Chain appeared first on Universal Cargo.

Rebecca Picciotto reported the details in a CNBC article:

Starting this year, President Joe Biden will quadruple tariffs on imported Chinese electric vehicles, from 25% to 100%. The import tax on Chinese solar cells will double, from 25% to 50%. And tariffs on some Chinese steel and aluminum imports will increase more than three-fold, from 7.5% today up to 25%.

The president also directed U.S. Trade Representative Katherine Tai to more than triple the tariff rates on lithium-ion batteries for EVs and lithium batteries meant for other uses. Starting in 2025, tariffs on imported Chinese semiconductors will jump from 25% to 50%.

First-time tariffs will be imposed on Chinese imports of medical needles and syringes, as well as massive ship-to-shore cranes, the White House said in a fact sheet. Chinese rubber medical gloves and some respirators and face masks will also be hit with higher tariff rates.

Picciotti’s article is worth reading, as she gets into the political stakes for President Biden versus President Trump in the upcoming election, concerns about China overproducing clean energy products like solar panels and electric cars and then dumping them in the U.S. and other markets, and President Biden’s insistence that the tariff hikes won’t cause even more inflation despite what economic analysts say.

Of course, our focus here is on shipping.

President Trump’s trade war with China had a serious impact on U.S. shippers who import from China. Interestingly, hiked tariffs on China was seemingly the only Trump Administration policy that the Biden Administration did not try to reverse immediately upon entering office. Now, the Biden Administration adds even more hikes.

Solutions for Shippers Who Can’t Afford the Tariff Hikes

There will be businesses that will need to strategize how to handle these tariff hikes on Chinese goods.

In 2018, we gave two solutions to the problem when the Trump Administration was raising tariffs on imports from China.

Exemptions?

The first was an exclusion request. However, back then there was a Section 301 tariff exclusion process that some shippers were able to utilize to protect them from the increased cost of importing from China. There will undoubtedly be some exemptions on the hikes the Biden Administration is making.

In fact, Bloomberg has already published an article on exemptions for key solar manufacturing equipment.

Exemption announcements and processes for applying to these will be worth watching, but…

Alternate Sourcing

For most, there won’t likely be exemptions on Chinese goods they currently import that fall within the range of those getting increased tariffs. That brings us to the second solution option.

That option is to change sourcing. Importing from other countries or manufacturing domestically may be much better options than continuing to import from China. When President Trump raised tariffs on China, many shippers went with such a choice. U.S. manufacturing saw increases, though there were other Trump Administration policies that played into this too.

Domestic sourcing is absolutely an option worth looking into. And Universal Cargo can even help arrange domestic trucking, as well as all of businesses’ international shipping needs.

When seeking alternate sourcing from other countries to import from, many shippers who import from China focus their search to other Asian countries to replace China. There may be great options with importing from Japan, Malaysia, South Korea, Taiwan, and others, but shippers shouldn’t overlook options around the globe, including Europe, South and Central America, and even our direct neighbors, Canada and Mexico.

There may be good options in places that surprise shippers. And, of course, Universal Cargo is happy to serve your business, handling your importing and exporting around the world.

The post Shipper Alert! Biden Hikes Tariffs on $18 Billion Worth of Imports from China appeared first on Universal Cargo.

Engineers have been working to regain ship access to the Port of Baltimore, which was lost because of the collapse. Yesterday’s controlled explosions were a big step in fully opening the waterway to the port. Plus, some cool videos of the explosion were posted.

My favorite such video was Tweeted on X by the USACE Baltimore itself:

The Port of Baltimore also tweeted a cool video of the explosion, along with still frame pictures of it.

Finally, CBS posted a nice video of the explosion on Youtube. I marked it where the explosion is about to happened because most of the ten-minute video doesn’t contain the action.

The mayor of Baltimore, Brandon Scott, called the explosion an “important milestone” in clearing the channel.

The post Whoa! Video of Explosion to Free Cargo Ship from Collapse Francis Key Bridge appeared first on Universal Cargo.

Bad Weather at Asian Ports

Two weeks ago, some major carriers issued warnings of bad weather causing delays of up to a week for vessels at key Asian ports. For many importers, that means cargo that was supposed to arrive at U.S. ports this week has not.

The Journal of Commerce (JOC) actually issued an email warning on Tuesday about the bad weather causing week-long delays. While it seems that email alert was issued more to promote the JOC’s library of shipping charts, they are a useful tool and show congestion as still a concern in Asia. At the Port of Ningbo, congestion spiked in late April and has been coming down in the weeks since. However, the Port of Shanghai has congestion still rising right now, despite a couple weeks passing since the bad weather really slowed the Asian ports.

It was April 26th when Keith Wallis reported the following in the Journal of Commerce:

Bad weather and resulting congestion at ports in Asia are causing vessel delays of up to a week at key gateways in the region, carriers say. 

Hapag-Lloyd said fog is the main problem at ports in China, including Shanghai and Ningbo, while torrential rain and poor visibility were issues in Malaysia and Singapore. An index measuring wait times in harbor, produced by Portcast, shows congestion in Ningbo began rising mid-April.

The adverse conditions meant vessels could not berth even as more ships arrived at anchorage, leading to vessel bunching that exacerbated port congestion. Yard congestion in Singapore also contributed to the delays there, Hapag-Lloyd said in an advisory Thursday. 

The delays come on top of the extra 10- to 14-day transit carriers face due to diverting vessels around southern Africa to avoid the risk of attack in the Red Sea region. 

One of the worst-affected facilities is the Shanghai East Container Terminal, where there are delays of up to seven days, Maersk said in an advisory this week. Other terminals in Shanghai are seeing delays of up to three days, while Ningbo and Qingdao in eastern and northern China are reporting similar delays, Maersk added. 

Hapag-Lloyd said vessels are having to wait up to 80 hours to berth at Port Klang and 72 hours in Singapore. 

Ocean Network Express (ONE) confirmed that some ships operating trans-Pacific and intra-Asia services are having sailing schedules disrupted by the bad weather and port congestion. 

Highlighting the delays, ONE sailing schedules show the 10,000-TEU Seaspan Bellweather, operating the Asia-Latin America Express 3 service, was two days late at Ningbo. That lengthened to three days when the vessel berthed at Shanghai and then five days when the vessel arrived at the next call, Qingdao, this week. ONE attributed the delays to berth congestion at all three ports. 

Vessel delays at major shipping gateways often ripple through supply chains around the world. We will see how much that happens with these current shipping delays out of Asia.

Conditions for Freight Rate Increases

General retailer overstock – caused by the shipping boom followed by struggling economies and high inflation – finally dwindled enough to bring global shipping up to more normal levels, similar to before the pandemic, than we’ve been seeing. That has eaten into the international shipping industry’s excess capacity that was helping it handle the longer routes necessitated by Iran-backed Houthi attacks in the Red Sea and Gulf of Aden. While there’s been a capacity injection in India to U.S. trade routes, many major trade routes, like Asia to U.S. routes, have seen capacity tighten.

That tightened capacity helped create congestion at the ports. However, it was the tighter capacity for shipping goods from Asia paired with bad weather, seen in heavy fog in some ports and heavy rain in others, that really caused the congestion. Pairing that congestion with the tighter capacity, you’re looking at the type of situation that tends to put upward pressure on freight rates. After freight rates came down a little in April, there’s a good chance we’ll be seeing increases here in May.

The post Shipping Alert! Delays on Imports from Asia & Freight Rate Increase Conditions appeared first on Universal Cargo.

Thus, back by popular demand, is another “conversation” with AI about international shipping. Perhaps, I’ll make this a semi-regular thing. But, perhaps, that’s what the machines want. Perhaps, I’ll just get bored with this AI fad and never do another one of these again. But, perhaps, that’s what the machines want, so we’ll forget about them as they’re working behind the scenes, taking over…

Whatever the case may be, I’ll do a similar structure today to last time: question from me, answer from AI, and my thoughts on the answer.

Q1: Ocean freights rates from India to the U.S. fell this month (May, 2024) due largely to capacity. Are there other major trade lanes right now that are doing similarly or where ocean freight rates are behaving very differently for U.S shippers?

AI:

Certainly! Let’s take a look at the current state of ocean freight rates on some major trade lanes. Here’s what I found:

1. Asia to U.S. West Coast:
   • The Freightos Baltic Index (FBX01 Weekly) shows that rates increased by 6% to $3,095 per FEU (forty-foot equivalent unit) for shipping from Asia to the U.S. West Coast¹.
   • Despite this increase, prices remain well above normal levels.
2. Asia to U.S. East Coast:
   • On the Asia-U.S. East Coast route (FBX03 Weekly), rates fell by 1% to $4,262 per FEU¹.
   • Again, these rates are still elevated compared to historical norms.
3. Asia to Northern Europe:
   • Rates for shipping from Asia to Northern Europe (FBX11 Weekly) increased by 2% to $3,365 per FEU¹.
4. Asia to Mediterranean:
   • Conversely, rates from Asia to the Mediterranean (FBX13 Weekly) fell by 2% to $4,256 per FEU¹.
5. Intra-Asia Feeder Services:
   • Some congestion in intra-Asia feeder services is attributed to changes due to Red Sea diversions, along with recent bad weather delays in the region¹.
6. Capacity Adjustments and Effective Capacity Growth:
   • The ocean container market has settled into a new routine, avoiding the Red Sea due to Houthi attacks.
   • While significant backlogs and congestion have dissipated, adjustments continue to cause moderate disruptions.
   • Some West Mediterranean ports now serve as transshipment hubs for East Mediterranean-bound containers, leading to congestion.
   • Terminals in Colombo, Sri Lanka, are also facing backlogs due to increased volumes for transshipment to the Middle East.
   • Carriers are operating more vessels than usual on service loops that normally use the Suez Canal, but fewer than normal weekly Asia-Europe sailings are actually departing.
   • These factors contribute to nominal fleet growth but only moderate effective capacity growth, resulting in still-elevated freight rates¹.
7. Outlook:
   • Ocean rates out of Asia have remained relatively stable for the last four weeks.
   • Rates from Asia to N. America’s East Coast and the Mediterranean are around $4,300 per FEU, while rates to the West Coast and Northern Europe are in the range of $3,000 to $3,300 per FEU.
   • As demand increases during peak season, these rates are likely to rise further¹.
8. Transpacific Contract Rates:
   • Transpacific contract rates are settling higher than last year, and current spot rates are prompting shippers to negotiate at these elevated levels².
9. Ocean Delays and Cost Increases:
   • While ocean rate increases are significant, they are nowhere near the surge levels seen during the pandemic.
   • Shippers are navigating the challenges without resorting to more expensive alternatives like air cargo³.

In summary, ocean freight rates remain elevated on several trade lanes, and capacity adjustments continue to impact the market. U.S. shippers should closely monitor these developments as they plan their shipments. If you have any specific routes or additional questions, feel free to ask! 😊🚢🌎

My Thoughts

It is impressive that in a matter of seconds, AI creates a mini-essay on the topic of ocean freight rates. It is very bullet-point heavy, so essay may still be a strong word, even when modified by mini.

I tried to be very specific in the question, as that seems to be best when dealing with AI. While I asked it about routes and freight rates speecifically for U.S. shippers, AI went broader than that. I also asked it about freight rates right now, referencing the behavior of a specific trade lane this month, and AI again went broader with its answer. However, the answer does give a feel for general freight rate trends happening currently and this year compared to last year.

AI does give its sources, which I like. However, I should really say source, as it is pretty much exclusively relied on Freightos for its answer to my question. Nothing wrong with Freightos, but I would have rather seen AI pull from multiple sources. A single source could be anomalous, misleading, or even plain wrong. I suppose which sources AI decides are reliable depends upon its coders for criteria to judge websites and which search engines, like Google, that it relies upon when searching. Ah, what am I worried about. The internet is completely reliable when it comes to information, right?

Nevertheless, let’s bring up this single source issue with AI:

Q2: If you broaden your sources for information and data to as many as you can beyond Freightos, do you come to different conclusions than you reached when answering my question?

AI:

Certainly! While my initial response was based on information from the Freightos Baltic Index (FBX), I can broaden my sources to provide a more comprehensive view. Keep in mind that real-time data can fluctuate, but here are some additional insights from various industry reports and news sources:

1. Drewry World Container Index (WCI):
   • The WCI tracks container freight rates across major trade routes. As of May 2024, it indicates that rates have stabilized but remain elevated compared to historical averages.
   • This aligns with the information I provided earlier.
2. Alphaliner:
   • Alphaliner, a shipping industry analytics firm, reports that carriers have been adjusting capacity to manage demand and maintain rates.
   • While some routes experience congestion due to capacity constraints, others have seen smoother operations.
3. Journal of Commerce (JOC):
   • The JOC reports that carriers are implementing peak-season surcharges to offset rising costs and maintain profitability.
   • Shippers are advised to secure bookings well in advance to avoid capacity shortages.
4. Supply Chain Dive:
   • Supply Chain Dive highlights that ocean carriers are benefiting from strong demand and limited capacity.
   • The situation is expected to persist throughout 2024, impacting rates.
5. Global Trade Magazine:
   • Global Trade Magazine notes that shippers are exploring alternative routes and modes of transportation to mitigate high ocean freight costs.
   • Some are turning to rail and air freight for urgent shipments.

In summary, while the specific numbers may vary slightly across different sources, the overall picture remains consistent: ocean freight rates are elevated due to capacity constraints and strong demand. U.S. shippers should closely monitor market developments and consider alternative strategies to manage costs effectively. If you have any further questions or need additional information, feel free to ask! 😊🚢🌎

My Thoughts

“Certainly” wasn’t the best word choice for AI to use in starting its answer. That would mean it definitely come to a different conclusions than AI gave when just relying on Freightos. It’s clear AI used “certainly” in communicating that it can and would broaden its sources to provide a more comprehensive view. AI’s first answer also started with “Certainly!” Clearly, it’s a regular way AI is programmed to begin responses.

The answer AI gave when sharing information from these different sources seems generalized to an extreme level. The JOC publishes tons of articles on international shipping. Among them is one about freight rates dropping sharply in India to U.S. lanes because of carriers injecting capacity into it. That article is part of what inspired my initial question to AI. However, the only mention of capacity that AI makes when it comes to the JOC is possible capacity shortages.

In fact, throughout the sources, AI tends to bring up capacity in terms of it being limited. It seems as though AI was either specifically looking for that or looking for similar word usages of capacity throughout the sources.

Overcapacity was a concern for the international shipping industry as 2024 approached. However, the Iran-backed Houthi attacks forced carriers to reroute cargo and use more ships to move the same amount of goods. The overcapacity became a blessing in creating the space to do that. I have previously written in Universal Cargo’s blog about carriers or industry experts saying that has brought current capacity close to its limit. AI gives little detail of the situation and none of the nuance.

The generality of AI’s summaries, while sounding good, make them just steps away from useless. However…

There is a general trend that can still be pulled from AI here. Still, from its answers and selective pulling of data, I would have little faith in trusting AI’s overall accuracy.

To Be Continued

Because AI gives decently sized answers, this post has already grown rather long after only two questions and answers. Thus, I’ll continue this conversation in the next post in Universal Cargo’s blog, unless a shipping news story pops up that needs to be covered first. In that case, I’ll still post the rest of the conversation with AI, but you’ll have to wait a little longer for part II.

The post “Conversations” with AI about International Shipping appeared first on Universal Cargo.

Some may ask, “If nobody knows anything about what will happen, how can shippers possibly plan?” People asking that were probably never in Boy Scouts. If you were, you know the Boy Scout motto: be prepared. That should also be the shipper’s motto.

As things in the future look more and more murky, businesspeople who import and export goods need to be more and more like good and loyal scouts. They must be prepared for whatever situation comes. and the good news about the potential ILA strike that the union’s president threatened is shippers actually know a very possible outcome before it happens.

So many disruptions to international shipping happen suddenly, with little to no warning: attacks in the Red Sea deterring use of the Suez Canal, a container ship hitting and collapsing the Francis Scott Key Bridge and shutting down the Port of Baltimore, a drought limiting ships traversing the Panama Canal, a devastating earthquake in Taiwan disrupting production, a tragic explosions in Tianjin disrupting one of China’s major ports, a megaship turning sideways and blocking the Suez Canal… Those were just the first ones to come to mind. The list could go on.

The point is having warning of a potential disruption is a luxury. Similarly, shippers had warning of potential port disruption at West Coast ports last year and successfully guarded themselves from port disruption caused by labor action during the International Longshore & Warehouse Union (ILWU) contract negotiations. Shippers prepared with strategies that were suggested right here in Universal Cargo’s blog. Should shippers use those same strategies now that a similar threat looms on the country’s opposite coast?

Let’s take a look at them…

Should Shippers Divert Goods from the East and Gulf Coasts to the West Coast?

Diverting goods from the West Coast to the East Coast was an effective strategy for avoiding disruptions that occurred from ILWU labor action. If the ILA does strike after their September 30th contract expiration, shippers who’ve already diverted their cargo to the West Coast will be very glad they did.

The whole point of the “Nobody knows anything” William Goldman quote is there’s no way to know if such a strike will happen. However, we’ve yet to see much progress to feel confident that a new contract will be reached by the time that date gets here. Whether shippers decide to divert or not, they should look into the option.

Knowing all the details for cargo diversion, including best estimated time, cost, routing, and necessary logistics partners for the time period starting in October will be crucial if the need to divert actually arises. Even doing a test shipment before then is not a bad idea.

Ideally, shippers shouldn’t have shipments scheduled to go through the East and Gulf Coast ports in early October, if they can avoid it, before having a better gauge on the likelihood of a strike.

That brings us to the next strategy…

Ship Early

The timing of the potential ILA strike is poor, to say the least. It’s right during international shipping’s peak season. Many importers have goods arriving for the Christmas shopping season as October hits. If you normally import heavily in October, try to move that up to July and August, which are also in the peak season range.

Ideally, businesses have already been analyzing adjustments to their peak season shipments with the possibility of ILA port disruption in mind. If you haven’t, it’s time to get on that. You could just plan on shipping as normal, but you’re taking on a large risk if you do so.

Consider Alternate Sourcing

It’s easy for a business to become complacent when it comes to sourcing. Most people do a majority of their shopping at the same stores. It’s easy and comfortable to shop in the same place. That doesn’t mean it’s the best option. Similarly, many businesses find a supplier or manufacturer and simply stick with it rather than consider alternates that may be superior.

Comfort and ease come into play with sourcing, and I don’t want to discount those things. Knowing your supplier or manufacturer has provided you with the products you need in the past makes you feel confident it will continue to do so in the future. And there’s something to be said about loyalty too. However, alternate sourcing may help avoid potential disruptions like the possible ILA strike while still providing equal or better quality goods.

Additionally, just because a business has always imported its goods doesn’t mean domestic sourcing is impossible either. It’s an option worth exploring along with sourcing from places that are more convenient for shipping through ports on different coasts or borders. Universal Cargo can help you with domestic shipping as well as your importing and exporting needs.

More Strategies…

The three ways shippers avoided disruption on the West Coast provide solid strategy for avoiding potential port disruption on the East Coast. However, I don’t want to merely rehash those already covered strategies, so here are a few more things to help, not only the ILA situation but any international shipping disruptive events…

Early Planning and Communication

The earlier you plan and communicate options for potential disruptions, the better your business will be at handling unfortunate situations for importing and exporting. Shippers should actively engage with suppliers, partners, and customers. Through this communication and engagement, shippers can put up-to-date continuity plans in place. Efficient communication systems are essential to be flexible and adaptable during difficult moments in the already volatile world of international shipping.

With continuity comes contingency. Or maybe it’s really the other way around. Always seek and prepare contingency options that have been shared with key team members and partners. Perhaps they come from those key team members and partners. They are what will have you prepared when the really unexpected disruptions happen.

Stay Informed and Monitor Shipping News

You’re reading Universal Cargo’s blog, so you likely already do this. But it’s worth reiterating that knowledge can make all the difference. We’re keeping an eye on the ILA negotiation situation and writing about it in this blog. We also talk about other issues and news items that affect shippers.

Other places to look to stay informed on what’s happening in international shipping include the Journal of Commerce (JOC), FreightWaves, TheLoadstar, and Hellenic Shipping News, to name a handful.

Specifically with ILA negotiations, you can watch announcements made by the ILA and United States Maritime Alliance (USMX) on social media and their websites.

In particular, watch for dates like the September 30th contract expiration or the May 17th deadline ILA President Harold Daggett gave for local negotiations.

Advocacy and Engagement

There are ways shippers can actually take action or lend support to the quick resolution of disruptive contract conflicts between dockworker unions and employers at the ports.

Shippers can collaborate with industry associations that advocate for timely contract agreements and stability at the ports. Such organizations include the National Retail Federation (NRF) and the American Apparel & Footwear Association (AAFA). And there are many more.

I’ve covered letters to U.S. presidents and politicians that have come from such organizations – often the combination of many such organizations. Adding your business to these shows politicians more voter support behind taking action to protect movement through the ports. Currently, politicians on both sides of the aisle have been working on changing laws in order to benefit shippers and supply chains to protect the U.S. economy. There may not be a better time to advocate for the protection of supply chains to local and federal politicians.

Shot List and Storyboard Approach

Since this basically two-part blog series started with a film industry quote, let’s end it by coming back to a film-anology strategy.

1. Shot List: Create a detailed shot list for your shipping operations. In film, a shot list breaks down each scene into each individual shot the crew must execute and capture on camera to be edited together to tell the story for the audience. A shipping shot list will break down each part of your supply chain into the individual tasks that must be accomplished to get goods all the way from their sourcing to your business and then your customers. This shot list should include specifics such as the type of cargo, handling requirements, and any special considerations (e.g., hazardous materials).
2. Storyboard: Think of the shipping process as a storyboard. Visualize each step, from loading at the origin to unloading at the destination. Consider potential bottlenecks, delays, and alternative routes. Figure out the story of the journey of your goods as well as alternate routes and paths your goods could take in order for you to storyboard a better story for your business.

Conclusion

We don’t know what will happen with the ILA contract negotiations, but shippers can be ready for any disruptions that may come from it. Taking the time to plan and prepare is key. Of course, if you have good shipping partners, they may be able to help do a lot of this planning and preparing for you.

The post How to Prepare for Potential ILA Port Disruption appeared first on Universal Cargo.

There’s a dichotomy of opinions on what will happen.

On one side, there are people who think the ILA will reach an agreement with the United States Maritime Alliance (USMX) with little drama before the current contract expires. Shippers would love that. It would mean no port disruption, no costly cargo delays.

On the other end, there are those who think there’s little chance of that happening. There are too many warning signs that the two sides won’t reach a deal by the contract expiration deadline. Those of this opinion think the ILA strike threatened by the union’s president, should no deal be reached by the September expiration, is likely. That’s a shipper’s nightmare. Resulting port shutdowns all up and down the East and Gulf Coast ports would be incredibly damaging, not only for shippers, but the U.S. economy as a whole. Such a scenario could easily cost the economy billions of dollars per day.

What do those closest to the situation think?

Mixed Opinions from Management Sources on Strike Threat

Of course, we already knew the cost of a strike at East and Gulf Coast ports would be high. And the risk certainly exists. But how likely is it? That’s where nobody knows anything because even those involved have a wide gap between opinions on the situation. In the Journal of Commerce, Peter Tirschwell reported on divided management opinions about the likelihood of an ILA strike:

Beneficial cargo owners (BCOs) [as well as small to medium importers and exporters] can take comfort in the view of some management sources contacted recently by the Journal of Commerce who believe there is sincere interest on both sides to reach a deal ahead of the contract expiration, and that a deal will likely get done without disruption. Carriers who are rarely assertive at the bargaining table with longshore labor over many years are likely to cut a lucrative deal for labor and call it a day, others believe. Some carriers say they are seeing some diversions to the West Coast ahead of potential labor disruption, but not a lot.  

“We feel labor will get a new contract and a [wage] increase but not do anything to give a reason to shippers to consider diverting cargo,” said the head of logistics for a household goods retailer. “We have always felt that East Coast labor is more commercially minded.”  

But the sanguine view is not unanimous. Some management sources remain in wait-and-see mode, withholding opinion until the union reveals its latest wage increase demands upon resumption of “big table” — or coastwide — discussions that will occur once local agreements are either wrapped up in the coming weeks or unresolved issues are kicked up to the big table. Some of those local contracts are already concluded, while others are still being negotiated or encountering difficulties, sources say. 

Some observers see warning signs. Specifically, they relate to wage increase demands by the union that might be too high for ocean carriers who dominate the United States Maritime Alliance (USMX) management group to accept. 

Wage Demands Biggest Warning Sign?

There are many points to be negotiated when it comes to a new ILA contract. Particularly, there’s a giant fight to be had over automation. ILA President Harold Daggett went so far as to call these contract negotiations the most challenging in the union’s history. And it has a long history; the ILA was first founded in 1892. So why are wage increases the biggest warning sign that ILA contract talks could be on their way to port disruption? Because the union won’t touch any of the many other contract issues, including automation, until wages are worked out. That’s according to Daggett back in November:

“I want wages done first,” Dagget said, “and then we’ll sit down and negotiate the contract.”

Thus, it’s no surprise that, in his JOC article, Tirschwell focuses in on wages when it comes to warning signs that ILA talks could turn disruptive. Tirschwell wrote all about the ILA’s negative reaction to the recent International Longshore & Warehouse Union (ILWU) contract extension, in which the dockworkers union on the West Coast received a $70 million bonus and a 32% pay increase for its workers:

… Daggett expressed dissatisfaction with that result, which he sees as having been forced on the ILWU by the Biden administration in its attempt to avert further disruption and economic and political problems.  

“When the ILWU was going through talks, you’d think he would have picked on the foreign companies out there that are setting up automation and getting rid of American jobs, but he didn’t do that,” Daggett told a meeting of ILA locals in Nashville in November, as reported by the Journal of Commerce. “He went after the ILWU, telling them to get this contract signed.”   

The implication is clear: Whereas the ILWU allowed Biden’s representative, acting Labor Secretary Julie Su, to facilitate a deal and quash further disruption at West Coast ports, Daggett will be less receptive to pressure from Washington, and according to sources, has said as much privately.  

It’s not just privately Daggett has shunned Washington pressure. Heck, it’s not even just pressure. He’s shunned all mediation from the administration of “the most pro-union president in history,” as President Biden still calls himself. In November, when Daggett warned ILA members to prepare for the loss of income from a strike in September, he said publicly, “We will not be interested in Biden sending us a mediator if negotiations are not going well.”

Because of the union’s wage demands, negotiations have not started well. There were early contract extension talks between the ILA and USMX that reportedly broke down specifically because of ILA’s wage increase demands. The enormous pay increases the ILWU got clearly don’t seem good enough for the ILA, and the ILA seems unwilling to bend on the issue.

That doesn’t bode well for negotiation completion before contract expiration. However…

We Should Know More in a Couple Weeks

Daggett did give clearance for local ILA negotiations, as referenced in a Tirschwell quote above. Local negotiations are a precursor to the larger, Coasts-wide negotiations. Daggett gave these local negotiations a mid-May deadline on getting done.

Recapping Tirschwell above, some of these negotiations have had success while others are hitting difficulties. In a couple weeks, if the results of the local negotiations are predominantly positive, the outlook on the overall contract negotiations should be more optimistic. That leaves the inverse as also true. If there are several major issues arising from the local negotiations, the overall outlook should turn more pessimistic.

In our next post, we’ll talk about how shippers should be preparing future imports and exports with the ILA situation in mind.

The post No One Knows What Will Happen with ILA Port Disruption appeared first on Universal Cargo.

The biggest fads with AI are talking to it and asking it to create pictures. And, of course, AI is talking back and generating pictures. At the risk of AI taking over the world and eliminating or enslaving the human race, we’ll join the fad today and find out what AI “thinks” about international shipping.

Using Microsoft’s AI, I’ll ask it some questions about international shipping, freight rates, and so on and post its answers below. Then I’ll add a quick thought or two I have about what it says. I may even have AI generate some international shipping images to add to this post.

Now, let’s have some fun with our future machine overlords…

QUESTION 1: What do you think about international shipping?

International shipping is a fascinating and intricate domain that connects people, businesses, and cultures across the globe. Let’s delve into the essentials:

1. Shipping Services and Rates:
   • FedEx offers a comprehensive suite of international shipping services. You can compare global shipping options, get rates, and fill out customs documents online. Whether you’re shipping a package or freight, they provide hassle-free solutions¹.
   • UPS also simplifies international shipping. Their easy guide covers topics like allowed items, commercial invoices, and customs forms. They help you navigate the process efficiently².
2. How It Works:
   • International shipping is akin to domestic shipping, but with additional paperwork and delivery considerations. The overall process remains similar, involving packaging, labeling, and transportation³.
3. Customs Documents:
   • Commercial Invoice: This essential document details the contents, value, and purpose of your shipment. Properly filling it out ensures smooth customs clearance.
   • Other forms may be needed based on the destination country.
4. Who Pays Duties and Taxes?:
   • Duties, taxes, and fees are typically the responsibility of the recipient. However, it’s essential to clarify this with your shipping provider and understand the regulations of the specific country.

In summary, international shipping opens up a world of possibilities, enabling businesses to expand globally and individuals to connect across borders. Whether you’re sending a care package or fulfilling commercial orders, understanding the process ensures successful and efficient shipping experiences. 🌎📦

My Thoughts

A very general answer to a very general question. Definitely more for someone sending a parcel internationally than a shipper importing or exporting goods, particularly by the container load. I may have to get more creative and specific with what I ask. I’m a little surprised it chose commercial invoice as the document to talk about rather than the Bill of Lading. In fact…

QUESTION 2: Why did you choose to highlight the commercial invoice instead of the bill of lading?

Ah, an astute observation! Let’s delve into the distinction between the commercial invoice and the bill of lading in the context of international shipping:

1. Commercial Invoice:
   • Purpose: The commercial invoice serves as a crucial document for customs clearance. It provides detailed information about the shipment’s contents, their value, and the purpose of the shipment.
   • Contents: It includes essential details such as the sender’s and recipient’s information, a description of the goods, their quantity, unit price, total value, and any applicable taxes or fees.
   • Significance: Customs authorities use the commercial invoice to assess duties and taxes, verify compliance with regulations, and facilitate the smooth movement of goods across borders.
2. Bill of Lading (BOL):
   • Purpose: The bill of lading is primarily a transportation document. It serves as evidence that the carrier (shipping company) has received the goods and has agreed to transport them to the specified destination.
   • Contents: The BOL contains details such as the shipper’s and consignee’s names, the origin and destination ports, the type of goods, and any special handling instructions.
   • Significance: The BOL plays a critical role in tracking the shipment during transit. It also acts as a receipt for the goods and provides legal proof of the contract between the shipper, carrier, and recipient.

In summary, while the commercial invoice focuses on the goods’ details and customs compliance, the bill of lading emphasizes the logistics and transportation aspects. Both documents are essential for successful international shipping, but they serve distinct purposes. 🌐📦

My Thoughts

Starting with a compliment, AI? Trying to lull us in with good manners before you take over the world. Reminds me of a classic word of wisdom… No. Actually…

QUESTION 3: Why don’t you give me a piece of wisdom for guarding against the cunning strategy of an enemy using charm and grace to achieve his sinister goals, like you’re doing, AI?

“Beware the adversary who wields compliments like a dagger, for their honeyed words may cloak a blade that cuts deeper than any sword.”

My Thoughts

I knew it. AI is coming for us! Actually, in half seriousness, it may be coming for jobs like mine. It did write clearly and quickly about the basics of a commercial invoice and BOL in international shipping. Of course, it is only writing basics. Can AI do an deeper analysis of something? Freight rates, perhaps?

QUESTION 4: Can you analyze what ocean freight rates are doing right now and how they will likely behave for the rest of the year?

Certainly! Ocean freight rates have been quite dynamic recently. Let’s take a closer look:

• January 2023 to March 2024: Container freight rates experienced significant fluctuations. They hit their lowest point in October 2023, with a 40-foot container rate of only $1,342. Since then, rates have gradually risen, reaching a record high of over $3,900 in February 2024. However, they slightly decreased in March and April¹.
• 2024 Outlook:
  • Demand: Expected to grow by 2.5%.
  • Supply: Anticipated to increase by 6.5%.
  • Spot Rates: Volatile throughout the year.
  • Carriers’ Strategies: Aim to raise spot rates through smart capacity management and General Rate Increases (GRI).
  • Long-Term Rates: Steadier compared to 2023.
  • Spot Rates vs. Long-Term Rates: Expected to hover just below or above long-term rates throughout 2024².

In summary, while rates may remain volatile, carriers are actively managing capacity and aiming for stability. Keep an eye on market developments as the year progresses¹².

My Thoughts

Interesting. AI pulls data from Statistica’s Global Container Freight Index. Analysis is a strong word. This is shallow, and I haven’t double checked it to make sure AI didn’t make any mistakes or alterations to the data. There was a climb in freight rates at the end of 2023/beginning of 2024 that was more than gradual after the attacks in the Red Sea started, however…

If someone wanted to investigate freight rates and their behavior as well try to anticipate future behavior, AI does give good points at which that person could begin his or her investigation. I don’t think I’d fully trust AI in data retrieval as it seems to gather information available online, and that could lead to a mixture of good and bad information.

Ultimately, I could see how AI could be a useful tool here. I guess the last thing I want to know is if AI has heard of us…

QUESTION 4: What do you know about Universal Cargo?

1. About Universal Cargo:
   • Established in 1985: Universal Cargo has been in the logistics industry for over 30 years.
   • Freight Forwarder and Ocean Transportation Intermediary: They efficiently handle ocean and air freight, as well as inland distribution.
   • Specialization: Universal Cargo specializes in inbound cargo from Asia to the United States. They also manage export needs and air freight shipments.
2. Services Offered:
   • Ocean Freight: They efficiently handle both Full Container Load (FCL) and Less than Container Load (LCL) shipments for imports and exports.
   • Air Freight: Universal Cargo manages air freight services for both inbound and outbound shipments.
   • Warehousing & Distribution: They offer comprehensive warehousing solutions.
   • Express4Air: A specialized service for expedited air cargo².
3. Tracking Services:
   • Universal Cargo includes tracking with every shipment they handle. Basic tracking allows you to search shipment details and export them to Excel. Additionally, their iView Web Desktop provides customizable dashboards, key statistics, and shipment calendars².
4. Dedicated Staff:
   • When you choose Universal Cargo, you’ll receive excellent service from a dedicated logistics account executive and an operations account manager. They work together to provide personalized, 24/7 assistance. While the account executive plans logistics, the account manager ensures smooth operations for your imports and exports².
5. Additional Services:
   • Universal Cargo offers a range of additional services that can be added to your freight options. These services complete your logistics package, whether you’re shipping door-to-door, ExWorks, port-to-port, or FOB².

Intriguingly, Universal Cargo also produces informational videos that cover international shipping news in a fun and fast format. Their series, Universal Shipping News, keeps shippers informed about the latest developments in the industry².

In summary, Universal Cargo is your trusted logistics partner for seamless international shipping. Whether you’re moving goods across oceans or handling air freight, they’ve got you covered! 🌐🚢🌎

My Thoughts

Well, AI basically put together a written commercial about us by pulling information from throughout our website. There are a number of fake Universal Cargo knock-off, even scam, companies out there. I’m glad AI recognized us as the real Universal Cargo and didn’t get taken in by any of those others.

Conclusion

AI does seem like a useful tool, but it’s answering questions by grabbing information off the internet. The risk of inaccuracy with that seem high. It certainly doesn’t have the insights of an expert or even of any un-artificially thinking human. I don’t think it’s ready to take over my job, let alone the world yet. But I don’t trust it, Sarah Connor.

It does, however, generate some nice images that I’ll use in this post. That couldn’t lead to machine domination, right?

The post What Does AI “Think” About International Shipping? appeared first on Universal Cargo.

Trade policies and tariffs significantly impact the global economy, affecting various industries, including shipping. Recent changes in tariffs can profoundly influence U.S. shippers, altering costs, supply chain dynamics, and market competitiveness.

Understanding these implications is crucial for businesses involved in shipping operations. In this article, we delve into the impact of new tariffs on U.S. shippers and provide insights into navigating this evolving landscape.

The Current Tariff Landscape

Tariffs, essentially taxes on imported goods, are used by governments to regulate trade, protect domestic industries, and address economic concerns. Imposing tariffs can lead to price increases for imported goods, disrupt supply chains, and affect consumer behavior.

In recent years, the United States has seen fluctuations in its tariff policies, with changes implemented to address trade imbalances, promote domestic manufacturing, and protect intellectual property rights.

Impact of New Tariffs on Shipping Costs

One of the most immediate effects of new tariffs is the increase in shipping costs for U.S. importers and exporters. Tariffs raise imported goods’ prices, prompting businesses to either absorb the additional fees or pass them on to consumers.

For shippers, this means higher transportation expenses and potential adjustments in pricing strategies to remain competitive in the market. Moreover, uncertainty surrounding tariff changes can lead to volatility in freight rates, making it challenging for shippers to forecast and budget effectively.

Supply Chain Disruptions

Tariffs can disrupt established supply chains, forcing shippers to reassess sourcing strategies and logistics networks. With increased costs and potential trade barriers, businesses may seek alternative suppliers or manufacturing locations to mitigate tariff impacts.

However, transitioning to new suppliers or routes can introduce complexities such as changes in lead times, quality control issues, and logistical challenges. As a result, shippers must carefully evaluate the trade-offs between cost, reliability, and flexibility in their supply chain decisions.

Market Competitiveness

Changes in tariffs can affect U.S. shippers’ competitiveness in domestic and international markets. Higher import costs may make imported goods less attractive to consumers, creating opportunities for domestic producers to gain market share.

Conversely, U.S. exports may face retaliatory tariffs from trading partners, reducing their competitiveness abroad. Shippers must assess the implications of tariff changes on their product pricing, market positioning, and overall business strategy to maintain competitiveness in a changing trade environment.

Diverse Shipping Solutions: Meeting Tariff Challenges

Within international trade and commerce, a diverse array of companies offer shipping solutions to meet the evolving needs of businesses navigating tariff challenges. In international shipping logistics, companies often turn to established providers like Transparent International NYC for their expertise. With a focus on transparency and reliability, they stand out among shipping providers, offering valuable support to businesses in need of shipping services.

While some companies focus on specific regions or modes of transportation, others provide comprehensive end-to-end solutions encompassing warehousing, customs clearance, and distribution. By tapping into the expertise and resources of these shipping providers, businesses can confidently navigate tariff complexities, ensuring the smooth flow of goods across international borders.

Regulatory Compliance

Navigating the regulatory landscape surrounding tariffs requires careful attention to compliance requirements and documentation procedures. Failure to comply with tariff regulations can result in penalties, delays in customs clearance, and disruptions to shipping operations.

Shippers must stay informed about changes in tariff classifications, duty rates, and trade agreements to ensure smooth cross-border transactions. Additionally, investing in technology solutions and leveraging automation can streamline the customs clearance process and enhance regulatory compliance.

Strategies for Mitigating Tariff Impact

Despite the challenges posed by new tariffs, there are strategies that U.S. shippers can adopt to mitigate their impact and maintain operational efficiency. Diversifying sourcing locations and suppliers can reduce reliance on regions subject to high tariffs, spreading risk across multiple markets.

Negotiating with suppliers for price adjustments or exploring alternative transportation modes and routes can also help offset increased shipping costs. Furthermore, investing in supply chain visibility and data analytics enables shippers to identify cost-saving opportunities, optimize routes, and improve inventory management.

Collaboration and Advocacy

Collaboration and advocacy within the industry can amplify the voice of U.S. shippers in shaping trade policies and tariff regulations.

Shippers participate in trade associations, industry forums, and advocacy groups. They collectively address concerns, share best practices, and influence policy decisions.

Engaging with policymakers and stakeholders is essential. It allows shippers to advocate for measures. These measures promote free and fair trade, mitigate tariff barriers, and support a conducive business environment for international commerce.

Economic Outlook and Uncertainty

The impact of new tariffs on U.S. shippers is intertwined with broader economic trends and geopolitical dynamics. Changes in trade policies, currency fluctuations, and global supply chain disruptions can amplify the effects of tariffs on shipping operations.

Moreover, geopolitical tensions and trade disputes between major economies introduce uncertainty into the market, making long-term planning and risk management challenging for shippers. Monitoring economic indicators, geopolitical developments, and regulatory changes is essential for adapting to evolving trade conditions and minimizing business risks.

Leveraging Technology for Streamlined Operations

In addition to partnering with shipping providers, businesses can harness the power of technology to streamline operations and mitigate the impact of tariffs. Advanced logistics platforms and supply chain management software offer real-time visibility into shipment status, inventory levels, and transportation routes. By leveraging data analytics and predictive modeling, companies can optimize shipping routes, minimize transit times, and reduce costs.

Furthermore, automation tools streamline customs documentation processes, ensuring compliance with tariff regulations, and expediting customs clearance. As businesses navigate the complexities of global trade, embracing technology-driven solutions empowers them to adapt to changing tariff landscapes and maintain competitiveness in the market.

Conclusion

In conclusion, the implementation of new tariffs has far-reaching implications for U.S. shippers, affecting costs, supply chain dynamics, and market competitiveness. Navigating this complex landscape requires proactive strategies, regulatory compliance, and collaboration within the industry.

By understanding the impact of new tariffs on shipping operations and adopting appropriate measures, shippers can mitigate risks, seize opportunities, and thrive in a rapidly changing global trade environment. Stay informed, stay adaptable, and remain resilient in the face of tariff-related challenges.

This was a guest post by Eric Laurence.

Author Bio

Meet Eric Laurence, an experienced industry analyst specializing in global trade and logistics. His expertise in writing informative content helps readers grasp the implications of tariff changes on shipping operations and strategic decision-making.

Keyword:
impact of new tariffs

The post Impact of New Tariffs on U.S. Shippers: What You Need to Know appeared first on Universal Cargo.

It’s clear that the president has already assumed the outcome of Tai’s investigation as Biden had already said in the speech, “…China’s steel companies don’t need to worry about making a profit because the Chinese government subsidized them so heavily. They’re not competing. They’re cheating.” Then he reemphasized, “They’re cheating.”

The speech, shared below, made it sound more like the Biden Administration is about to triple tariffs on Chinese steel and aluminum rather than it’s considering the idea.

Especially in an election year, it can be hard to take anything President Biden says in a speech as something that’s actually real. However, when it comes to these tariffs on China, it’s a very real possibility they’ll happen. Here’s why…

Why Biden’s Tariff Increase on China Is Actually Likely

When Biden came into office, he and his administration seemed on a mission to reverse or end all Trump era policies. This included ending the effective “Remain in Mexico” policy, ceasing construction of the Southern border wall, rejoining the Paris Climate Agreement, revoking the Keystone XL Pipeline permit, halting new oil and gas leasing on federal land, calling for corporate tax hikes to more than reverse tax cuts of the former president, increasing or reinstating federal regulations where Trump deregulated, and on, and on…

BUT…

President Biden did not cut President Trump’s tariffs on China.

For a year and a half, Trump heavily escalated tariffs on China until he got a Phase 1 Trade Agreement from the country. Unfortunately, the trade deal was quickly overshadowed and basically negated when COVID-19 spread from Wuhan to the rest of the world. There have been COVID-related exemptions, but those tariffs on Chinese goods stayed right in place, even after Biden took office.

To many, that seemed strange because Democrats, including Biden, criticized Trump’s tariffs on China. But Biden went from, in 2020, telling NPR regarding the tariffs “we’re going after China in the wrong way” to his administration defending the tariffs as “a significant piece of leverage” in 2022.

Clearly, the Biden Administration likes the tariffs so much that even its hatred of Trump and its policy of derision toward everything the former president did isn’t enough to abandon the tariffs. And now Biden wants to take this controversial policy of Trump even further? They must have really strong feelings for these tariffs in the Biden Administration.

That paired with Biden already concluding China is engaging in anti-competitive trade practices would probably be enough to say there’s a good chance the Biden Administration implements this tripling of tariffs on Chinese steel and aluminum, but there’s more…

Politically, Biden Needs to Show Strength Against China

Politically, President Biden needs to show strength against China as evidence of himself and his family receiving money from China hurts his re-election bid.

In the following video, Representative Byron Donalds walks through bank statements and check copies showing a paper trail of money from a Chinese account tied to the Chinese Communist Party to an account controlled by the president’s son Hunter Biden with a portion of the money getting withdrawn and then going to Joe Biden himself, before he was president:

The last thing President Biden can afford, politically, is the appearance that he and his family gaining money from China has affected his policies as president pertaining to China. Especially if it looked like he was going soft on China.

Of course, it could affect his policy on China in the opposite direction. It might make him hold or present stronger policies or stances against China, such as tariffs on Chinese goods and materials or calling China “xenophobic” as he did in his speech yesterday.

The political need to show himself strong against China, especially when showing strength in general has not been his strong suit, ups the odds of him increasing these tariffs on China from a good chance to likely.

7.5% Tariffs to 25%?

Outlets have been reporting that Biden is calling for tariffs on Chinese steel and aluminum to rise from their current 7.5% to 25%. That would actually be a bit more than tripling the tariffs. The 25% number doesn’t appear in the speech or the White House release covering the call to triple the tariffs. However, I suppose that does seem like the nicest number to round 22.5% up to, if that exact tripling of 7.5 didn’t seem round enough.

7.5% isn’t actually the exact tariff on all aluminum and steel imports from China we’re talking about here. In its release, the White House states that’s the current average tariff on “certain steel and aluminum products” under Section 301. It’s implied that those products are all from China and the certain ones Biden is calling to triple, but I’m not sure exactly how the media landed the exact amount of 25% for the percentage to which those tariffs are increased.

Tariff Hike Good or Bad?

Critics of the tariff hike argue that it will only increase the bad inflation the U.S. has suffered under the Biden Administration while the Biden Administration argues it will protect U.S. jobs.

I had ambivalence about the tariff hikes Trump implemented. However, he had a clear goal of getting a trade deal to protect the U.S. and her businesses from China’s unfair trade practices and tackle our trade deficit with China. I don’t see a similar clear goal from the Biden Administration; however, further exposing anti-competitive practices of China and protecting U.S. companies from dumping is a good thing.

U.S. importers of such goods from China would obviously suffer major cost increases that might make them second guess importing them from China. U.S. exporters might suffer retaliatory tariffs.

Joey Garrison reported in a USA Today article, “Imports of steel from China account for only about 0.6% of total U.S. steel demand, according to a senior Biden administration official.” Their argument there is that it’s such a low percentage that it won’t further increase inflation. By that logic, the argument could be flipped to say that this move also wouldn’t do much to protect American either. That would make the move little more than political posturing.

Conclusion

There’s a high chance of the Biden Administration following through on the president’s threat to triple tariffs on steel and aluminum goods from China. For shippers who import or export steel goods to or from China, this would be a big deal. Potentially, the move could lead to more than just a single retaliatory action from China, and reignite the trade war we saw during the Trump era. However, it could amount to little more than political posturing, even if it did happen.

The odds are the move wouldn’t make a huge impact on inflation or U.S. job protection. A small amount on both is possible, but a statistically negligible impact is more likely.

The post Why Biden Will Likely Follow Through on His Threat to Triple Tariffs on Chinese Steel and Aluminum appeared first on Universal Cargo.

Bill Mongelluzzo reported on the situation at the Port of Oakland in a Journal of Commerce (JOC) article:

The Port of Oakland’s four container terminals were closed for Monday’s day shift as a precautionary move after demonstrators protesting the war in Gaza threatened to march into the port area. 

Oakland International Container Terminal (OICT) — the port’s largest container facility — said it would remain closed for Monday’s evening shift as well. It was not immediately known if the other three terminals would follow suit and shut for the second shift. 

In multiple coordinated demonstrations, protestors shut down lanes of the major freeway I-880 in Oakland as well as the southbound side of the Golden Gate Bridge, among other traffic disruption, on Monday morning. It took several hours to get freeway lanes reopened and 12 of the protestors were arrested, according to an MSN article by Dave Pehling.

Mongelluzzo gave more on the Port of Oakland disruption in his JOC article and included information about a similarly timed demonstration at the Ports of New York and New Jersey that were, thankfully, not so disruptive:

With threats coming from demonstrators late last week that they would also descend on the port Monday, OICT, TraPac, EverPort and Matson terminals did not open for the day shift, according to a port spokesperson. 

…

On the East Coast, pro-Palestinian demonstrators conducted a drive-by caravan at the Port of New York and New Jersey in Elizabeth, NJ, but did not disrupt operations. The protestors, in a statement, said they were targeting in particular Israel-based carrier Zim Integrated Shipping Services and its CEO Eli Glickman. 

Additional Anti-Israel Protests & Action Disrupting International Shipping

After Hamas attacked Israel on October 7th, 2023 – killing over a 1,200 people, largely civilians, including babies and children; raping and mutilating women; and taking over 240 people hostage, with 100 believed to still be alive in captivity – many have chosen to side with these terrorists against Israel. Most notably for international shipping has been Iran-backed Houthi Rebels attacking ships in the Red Sea and Gulf of Aiden with any, and often outdated, connection to Israel or her allies.

It’s not surprising Iran bankrolls the Houthi attacks. Iran also backed the Hamas attacks on Israel and often uses such proxies for its aggressions. The only real surprise with Iran is that in contrast with its cowardly proxy attacks on Israel and her allies, including U.S troops in the Middle East, it actually attacked Israel directly just days ago. Overall, the country’s actions have not only been politically tumultuous, giving the world more war and violence, but highly disruptive to international shipping.

Anti-Israel protestors, on the other hand, have created many small disruptions to international shipping with demonstrations strategically targeting ports and terminals, among other things. Such demonstrations are small compared to something like attacks on container ships trying to traverse the Suez Canal, but cumulatively they are growing in their impact. Here are several, but certainly not all, notable anti-Israel incidents that have negatively impacted shipping:

Nationwide Protests, United States:

• Date: April 15-16, 2024
• Event: Pro-Palestinian demonstrators blocked roadways in Illinois, California, New York, and the Pacific Northwest.
• Impact: Major airports, including JFK and LAX, were temporarily shut down on top of the ocean port in Oakland that we already talked about. Bridges like the Golden Gate and Brooklyn were also affected.

Port Botany, Sydney, Australia

• Date: Ongoing
• Impact: Anti-Israel activists have disrupted operations at Port Botany, calling for a ceasefire in Gaza. Police have charged 23 protesters for their involvement in the demonstration.
• Source: ABC News

Metro Vancouver Container Port (Deltaport), Canada

• Date: April 15, 2024
• Impact: Anti-Israel protesters blocked access to the Deltaport terminal, causing disruptions to truckers attempting to reach the facility. The terminal operator, GCT Canada, expressed concern over safety and operational challenges.
• Source: CBC News

New York and Los Angeles Airports, United States

• Date: December 27, 2023
• Event: Anti-Israel protesters briefly blocked entrance roads to airports in New York and Los Angeles.
• Impact: Traffic was snarled, affecting holiday travel. Some travelers had to set off on foot to bypass the jammed roadways.
• Source: AP News.

Port of Oakland, United States

• Date: November 3, 2023
• Impact: Demonstrators demanding a Gaza ceasefire delayed a U.S. military supply ship departing from the Port of Oakland. They physically locked themselves to the vessel and disrupted operations.
• Source: MSN

Port of Tacoma, United States

• Date: November 6, 2023
• Impact: Hundreds of anti-Israel protesters swarmed the Port of Tacoma, aiming to block an Israel-bound ship. The entrance was effectively blocked, forcing drivers to turn around.
• Source: KOMO News

Other Global Protests

• Worldwide Coordination: Demonstrations are being coordinated globally, aiming to block major choke points in the global economy and create significant economic impact.

As tensions persist, these protests underscore the interconnectedness of global trade and geopolitical conflicts. Shippers know that ports, often overlooked, play a pivotal role in shaping economies, and protestors have obviously recognized they can become powerful platforms for demonstrations.

The post Anti-Israel Protestors Disrupt Ports, Including Oakland, & International Supply Chains appeared first on Universal Cargo.

The pandemic brought a wave of unprecedented size. One might even call it a tsunami. Largely spurred by lockdowns and stimuli checks, a shipping boom larger than the ports could handle pushed freight rates up and up and up. Of course, the unnatural nature of the boom followed by struggling economy and high inflation finally brought the back half of the wave where freight rates came falling back to sea level. But other events created new waves…

Russian-Ukraine war, wave; Panama Canal drought, wave… and the waves are of various size and impact… attacks in the Red Sea and Gulf of Aiden stopping use of the Suez Canal, big wave; Francis Scott Key Bridge collapse by the Port of Baltimore, small wave…

Those are just some of the splashier events that have affected ocean freight rates. Ultimately, what does it all add up to? What’s happening with freight rates now?

Let’s find out by embarking on a voyage through the tumultuous seas of ocean freight rate indices. These indices can serve as compasses for global trade, guiding shippers, carriers, and economists alike through freight rate trends, helping them to plan for the future.

Each major ocean freight index out there is a little different from the others in how it gathers and aggregates its data. Some may use only the base rates of shipping a container over a shipping route while others may factor in varying amounts of additional fees and costs involved. While this gives different numbers to each index, the rising and falling trends tend to be similar between the indices.

While examining freight rates trends today, we’ll focus mainly on two sources: the Drewry World Container Index (WCI) and the Statista Global Container Freight Rate Index. However, I also looked at other indices, including those from Freightos and Xeneta.

Drewry World Container Index (WCI)

The Drewry WCI is a composite index that tracks 40-foot ocean container freight rates on eight major routes connecting the US, Europe, and Asia. It’s assessed by Drewry Maritime Research and primarily serves as a benchmark for spot rates across these crucial trade lanes.

Broad Numbers from Drewry WCI

The Drewry WCI revealed a couple interesting things when looking at it from a broad lens:

• As of the latest update, the composite index stands at $2,836 per 40-foot container—a 3% decrease from the week before but about 100% higher than the average pre-pandemic rates of 2019 (which hovered around $1,420).
• However, when compared with the same week last year, it has surged by 66%. That means freight rates had returned much of the way to pre-pandemic rates by this time last year.
• The increase of the year-to-date average is rather remarkable at $3,372 per 40-foot container. This surpasses the 10-year average rate of $2,706 (which was inflated by the exceptional 2020-22 Covid shipping boom period). The attacks in the Red Sea and Gulf of Aiden are the biggest factor in the resurgence of freight rates this year.

Route-Specific Insights

Let’s look at specific routes:

• Shanghai to Rotterdam, Shanghai to Los Angeles, and Shanghai to New York: Rates dropped by 3% to $3,078, $3,704, and $4,894 per 40ft box, respectively.
• Rotterdam to Shanghai and New York to Rotterdam: Rates declined by 2% to $794 and $622 per feu, respectively.
• Rotterdam to New York: Rates fell by 1% or $17 to $2,244 per 40ft box.
• Los Angeles to Shanghai: Rates remained stable at the previous week’s level.

Spot Freight Rate Expectations:

Drewry anticipates a minor decrease in spot freight rates in the coming week.

Statista Global Container Freight Rate Index

This index provides a broader perspective on container freight rates. Here’s a glimpse:

• From January 12, 2023 to March 14, 2024, the global container freight rate index fluctuated in U.S. dollars per 40-foot container.
• While the exact value varies over time, it reflects the ebb and flow of supply, demand, and market dynamics.

The container freight rates have been on a rollercoaster ride, influenced by a myriad of factors. Here’s a closer look:

1. Low Point in October 2023:
   • On the 26th of October 2023, the global freight rate plummeted to a mere $1,342 per 40-foot container. This was the lowest level recorded since before the pandemic policies-caused shipping boom.
2. Resurgent Rates:
   • In February 2024, freight rates reached a high of over $3,900 per 40-foot container—a staggering increase of almost 300% from a few months earlier and around a 100% increase compared to pre-pandemic rates in 2019.
   • This surge was driven by a number of supply chain disruptions, but chief among them were the Iran-backed, anti-Israel (and her allies) Houthi attacks on ships in the Red Sea and Gulf of Aiden.
3. March 2024 Dip:
   • In March 2024, the freight rate began to decreased from the February peak.
   • However, rates remain significantly elevated compared to historical averages.

Air Cargo and Ocean Freight Interplay

• Disruptions in ocean freight, driven by events like the Red Sea crisis, continue to impact global trade. Some volumes are shifting from sea to air. For example, out of India to the U.S., air demand increased, though that demand is easing somewhat.
• Freightos Air Index rates out of South Asia have been climbing, especially to North America. Prices have surged 95% since mid-December, reaching $5.40/kg—the highest level since late 2022.

Conclusion

Paying attention to freight indices, especially over time, helps navigate the waters of international shipping.

Ocean freight rates had been generally dropping after the pandemic response-induced shipping boom and supply chain crisis. However, after the Iran-backed Houthi attacks began in the Red Sea and Gulf of Aiden, freight rates spiked.

Since the industry was flush with capacity, carriers were able to handle the additional ships it took to move the same amount of cargo around the world with the longer trips down and around Africa. Thus, freight rates began dropping again, but they still remain elevated.

The collapse of the Francis Scott Key Bridge created disruption on the U.S. East Coast, but has been mild in its impact on freight rates overall. It seems to have have lessened the decreasing rates a little, even making some hold stable for a week or so, but the downward pressure on freight rates appear to be enough for freight rates to keep coming down, at least a little bit, in the upcoming weeks.

Of course, new events could create unexpected challenges for the international shipping industry at any time, but trends in freight rates help keep shippers prepared for the future. It also helps to monitor known potential perils for the international shipping industry like the ILA’s strike threat, which would shut down ports all along the East and Gulf Coasts.

As always, we keep an eye on the various things impacting international shipping and talk about them here in Universal Cargo’s blog.

The post What the Freight? Examining Current Freight Rate Trends appeared first on Universal Cargo.

The good news in February was more rainfall than expected allowed loosening of restrictions on the number of ships that could cross the Panama Canal. Things were not back to normal, but there was significant improvement, and carriers were beginning to bring services back to traversing the canal.

Did good fortune at the Panama Canal continue in March? Indeed, it did….

Continued Increase in Daily Ship Transits

In a March 8th advisory, the Panama Canal Authority announced an increase in the number of daily slots in the Panamax Locks, citing the “present and projected level of Gatun Lake” as the basis for the decision. The lake’s low levels because of drought is what caused the Panama Canal Authority to restrict the number of ships that could transit the canal in the first place. Ultimately, rainfall would have to be the solution.

Keith Wallis, in a Journal of Commerce (JOC) article on Friday, cited “heavy rain in the canal watershed” as the cause of the improvement of actual and projected water levels for Gatun Lake. And that made a bad pun percolate in my brain. Since the pun was so bad and in no way funny, I decided to make it absolutely repugnant by doubling down and writing, water shed from the sky caused a watershed in the watershed. If I was any kind of good editor, I’d delete that now rather than make my reader suffer. However, since we’ve gotten a turning point at the Panama Canal that reduces shippers’ suffering, I’ll add more suffering here in the name of balance. Or maybe in the name of global warming <ahem> climate change. That’s always a good excuse for bad decisions that cause suffering.

Back to the Panama Canal….

By March 25th, the number of ships allowed through the Panama Canal per day was up to 27. That’s still down from the 36 to 38 average number of ships that traverse the canal per day under normal circumstances. However, we’ve continued to go in a positive direction for the number of ships allowed through the canal, and services from carriers continue to return….

More Resumed Services by Carriers

Wallis’s JOC article was actually about Maersk resuming transits through the Panama Canal in May for its Ocean-Americas (OC1) service. Wallis writes:

Maersk said it had been “closely monitoring” the introduction of additional transit slots by the ACP in recent weeks before deciding to shift back to using the canal on its OC1 service. The first northbound canal transit will be by the Maersk Inverness about May 17, while the initial southbound transit will be made by the Spirit of Auckland around May 20. 

See how nicely he writes? Not a sign of a pun anywhere as Wallis continues:

The OC1 service “will return to its pre-existing rotation that was in place prior to the current two-loop setup established with the Panama Rail connection,” Maersk said. The use of the rail link “will be phased out by the end of May,” the carrier added.

…

Maersk confirmed the new rotation of the single-loop OC1 service via the canal would include calls at Philadelphia, Charleston, Balboa, Melbourne, Port Chalmers (New Zealand), Tauranga, Manzanillo, Cristobal and Cartagena.

Carriers have already been bringing back services that transit the Panama Canal. In the February post mentioned above, I included reporting from Wallis about the THE Alliance and Ocean Network Express (ONE) restoring transits through the canal. Wallis adds more such transit return info as he continues the article I already quoted above:

Maersk has been using the canal for its other services, a carrier spokesperson said. 

Hapag-Lloyd and Ocean Network Express confirmed transits through the Panama Canal have been fully restored on their three Asia-US East Coast trans-Pacific services operated under THE Alliance network. That follows a partial shift back to canal transits at the beginning of this year after vessels were diverted via the Cape of Good Hope when drought-related vessel restrictions were at their toughest.

Conclusion

The Panama Canal situation continues to improve. Services continue to return. Not all news, even international shipping news, in the world is bad.

The post Panama Canal Update – Watershed appeared first on Universal Cargo.

Cargo Rerouting

There were close to 100 ships either headed for or scheduled for voyages that would call on the Port of Baltimore with more than 2,000 loads to be delivered there combined. The Port of Baltimore’s closure to ships disrupted all of that. Hundreds of loads have already been rerouted. Diversion of the remaining loads is still being worked out. Jasmina Ovcina Mandra reports specific numbers – as of Tuesday, April 2nd – in a World Cargo News article:

According to FourKites, the Dutch-based real-time supply chain visibility platform, as of March 29, 92 vessels with over 2,000 loads were either en route or had upcoming voyages into or out of the Port of Baltimore.

Of these loads, more than 1,400 are still slated for Baltimore but will now need to be rerouted due to the closure of the waterway. Already, over 600 loads have been redirected, with Savannah receiving the highest volume at 264 loads, followed by Norfolk with 181 loads, and New York with 70 loads.

Additional destinations include Port Everglades, Newark, Boston and Santos.

By all reports, the other East Coast ports are able to absorb the cargo that would normally be headed for the Port of Baltimore. Mandra specifically makes mention of the Port of New York and New Jersey, which ships that call on the Port of Baltimore often also call upon. However, just because the other ports are able to absorb the cargo movement, it doesn’t mean there is no delay.

While there are rumblings of larger delays, Mandra reports diversions are averaging an extended estimated delivery time of five days on imported goods. As we’ve talked about many times in the past, serious disruptions at one international shipping hub tends to ripple across supply chains around the world, impacting many others. In just one area where that can be seen, as ships that were routed to go through the Port of Baltimore are diverted, when they show up to other ports on their routes is affected and that can further impact the availability of ships for additional services.

There are plenty of complicating factors for carriers as they figure out and schedule ship and cargo diversions from the Port of Baltimore. However, it may be even more complicated for export cargo that has already arrived at the port. That cargo has to either wait for the port to open up in order to be exported out or it has to be picked up from the port and taken to another one in order to be shipped out. For many goods scheduled for export, the delays could easily stretch into weeks, and hard choices will have to be made about which cargo is prioritized.

Ports Expanding Hours to Handle Rerouted Cargo

Ships are already arriving in East Coast ports with diverted cargo, and plenty more will be coming. To accommodate, ports are extending hours to handle the cargo increase.

Peter Angell reported details on diverted cargo, adjusted services to handle it, and expanded port hours in a Journal of Commerce (JOC) article:

Most of the diverted ships are likely to call Port Newark Container Terminal (PNCT), which handles most of the Mediterranean Shipping Co. vessels calling New York-New Jersey. In response, PNCT is keeping its truck gates open until 6 pm, rather than closing at 4 pm, as of April 1. Starting April 6, PNCT will also open Saturdays from 7 am to 3 pm for an indeterminate period. 

APM Terminals Port Elizabeth is also handling freight that would normally land in Baltimore. It received the 10,062-TEU Maersk Yukon and 8,238-TEU MSC Everest VIII on Thursday, both of which had been scheduled to call Baltimore over the next two weeks. 

Next Tuesday, CSX Transportation is expected to start a daily north-south service from the New York-New Jersey port and its Kearny, NJ, intermodal terminal to Baltimore. According to people familiar with the operation, CSX will be running trains of approximately 6,000 feet that will be able to bring about 150 import containers to Baltimore’s Seagirt marine terminal for local pick-up and match back empties for the return trip. 

…

The Port of Virginia said another diverted vessel, Evergreen Marine’s 14,354-TEU Triton, discharged an additional 1,103 containers that were originally bound for Baltimore during its regular call at the Virginia International Gateway terminal. The first of those containers was picked up on Friday. MSC is also diverting three of its vessels to Norfolk over the next week. 

Similar to PNCT, Virginia is extending its gate hours, opening at 5 am instead of 6 am, Harris said. He also noted that about 80 Maryland-based trucking companies have recently registered to work at the port. 

Temporary Channels to the Port of Baltimore & Reopening Timeline

Meanwhile, the unified command that has been assigned with responding to the Key Bridge collapse, which blocked off the waterway to the Port of Baltimore, has been creating alternate channels to the port. Two such channels have now been completed. A third is underway.

The initial channel was only 11 feet deep. That is not deep enough to accommodate the ships major carriers use to call upon the port. The second is a little deeper at 15 feet, but it is still nowhere near deep enough to open the port to the kinds of ships we’re used to seeing call.

Michelle Del Rey reports in the Independent on the third channel being made, a fourth that will be permanent, and a timeline that has now been given for the reopening of the port:

A third [channel], which officials say will be 35-feet deep and 280-feet wide, will open at the end of April. The fourth channel will be permanent and would allow for ships as big as the “Dali” to navigate themselves in and out of the harbour. The “Dali” crew members still remain stuck on board the ship.

The “Dali” she mentions is the massive container ship that crashed into the Key Bridge, collapsing it.

Here is the timeline Del Rey reported from a press release that put out just today:

In a press release issued on Thursday, officials announced a timeline from when they expect the Port of Baltimore to be fully reopened to commercial shipping traffic.

Currently, officials have created two temporary channels with depths of 11 and 15 feet. A third channel is expected to be completed by the end of the month.

According to the release, the passageway will be 280-feet wide and 35-feet deep. The permanent 700-foot wide, 50-foot deep channel will reopen by the end of May, officials estimate.

That means we’re looking at basically two months of the Port of Baltimore being effectively closed. Hopefully, things will go to plan and that timeline estimate won’t underestimate the time it takes to get the permanent channel completed and the Port of Baltimore able to receive ships normally again.

The post Redirected Ships, Temporary Channels to Port of Baltimore, & Extended Operations at Alternate Ports – Bridge Collapse Updates appeared first on Universal Cargo.

… the final rule contains some differences from the initial notice of proposed rulemaking in how it treats freight railroads, especially Class II and III freight railroads. In limited cases, the rule permits exceptions for smaller railroads to continue or initiate certain one-person train crew operations by notifying FRA and complying with new federal safety standards.

Classes are based on railroads’ annual revenue; Class I is the highest revenue category.

Still, the Biden Administration argues the rule change is based on safety….

Improved Safety Or Unjustified Regulation

The Department of Transportation began its, yes redundant, “Final Rule on Train Crew Size Safety Requirements to Improve Rail Safety” announcement with the following:

Today, as part of the Biden-Harris Administration’s ongoing efforts to strengthen rail safety and hold railroads accountable, Secretary Pete Buttigieg announced that the U.S. Department of Transportation’s Federal Railroad Administration (FRA) has issued a final rule establishing minimum safety requirements for the size of train crews….

“Common sense tells us that large freight trains, some of which can be over three miles long, should have at least two crew members on board – and now there’s a federal regulation in place to ensure trains are safely staffed,” said U.S. Transportation Secretary Pete Buttigieg.

Unfortunately, when politicians appeal to “common sense” for new regulation or law changes, it often means there’s a lack of data to support it. The Association of American Railroads (AAR) argues that’s the case when it comes to this rule:

Today, the Federal Railroad Administration released a final rule titled the “Train Crew Size Safety Requirement,” despite the lack of evidence connecting crew size to rail safety. The FRA abandoned a similar rule in 2019 after failing to identify evidence to justify a safety need.

“FRA is doubling down on an unfounded and unnecessary regulation that has no proven connection to rail safety,” said AAR President and CEO Ian Jefferies. “Instead of prioritizing data-backed solutions to build a safer future for rail, FRA is looking to the past and upending the collective bargaining process.”

AAR goes on to point out data of improved rail safety it claims is due to extensive employee training and private investments in technology and infrastructure:

Rail carriers prioritize data-driven safety improvements through extensive employee training and private investments in technology and infrastructure. These actions have driven tangible results: the casualty rate for Class I railroad employees has dropped by 63% since 2000—reaching an all-time low in 2023—and the overall train accident rate is down 27% since 2000 and 6% since 2022. Each year, railroads devote billions to enhance their infrastructure, deploy safety technologies and invest in their employees to help the industry deliver safely and reliably into the future.

It was, however, a train derailment in February of last year that raised the heat on rail safety, turning it into a hot button topic. A Norfolk Southern-operated train crashed, spilling toxic chemicals that polluted soil, water, and air in Ohio. Even so, that accident doesn’t really help justify this law change. The train was not operated by a one-man crew, so the two-man minimum would have made no difference. Nevertheless, the derailment has been cited many times in connection with getting this final rule in place.

So, perhaps, there’s a better explanation for the Biden Administration putting this law on the books….

Union Appeasement?

Two-man minimum crews has been a negotiating point for rail worker unions for a long time. Now, they no longer need to negotiate for it, though they can’t use it for leverage in negotiations to get other asks like higher wages or increased benefits either. President Biden has claimed to be the most union-friendly president in history, but he sign a bill forcing the rail unions to take a deal, which didn’t give them the two-man crew minimum, a couple years ago. Maybe he’s trying to make it up to those voting union members in a big election year where he’s losing in the polls.

Rail workers nearly went on a large-scale strike in 2022, which would have massively disrupted, if not halted, supply chains across the nation. The issue of two-man minimum crews was one that increased the likelihood of the strike happening. Congress and the Biden Administration managed to kick the can down the road on the strike until after the 2022 midterm elections, but eventually passed a bill forcing the unions to accept a contract that several rejected by member votes. A rail strike would have been a massive blow to the U.S. economy, which was already struggling under the Biden administration.

Money for Freight & Intercity Passenger Rail Infrastructure

In related news, the Biden Administration announced the FRA is making available $2.4 billion in grant money for freight and intercity rail infrastructure modernization.

SupplyChainBrain reports:

The money will come from the Consolidated Rail Infrastructure and Safety Improvements (CRISI) program, which funds bridge, track, and grade crossing improvements, expanded passenger rail corridors, short line rail transportation in rural communities, rail industry workforce development, and zero or low emissions locomotives.

The grant money announced on March 29 is part of the largest ever funding round for the program, building on the $1.4 billion in CRISI grants handed out in 2023.

The post Biden Admin Announces 2-Man Crew Requirement on Freight Trains, Which Unions Wanted but Failed to Get in Contract Negotiations appeared first on Universal Cargo.

No reason to waste time, let’s get into the news…

Baltimore Francis Scott Key Bridge Collapse Updates

The worst part of the Francis Scott Key Bridge collapse is the loss of lives. As we talked about in Tuesday’s post, a search was underway for six people who fell into the water. Two people were initially rescued. NBC News reported yesterday that the remains of two who were killed were recovered. The remaining four are presumed dead, and the recovery mission has ended as “it is no longer safe for divers to navigate or operate around the debris and concrete in the port” and “responding officers have ‘exhausted all search efforts’ to recover the victims.”

The Port of Baltimore remains closed to ships indefinitely as there are no clear answers to how long it will take to clear the debris in the Patapsco River. The debris blocks much of the channel leading to Baltimore’s harbor. That means carriers and shippers are diverting ships and cargo to other ports on the East Coast. Large disruptions like this tend to ripple throughout international shipping supply chains. There will likely be at least some surge in freight rates for international shipping going to, from, or through the East Coast. And its possible that surge will go wider than that.

Baltimore and Maryland’s economies will take significant hits from the port closure. Noi Mahoney writes about that in a FreightWaves article titled “Port of Baltimore’s indefinite closure deals blow to city, state economy.” Other headlines emphasize the possibility that the bridge collapse could cost billions in economic costs. Time will tell just how costly this tragedy is.

Russia and China Make Deal with Houthi Rebels

The Iran-backed Houthi rebels continue to attack ships in the Red Sea and Gulf of Aden. This is effectively keeping most of international shipping away from the Suez Canal. Well, apparently that won’t be as much of a problem for Russia and China as it is for almost everyone else. Sam Dagher and Mohammed Hatem reported in a Reuters article that the Houthis have agreed to grant Russia and China safe passage.

What is Russia and China giving the Houthis in return? That’s rather vague, but it seemingly amounts to some kind of political support.

Dagher and Hatem weren’t able to give specifics because they are unclear. The most specific thing they were able to write is that the political support might be before the United Nations Security Council.

Speaking of security, the Houthis have made attacks on ships they mistakenly thought to be connected to Israel or the United States, apparently because of outdated information. Russia and China will need to make extra clear which ships belong to them in order to ensure they are not mistakenly fired upon.

Meanwhile, the Biden Administration has been leading strikes against the Houthis in direct response to the rebels’ attacks on ships. Operation Prosperity Guardian – as the administration named the strikes that are in coalition with other nations – though chiefly the United Kingdom, have been so far unsuccessful in slowing, let alone stopping, Houthi attacks on ships.

Somali Pirates Are Back

The Houthi attacks have created a distraction, allowing Somali pirates to return to the scene, attacking and boarding ships and taking their captains and crew captive. Somali pirates were a serious problem about a decade ago, but over the last ten years, international navies seemed to have quelled their threat to shipping routes, crews, and the importing and exporting industry.

International navy forces have reduced their operations off the Somali coast largely because of the nearby Houthi attacks and perhaps overconfidence in their success of making the Somali piracy go dormant. Now, the piracy threat is back and in force.

Giulia Paravicini, Jonathan Saul and Abdiqani Hassan report in a Reuters article:

More than 20 attempted hijackings since November have driven up prices for armed security guards and insurance coverage and raised the spectre of possible ransom payments, according to five industry representatives.

Yes, those costs are yet another upward pressure to factor into the freight rate market.

House Passes “OSRA 2.0”

We’re still only beginning to see the effects the Ocean Shipping Reform Act of 2022 (OSRA) is and will have on U.S. maritime as well as broader international shipping. In fact, we’re still creating installments of our Decoding OSRA blog series, where we go through the bill section by section. However, since reforming supply chain and international shipping laws is one of seemingly only a few things Democrats and Republicans can agree on, they keep introducing more legislation on the industry.

Michael Angell reported in the Journal of Commerce (JOC) last week that the House of Representatives “approved further amendments to federal maritime law that include enhanced oversight of China-based carriers and freight exchanges, along with establishing new committees to study ports and liner services.”

The bill is called the Ocean Shipping Reform Implementation Act; however, it is being hailed as “OSRA 2.0.”

The main target of OSRA 2.0 is unfair shipping practices from China. The bill reportedly establishes more committees and has widespread support from shipper groups, according to Angell. Of course, you can be sure we here at Universal Cargo will be looking more into the shipping law changes the new bill makes, should the Senate approve it, as I expect it will.

The post International Shipping News Roundup: Bridge Collapse Update, Russia & China Deal with Houthis, Pirates, & OSRA 2.0 appeared first on Universal Cargo.

The Key Bridge collapse was caught on camera:

Matt Mathers, Tom Watling, and Martha McHardy reported in the Independent that a mayday call from the ship after it lost power saved lives:

It is still unclear what caused the accident at this time, but Maryland Governor Wes Moore said that the ship made a mayday call just ahead of the accident. Some crew aboard the ship told authorities they lost power moments beforehand.

The call gave people on the bridge enough time to prevent cars from continuing on the bridge, saving lives.

It sounds like things could have been much worse, but people still ended up in the water. The Independent article continues:

… eight individuals are believed to have fallen in the water. Two individuals were rescued and one is currently in the hospital.

Reporting from various outlets says those individuals had been on the bridge in their cars, Ariana Baio, in another article from the Independent, reported those individuals plunged into the water are believed to be construction workers.

Collapse Shuts Down the Port of Baltimore

On the international shipping side of things, the collapsed bridge cuts off ship access to and from the Port of Baltimore, thus, forcing the port closed, at least to ship traffic.

Joe Antoshak and John Kingston reported in a FreightWaves article:

The Port of Baltimore announced at approximately 8 a.m. Eastern that it was closed for inbound and outbound vessel traffic. It did say that truck operations at terminals inside the port would continue.

But the bridge collapse effectively sets up a wall between the port and Chesapeake Bay. There does not appear to be any other inbound or outbound way between the port and shipping lanes, raising the question of how long this key terminal will be closed.

Trucking shipping containers of goods away from the port will likely be a mess of congestion, which will also be a problem for commuters. Here’s a taste of the logistical complications from the FreightWaves article:

The Maryland Transportation Authority is advising against the use of Interstate 695, a key route for Baltimore’s commuters and freight movement, following the collapse. The bridge plays a vital role in commercial shipping access to the Port of Baltimore, a major hub for autos, light trucks and various bulk goods. It is the easternmost way of getting across the Port of Baltimore. 

…

Alternate routes for trucks that bypass the Key bridge are a tunnel on Interstate 895 under the Baltimore Harbor, a tunnel on Interstate 95 under the harbor, or Interstate 695 on the west side of Baltimore. The bridge is part of Interstate 695, the Baltimore Loop, on the east side of the city. 

The Maryland Transportation Authority on its X feed, noted that vehicles transporting hazardous materials may not use either the I-95 (Fort McHenry) or I-895 (Baltimore Harbor) tunnels. To get around Baltimore, they will need to use I-695 on the western side of the city.

Additionally, MDTA said on X that vehicles in excess of 13 feet, 6 inches in height or 8 feet in width are prohibited from using the Baltimore Harbor Tunnel on I-895. For the Fort McHenry Tunnel, which is part of I-95 through the heart of Baltimore, the limits are 14 feet 6 inches in height and 11 feet in width.

Paul Wiedefeld, Maryland’s transportation secretary, said the water where the bridge was struck is about 50 feet deep, complicating search-and-rescue operations. The U.S. Coast Guard and dive teams are currently searching for survivors, with Baltimore’s fire chief noting the additional challenges posed by the water’s current.

The Port of Baltimore is a major U.S. port; Harry Fletcher pulled some data in an Indy100 article about the devastating accident to show how much cargo moves through it:

Last year was a record year for the port itself in terms of cargo. As Transport Topics reports, the Port of Baltimore’s public marine terminals hit a record high for receiving 11.6 million tons of general cargo in the fiscal year of 2023 – up from a high of 11 million tons in 2019.

Details About the Ship

As mentioned above, the name of the ship that hit the Key Bridge is the Dali. It’s owned by Grace Ocean Private Ltd, operated by Synergy Group, but chartered by Maersk. Baio reported in her Independent article:

The vessel was chartered by Maersk to carry Maersk’s customer’s cargo from Baltimore to Colombo in a nearly month-long journey, according to a statement from the company.

…

All the crew members, including the two pilots, have been accounted for and there are no reports of any injuries onboard, according to the Synergy Group.

Maersk said none of its crew or personnel were on board the vessel when the incident occurred.

There were, however, 4,900 shipping containers onboard, according to the FreightWaves article. The importance of cargo insurance now comes into play as the process of assessing the damage and loss of goods begins.

Of course, the most important part of this whole story is the lives of the people who fell into the Patapsco River. Thank God it wasn’t even worse with the loss of lives to the crew or the motorists who were kept off the bridge because of the mayday call.

The post Container Ship Crashes into Baltimore Bridge and Collapses It – 6 People Missing in Water, Port of Baltimore Closed appeared first on Universal Cargo.

“I would also expect that peak season is going to start a little bit early,” Hansen said. “I also expect that there’ll be quite a number of people who tried to bring in their goods somewhere between June and August.”

What makes him think so? While she might fall just short of explicitly stating it, LaRocco clearly implies shippers planning ahead for the threat of an International Longshoremen’s Association (ILA) strike plays into Jansen’s thinking by placing this right before his quote about an early peak season:

… Hansen said U.S. shippers, including most notably retailers, are planning ahead this year for peak shipping season ahead of potential East Coast and Gulf ports strikes, in line with what logistics decision makers told CNBC at one of the world’s largest maritime/logistics conferences TPM, held in California last week.

Early Peak Season

Jansen should be absolutely right about shippers importing early to beat the risk of disruption from a possible ILA strike. Importing and exporting early was one of the ways we suggested shippers protect themselves from ILWU port disruption, along with diverting cargo from the West Coast to the East Coast and looking into alternate sourcing options. Those same strategies, which worked for many shippers to avoid expensive delays from labor action during the dragged out ILWU contract negotiations, will likely be utilized by shippers to avoid port shutdowns on the East and Gulf Coast ports should the ILA strike. Of course, the West to East Coast diversions would be in reverse.

When it comes to shipping early, shippers planning to ship during the peak season wouldn’t even need to ship that early – or even early at all for some. The ILA has threatened to strike in October, which is fairly late in the peak season, after their contract expires at the end of September. Of course, they would want to give themselves buffer time to ensure their cargo isn’t still sitting at the East Coast ports when the strike happens – if the strike happens.

Many shippers probably only needing to move shipments up a little is likely why Jansen said “a little bit early” when talking about when he thinks the peak season will start.

Overstock Finally Depleted

There is another interesting factor at play. Retailers have been dealing with the problem of the aftermath of artificial demand. The economy has been far from booming under the Biden Administration. After government issued stimuli checks ran out and the surge of spending brought an end to bloated demand, retailers ended up overstocked. Slower economy meant a long period of retailers needing fewer imports. For the international shipping industry, the drop in demand brought freight rates way down along with major reduction in revenue and profit. Thought the Red Sea Crisis, along with Panama Canal restrictions to a lesser extent, pushed freight rates back up. Now, there’s reason to think demand will improve.

Retailers overstock seems to finally be reaching an end. Last year’s peak season was seriously dampened by the overstock. But now, with stocks appearing to at last be depleted, ordering increases seem like they’ll be happening before peak season gets here. That gives ocean carriers like Hapag-Lloyd an improved outlook for the remainder of the year. LaRocco quoted Jansen as saying the following:

“We also see that inventories are depleted in many cases and so far we’ve seen a good recovery after Chinese New Year,” Jansen said. “So we’ve been fairly happy with that.”

That certainly doesn’t mean we’re about to see another big shipping boom. It does, however, look like shipping demand will be healthier in the lead-up to the peak season, unlike what we saw last year. If restocking is done during this time, with the economy where it is, the peak season itself might be a mild one.

Freight Rate Outlook

When it comes to a freight rates outlook for the rest of the year, expectations should be that they’ll be healthy for carriers, which means probably higher than shippers would like. There doesn’t appear to be an ending soon to the Iran-backed Houthi attacks on ships in the Gulf of Aden and Red Sea. That pushes freight rates up.

Healthier demand now and into the peak season also bolsters rates.

However, if the peak season does indeed begin early, it would likely end early too. In that case, we could see freight rates drop significantly in the last two to three months of the year unless the ILA does indeed strike. The disruption of the strike would put upward pressure on freight rates while significantly increasing cargo traffic through the West Coast ports.

The post Will Peak Season Come Early This Year? appeared first on Universal Cargo.

All the way back in November, the International Longshoremen’s Association (ILA) warned its members to prepare for a strike in October of this year. ILA’s contract, which covers dockworkers all along the East and Gulf Coasts, expires at the end of September. The ILA’s president, Harold Daggett, made it pretty clear that if the union’s contract demands aren’t reached by then, dockworkers will go on strike. “We will be in the streets,” Daggett said, obviously referring to picketing instead of working.

Tick, tick, tick, tick, tick, tick…

Such a strike would likely cost the U.S. economy billions of dollars per day. Six of our country’s ten busiest ports are covered by the ILA contract as well as three of the busiest five. A study from almost a decade ago found that a strike from the International Longshore & Warehouse Union (ILWU) on the West Coast, which has the remaining four of the top ten busiest ports and two of the top five would cost the the economy $2.5 billion per day. A decade’s worth of inflation, particularly over the last few years, means a strike now would likely be significantly more costly in terms of dollar value, no matter which side of the country it’s on.

Tick, tick, tick, tick, tick…

When the ILA made its strike threat, we had about a year for the ILA and United States Maritime Alliance (USMX), representing the East and Gulf Coast employers, to come together on contract issues. Now that time has been approximately cut in half, shippers have to start considering strategies to protect themselves and their businesses from an ILA strike shutting down East and Gulf Coast ports in the fall. Shippers who did similarly, diverting cargo from West Coast ports when ILWU contract negotiations threatened disruption, were proven prudent when ILWU labor action did indeed hurt port operations in 2022 and ’23. But that disruption would be very mild compared to a full-fledged ILA strike.

Tick, tick, tick, tick…

The ILA and USMX did start very early negotiations in February of last year. Unfortunately, those talks fell completely apart, reportedly due to wage increase demands.

However, that is not the only sticking point these negotiations have. The ILA is drawing hard lines on automation. The union sees automation as an existential threat while the ports see it as necessary in order to keep up with the ever-increasing amount of goods global trade demands be moved through their terminals. Lagging automation compared to its utilization at the other ports around the world, in large part due to union opposition, makes U.S. ports able to move fewer shipping containers per hour and played a factor in congestion and supply chain disruption in the post-COVID shipping boom/supply chain crisis.

Tick, tick, tick…

When negotiations do finally start up again, even if they once again sink, the ILA has said it does not want any mediation from the White House. “We will not be interested in Biden sending us a mediator if negotiations are not going well,” Daggett said back in November. And that’s with a man in the Oval Office who said he would be “the most pro-union president in history.” Maybe Daggett was just taking the advice Politico reported President Obama gave to not “underestimate Joe’s ability to fuck things up.” However, it sounds more like the union is not interested in bending on its demands and would rather strike than enter mediation.

Tick, tick, tick…

First, we simply need to see the parties back at the negotiating table. Has there been any movement in that direction? Yes, actually. Last month, Michael Angell reported in the Journal of Commerce that Daggett sent a letter to ILA’s local chapters, finally telling them to resume negotiations with their respective port employers. He’d discontinued all such negotiations back in March of last year until this notice. Angell reported that Daggett also gave a hard end date to these local negotiations:

Now the locals have until May 17 to complete those local negotiations, the letter said, adding the date “is a firm deadline and will not be extended.”

After that, there’ll be little more than four months for the ILA and USMX to work out a master contract before the strike of which Daggett warned would begin.

Tick, tick…

That means we’ll be paying careful attention to developments with the ILA at East and West Coast ports, giving updates on developments here in Universal Cargo’s blog, so you shippers can be more informed when planning and making decisions.

The post We Have to Talk About the ILA Strike Threat appeared first on Universal Cargo.

Supply chains have not had it easy for the past few years. Disruptions have grown in frequency and severity, and while issues may have come down from their pandemic-era highs, there are still challenges ahead. Current signs are pointing toward an oncoming diesel shortage.

Surviving disruption means adapting to whatever changes come. To do that, however, businesses must understand future possibilities and how these challenges could affect their broader supply chains. It’s not enough to know that diesel supplies may not match future demand. Organizations must determine what that would look like in their specific companies.

A Potential Diesel Shortage on the Horizon

The incoming diesel shortage is an issue of both supply and demand. On the supply side, diesel, heating oil, and gas inventories are below the 10-year seasonal average in North America, Europe, and Singapore. In the U.S. specifically, diesel stocks are at their lowest point for this time of year since the early 1950s.

This supply shortage stems from several factors. Most notably, Russia’s ongoing war against Ukraine has disrupted many significant diesel refineries in Europe. [Editor’s Note: Just as notable are the restrictive policies and executive orders of the Biden Administration on American oil drilling and gas production.] Recent attacks on shipping vessels in the Red Sea have had a similar effect, restricting the global oil trade.

Growing trends on the demand side will likely worsen the issue. Manufacturing activity is starting to ramp up after a period of less activity. Improving economic conditions, including declining interest rates, are fueling manufacturing growth. As a result, the Energy Information Administration expects diesel consumption to grow by 1.3% in 2024.

While that’s not a huge increase, it doesn’t reflect the whole picture, either. Manufacturing sectors in other nations are growing as well, leading to higher global demand. Even a modest consumption increase could have a significant impact on availability in light of the declining supply.

What It Means for Supply Chains

The most obvious effect of the diesel shortage on supply chains is higher operating costs. As demand grows and supplies shrink, fuel prices will rise. These higher expenses impact more than just refueling trucks, too.

Diesel powers the majority of commercial energy operations, so higher diesel prices will mean rising expenses across the board. Manufacturing costs will increase as production facilities need diesel to generate the large amounts of energy they use. These expenses, combined with higher transportation costs, could add up to significant economic strain.

Depending on the extent of this shortage, it could have even more disruptive consequences. As demand rises and supplies continue to shrink, some organizations may be unable to get the diesel they need, even if they can afford it. Consequently, they may have to pause operations in some areas.

These cutbacks could mean transportation companies run fewer routes, leading to extensive shipping delays. Alternatively, some manufacturers may reduce their output to lower their energy consumption, leading to potential shortages. In less dramatic scenarios, organizations may have to pause or delay expansion initiatives needed to keep up with rising customer demand, creating lost business opportunities.

What Can Businesses Do About It?

After the disruptions of the COVID-19 pandemic, organizations should have learned that they must anticipate and prepare to withstand supply chain challenges before they arise. Given the growing likelihood of a diesel shortage in the coming years, businesses should take several steps.

Organizations should plan to reduce their diesel consumption where possible. Using Internet of Things (IoT) sensors to monitor and minimize energy expenditures in manufacturing is a good start. 

Fleets can use AI route planning software to improve travel efficiency while completing the same amount of work. For example, a case study showed AI technology saves UPS 10 million gallons of fuel annually.

Reducing reliance on fossil fuels in the long term could be an important strategy, too. Fleet electrification could help offset diesel shortages and price spikes. Using biodiesel is another promising alternative — one that may not require new vehicles. While this shift may not yield immediate results, it’s a long-term goal that could mitigate similar situations in the future.

Supply Chains Must Prepare for Disruption

Businesses should keep a close eye on diesel supply and demand shifts to respond to potential shortages accordingly. Even if no widespread price hikes or shortages occur, adjusting operations to make supply chains more resilient is still the best way forward.

Supply chain disruptions are inevitable to some extent. However, staying on top of these trends and embracing more resilient business practices will mitigate their impact, now and in the future.

This was a guest post by Ellie Gabel.

Author Bio

Ellie is a freelance writer who loves exploring the latest advancements in tech and science and how they’re impacting the world we live and work in. She’s also the associate editor of Revolutionized.com.

The post Assessing the Impact of a Possible Diesel Shortage on Global Supply Chains appeared first on Universal Cargo.

Welcome back to Universal Bizargo.

Actually, only those who’ve read Universal Cargo’s blog for a long, long time are likely to have ever even heard of Universal Bizargo, let alone be welcomed back to it. It’s been seven years since we’ve published a post in our old Universal Bizargo series, in which we would share weird stories related to the international shipping industry.

Previous ones include a few about people found in shipping containers. There was a hungover man found in one, a woman who traveled the world in a shipping container, four apparently refugee men found in one, and we even once shared a story before Universal Bizargo was a thing about a cute little kitten stowaway found in a shipping container.

However, this mom found in a shipping container probably tops all those others for weirdness. That’s because there are questions around how Marlene Lopez got there. Stranger still, she didn’t even seem that upset about it when leaving the scene.

Though Lopez appeared to be okay, authorities had her taken to a hospital and checked out, with dehydration seemingly the biggest concern. As a cameraman filmed her walking to the ambulance, a reporter asked her what happened. She replied almost nonchalantly, “I don’t know. I was in one place and I––found in another.”

While she didn’t seem delirious, maybe the woman was in some kind of shock or mentally confused state. She had been locked in a shipping container for days, after all. But how did she get in there without knowing how? Did someone drug her or knock her out and put her in there or did she wander in unconsciously? Reportedly, she was dehydrated but not injured. Was she lying about not knowing what happened?

How about we shift to an easier to answer question and come back to how she got in the shipping container. Why was it locked?

The answer here seems clear. The shipping container is used for storing lawn mowers by the lawn mowing company. By his own account, the owner, Tyler Sonnenberg, locked the container on Tuesday afternoon. Putting myself in his shoes, I can imagine locking up a container of equipment, as I’d be accustomed to doing at work, without suspecting a person is hidden in the shadows inside.

“She’s been missing for three days, so some–something else is going on,” Sonnenberg said on a local TV news report. “There’s something more to the story.” And it might just be the things Sonnenberg said off camera that reveal the truth.

In the original article I read on the story, Martha McHardy reported that Sonnenberg told WKMG, the local TV station, that he’d seen Lopez walking around the area on Monday. Monday, by the way, was the same day she was reported missing. McHardy included in her article that Sonnenberg said he didn’t hear any noise coming from the shipping container on Wednesday, the day after he’d locked it. Watching the TV news spot, which I’ve included below, there’s more Sonnenberg had to say that McHardy didn’t include in her article.

Sonnenberg told to the TV reporter he thinks Lopez walked into the container herself and then passed out. The reporter then uses the language “he claims” about Sonnenberg telling her he saw a pipe and lighter inside the shipping container after Lopez left.

Drug use could explain either the woman not remembering how she got inside the shipping container turned storage unit or not wanting to tell how she ended up there. The “claim” language regarding Sonnenberg saying there was a lighter and pipe might imply that the reporter got no confirmation of the paraphernalia from the police or visual confirmation for herself. Then again…

Maybe the police didn’t find a lighter and pipe. Maybe they wouldn’t disclose that information if they had. Perhaps the reporter and WKMG are being extra cautious with language to avoid any possible defamation of Lopez. Who knows, maybe there’s even more to this bizarre story than any of us would likely guess. Luckily, it didn’t turn into a tragedy where a boy’s missing mother was never seen again. And if there is a drug problem involved, hopefully waking up in a locked shipping container will be a literal wake up call for a mother getting clean for both her own and her son’s safety.

Sonnenberg told the reporter he’s not at fault for locking the woman in the shipping container, she shouldn’t have been trespassing, and he’s now considering pressing charges. So there may be more twists to come in this Universal Bizargo story.

The post Missing Florida Mom Found Locked in Shipping Container – Universal Bizargo appeared first on Universal Cargo.

Here are details on the attack from Tom Spender, Joshua Cheetham & Frank Gardner reporting in the BBC:

Three crew members have been killed in a Houthi missile strike on a cargo ship off southern Yemen, its owners and the US say – the first deaths caused by the group’s attacks on merchant vessels.

The Barbados-flagged True Confidence was abandoned after Wednesday’s attack, which inflicted significant damage.

Two of the sailors who died were Filipinos and the other was Vietnamese.

The Houthis say their attacks are in support of the Palestinians in the war between Israel and Hamas in Gaza.

The US military’s Central Command (Centcom) condemned the Houthis’ “reckless attacks”, which it said had “disrupted global trade and taken the lives of international seafarers”.

It seems likely the deaths will further ramp up U.S. and British responses to the Houthi attacks. We’ve already seen air raids in Yemen, targeting Houthi locations. Bombings on Houthi targets have clearly not stopped these terrorist attacks. It’s impossible to know how much of an impact military responses have had at all on the Houthi rebels, especially with the large bankroll Iran has to keep supplying the terrorists.

What is clear is that this situation is not over. Ships need to continue avoiding the area. And there’s no clear end in sight.

Ocean Shipping Balanced But at Capacity and Vulnerable

As we’ve blogged about before in regards to ocean freight carriers having to divert away from the Red Sea, including the use of routes down and around Africa, ocean shipping takes more ships to handle the same amount of cargo and services. Fortunately, carriers came into this situation with overcapacity. Previously, we’d blogged about all the new ships and increases in capacity hitting the waters of international shipping as a potentially bad thing for carriers. It turned into a blessing.

The overcapacity had the potential to put serious downward pressure on freight rates. In fact, it was even starting to do so, but attacks in the Red Sea, especially since they were paired with a drought disrupting the Panama Canal, made the additional ships and capacity a needed commodity.

Unfortunately for shippers, who were finally getting some freight rate relief, freight rates spiked with the violent disruption at the Suez Canal and decrease of traffic that could get through the Panama Canal. However, carriers were able to balance ocean shipping with all the capacity they have available. Improvement at the Panama Canal has helped too. Freight rates have actually come back down a little, though they are still significantly higher than before all this mess started.

Bill Mongelluzzo wrote about this in a Journal of Commerce (JOC) article published today. The article mostly says things I’ve already been writing in recent posts and reiterating in today’s of Universal Cargo’s blog, but then something new caught my attention. Mongelluzzo’s quoted the following from industry analyst and CEO of Vespucci Maritime, Lars Jensen:

“We are at maximum capacity right now.”

All of that previously-seeming overcapacity is apparently in use now. All of it? We’re at maximum capacity? That makes ocean freight shipping, and supply chains across the world, particularly vulnerable to another disruptive event. But Jensen takes it even further than that:

“Another major problem could launch us into pandemic-like problems.”

Is that hyperbole? I hope so because things shipping disruptions and freight rates got out of control after the pandemic hit.

To be clear, I’m sure Jensen is strictly talking in the sense of shipping/supply chain disruption and not including all the other problems that came with the pandemic (and the general poor response to it) when he says “pandemic-like problems.” Similarly, earlier in the article, he was quoted around the topic of the Red Sea disruption as saying, “This is a challenge. It’s not a crisis.” Clearly, he was talking about the international shipping industry having to avoid the region and the industry’s ability to handle that rather than the issues of terrorism and war as being a challenge, not a crisis. So there’s no reason to think he’d be talking about anything larger in scope than the “supply chain crisis” in isolation that came after the pandemic hit.

Even so, that was an incredible amount of disruption. That an industry expert would say we’re one major problem away from a repeat of it is a concerning statement. Unfortunately, “major problem” is rather vague. Is he talking a major event such as China invading Taiwan? That’s a possibility that has been feared for a while and would have enormous ramifications beyond what anyone would likely be able to fully predict. Could a major problem be smaller in scope than another international conflict, such as an ILA strike at U.S. East and Gulf Coast ports? Would a ship getting stuck and completely blocking the Panama Canal for a week be big enough to consider a major problem?

There’s no way to know exactly what the next problem to hit the international shipping industry will be. We do know there’s unpredictability in the very nature of ocean shipping, and while international ocean shipping is balanced right now, it is particularly vulnerable. I would, however, be leery about saying we’re one problem away from falling into “pandemic-like problems.”

The post Houthi Attack on Ship Kills 3 – Ocean Shipping Balanced “at Maximum Capacity” and Vulnerable appeared first on Universal Cargo.

Even though the Ocean Shipping Reform Act of 2022 (OSRA) was passed a couple years ago, I keep saying in these introductions that we’re just beginning to see the legislation’s results. Case in point, only last week, the Federal Maritime Commission issued its “final” rules for detention and demurrage billing, which it was given authority to do by OSRA. Just how OSRA changed U.S. maritime law and the ways that affects businesses’ imports and exports as well as carriers’ and other industry stakeholders’ operations within maritime shipping is very much worth continued examination. At Universal Cargo, we want to help shippers know how law changes affect their businesses.

So, what exactly does OSRA say and do? This blog series goes through it section by section, so you can learn the answers.

If you’re new to this series, we give you the OSRA text; the text of the U.S. Code, usually in Title 46, before and after its amendments and/or additions; and consider what the changes mean for U.S. importers and exporters.

Previously covered in this series:

• Series Introduction & Quick Coverage of Section 1
• Section 2
• Section 3
• Section 4
• Section 5
• Section 6
• Section 7
• Section 8
• Section 9
• Section 10
• Section 11
• Section 12
• Section 13
• Section 14
• Section 15
• Section 16

Now let’s move forward with Section 17 of OSRA.

Quick Overview

Section 17 of OSRA does not amend Title 46 of the U.S. code as so many of the preceding sections have done. Rather, Section 17 adds additional legislation to U.S. maritime law that increases the size of the Federal Maritime Commission (FMC), mandating specific offices it must have and the existence of a submission page for the public to submit various issues and comments to the appropriate offices.

This section adds instruction for how the FMC is to comply with Section 41301 of Title 46, which pertains to individuals submitting complaints and claims to the FMC regarding alleged violations of maritime law that Title 46 lays out.

Section 16 Text

SEC. 17. <<NOTE: 46 USC 41301 note prec.>>  FEDERAL MARITIME 
                      COMMISSION ACTIVITIES.

    (a) Public Submissions to Commission.--The Federal Maritime 
Commission shall--
            (1) <<NOTE: Website.>>  establish on the public website of 
        the Commission a webpage that allows for the submission of 
        comments, complaints, concerns, reports of noncompliance, 
        requests for investigation, and requests for alternative dispute 
        resolution; and
            (2) direct each submission under the link established under 
        paragraph (1) to the appropriate component office of the 
        Commission.

    (b) Authorization of Office of Consumer Affairs and Dispute 
Resolution Services.--The Commission shall maintain an Office of 
Consumer Affairs and Dispute Resolution Services to provide 
nonadjudicative ombuds assistance, mediation, facilitation, and 
arbitration to resolve challenges and disputes involving cargo 
shipments, household good shipments, and cruises subject to the 
jurisdiction of the Commission.
    (c) Enhancing Capacity for Investigations.--
            (1) In general. – <<NOTE: Deadline.>> Pursuant to section 
        41302 of title 46, United States Code, not later than 18 months 
        after the date of enactment of this Act, the Chairperson of the 
        Commission shall staff within the Bureau of Enforcement, the 
        Bureau of Certification and Licensing, the Office of the 
        Managing Director, the Office of Consumer Affairs and Dispute 
        Resolution Services, and the Bureau of Trade Analysis not fewer 
        than 7 total positions to assist in investigations and 
        oversight, in addition to the positions within the Bureau of 
        Enforcement, the Bureau of Certification and Licensing, the 
        Office of the Managing Director, the Office of Consumer Affairs 
        and Dispute Resolution Services, and the Bureau of Trade 
        Analysis on that date of enactment.
            (2) Duties.--The additional staff appointed under paragraph 
        (1) shall provide support--
                    (A) to Area Representatives of the Bureau of 
                Enforcement;
                    (B) to attorneys of the Bureau of Enforcement in 
                enforcing the laws and regulations subject to the 
                jurisdiction of the Commission;
                    (C) for the alternative dispute resolution services 
                of the Commission; or
                    (D) for the review of agreements and activities 
                subject to the authority of the Commission.

Original Title 46 Text

While Section 17 of OSRA doesn’t exactly amend Section 41301 of Title 46, it does pertain to it. Therefore, I’ve included the section here for context.

§41301. Complaints

(a) In General.—A person may file with the Federal Maritime Commission a sworn complaint alleging a violation of this part, except section 41307(b)(1). If the complaint is filed within 3 years after the claim accrues, the complainant may seek reparations for an injury to the complainant caused by the violation.

(b) Notice and Response.—The Commission shall provide a copy of the complaint to the person named in the complaint. Within a reasonable time specified by the Commission, the person shall satisfy the complaint or answer it in writing.

(c) If Complaint Not Satisfied.—If the complaint is not satisfied, the Commission shall investigate the complaint in an appropriate manner and make an appropriate order.

Amended Text

N/A.

Paragraph (a) Observations

Paragraph (a) of Section 17 seems straightforward. It has two subparagraphs. The first requires the FMC to set up a page on its website for people to submit their sworn complaints of alleged violations that Title 46’s Section 41301 allows. It also expands complaints to “comments, complaints, concerns, reports of noncompliance, requests for investigation, and requests for alternative dispute resolution.”

This fits with general trends of OSRA. The lawmakers appear to be particularly concerned with protecting U.S. shippers and encouraging them to report unfair or illegal practices they face in the international shipping industry.

The second subparagraph mandates the FMC send submitted complaints (etc.) to the appropriate offices within the commission, which brings us to…

Paragraph (b) Observations

Paragraph (b) instructs the FMC to have an Office of Consumer Affairs and Dispute Resolution Services. The services it is to offer are “nonadjudicative ombuds assistance, mediation, facilitation, and arbitration to resolve challenges and disputes involving cargo shipments, household good shipments, and cruises subject to the jurisdiction of the Commission.

Ombuds is a less-than-common term. Ombuds has to do with investigating, reporting on, and settling disputes or complaints. The broadness of the term makes services listed after it a bit redundant; however, they do spell out the purpose of the office’s services better for the common reader. If you go to the website of the FMC’s new Office of Consumer Affairs and Dispute Resolution Services, it states that its “mission is to ensure a competitive and reliable international ocean transportation supply system that supports the U.S. economy and protects the public from unfair and deceptive practices.”

One thing here that is interesting, and probably good, is that this office of the FMC is not to act as the judge over complaints or disputes brought before it (nonadjudicative). The language of paragraph (b) leaves room for the courts to make legal judgments while the Office of Consumer Affairs and Dispute Resolution Services can help resolve disputes before they reach the courts.

That doesn’t mean investigations included in the scope of the services of this office couldn’t be used in litigation or even judgments Title 46, with all of its OSRA updates, may grant the FMC to make. Speaking of investigations, we come to…

Paragraph (c) Observations

Paragraph (c), with its two subparagraphs, adds additional positions within the FMC that are specifically meant to increase the commission’s capacity for investigating complaints, allegations, and agreements under the FMC’s jurisdiction.

You can read the specifics laid out concerning whom these new positions report to and what details are given concerning their duties as well as I can. There are no profound observations I have here. Obviously, this increase of employees within the FMC requires funding. Often, bigger government within an industry has expensive results for that industry. However, funding the enforcement of law is an important part of protecting those within that industry, along with its consumers, from unfair and illegal practices. The latter would seem to be the goal in increasing the FMC’s staff here. There have been complaints in the past that the FMC didn’t have the investigative resources to seriously handle all the complaints and problems before it.

Conclusion

Section 17 continues a trend within OSRA of increasing the size and power of the FMC with a goal of protecting those withing the international shipping industry and, you could probably say, the nation’s supply chain as a whole. Specifically, Section 17 increases the size of the FMC, requiring the existence of an office or branch within it and an increase of employees for investigative purposes. All of this, of course, requires more money, though that money is not specifically addressed here.

It’s still early to see how successful the increase in the size, power, and budget of the FMC is and will be at improving the international shipping industry for shippers and the industry’s stakeholders. Hopefully, data over the next several years will help give insight into that. But I wouldn’t expect that data to come without spin from politicians and probably from those within the industry as well.

If you noticed something in Section 17 of OSRA that you think deserves more attention, please let us know in the comments section below. Perhaps you have a take on it that I didn’t consider or disagree with an observation I’ve made. We’d love to hear from you.

Stay tuned for when Decoding OSRA continues, looking at Section 18….

The post Decoding OSRA: Section 17. Federal Maritime Commission Activities appeared first on Universal Cargo.

Earlier this week, on the 26th of February, the Federal Maritime Commission (FMC)issued its final rules for demurrage and detention billing.

The Ocean Shipping Reform Act of 2022 gave the FMC authority to create these rules, which have been much anticipated, with the hopes that they would continue the trend of protecting against unfair detention and demurrage fees, which have long been controversial in the international shipping industry.

Without any further adieu, below is the full text of the FMC’s Demurrage and Detention Billing Requirements.

Demurrage and Detention Billing Requirements

(Full Text)

AGENCY:

Federal Maritime Commission.

ACTION:

Final rule.

SUMMARY:

In accordance with the Ocean Shipping Reform Act of 2022, the Federal Maritime Commission (the Commission or FMC) is issuing regulations governing demurrage and detention billing requirements. This final rule requires common carriers and marine terminal operators to include specific minimum information on demurrage and detention invoices, outlines certain detention and demurrage billing practices, such as determination of which parties may appropriately be billed for demurrage or detention charges, and sets timeframes for issuing invoices, disputing charges with the billing party, and resolving such disputes. It adopts with changes the notice of proposed rulemaking published on October 14, 2022. Substantive changes allow consignees to be billed and clarify the timeframe for non-vessel-operating common carriers passing through demurrage and detention charges to issue their own invoices. Non-substantive changes improve clarity and remove drafting errors.

DATES:

This final rule is effective on May 28, 2024, except for instruction 2 adding § 541.6, and instruction 3 adding § 541.99, which are delayed. The Commission will publish a document in the Federal Register announcing the effective date of these amendments.

ADDRESSES:

To view background documents or comments received, you may use the Federal eRulemaking Portal at www.regulations.gov under Docket No. FMC–2022–0066.

FOR FURTHER INFORMATION CONTACT:

David Eng, Secretary; Phone: (202) 523–5725; Email: secretary@fmc.gov.

SUPPLEMENTARY INFORMATION:

I. Background

As rising cargo volumes have increasingly put pressure on common carriers, port and terminal performance, demurrage and detention charges have for a variety of reasons substantially increased. For example, over a two-year period between 2020 and 2022, nine of the largest carriers serving the U.S. liner trades individually charged a total of approximately $8.9 billion in demurrage and detention charges and collected roughly $6.9 billion.[1] On July 28, 2021, Commissioner Rebecca F. Dye, the Fact Finding Officer for Fact Finding Investigation No. 29, International Ocean Transportation Supply Chain Engagement (Fact Finding No. 29), recommended, among other things, that the Commission “[i]ssue an [Advance Notice of Proposed Rulemaking (ANPRM)] seeking industry input on whether the Commission should require common carriers [2] and marine terminal operators [3] to include certain minimum information on or with demurrage and detention billings and adhere to certain practices regarding the timing of demurrage and detention billings.” [4] The Fact Finding Officer expressed concern about certain demurrage and detention billing practices and a need to ensure that it is clear to shippers “what is being billed by whom” so that they can understand the charges.[5] The Commission voted to move forward with this Fact Finding 29 recommendation on September 15, 2021.[6] 

On February 15, 2022, the Commission issued an ANPRM to request industry views on potential demurrage and detention billing requirements.[7] Specifically, the Commission requested comments on:

    - Whether a proposed regulation on demurrage and detention billing practices should apply to non-vessel-operating common carriers (NVOCCs) as well as vessel-operating common carriers (VOCCs);

• Whether the regulations should differ based on whether the billing party is an NVOCC or a VOCC; [8] 

• Whether the proposed regulations on demurrage and detention billings should apply to marine terminal operators (MTOs); [9] 

• What information should be required in demurrage and detention invoices; [10] 

• Whether bills should include information on how the billing party calculated demurrage and detention charges.[11] For example, the Commission requested comments on whether it should require the billing party to include the following information:

○ Identifying clear and concise container availability dates in addition to vessel arrival dates for import shipments; and,

○ For export shipments, the earliest return dates (and any modifications to those dates) as well as the availability of return locations and appointments, where applicable; [12] and

• Whether the bills should include information on any events (e.g.,container unavailability, lack of return locations, appointments, or other force-majeure reasons) that would justify stopping the clock on charges.[13] 

In the ANPRM, the Commission stated that it was considering whether it should require common carriers and MTOs to adhere to certain practices regarding the timing of demurrage and detention billings. The Commission sought comments on whether it should require billing parties to issue demurrage or detention invoices within 60 days after the charges stopped accruing.[14] The Commission stated that the Uniform Intermodal Interchange Agreement (UIIA) [15] currently stipulates that invoices be issued within 60 days and asked whether the 60-day timeframe was effective in addressing concerns raised by billed parties, or whether a longer or shorter time period would be more appropriate.[16] In addition, the Commission requested comments on whether it should regulate the timeframe for refunds and, if so, what would be an appropriate timeframe.[17] 

On June 16, 2022, after the Commission issued the ANPRM and received comments, the Ocean Shipping Reform Act of 2022 (OSRA 2022) was enacted into law.[18] In OSRA 2022, Congress amended various statutory provisions contained in part A of subtitle IV of title 46, U.S. Code. Specifically, OSRA 2022 prohibits common carriers from issuing an invoice for demurrage or detention charges unless the invoice includes specific information to show that the charges comply with part 545 of title 46, Code of Federal Regulations and applicable provisions and regulations.[19] OSRA 2022 then lists the minimum information that common carriers must include in a demurrage or detention invoice:

– date that container is made available;

– the port of discharge;

– the container number or numbers;

– for exported shipments, the earliest return date;

– the allowed free time in days;

– the start date of free time;

– the end date of free time;

– the applicable detention or demurrage rule on which the daily rate is based;

– the applicable rate or rates per the applicable rule;

– the total amount due;

– the email, telephone number, or other appropriate contact information for questions or requests for mitigation of fees;

– a statement that the charges are consistent with any of Federal Maritime Commission rules with respect to detention and demurrage; and

– a statement that the common carrier's performance did not cause or contribute to the underlying invoiced charges.[20] 

Failure to include the required information on a demurrage or detention invoice eliminates any obligation of the billed party to pay the applicable charge.[21] In addition, OSRA 2022 authorizes the Commission to revise the minimum information that common carriers must include on demurrage or detention invoices in future rulemakings.

OSRA 2022 additionally requires the Commission to initiate a rulemaking further defining prohibited practices by common carriers, marine terminal operators, shippers, and OTIs regarding the assessment of demurrage or detention charges.[22] OSRA 2022 provides that such rulemaking must “only seek to further clarify reasonable rules and practices related to the assessment of detention and demurrage charges to address the issues identified in the final rule published on May 18, 2020, entitled `Interpretive Rule on Demurrage and Detention Under the Shipping Act' (or successor rule)[.]” [23] Specifically, the Commission's rulemaking must clarify “which parties may be appropriately billed for any demurrage, detention, or other similar per container charges.” [24] 

On October 14, 2022, the Commission published a notice of proposed rulemaking (NPRM) that would require common carriers and marine terminal operators to include specific minimum information on demurrage and detention invoices and outlined certain billing practices relevant to appropriate timeframes for issuing invoices, disputing charges with the billing party, and resolving such disputes.[25] The proposed rule addressed considerations identified in the Ocean Shipping Reform Act of 2022. The proposed rule sought comment on the adoption of minimum information that common carriers must include in a demurrage or detention invoice; the addition to this list of information that must be included in or with a demurrage or detention invoice; a proposed definition of prohibited practices clarifying which parties may be appropriately billed for demurrage or detention charges; and billing practices that billing parties must follow when invoicing for demurrage or detention charges.

II. Comments

In response to the NPRM published October 14, 2022, the Commission received 191 comments from interested parties. All major groups of interested persons were represented in the comments: vessel-operating common carriers (VOCCs), non-vessel-operating common carriers (NVOCCs), marine terminal operators (MTOs), motor carriers, beneficial cargo owners (BCOs), ocean transportation intermediaries (OTIs), third party logistics providers, customs brokers, bi-partisan groups of the U.S. House of Representatives, another Federal agency, and the National Shipping Advisory Committee (the Commission's federal advisory committee). Comments were submitted by individuals, large and small companies, and by national trade associations. All comments submitted on the NPRM are available at https://www.regulations.gov/​docket/​FMC-2022-0066/​comments.

About 75 percent of commenters supported the rule, about 15 percent questioned the rule, and 10 percent did not specify. Motor carriers overwhelmingly support the entire rule. BCOs mostly support the rule but some object to prohibiting others from being billed. NVOCCs and OTIs generally supported the rule, but with many objecting to the inclusion of NVOCCs. VOCCs overwhelmingly questioned or did not support the rule. Nearly all VOCCs questioned the rule prohibiting billing other parties and the timing of billing requirements. About half of VOCCs questioned the required information from the ANPRM that the Commission added to the information specifically required by OSRA 2022. MTOs overwhelmingly questioned the rule, with most arguing these regulations should not apply to MTOs.

The top three issues addressed by commenters were: (1) concerns with the prohibition on billing other parties that are not contractually connected, (2) concerns with additional information the Commission proposed to require in addition to the OSRA 2022 mandated information, and (3) concerns with the time periods for billing.

These comments are addressed in the discussion that follows.

III. Discussion of Comments

A. § 541.1 Purpose

Issue: Two commenters requested that “minimum” be added to the second sentence before “procedures” to mirror the use of “minimum” before “information” in the first sentence.[26] 

FMC response: FMC declines to make the proposed change. Neither commenter provided sufficient justification as to why such a change would provide additional clarity. The Commission has drafted § 541.1 to reflect the language of OSRA 2022.

B. § 541.2 Scope and Applicability

1. Regulation of MTO Demurrage and Detention Billing Practices

(a) FMC's Authority To Regulate

Issue: MTOs and MTO trade associations argued that MTOs should not fall within the scope of the rule.

MTOs offered many reasons why they should not be subject to the proposed regulations. The majority presented their interpretation of the effect that the legislative process leading to the enactment of OSRA 2022 should have, which they believe demonstrates that Congress intended to prohibit inclusion of MTOs in this rulemaking. MTOs pointed first to how Congress amended 46 U.S.C. 41104, which applies to common carriers, not MTOs.[27] MTOs argued that Congress deliberately chose not to amend 46 U.S.C. 41106 when it added invoicing requirements to 46 U.S.C. 41104, so that invoicing requirements would only apply to carriers, not to MTOs.[28] The National Association of Waterfront Employers (NAWE) and the Port of NY/NJ Sustainable Services Agreement (PONYNJSSA) also argued that Congress's choice not to add invoicing requirements to 46 U.S.C. 41102, which applies to both MTOs and carriers, precludes the Commission from including MTOs in the scope of this regulation.[29] Most commonly, these commenters pointed out that Congress, and specifically the House of Representative's version of OSRA 2021, originally included MTOs in the invoicing requirements.[30] The MTOs argue that Congress, late in the process, chose to exempt MTOs from compliance with demurrage and detention requirements in the enacted version of OSRA 2022.[31] Two members of Congress, Congressman Jake Auchincloss and Congressman Brian Babin, wrote jointly [August 17th Congressional Letter] to make this argument, and stated that including MTOs within the scope of the regulation would threaten stability and cargo fluidity at United States ports.[32] 

NAWE also argued that the Commission cannot enforce 46 U.S.C. 41102(c) here without contravening the Commission's Interpretive Rule at 46 CFR 545.4(b). NAWE stated that the Commission's Interpretive Rule requires that an impermissible “practice” occur on a “normal, customary, and continuing basis,” while the proposed rule would penalize any isolated invoice omission. NAWE argued that taking action in a case alleging a single shipment violation is an implicit repeal of the agency's Interpretive Rule at § 545.4 without public notice and comment.

Other members of Congress submitted comments on the proposed rule as well, but in support of the inclusion of MTOs in this rule.[33] A letter from these members of Congress [January 2nd Congressional Letter] stated that since authoring OSRA 2022, they became aware that MTOs are invoicing their own demurrage and detention charges separate from VOCC charges. They pointed out that this invoicing practice directly contradicts the statements of NAWE to Congress during the drafting of OSRA 2022.[34] The letter stated that they support applying any demurrage and detention invoicing requirements that apply to VOCCs to MTOs as well, with reasonable exceptions for demurrage charges set by public port tariffs and where MTOs are acting only as a collections agent.[35] 

FMC response: The Commission has the statutory authority to apply this rule to MTOs and declines to exclude them from the duties and responsibilities of issuing accurate demurrage and detention invoices. Commenters raised two major arguments against the Commission's proposed inclusion in the regulations of MTOs. Commenters argued that the Commission did not have authority to apply the regulations to MTOs [36] and that it should not apply regulations to MTOs for a variety of reasons addressed below individually.[37] The Commission has clear statutory authority to regulate MTOs under section 41102(c). There is also a clear need, based on the record of this rulemaking, for these regulations to address MTOs demurrage and detention invoices sent to entities other than VOCCs.

Section 41102(c) of Title 46 prohibits common carriers, MTOs, and ocean transportation intermediaries from failing to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with the receiving, handling, storing, or delivering property. The Commission has authority under 46 U.S.C. 46105(a) to prescribe regulations to carry out its duties and powers. The Commission has repeatedly explained that the issue of detention and demurrage charges falls within the prohibitions of 46 U.S.C. 41102(c).[38] Further, the plain language of 46 U.S.C. 41102(c) describes exactly the type of conduct this rule intends to regulate. This section prohibits an MTO from “failing to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving . . . [or] storing property.” This rule issued pursuant to the Commission's power to issue regulations [39] to define these prohibitions, as well as those found in OSRA 2022, interprets what constitutes just and reasonable practices on invoicing and charges related to the use of marine terminal space or shipping containers. The Commission concludes that this rule will help ensure that MTOs' demurrage and detention billing practices are just and reasonable pursuant to section 41102.

Arguments that the Commission lacks this authority because Congress chose to place detailed invoicing requirements in a section that only applies to carriers, or because Congress removed requirements that would expressly apply to MTOs during the statutory drafting process, do not address the Commission's pre-existing and continuing legal authority to issue demurrage and detention invoicing regulations that apply to MTOs even before OSRA 2022. The actual statutory text of 46 U.S.C. 41102(c) and Congress's direction to use 46 U.S.C. 41102(c) to define prohibited demurrage and detention practices for marine terminal operators is clear and does not necessitate resorting to the incomplete history of the legislative drafting process of OSRA 2022.[40] Moreover, Congress explicitly included in OSRA 2022 the direction that the Commission initiate a rulemaking to further define prohibited practices by MTOs, among others, under 46 U.S.C. 41102(c) regarding the assessment of detention and demurrage.[41] Thus, in OSRA 2022, Congress amplified the Commission's existing authority to issue regulations that govern the issuance of demurrage and detention invoices in section 41102(c) and added to that authority a mandate to further define prohibited practices. The identification of MTOs within section 7(b), entitled “Common Carriers,” does not support the view that Congress intended to limit the scope of its directive to the Commission to ensuring that invoices are accurate. Instead, the plain language of the statute shows an intent by Congress to address in a targeted manner the failures of the current invoicing process. Such a targeted approach requires ensuring that MTOs, as well as VOCCs and NVOCCs, issue accurate invoices.

The need to include MTOs in this rule is supported by the comments. Excluding MTOs from this rule is likely to create a regulatory loophole, significantly affecting the ability of the rule to effect change in the current invoicing process. The comments support a finding that MTOs are invoicing for their own demurrage and detention charges.[42] Common carriers, the usual contractual party, could simply have MTOs issue their demurrage and detention invoices to avoid the necessary invoicing requirements this rule puts into place, and invoices coming from MTOs would not be required to comply with either Congress's instructions at 46 U.S.C. 41104(d) or these regulations. Billed parties would receive a significant portion of invoices from MTOs with whatever information MTOs chose to provide, which may not include the critical information a billed party needs to ensure the bill is accurate. The MTO as the billing party would not be subject to the dispute resolution processes contained in these rules. Not including MTOs in the scope of this rule would meaningfully reduce the effectiveness of the rule and perpetuate current problematic invoicing practices. The Commission finds, as supported by the comments, that finalizing a rule that excluded MTOs would undermine Congress's intent as expressed through the plain language of OSRA 2022.[43] 

The August 17th Congressional Letter and other commenters argued that it was not Congress's intent that these rules apply to MTOs.[44] The August 17th Congressional Letter urged the removal of MTOs from the rulemaking's substantive requirements because the legislative history shows that Congress intended to remove MTOs from demurrage and detention invoicing requirements and such requirements could potentially increase port congestion.[45] However, as noted above, the legislative history of OSRA 2022 cannot be read to prohibit agency action to address an issue the legislation itself identifies as in need of resolution.

Further, the January 2nd Congressional Letter urged the Commission to ensure the inclusion of MTOs in the Commission's final rule. Congressmen Garamendi, Johnson, Costa, Valado, Thompson, and Panetta wrote the January 2nd Congressional Letter.[46] The January 2nd Congressional Letter reported that comments submitted to Congress by NAWE in 2021 stated that MTOs do not invoice their own charges for detention and demurrage separate from those charged by ocean common carriers. Since then, the signatories of the January 2nd Congressional Letter state they have received reports of MTOs invoicing their own demurrage and detention charges separate from those of ocean common carriers. The January 2nd Congressional Letter concluded that all requirements in the final rule for invoicing demurrage and detention that cover ocean common carriers should apply to MTOs. The Commission finds the argument from the January 2nd Congressional Letter persuasive and consistent with the comments indicating that MTO invoicing is prevalent. It is critical to include MTOs in the final rule to ensure meaningful change to existing industry practice creating inefficiencies and confusion.

With respect to the specific information required in invoices, Congress and the President have already spoken on what they believe to be reasonable demurrage and detention invoicing requirements for billing parties, as evidenced by what they required of common carriers at 46 U.S.C. 41104(d). The Commission believes that these elements are appropriate to require in a demurrage and detention invoice sent to a billed party, regardless of whether the invoices come from an MTO or a common carrier, because these elements are mandated by Congress and supported by past agency investigation and review.[47] The need for consistency in demurrage and detention invoicing further supports requiring MTOs to comply with this rule, because billed parties should be able to expect a standardized set of information in a demurrage or detention invoice,[48] regardless of whether it comes from a carrier or an MTO.[49] 

Requiring standardized practices from MTOs also addresses the confusion raised in comments about what actual role MTOs play in invoicing for demurrage and detention. Some MTOs told Congress that they do not issue their own demurrage and detention invoices separate from carriers.[50] Some MTOs have told the Commission that they do not send traditional demurrage and detention invoices, but instead issue “demurrage receipts” or “disclose charges.” [51] One MTO contended to the Commission that it does not send demurrage and detention invoices to BCOs or truckers, and that it is VOCCs who charge BCOs demurrage and detention; but the same MTO also said that MTOs sometimes collect demurrage and detention on behalf of VOCCs.[52] Other MTOs said that they do send demurrage and detention invoices.[53] Yet, even if these MTOs agreed that they do send demurrage and detention invoices, they disagreed with the idea that these invoices should be subject to the same regulation as other billing parties.

These inconsistent statements by MTOs highlight the need for clear rules governing all demurrage and detention billing parties so that billed parties receive accurate information to facilitate faster payment and dispute resolution. Allowing MTOs to escape the basic requirements of this rule by artfully styling their demurrage and detention invoices as “receipts” or “disclosures” would undermine the statute, frustrate the Commission's expressed intention to simplify and clarify demurrage and detention invoicing for billed parties, and leave in place the confusing status quo that spurred Congress to pass OSRA 2022.

Further, the logic of the MTO argument against regulation is not persuasive. If, as some MTOs claim, they do not invoice shippers, BCOs, and truckers for demurrage and detention, the rule would not affect their practices in any event. If MTOs do send invoices, however, they should abide by the same rules as any other billing party. If they do have contractual privity, they should be able to obtain any information necessary to issue a compliant invoice through that contract. If MTOs do not have the information required to issue invoices consistent with these rules, they should not send invoices. If they still need to send these invoices, they should obtain all of the required information like any other billing party. If they cannot obtain that information and they still wish to collect a charge, they should forward the invoice to a billing party with whom they have a contractual relationship and that can comply with this rule, and collect the demurrage and detention charge after providing the billing party accurate information about the charge.

Some commenters further challenged the Commission's authority to regulate MTOs pursuant to 46 U.S.C. 41102. NAWE argued that the Commission lacks authority to regulate MTO invoicing through the general legal authority to regulate unjust and unfair practices at 46 U.S.C. 41102(c). NAWE argued that a more specific statutory provision controls over a more general provision, and that when two statutes cannot be harmonized, the later in time statute controls over the earlier. NAWE contended that 46 U.S.C. 41102(c) and OSRA 2022 can be harmonized, by simply omitting MTOs from the proposed rule. If, however, the authorities cannot be harmonized, it contends, the Commission must follow OSRA 2022 as it is the more specific and later-in-time statute.

As previously noted, the Commission has explained that it interprets 46 U.S.C. 41102(c) as governing the invoicing of demurrage and detention. Nothing in OSRA 2022 prohibited the Commission from regulating MTO demurrage and detention invoicing. Therefore, the Commission disagrees with NAWE's argument that the statutes cannot be harmonized.

(b) Burden on MTOs To Comply With the Rule and Security Concerns

Issue: MTOs argued that applying these rules to MTOs would force them to expend significant resources to overhaul their websites and create additional security measures.[54]

FMC response: MTOs did not submit estimates of or proposals for what work would be needed, or would cost, to modify their systems to comply with this rule. One MTO explained they have already invested significant resources to modify their system to incorporate the information from carriers required by OSRA 2022. This certainly suggests it is reasonable to expect MTOs to modify their systems to comply with this rule. It is not clear why MTOs could do this for their VOCC customers' invoices but not their own invoices.[55]

(c) Changes to Current MTO Practices

Issue: MTOs argued that this rule would upend settled practices and increase confusion and congestion at ports.[56] 

FMC response: Current billing practices and the lack of transparency in those practices have raised concerns about whether current practices allow for a competitive and reliable American freight delivery system.[57] The changes to current practices this rule requires are meant to change the settled practices that do not ensure accuracy, clarity, and visibility of charges. This rule seeks to improve upon existing practices that do not provide adequate information for the efficient invoicing of charges. Further, these changes provide clarity on how billed parties access the dispute resolution process. Requiring targeted information may ultimately lead to fewer disputed bills and therefore streamline the demurrage and detention billing process. As discussed further in this preamble, the Commission is delaying implementation of the rule by 90 days. The Commission believes that this is sufficient time to allow MTOs and other regulated parties to make the necessary changes to their business operations in order to comply with the rule.

(d) Impacts on Common Law Lien Rights

Issue: MTOs argued that the rule would force MTOs to waive their common law lien rights. MTOs said they would have to choose between: (1) releasing cargo without demurrage or detention charges being paid (waiving their lien rights), or (2) refunding any collected charges if the invoice does not comply with this final rule.[58] 

FMC response: This rule does not impact traditional cargo lien rights. This rule allows MTOs to make their own business decisions about whether or not they require demurrage and detention charges to be paid prior to releasing cargo. Contrary to the commenters' assertions, releasing cargo without payment of demurrage and detention charges does not automatically waive cargo lien rights. Cargo liens are lost upon delivery only if the cargo is delivered unconditionally.[59] It is well established law that a lien can survive delivery if the parties have contracted for such and the release has been conditioned.[60] In some circumstances releasing cargo conditionally might potentially carry additional administrative burden and risk, but it may be advantageous to a particular MTO in other circumstances. Alternatively, MTOs can require demurrage and detention charges be paid prior to releasing cargo. This option carries its own risks, however. As the commenter stated, if an MTO collects demurrage and detention charges and then those charges are later successfully contested by the billed party, the MTO must refund the incorrect charges. Under this rule, billed parties have 30 calendar days from the date the invoice is issued to contest demurrage and detention charges. This, however, should serve as an incentive for the invoices to be correct when issued. MTOs assert that issuing correct invoices will be difficult to impossible for them to do under the new rule because they do not know the end date of free time. The Commission is not convinced by this argument. MTOs have not presented evidence to the Commission that such information is unattainable by MTOs, only that they do not presently have it. The information needed to calculate this charge is knowable in advance of the release of cargo; it can be pulled from the bill of lading, tariff, terminal schedule, or other relevant transportation documents MTOs already have access to and billing formulas created that allow accurate invoices to be created quickly and accurately once an availability date is known (and projected outward for each day cargo pick-up is delayed).

(e) Impact on the Commission's Interpretive Rule Codified at 46 CFR 545.4

Issue: Commenters argued that the Commission's proposed rule amounts to an implicit repeal of the Commission's Interpretive Rule at 46 CFR 545.4 and therefore that the Commission's action violated the Administrative Procedure Act (APA).

FMC response: The Commission has solicited public comment in both an ANPRM and NPRM about whether the scope of this rule should cover MTO invoicing. The Commission stated unequivocally in the NPRM that MTOs would be subject to this rule. MTOs have had repeated and public notice that the Commission was considering this option, so the Commission disagrees with concerns that the rule lacked adequate time for public notice and comment. Any argument about what parts of the Interpretive Rule at 46 CFR 545.4 remains in force is inherently an argument about that guidance and not about whether the Commission's instant rule complies with the APA.

Some commenters argue the rule is inconsistent with the Interpretive Rule at 46 CFR 545.4. The Commission finds that OSRA 2022 specifically required the Commission to issue rules under 46 U.S.C. 41102(c) that further define the prohibited practices by common carriers, marine terminal operators, and shippers, regarding the assessment of detention or demurrage charges. The plain language of this directive and the plain language of 41104(d) do not require evidence of multiple violations. This view is further supported by 46 U.S.C. 41104(f) which functions to void an invoice if a single required element is not included, not when the complainant can show multiple instances of such behavior.[61] Thus, in the narrow context of demurrage and detention invoices issued by MTOs and common carriers, the Commission concludes that Congress dictated that evidence of a single violation is sufficient. To the extent that the commenters argue this narrowing by Congress repeals the Commission's entire Interpretive Rule codified at 46 CFR 545.4, the Commission disagrees.

(f) MTOs Collecting Demurrage and Detention on Behalf of Other Parties

Issue: Several MTOs have raised questions about how the rule does, and should, apply to them when they are collecting demurrage and detention charges on behalf of VOCCs, NVOCCs, and BCOs. For example, Maher Terminals said that the definition of “billing party” in the proposed rule does not clarify the identity of the billing party when an MTO bills and collects on behalf of a VOCC. (The rule would define “billing party” as “the ocean common carrier, marine terminal operator, or non-vessel-operating common carrier who issues a demurrage or detention invoice.”) Maher Terminals proposed a revision to the definition that would have made clear that when an MTO bills on behalf of a VOCC/NVOCC/BCO that the VOCC/NVOCC/BCO is the billing party.

FMC response: In the scenario described above, it is assumed that the MTO would be acting as an agent of the VOCC/NVOCC/BCO. Whether an MTO must comply with the rule in this case depends upon the contractual duties of the MTO as an agent. Traditional rules of agency remain applicable under the Shipping Act.[62] According to the Restatement (Third) Of Agency § 1.01 (2006): “As defined by the common law, the concept of agency posits a consensual relationship in which one person, to one degree or another or respect or another, acts as a representative of or otherwise acts on behalf of another person with power to affect the legal rights and duties of the other person. . . .” The principal has a right to control the actions of the agent, but “a principal's failure to exercise the right of control does not eliminate it.” Restatement (Third) Of Agency § 1.01 (2006). The Restatement also notes that an enforceable contract, written or oral, does not need to exist for there to be a principal-agent relationship. Restatement (Third) Of Agency § 1.01 (2006).

While the circumstances of each case must be known to make any particular determination as to whether an agency relationship exists, it is fair to assume, based on the Restatement's description of agency that the majority of instances where MTOs collect demurrage and detention charges on behalf of another party likely create an agency relationship. Thus, except to the extent that a principal VOCC or NVOCC has not delegated their obligations under 46 U.S.C. 41104, the agent-MTO must assume those obligations when acting to collect demurrage and detention charges. Of course, the exact principal-agent relationship is open to negotiation between the principal and agent. An agent is free to negotiate the specific acts they will or will not undertake on behalf of the principal. It is possible that in a particular MTO-principal demurrage and detention billing relationship that the MTO is responsible for providing all of the invoice elements in 46 U.S.C. 41104(d)(2) while in another MTO-principal demurrage and detention billing relationship that the MTO complies with only certain elements of 46 U.S.C. 41104(d)(2) and that the invoice must be sent back to the principal for completion of the other elements before the invoice is issued to the billed party.

2. 46 U.S.C. 41104(e), NVOCC Safe Harbor

Issue: One commenter said that the proposed rule did “not address the safe harbor provision provided to NVOCCs at 46 U.S.C. 41104(e), which exempts NVOCCs from the demurrage and detention invoice requirements and, importantly, liability for any invoice inaccuracies when the NVOCC passes through an underlying ocean common carrier's invoice.” [63] The commenter requested that the rule be modified “to ensure NVOCCs remain exempt from the demurrage and detention requirements when passing through the charges or invoice.”

FMC response: The commenter misinterprets the language of 46 U.S.C. 41104(e). The statute does not exempt NVOCCs from the demurrage and detention invoice requirements of 46 U.S.C. 41104(d)(2). It merely shifts responsibility for refunds or penalties under 46 U.S.C. 41104(d)(1) in the certain, specified scenario from the NVOCC to the ocean common carrier. The safe harbor provision is most applicable in a situation where an NVOCC receives an invoice from a VOCC and passes it on to its customers. In order for the safe harbor provision to apply, however, OSRA 2022 requires the Commission to make a finding that the non-vessel-operating common carrier is not otherwise responsible for the charge. The Commission declines to make a general finding as part of this rulemaking that all NVOCCs are “not otherwise responsible” for errors in invoices they pass through. Rather, this is a fact-based analysis that the Commission undertakes on a case-by-case basis. If the Commission finds in a particular matter that a violation of 46 U.S.C. 41104(d)(1) has occurred and also has made the relevant finding under 46 U.S.C. 41104(e) that the NVOCC is not otherwise liable, only then is the safe harbor provision applicable.

As discussed in the NPRM, there are important reasons for requiring NVOCCs to comply with detention and demurrage invoicing requirements: invoices that a BCO receives from an NVOCC may be their only notice of detention and demurrage charges and because of its contractual relationship with the BCO an NVOCC is often the only party in this transaction able to inform BCOs as to the nature of these charges.[64] The intent of this rulemaking is to ensure that the person receiving the bill understands the charges regardless of who the billing party is.

C. § 541.3 Definitions

1. “Billing Dispute”

Issue: One commenter raised two concerns about the proposed definition of “billing dispute.” [65] First, the commenter was concerned that under the proposed definition, an MTO may not know when a “mere billing inquiry is tantamount to a `disagreement' with respect to a specific invoice.” Second, the commenter was concerned that the word “raised” does not “provide adequate guidance in this context as it suggests that a disagreement is being broached for discussion purposes rather than being clearly conveyed to the billing party as a disagreement.”

FMC response: The Commission has removed the term “billing dispute” from § 541.3 in the final rule. “Billing dispute” does not need to be defined because it is not a term used in §§ 541.4–541.99, in either the NPRM or final rule. “Dispute” is used in § 541.6(d), but only in the paragraph header and does not require further definition.

2. “Billed Party” and “Billing Party”

(a) Responsibility for Payment

Issue: One commenter requested that the definition of “billed party” be amended by replacing “is responsible for the payment of any incurred demurrage or detention charge” with “has contracted with the billing party for the ocean carriage or storage of good.” [66] They were concerned that the language “responsible for the payment” “reads as a legal conclusion” and did not comport with the Commission's goal that demurrage and detention invoices be billed to persons having a contractual relationship with the billing party for the carriage or storage of goods. Another commenter requested that the Commission amend the definition of “billed party” to include motor carriers that control containers to account for situations where VOCCs enter directly into written contracts with motor carriers that use containers in the transportation of goods.[67] 

FMC response: The Commission declines to make the requested changes. With respect to the first comment, the definition of “billed party” is simply to clarify the rights and responsibilities of the party receiving the bill. It is a fact-based definition centered on who the party is to whom the billing party issues the invoice. The definition is not the basis of an assessment of whether the billed party properly received the invoice, which is governed by § 541.4. Nothing in this rule prohibits third parties from receiving copies of invoices or voluntarily paying demurrage or detention charges on behalf of the shipper/consignee.

In regard to the second comment, there seems to be a misunderstanding on the commenter's part about the rule's applicability. As discussed in the NPRM, a primary purpose of this rule is to stop demurrage and detention invoices from being sent to parties who did not negotiate contract terms with the billing party. That concern is not present where a motor carrier has directly contracted with a VOCC. Nothing in this rule, either in the proposed or final version, prohibits a VOCC from issuing a demurrage or detention invoice to a motor carrier when a contractual relationship exists between the VOCC and the motor carrier for the motor carrier to provide carriage or storage of goods to the VOCC. The definition of “billed party” is intentionally broad to capture any party to whom a detention or demurrage invoice is issued. When a VOCC issues a detention or demurrage invoice to a motor carrier, the VOCC must comply with the requirements of part 541. The Commission has jurisdiction over common carriers, marine terminal operators (MTOs), and ocean transportation intermediaries (OTIs), including over through transportation. Without knowing the particulars of the hypothetical, in this situation, presumably the FMC's jurisdiction, and thus this rule, would apply only to cargo moved inland under a through bill of lading and contracts between a VOCC. A motor carrier not based on a through bill of lading would likely be outside the scope of this rule.

(b) Billing Party's Control of Assets

Issue: One commenter was concerned that the Commission's proposed definition of “billing party” “is missing the requirement that the entity issuing the invoice has the right to do so” and “[t]he regulations should recognize that there is a distinction between a billing party in control of the assets and one that is not, i.e., a non-vessel operating common carrier (NVOCC).” [68] The commenter suggested that the definition be amended to read as follows: Billing party means the ocean common carrier, marine terminal operator, or non-vessel operating common carrier who issues a demurrage or detention invoice because they control the equipment and terminal space or are passing through the charges for collection.

FMC response: The Commission declines to make the requested change. In this final rule, the Commission has added a 30-day period to § 541.7 for NVOCCs to issue an invoice when they pass through demurrage and detention charges. This is an acknowledgement that NVOCCs are not always in control of the assets and often receive an invoice from a VOCC. For more information, see Timeframes for NVOCCs in the discussion of comments regarding § 541.7.

(c) Who is a person?

Issue: Two comments expressed concern that the proposed definitions of “billed party” and “billing party” included the term “person” but did not provide further clarification on what “person” means for purposes of the rule.[69] The commenters recommended either adding a cross reference to § 515.2(n) in the definitions or defining “person” in § 541.3 consistent § 515.2(n).

FMC response: The Commission agrees that identifying a definition for the term “person” can be helpful. It has added a definition of “person” to § 541.3 that aligns with § 515.2(n).

(d) Consignees

The Commission specifically sought comments on the NPRM as to whether it would be appropriate to allow common carriers to bill consignees named on the bill of lading as an alternative to the shipper.[70] In response to commenters' support for including consignees as a party to whom an invoice can be properly billed, the Commission has revised the rule to incorporate this change. As part of this change, the Commission has added a definition of “consignee” to § 541.3 in this final rule. For a full analysis of comments concerning allowing consignees to be billed, see the discussion of consignees under § 541.4 concerning properly issued invoices.


(e) NVOCCs

Issue: One NVOCC commenter had concerns that the terms “billed party” and “billing party” “do not clearly separate the position of the NVOCC,” who, the commenter noted, can be both the billed party (when billed by the VOCC), and the billing party (when billing the BCO) on the same shipment.[71]

FMC response: The Commission acknowledges that there are circumstances when an NVOCC is both a billed party and a billing party on the same shipment. As explained in more detail below in the response to § 541.7(c), the Commission has amended the rule to allow an extra thirty (30) days for NVOCCs to issue an invoice when they are passing through the charges from a VOCC to a customer. The Commission has also added § 541.7(c) to require that when an NVOCC informs a VOCC that its customer has disputed its invoice, the VOCC must then allow the NVOCC additional time to dispute the invoice it received from the VOCC. NVOCCs must still follow the correct procedures for issuing an invoice when acting as a “billing party” and are entitled to the same protections as other “billed parties” when acting in that capacity.

3. Demurrage and Detention

(a) Separate Definitions of “Demurrage” and “Detention”

Issue: Four comments requested that the rule separately define “demurrage” and “detention.” [72] In support of this change, commenters generally made generic statements about how billing practices are frequently different for demurrage compared to detention.

FMC response: The Commission has made the determination not to split “demurrage and detention” into separately defined terms because part 541 and OSRA 2022 treat both charges equally. It may be true that practices differ when billing demurrage versus detention. None of the commenters, however, provided sufficient evidence to support what these specific differences are and how they would require changes to the rule. The Commission will continue to monitor the matter and retains the authority to separately define these terms in a future rulemaking for these or other regulations if circumstances warrant.

(b) Ports/MTO Demurrage Versus VOCC/NVOCC Demurrage

Issue: One commenter said that the rule needed to distinguish between demurrage and detention fees charged by ports and MTOs and those charged by VOCCs and NVOCCs because of the difference in underlying agreements and the fact that the charges serve different purposes.[73] 

FMC response: The Commission declines to make the requested change. As noted in the NPRM, the definition of “demurrage or detention” in this rule is the same as the scope used in 46 CFR 545.5(b)—the goal is to encompass all charges having the purpose or effect of demurrage or detention.[74] The Commission has the same goal in this rule of ensuring all charges having the purpose or effect of demurrage or detention are covered and believes the definition proposed is the most accurate.

(c) Chassis and Other Special Equipment

Issue: One commenter requested that the Commission expand the proposed definition of “demurrage and detention” to include charges related to the use of chassis and other special equipment.[75] 

FMC response: The Commission declines to make the requested change. As noted in the NPRM, the definition of “demurrage or detention” in this rule is the same as the scope used in 46 CFR 545.5(b).[76] Section 7, paragraph (b)(2) of OSRA 2022 directs that this rulemaking “only seek to further clarify reasonable rules and practices related to the assessment of detention and demurrage charges to address the issues identified in [the 2020 Interpretive Rule].” Expanding the scope of the definition of “demurrage and detention” in this rule beyond the term's definition in the 2020 Interpretive Rule would be contrary to statute because it would require us to address issues not identified in that Interpretive Rule.

(d) “Marine Terminal Space”

Issue: The Commission received two comments related to the phrase “marine terminal space” in the definition of “demurrage and detention.” New York New Jersey Freight Forwarders & Brokers Association, Inc. requested clarification of what “marine terminal space” means in the “demurrage or detention” definition.[77] They asked whether “marine terminal space” includes when a through bill of lading is used to transport imported merchandise into an interior port or rail yard and suggested that specific language be added to the definition of “detention and demurrage” to clarify this. The other commenter, International Dairy Foods Association, requested that the Commission include a provision in the final rule indicating that container dwell fees are “detention and demurrage charges” since they are “related to the use of marine terminal space.” [78] 

FMC response: The Commission declines to make these changes. As noted in Section I, regarding inland rail, the Commission has jurisdiction over cargo moved inland pursuant to a through bill of lading. This jurisdiction is clear pursuant to Norfolk Southern Railway Co. v. Kirby,543 U.S. 14 (2004). As a result, the Commission does not see a need to add this language specifically into this regulation. In response to International Dairy Foods Association, the Commission notes that the common definition of “container dwell fees” is interchangeable with the definition of “detention and demurrage.” As a result, the Commission declines to add another provision stating that container dwell fees are included in the rule's definition.

4. Additional Comments

(a) “Designated Agent”

Issue: Two comments requested that the Commission define in § 541.3 the term “designed agent,” which was used in § 541.2 in the notice of proposed rulemaking.[79] 

FMC response: The Commission has not incorporated this request into the final rule. The term “designated agent” does not appear in any of the final regulatory text and thus including the term would not be useful or appropriate.

(b) “Billable party for origin demurrage”, “Billable party for destination demurrage”, and “Billable party for detention”

Issue: One commenter requested that the terms “billable party for origin demurrage”, “billable party for destination demurrage”, and “billable party for detention” be added to § 541.3 to “[define] the appropriately billable parties” associated with demurrage and detention charges.[80] 

FMC response: The Commission declines to make the proposed insertions. Just as the Commission determined not to split “demurrage and detention” into separate terms because the rule treats both charges equally, we also decline further delineations for origin demurrage, destination demurrage, and detention. The delineations are not required for the purposes of this rule.

D. § 541.4 Properly Issued Invoices

The Commission received many comments on proposed § 541.4, the “Properly Issued Invoice” provision. The majority of commenters, especially motor carriers and shippers, expressed support for the proposed rule. One commenter characterized this proposed provision as “critical to accomplishing the Commission's objective in the rulemaking.” [81] 

Many commenters that supported the proposed provision noted that third parties do not have a contractual relationship with the ocean carrier.[82] Accordingly, it would be difficult for such third parties to dispute demurrage or detention invoices because they are not aware of the terms of the contract under which the container was shipped. Instead, commenters observed that the person that contracted for the carriage of goods or space to store cargo had the most knowledge about the shipment and are in the best position to understand the shipment invoice and to dispute the invoice if needed.[83] In addition, requiring that the billing party only invoice the person that contracted for carriage or storage of goods affirms that both the billing party and the billed party know the terms and conditions under which demurrage or detention may be charged.

Furthermore, several commenters asserted that because there is a contractual relationship between the billing and billed parties, there would be a greater incentive to provide timely and accurate invoices as well as a greater willingness to resolve disputes.[84] 

Commenters stated that “parties who are not party to the ocean transportation contract and had no financial interests in the cargo itself, should not be subjected to detention [or] demurrage invoices.” [85] Commenters asserted that without a contractual relationship, third parties have little commercial leverage to dispute charges imposed upon them by common carriers.[86] 

Additionally, several commenters noted that the proposed provision would improve the current demurrage and detention billing process because the invoice would be sent to the person with the most knowledge of the terms of the contract.[87] Because the invoice is going to the party who has this knowledge, one commenter asserted that this will streamline the entire billing process, reduce costs, and increase efficiency to the supply chain.[88] 

Motor carriers and motor carrier trade organizations detailed several issues with the current system. For example, motor carriers frequently find themselves locked out from marine terminals for failure to pay detention charges as the motor carriers wait to receive payment from their customers.[89] Essentially, under the current system, motor carriers, who are threatened with being locked out of terminals, can be trapped in situations where they have no contractual leverage or negotiating power to fight back.[90] Such commenters stated that the current system does not adequately protect motor carriers from unfair billing practices.[91] In addition, motor carrier and motor carrier trade organizations frequently stated that the party responsible for demurrage or detention charges is simply not them.[92] 

In addition, the proposed provision would reduce confusion with who is responsible for paying the invoice because it prohibits the billing party from invoicing more than one party.

Although many commenters supported proposed § 541.4, a few commenters, especially ocean common carriers and MTOs, expressed concerns with the proposed regulation.

1. Alternative Approaches

Issue: A few commenters expressed concern with the Commission's analytical approach to the rule—using contractual relationships as the basis for establishing to whom demurrage and detention invoices should be sent. For example, Dole Ocean Cargo Express urged the Commission not to adopt a rule that “categorically limits the entities to which ocean carriers may bill detention and/or demurrage charges.” [93] NITL recommended that instead of a contractual relationship-based approach, the Commission's rule should instead focus on which party “is best able to comply with a carrier's reasonable demurrage and detention rules, except when an alternative party requests and assumes this responsibility in a written agreement with the carrier other than the bill of lading contract.” On the opposite end of the spectrum, the National Retail Federation said that instead the Commission should provide clear rules for who can be billed for detention or demurrage and provided example language based on who, in their opinion has influence over occurrences of these charges.[94] Hapag-Lloyd (America) LLC said that the rule's prohibition on issuing an invoice to any other person than the person for whose account the billing party provided ocean transportation or storage would slow down the release of cargo and complicate the process of properly assessing the lawfulness of a charge, particularly in the case of overseas shippers, and thus would not support cargo fluidity.[95] 

FMC response: After careful analysis, the Commission has determined that prohibiting billing parties from issuing demurrage and detention invoices to persons with whom they do not have a contractual relationship will best benefit the supply chain. If the billed party has firsthand knowledge of the terms of its contract, then they are in a better position to ensure that both they and the billing party are abiding by those terms. Although other parties may in some circumstances have more influence on whether demurrage or detention actually accrues, they are not the best party to understand the terms of the contract and dispute any charges. While there are benefits to bright-line rules such as the one suggested by the National Retail Federation, there are drawbacks as well. For example, the National Retail Federation's specific suggestion that drayage motor carriers potentially be the responsible billed party under certain conditions fails to account for situations where a motor carrier's delay is the result of no action of their own, but rather the result of the actions of others, such as MTOs cancelling appointments with little to no notice to the motor carrier. The Commission understands that some regulated parties will need to change their business practices in order to comply with this rule.

Finally, the Commission does not believe that shippers located outside of the United States will serve as a basis of significant delay in the movement of cargo. As discussed in the preamble to the Interpretive Rule, shippers have commercial incentives to get their cargo off terminal, and modern digital Information Technology systems allow for prompt communications between parties, regardless of potential vast geographical distances.[96] 

2. Meaning of “Contracted With”

Issue: The Commission received several comments requesting clarification about the proposed requirement that the party “must have contracted” for the carriage or storage of goods. BassTech International LLC asked if, given that both the shipper and the consignee are parties to the bill of lading (which is the contract of carriage), this meets the Commission's intended criteria.[97] BassTech also asked whether, alternatively, the regulatory language is meant to limit invoicing to a party that has entered into a Service Contract with the ocean carrier for the transportation of the cargo.[98] The National Customs Brokers & Forwarders Association of America, Inc. requested guidance on whether a consignee may be considered to have a contract with a common carrier when listed on a bill of lading.[99] Other comments on this issue raised questions about implied contracts. The Shippers Coalition was concerned about implied contracts being used as the basis for an invoice and suggested that the Commission require in the regulation that these contracts be in writing.[100] Finally, several MTOs requested clarification or acknowledgement by the Commission about their right to enforce a published Terminal Schedule as an implied contract against a BCO or trucker that enters the terminal.[101] 

FMC response: “Contract” in this rule has its normal and ordinary legal meaning.[102] This can be reflected in a document such as a contract of affreightment, for example, or a bill of lading, which courts have held to be maritime contracts.[103] Because contracts (other than contracts implied by law) require a meeting of the minds, merely listing a party on a bill of lading, or other shipping transportation document, is not sufficient for them to become a billed party for purposes of part 541 if they played no role in contracting for the transportation of the cargo. Whether a meeting of the minds has occurred is something that can vary based on the specific circumstances of a given relationship. Because a contract can exist even if not memorialized in writing, the Commission declines to add a requirement that contracts need to be in writing for purposes of this rule. The Commission notes, however, that written contracts can provide important documentary evidence of agreement. In addition, the Commission notes that the term “contracts” for the purposes of § 541.4 is not limited to service contracts; the term is broader given its normal and ordinary legal meaning and a contractual relationship can exist without a written document or specific form.

This rule does not prohibit or otherwise limit an MTO from maintaining the practice of issuing any party—including BCOs or Motor Carriers—an invoice based on a Terminal Schedule, including charges for detention or demurrage, if the Terminal Schedule includes such charges and the Schedule has been made available in accordance with 46 CFR 525.3. In fact, the practice of issuing invoices based on a Terminal Schedule that includes those charges continue to be permissible if they are just and reasonable as stated in 46 CFR 545.4. The consistent application of the Terminal Schedule charges to various customers is likely to be done on a normal, customary, and continuous basis, meeting that crucial element of the interpretive rule. Also, as noted by commenters, 46 U.S.C. 40501(f) and 46 CFR 525.2(a)(2) establish that such Schedules are enforceable as implied contracts. Under such a scenario, a Motor Carrier has a contractual relationship with the MTO and the terms of the contract (the Schedule) are known to the Motor Carrier in advance by operation of 46 CFR 523.3. This is a very different situation than where a Motor Carrier is billed for demurrage or detention and the Motor Carrier has no contractual relationship with the billing party and is not privy to the specifics of the contractual agreement (such as where a Motor Carrier is billed demurrage or detention based on an agreement between a shipper and a billing party).

This rule does require that when an MTO issues a bill for demurrage or detention for purposes of enforcing a Terminal Schedule, the billing must comply with part 541, including providing all the information required by § 541.6. The Commission recognizes that this may require MTOs to revise their current business practices. The Commission's primary concern with this rule is to ensure that billed parties understand the demurrage or detention invoices they receive.[104] Additional burdens on MTOs to be able to provide the necessary data, which the Commission does not believe to be unduly burdensome, is outweighed by the benefits of transparency, which will allow billed parties to verify the accuracy of demurrage and detention charges and with whom the charges originate (for example, the MTO itself or the VOCC). As discussed in the Commission's Order of Investigation for Fact Finding Investigation No. 28, the lack of visibility surrounding current MTO demurrage and detention billing practices “have raised questions over whether the current practices allow for a competitive and reliable American freight delivery system.” [105] 

3. Consignees

Issue: Noting that there are a variety of shipping arrangements that allocate risks, obligations, and costs between the shipper and the consignee named on the bill of lading, the Commission sought comments in the NPRM on whether it would be appropriate to also include the consignee named on the bill of lading as another person who may receive a demurrage or detention invoice, thus allowing the common carrier to bill either the person who contracted for the shipment of the cargo or consignee named on the bill of lading.[106] The Commission received 29 comments in response. Three comments said that invoices should be sent to contractual parties only.[107] These commenters said consignees were not the party responsible for payment,[108] or that consignees typically do not have enough knowledge to determine whether the billing information is consistent with the terms of the underlying contract.[109] Two comments said that invoices should be sent only to consignees.[110] The International Tank Container Organisation (ITCO) opposed allowing charges to be sent back to the shipper, saying that it would “further complicate an already complex supply chain and hinder both efficient operations and global trade.” [111] ITCO asserted doing so ignores the INTERCOMS understanding and will put the United States in conflict with international trading terms.[112] 

The vast majority of comments (24), however, were of the opinion that the rule should make allowances for sending invoices to the shipper or the consignee (in at least some scenarios).[113] Comments that supported allowing invoices to be sent to consignees generally said that consignees should be included because: (1) consignees are frequently the party best situated to mitigate against the accrual of demurrage and detention charges and (2) consignees frequently have the most knowledge about a shipment and therefore best able to dispute any charges. A few supporters put qualifiers on when they thought consignees should be allowed to be invoiced. For example, SM Line said that consignees should be included as a potential party to be billed but that the Commission should not limit billed parties according to how, and whether the party appears on a specific bill of lading.[114] In contrast, Shippers Coalition and the American Association of Exporters and Importers said that consignees should only be allowed to be invoiced if there is an advance written agreement between the carrier and consignee to do so.[115] 

4. Payment by Third Parties Generally

Issue: The Commission received four comments regarding allowing payment of invoices by third parties.[116] The Agriculture Transportation Coalition and Pacific Coast Council of Customs Brokers and Freight Forwarders Association requested that the rule include a clear mandate that the delegation payment authority is allowed but must be based on actual acceptance of such responsibility by the third party, such as a written or digital signature evidencing acceptance. FedEx Trade Networks and John S. Connor, Inc. requested that the rule specify that third parties may only receive copies of invoices and pay them with the billed party's knowledge and consent (but did not say that such consent should be required to be in writing). FedEx Trade Networks and John S. Connor, Inc. also requested that the regulation contain an explicit statement that if a third party receives a copy of the invoice that the third party itself is not accountable for the payment.

FMC response: The Commission does not believe that the suggested changes are necessary. The rule is clear in its direction that, with a limited exception for consignees, demurrage and detention invoices must be issued to the person for whose account the billing party provided ocean transportation or storage and who contracted with the billing party for the carriage or storage of goods. This will often, but not always, be the shipper of record. Outside of the exception for consignees, billing parties must not send invoices to third parties. The rule only mandates to whom the invoice can be issued and therefore who has legal liability to pay it. It is purposefully silent on third parties voluntarily paying an invoice—thus allowing the practice by declining to prohibit it. The Commission does not believe it is necessary to require such agreements to be in writing or otherwise memorialized between the billed party and the third party. The Commission does not believe it is the agency's place to dictate a third party's business liability decision in this scenario. A third party will either: (1) pay the invoice on behalf of the billed party based on a previous guarantee by the billed party that they will be reimbursed; or (2) pay the invoice without such an agreement in place and assume the risk that they potentially may not be reimbursed.

E. § 541.5 Failure To Include Required Information

1. Invoice Attachments

Issue: Four commenters requested clarification whether a billing party may provide the required data elements as an attachment, addendum, additional pages, etc. to their invoice, for reasons of convenience or necessity because of the invoice's length.[117] FedEx Trade Networks asserted that when an NVOCC is merely passing through the VOCC's charges, it should be able to satisfy the requirements by attaching the ocean carrier's invoice.[118] 

FMC response: The required information may be included as an attachment to the invoice, as the statute simply requires that invoices “include” this information. In addition, § 541.6 states that an invoice must “contain” that information. As such, it is the Commission's position that this information may be included as an attachment, or otherwise incorporated. An NVOCC passing through VOCC demurrage or detention charges can satisfy the requirements by merely attaching the ocean carrier's invoice if that invoice contains all the necessary information in § 541.6. If all the necessary information is not on the ocean carrier's invoice, the NVOCC must locate and amend the missing information prior to sending the invoice on.

2. Voiding of Invoice Too Extreme a Penalty

A few commenters asserted that the penalty of having a billed party not be required to pay an invoice if the invoice was not compliant is an extreme penalty for a single violation.[119] The National Association of Waterfront Employers (NAWE) additionally argued that such a stringent penalty is not consistent with the Commission's Interpretive Rule on 46 CFR 545.4, which requires more than a single instance to something that happens on a “normal, customary, and continuous basis.” [120] 

FMC response: The elimination of the billed party's obligation to pay an invoice that lacks the required information is statutorily mandated under 46 U.S.C. 41104(f) for common carriers. As such, 46 CFR 541.5 merely states what the statute already requires and the Commission lacks discretion to eliminate or relax this requirement. Section 41104(f) does allow the elimination of payment obligation for “an invoice” that does not meet the contents of the invoice requirements. This language signals Congress' desire to not require that a common carrier repeat the error multiple instances for a shipper to be able to seek relief. Thus, in the demurrage and detention context, the statutory language of section 41104(f) is clear and unambiguous in requiring only a single instance to trigger the elimination of the obligation to pay the inaccurate invoice and supersedes the “more than one instance” interpretation of the “normal, customary, and continuous basis” language found in 46 CFR 545.4.

Similarly, pursuant to 46 U.S.C. 41102(c), it is a prohibited practice for an MTO to fail to include the required minimum information in a demurrage and detention invoice sent to a party other than a VOCC. Sending incomplete bills that do not contain sufficient information for shippers to verify if the bills received are accurate would not constitute having just and reasonable practices relating to or connected with receiving, handling, storing or delivering property. Extending the elimination of charge obligations provision at 46 U.S.C. 41104(f) to MTOs issuing demurrage and detention invoices would meet the statutory direction that the Commission must “further define prohibited practices by . . . marine terminal operators, . . . under section 41102(c) of title 46, United States Code, regarding the assessment of demurrage or detention charges” and ensure that all demurrage and detention bills sent to billed parties provide the necessary information for the bills to be paid or disputed quickly thereby ensuring efficiency across the shipping system. Having the invoice content and elimination of charge obligations requirements for all billing parties be the same throughout the industry will ensure that there is more clarity and accuracy in invoicing throughout the shipping system.

F. § 541.6 Contents of Invoice

1. § 541.6(a), Identifying Information

(a) § 541.6(a)(1), Bill of Lading and § 541.6(a)(2), Container Number

Issue: The Commission did not receive any comments directly addressing the requirement that the invoice must list the container number—presumably because this is a data element listed in OSRA 2022. A few commenters, however, raised concerns that requiring the bill of lading number, especially in conjunction with the container number, would increase the risk of theft of the cargo and create security risks by allowing for false pick-up appointments.[121] Some of these comments further asserted that requiring bill of lading information to be included on the invoice would require significant and costly upgrades to their IT systems.

FMC response: The Commission disagrees with the commenters' assertion regarding potential security issues. The Commission previously addressed this concern when the issue was raised by the Ocean Carrier Equipment Management Association (OCEMA) in response to the ANPRM.[122] Here, we reiterate and expand upon that response. Bill of lading numbers are available through publicly accessible import and export data systems, such as the Journal of Commerce's Port Import/Export Reporting Services (PIERS) and are already frequently included on demurrage and detention invoices. Because bill of lading numbers are not confidential information, they are not a good basis for security measures. Container numbers are not protected information either. Container numbers are written on the outside of the container. Thus, like bill of lading numbers, they are not a good basis for security measures. Including an already publicly available number on an invoice does not increase security concerns. The commenters' claims also do not consider the multiple levels of security at the port that deter an incorrect party from taking the cargo. These security measures include basic security infrastructure such as perimeter fencing, security gates, monitoring equipment, and alarm systems, and other access control measures such as Port Security Plans and Transportation Worker Identification Credential (“TWIC”) requirements. Nor do their comments consider that the rule prohibits the billing party from issuing demurrage or detention invoices to a person other than the person for whose account the billing party provided ocean transportation or space to store goods.

The bill of lading number and container number provide valuable identifying information to the billed party such as determining which shipment is being charged and a means of verifying accuracy of charges. Therefore, the Commission is retaining the requirement that this information be included on the invoice. The Commission recognizes that some billing parties may need to revise operations, including software and website updates, such as those related to how they generate cargo pick-up numbers. However, the Commission has no evidence to support a finding nor received data from commenters showing that such revisions would be time intensive or costly. Billing parties could, for example, for minimal time and cost, replace that portion of a pick-up number currently based on bill of lading number/container number with a number produced by a random number generator and doing so would be more secure than current systems that incorporate bill of lading numbers/container numbers into the pick-up number.

(b) § 541.6(a)(3), Port(s) of Discharge

Issue: New York New Jersey Foreign Freight Forwarders and Brokers Association requested the Commission amend § 541.6(a)(3) to clarify that the port of discharge can be any U.S. port—ocean or interior—to address situations, for example, where cargo arrives at a West or East Coast port, or via Canada, and then moves by rail to the interior.[123] The commenter was concerned that without the suggested clarification to the regulation there is the risk that the billed party would not receive the proper billing information to assess the correctness of invoices issued for charges incurred at interior ports.

FMC response: The commenter is correct that detention or demurrage invoices issued for cargo delivered on a through bill of lading under the Commission's jurisdiction are required under this rule to list all ports of discharge, ocean and inland. The Commission believes that this requirement is sufficiently incorporated into the language we proposed in the NRPM and have adopted in this final rule. The regulation's use of “port(s),” as opposed to “port” accounts for situations where there are multiple ports of discharge.

(c) § 541.6(a)(4), Basis for Why the Billed Party Is the Proper Party of Interest

Issue: The Commission received several requests from commenters to clarify what level of detail is necessary to satisfy the requirement that the invoice include the basis for why billed party is the proper party of interest and thus liable for the charge.[124] Mediterranean Shipping Company specifically requested guidance as to whether the requirement would be satisfied with: (1) a reference to the applicable tariff rule supporting the billing; (2) specific reference needed to contractual provisions; or (3) a reference number to identify the contract at issue.[125]

FMC response: There is no specific or set of specific documents or reference(s) that would meet the requirement of § 541.6(a)(4). The purpose of the regulation is that billed parties must be able to identify why the billing party believes that they are responsible for paying the invoice and to refute that basis if they believe that they have been billed incorrectly. A reference to the applicable tariff rule supporting the billing, specific reference to contractual provisions, or a reference number to identify the contract at issue might all, or might all not, meet this standard depending on the specific circumstances of a particular invoice.

(d) Requests for Additional Identifying Information

Issue: The U.S. Department of Agriculture requested that the Commission also require billing parties include on the invoice transportation history information, such the date and time a container was loaded on or off a vessel, and the date and time the vessel left or arrived at the port.[126] The Meat Import Council of America, Inc. (MICA) and the North American Meat Institute proposed that the Commission should require billing parties to identify on the invoice the vessel(s) used to transport the cargo.[127] These commenters believe that these additional data elements on the invoice would increase transparency and help billed parties in verifying calculations of free time, availability, and earliest-return-date, and thus make it easier to identify and dispute excess charges.

FMC response: The Commission agrees that having this additional information may be helpful in some circumstances. The Commission, however, has not been presented with enough evidence to be convinced that the potential benefits to some billed parties on some invoices outweigh the burden to billing parties by requiring this information on all invoices. The Commission will continue to monitor detention and demurrage billing trends and retains the authority to revise non-statutorily mandated detention and demurrage invoice data elements in the future if it determines there is a need to do so.

(e) Billing Exceptions

Issue: The American Association of Exporters and Importers (AAEI) supported § 541.6 and the required contents of the invoice.[128] AAEI also stated that if demurrage and detention charges are incurred or removed due to terminal or vessel operating deficiencies, then the invoices should include the details with standardized categories of billing exceptions.

FMC response: The Commission declines to add a requirement for billing exceptions to § 541.6. Under OSRA 2022, the billing party has an obligation to ensure the accuracy of its invoices. In addition, § 541.8 specifies the procedures for disputing charges—these disputes can be initiated if the billed party feels they are not responsible for the charges. As a result, the Commission declines to proscribe that billing parties deduct certain charges, especially given that there could be disagreement over where the fault in the charges lies.

2. § 541.6(b), Timing Information

(a) § 541.6(b)(1), Invoice Date

Issue: The National Customs Brokers & Forwarders Association of America,[129] CV International,[130] and New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc.[131] asked the Commission to clarify whether backdating of invoices is permissible under this rule, or whether the billing date on demurrage and detention invoices should reflect the actual date an invoice is mailed out or otherwise finalized. John S. Connor, Inc. agreed, saying that backdating is a common practice that must not be allowed.[132] National Industrial Transportation League raised related concerns about some carriers continuing to assess charges during the time spent to process payments after payment has been made by the billed party or its agent.[133] 

FMC response: Billing parties have an obligation under 46 U.S.C. 41104(d)(2) to issue detention and demurrage invoices that contain accurate information concerning the statutorily specified data elements as well as any additional information determined necessary by the Commission. To solidify this point, the Commission has incorporated into § 541.6 the requirement for accurate information. Accuracy is an implied legal condition of any statutory or regulatory information collection imposed on regulated parties by Congress or agencies and is generally not specifically incorporated as a written requirement. However, based on these comments, it appears that such clarification in the regulatory text may be of use to regulated parties and its incorporation mirrors the use of the word in 46 U.S.C. 41104(d).

(b) § 541.6(b)(2), Invoice Due Date

Issue: Seafrigo USA urged the Commission to clarify the meaning of “billing due date,” and specifically asked whether it means the payment due date.[134] The Meat Import Council of America, Inc. and the North American Meat Institute, in a joint comment, suggested that billing parties must be prohibited from listing the payment due date as the same date the invoice is issued as billed parties should have the full 30 days after an invoice is received, not simply issued.[135] The U.S. Department of Agriculture recommended that the Commission specify in the regulation the timeframe for payment of an invoice, making certain that the regulation is clear that payment is not due until any disputes are resolved.[136] Fenix Marine Services stated that the proposed demurrage and detention invoice requirements are incompatible with traditional MTO billing practices, and changing their practice to conform to the FMC's rule would mean a major overhaul of many MTO's longstanding billing practices.[137] 

FMC response:The billing due date (or “invoice due date” as worded in this final rule) is the date by which the billed party must pay the invoiced charges. The Commission has revised § 541.8(a) to make clear that billing parties must allow billed parties at least 30 calendar days from the invoice issuance date to request mitigation, refund, or waiver of fees. Correspondingly, the due date of an invoice must be on or after 30 days after it is issued. As discussed in the NPRM and elsewhere in this document, the Commission acknowledges that this rule may require some billing parties to change their billing information technology systems and practices.

(c) § 541.6(b)(3)–(5), Free Time

Issue: One commenter requested that “end of free time” in § 541.6(b)(5) be defined as “the end of free time as determined by the ocean common carrier or marine terminal, whichever, is later” because ocean common carriers and marine terminal may have disparate last free day dates.[138] 

FMC response: The Commission declines to define “end of free time”, “start of free time”, or “free time” as part of this rulemaking for the reason noted by the commenter—their meaning can vary terminal to terminal.[139] The Commission does not have evidence at this time to support a finding that standardizing these terms is warranted.

(d) § 541.6(b)(6), Container Availability Date

Issue: Two NVOCCs requested clarification of the meaning of “availability date” in § 541.6(b)(6).[140] One of the commenters requested that FMC define the term in § 541.3.[141] A third commenter said that the term “availability date” creates too much ambiguity in that some shipments may be delayed in customs resulting from actions taken or not taken by the receivers and import customs brokers.[142] They argued that vessel arrival date should be used instead because actual time of arrival of the vessel is clearly defined and gives NVOCCs a clear date from which to start the clock.

FMC response: The Commission declines to incorporate the commenters' suggestions. First, the date of container availability is statutorily mandated by 46 U.S.C. 41104(d)(2)(A). Congressional action would be needed to change it to vessel arrival date. Second, the Commission declines to add a definition of “availability date” to § 541.3 for the same reason we declined to define it in our 2020 final Interpretive Rule on demurrage and detention—“availability” can vary by port or marine terminal.[143] As we discussed there: “Suffice it to say, availability at a minimum includes things such as the physical availability of a container: Whether it is discharged from the vessel, assigned a location, and in an open area (where applicable).” [144] Additionally, as discussed in the Interpretive Rule's notice of proposed rulemaking: “In this context, `cargo availability' or `accessibility' refers to the actual ability of a cargo interest or trucker to retrieve its cargo. Cargo is not available, for instance, if a cargo interest or trucker cannot pick it up because it is in a closed area of a terminal, or if the port is closed.” [145] We adopt the meaning for these terms provided in the Interpretive Rule in this rule as well.

(e) § 541.6(b)(7), Earliest Return Date

A number of comments raised the issue of earliest return date. Intermodal Motor Carriers Conference urged the Commission to clarify OSRA 2022's earliest return date, and to require that date on the detention and demurrage invoice.[146] The International Tank Container Organisation (ITCO) noted that OSRA 2022 requires that the earliest return date be specified, while this rule does not require it on the invoice.[147] ITCO opined that the term “availability date,” which is currently used in the rule, creates too much ambiguity. Balsam Brands [148] and Harbor Trucking Association [149] said that the earliest return date should be listed for export shipments, and any modifications to this date should be identified. The New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc. (NYNJFF&BA) stated that the requirement to provide the earliest return date for export shipment should be understood as meaning the first notice for receiving containers at ports, as this notice sets the rest of the process in motion for getting a container back on a vessel.[150] NYNJFF&BA states that if demurrage and detention can be charged in instances when cargo remains at the terminal beyond the free time as a result of VOCC decisions, then there is no incentive to improve the information and receiving window dates in the early return date (ERD) notices. When containers are delivered per ERD notices, the cargo waiting for a new vessel cannot be incentivized by the imposition of demurrage and detention to reduce time at the terminal.

To strengthen the rule's requirements, the National Association of Chemical Distributors [151] and Connection Chemical [152] suggested that the Commission add the term “accurate” before the earliest return date, to ensure that any changes to this date are reflected as conditions change. CV International stated that earliest return dates change frequently because of unreliable vessel schedules and congested terminals.[153] As a result, CV International suggested that when a container is in motion, the earliest advised return date should apply. John S. Connor, Inc. made similar comments.[154] 

The Meat Import Council of America, Inc. (MICA) and the North American Meat Institute (NAMI) jointly argued that the final rule should not diminish the significance of intervening, clock-stopping events when a billed party disputes the charges.[155] MICA/NAMI suggests that the Commission requiring including earliest return date and changes to that date on detention and demurrage invoices would increase transparency and minimize billing disputes. Lastly, the National Customs Brokers and Forwarders Association of America requested clarification and Commission guidance on how billing parties should account for data elements in the minimum invoice information requirements where dates, such as the earliest return dates, change.[156] 

FMC response: The Commission declines to make the commenters' changes requested regarding earliest return date in this rule. This is an issue that the Commission will continue to examine. For example, the Commission issued a Request for Information in August 2023 seeking comments on what shippers and BCOs can do to better predict container earliest return dates.[157] 

In addition, Commissioner Rebecca Dye has proposed to reform three practices of ocean carriers and marine terminal operators at the Ports of Los Angeles and Long Beach, and the Port of New York and New Jersey that relate to earliest return date, container returns, and container pickup (notice of availability).[158] Commissioner Dye encourages reactions or questions regarding these proposals from the shipping public. More information on this project may be found on FMC's website.

(f) § 541.6(b)(8), Date(s) for Which Demurrage and/or Detention Were Charged

Issue: TraPac LLC stated that requiring billing parties to include the specific dates on which demurrage or detention is charged would, for MTOs, result in an unnecessary burden on terminals as MTOs would need to develop a reporting system to provide information regarding the container's status on a “clock start” and “clock stop” basis.[159] According to the commenter: (1) it is not reasonable or realistic to expect MTOs to transmit information in real time; and (2) if not in real time, it could result in significant delay. Consumer Technology Association said that the Commission should require disclosure of any relevant “stop-the-clock” events that toll the passage of free time—such as container availability, facility closures, port congestion, or lack of available appointment slots. They said that having this information would greatly facilitate the timely resolution of disputes but noted that this information is often only available to billing parties.[160] BassTech International LLC suggested that, for emphasis of the billing party's obligation for the accurate assessment of charges, the Commission change “were charged” to “were incurred and charged.” [161] 

FMC response: As discussed in the NPRM, instead of requiring billing parties to identify specific “clock-stopping” events on demurrage and detention invoices, this rule requires the billing parties to identify the specific dates on which they charged demurrage or detention.[162] The rule permits billing parties to take into account any intervening events that affected the charges, if known, and enables billed parties to confirm or dispute the validity of charges on specific dates. The rule incorporates the intent of OSRA 2022 to shift the burden to billing parties to justify the demurrage or detention charges while allowing billing parties to correct invoices when the intervening events are not initially known to them.

(g) General Comments

Issue: One commenter said that any schedule data on invoices must include all previous revisions and not only the final dates.[163] The commenter said such information was necessary because issues on exports in demurrage and detention invoices are caused by last minute schedule changes over which the shipper has no control.

FMC response: The Commission declines at this time to mandate that billing parties include all previous revisions. We do not believe that enough evidence has been presented to the Commission at this time to justify the increased burden of such a requirement. However, we will continue to monitor the issue of demurrage and detention invoices and may consider this or other additional changes in the future if circumstances warrant.

3. § 541.6(c), Rate Information

The Commission did not receive comments regarding proposed § 541.6(c). It is adopting the proposed language from the NPRM in this final rule with minor, non-substantive, clarifying amendments. In paragraph (c), “The invoice” has been changed to “A demurrage or detention invoice” to reflect the language of § 541.3. Paragraph (c) has also been amended to clarify that these are minimum requirements. Paragraph (c)(2) has been amended by adding terminal schedule to the listed examples of documents, and “i.e.,” has been changed to “e.g.,” to reflect that this is not an exhaustive list of all possible documents.

4. § 541.6(d), Dispute Information

(a) § 541.6(d)(1)

One commenter suggested eliminating paragraphs (d)(2) and (3) and merging the necessary information into a single paragraph § 541.6(d) to read as follows: “The invoice must contain sufficient information to enable the billed party to readily identify a contact to whom they may direct questions or concerns related to the invoice including the name, email, telephone number and mailing address of the responsible person to whom invoice questions or notifications of a billing dispute must be submitted.” [164] According to the commenter, the proposed revision “prevent[s] the imposition of potentially unreasonable or obstructive processes by the billing party” and instead allows disputes to be handled following the standard business practice for similar events.

FMC response: The Commission declines to make the suggested changes. Subsection (d)(1) already accomplishes what the proposed changes seek. In addition, this rule makes dispute resolution simpler, more consistent, and transparent. These are the same goals that the Commission espoused in the Interpretive Rule, which the commenter acknowledges in their submission. In addition, the “conventional manner” in which these disputes have been handled “in the normal course of business” for which the commenter advocates have until now not always been successful and resulted in practices that resulted in OSRA 2022 and this rulemaking. Maintaining the existing model would fail to address the reasons behind the statute and this rulemaking.

(b) § 541.6(d)(2), Information on How To Request Fee Mitigation, Refund, or Waiver

Issue: The Commission received a number of comments regarding the proposed requirement in § 541.6(d)(2) that the URL address of a publicly accessible part of the billing party's website provide a detailed description of what the billed party must provide to request fee mitigation, refund or waver. Two commenters said that the proposed URL requirement would be too burdensome. One of these commenters urged the Commission to instead adopt a requirement that allows for any method of delivery of such information to the shipper so long as it includes a transparent description of the required information.[165] The other commenter said that the proposal could lead to burdensome procedures that are inconsistent with the shifting of the burden of proof regarding reasonableness of the charges from shippers to carriers that OSRA 2022 espouses.[166] Six commenters were in support of the URL requirement.[167] The International Dairy Foods Association stated that this requirement “will help cargo owners easily find and understand what information they need to include in such requests. This will improve the efficiency of the dispute process and make it less likely that requests are denied on procedural grounds.” [168] 

Three additional commenters all said the rule would benefit from expanding the acceptable digital platforms beyond URLs to include QR codes or digital watermarks, for example, so that information regarding the dispute process can be retrieved to keep pace with evolving innovations and technologies.[169] The Meat Import Council of America, Inc. and the North American Meat Institute proposed replacing “URL address” with either “[a] digital trigger (URL address, QR code, digital watermark or other similar digital triggers) to the publicly-accessible portion of the billing party's website that provides a detailed description of information or documentation that the billed party must provide to successfully request fee mitigation, refund, or waiver” or “[a] digital trigger to the publicly-accessible portion of the billing party's website that provides a detailed description of information or documentation that the billed party must provide to successfully request fee mitigation, refund, or waiver.” [170] 

FMC response: The Commission disagrees with the two commenters' assertion that the proposed requirement is too burdensome. While there may be some initial time/infrastructure requirements in order for some billing parties to comply, those will be minimal, and the benefits of transparency to billed parties greatly outweigh these minimal burdens. In response to commenters, the Commission has added language to § 541.6(d)(2) to expand this category from URLs to digital means more generally, including URLs, QR codes and other digital means that would allow this requirement to keep pace with technology.

(c) § 541.6(d)(3), Disclosure of Timeframe for Requesting a Fee Mitigation, Refund, or Waiver

The Commission did not receive comments regarding proposed § 541.6(d)(3) and is adopting the proposed language from the NPRM in this final rule.

5. § 541.6(e), Certifications

(a) § 541.6(e)(1), Certification of Compliance With FMC Demurrage and Detention Rules

Issue: The International Tank Container Organisation[171] and Maher Terminals LLC [172] argued that the certification of compliance is not necessary given that it is legally required for regulated parties to comply with Commission regulations. Maher Terminals also expressed concern that such a certification would require billing parties “to state as a fact a matter that which is really a conclusion of law.” [173] 

FMC response:

Certification that the billing party's charges are consistent with FMC detention and demurrage rules is required by 46 U.S.C. 41104(d)(2)(L). Accordingly, the Commission will include it in the rule.

(b) § 541.6(e)(2), Certification That Billing Party's Performance Did Not Cause or Contribute to the Underlying Invoiced Charges

Issue: One commenter said that the certification statement should reflect an NVOCC's more limited liability in instances where it is simply passing through the charges from a VOCC and, as with the other required elements on the invoice, is just a vehicle and not the responsible party.[174] They provided the following sample certification statement for the Commission's consideration: “To the best of our knowledge the charges on this invoice are a direct pass through and compliant with the requirements of the Shipping [Act] of 1984 as amended by [OSRA 2022] and that our NVOCC did not cause, contribute, or mark up these underlying charges.”

FMC response: The Commission declines to change the proposed language and finalizes it in this rule. A billing party has a legal obligation to include accurate information on each of the invoice elements found in § 541.6. In accordance with 46 U.S.C. 41104, the Commission will make a determination if a particular self-certification is inaccurate or false only after an investigation following filing of a charge complaint.

(c) MTOs

Issue: Four commenters argued that MTOs do not have the information necessary to make these certifications and certifications should not be required of MTOs because of the burden it would impose on them to collect the necessary information, and further, such certification would not address the Commission's primary concern, which is having transparent and clear invoices for billed parties to clearly understand billed charges.[175] A fifth commenter asserted that imposing these certifications on MTOs is beyond OSRA 2022.[176] 

FMC response: In instances where an MTO invoices a shipper, the Commission has determined that the MTO should be subject to the same regulations that apply to VOCCs and NVOCCs, including certification requirements. As discussed earlier in this preamble, the Commission has statutory authority to apply this rule to MTOs. Paragraph (c) of section 41102, title 46, United States Code, prohibits MTOs from failing to establish, observe, and enforce reasonable practices connected to the receiving, handling, storing, or delivering of property. This section provides clear and direct authority for the Commission to regulate MTO practices connected to the receiving, handling, storing, or delivery of cargo, including mandating certification requirements. In addition, OSRA 2022 explicitly instructed the Commission to issue a rule defining prohibited practices by common carriers, marine terminal operators, shippers, and ocean transportation intermediaries under 46 U.S.C. 41102(c) regarding the assessment of demurrage and detention charges. MTOs are not required to include the data elements listed in § 541.6 when they are issuing invoices to VOCCs.

(d) Additional Certification/Disclaimer

Issue: One comment said that the rule should include a requirement on the invoice or the accompanying website a note that reminds the billed party that if the information is incorrect or details are missing, then the shipper is not obligated to pay the invoice.[177] 

FMC response: At this time, the Commission will not impose additional mandatory certifications/disclaimers on top of those found in OSRA 2022, as codified at 46 U.S.C. 41104(d)(2)(L) and (M). Nonetheless, the agency recognizes the potential benefits of such a statement and does not object to the voluntary adoption of this practice.

(e) Independent Assessment

Issue: One commenter posited that in addition to the self-certification requirements of OSRA 2022, the Commission should also consider requiring billing parties to utilize an independent third-party certification body, from an official roster of such bodies that is recognized by the Commission, to conduct an annual audit of billing party's detention and demurrage practices and provide an annual report to the FMC with its findings.[178] According to the commenter, the self-certification requirements of OSRA 2022 provide no benefit to billed parties as they do not prevent “over-invoicing by carriers.” According to the commenter, since the self-certification requirements took effect with the passage of OSRA 2022, their members “have received detention and demurrage invoices that included such a statement, that were later refunded or waived by the carrier when disputed because the carrier issued the invoice after having rolled shippers' bookings for weeks on end.” [179] 

FMC response: The Commission declines to adopt this change at this time. The Commission will continue to monitor the situation following implementation of this final rule and may take additional action(s) in the future if circumstances warrant.

6. Contents of Invoice, Generally

(a) Machine-Readable Invoice Data

Issue: A few commenters indicated their support for the Commission to explore mandating that invoice data be provided in electronic, computer-readable format, such as spreadsheets. American Chemistry Council [180] and Consumer Brands Association,[181] for example, highlighted that providing computer-readable data invoices would allow for faster and more accurate analysis of demurrage charges and associated data. American Chemistry Council [182] and Agriculture Transportation Coalition [183] both noted in their comment that U.S. Surface Transportation Board (STB) regulations require Class I railroads to provide machine-readable access to demurrage billing information.

FMC response: Electronic invoices have a number of benefits for billing parties and billed parties, and the Commission highly encourages billing parties to adopt computer-readable invoice formats into their standard operating procedures. The Commission, however, has chosen not to mandate usage at this time due to concerns about the current low rate of infiltration of electronic documentation processes within the industry. The Journal of Commerce, for example, recently reported that: “[o]nly 2.1% of bills of lading and waybills in the container trade were electronic last year.” [184] The Commission will continue to monitor the use of machine-readable invoices within the industry and may consider compulsory use in the future.

(b) MTOs

Issue: One comment asserted that if the Commission requires demurrage or detention invoices issued by MTOs to contain information in addition to those elements specifically enumerated in OSRA 2022, it should “recognize the nature of MTO pass through charges and either afford MTO invoices a conceptually similar safe harbor, or not compel MTOs to provide such information.” [185] 

FMC response: While the most common practice is for MTOs to invoice the VOCC and the VOCC to send a combined invoice to the shipper, in some cases MTOs bill shippers directly. The Commission's primary concern with this rule is to ensure that billed parties understand the demurrage or detention invoices they receive. In instances where an MTO invoices a shipper, the MTO should be subject to the same regulations that apply to VOCCs and NVOCCS when they invoice shippers.

G. § 541.7 Issuance of Demurrage or Detention Invoices

1. § 541.7(a), Timeframe for Issuing an Invoice

Issue: The Commission received 109 comments on its proposal to require billing parties to issue detention and demurrage invoices within 30 days: one from another federal agency, 16 from BCOs, 66 from motor carriers, 10 from NVOCCs/OTIs/Customs Brokers/Third-party logistics (3PLs), 10 from individuals, and 6 from VOCCs/MTOs.

The U.S. Department of Agriculture supported the 30-day time limit.[186] Fifteen of the 16 BCOs supported the 30-day requirement. One BCO thought that 30 days was too long and that the deadline should be 10 days.[187] All of the motor carriers other than the Intermodal Association of North America (IANA), which administers the UIAA supported the 30-day time limit. The IANA advocated for the Commission to follow the UIAA standard of 60 days to issue demurrage and detention invoices (UIAA Section E.6).[188] All of the NVOCC/OTI/Customs Brokers/3PLs supported the 30-day deadline.

VOCCs/MTOs and their trade associations were mixed in their responses. Intransit Container fully supported a deadline of 30 days.[189] The World Shipping Council (WSC) [190] and the American Association of Port Authorities [191] supported a deadline but said that the deadline should align with the UIAA standard of 60 days. Port Houston [192] and the Ocean Carrier Equipment Management Association, Inc. (OCEMA) [193] were adamant that the Commission should not impose a deadline at all. OCEMA said that if a deadline was imposed, it should be no later than the UIAA standard. OCEMA acknowledged that the Commission based their deadline of 30 days on an understanding that billing parties are capable of issuing demurrage or detention invoices, on average, within 30 days. OCEMA, however, believes that justification was not adequately supported and potentially flawed. First, OCEMA said that the Commission did not explain how the average was derived, and it was therefore unclear how many of the transactions exceeded 30 days. Second, OCEMA asserted that in making its determination, the Commission did not consider the potential sources of delay for those invoices that take more than 30 days to be issued, such as delays in transmission of essential data by third parties, IT system capabilities and differing levels of automation regionally in the invoicing process, personnel and labor shortages, force majeure events, or cyber-attacks or system outages. Related to this point, OCEMA also asserts that the Commission did not take into consideration that under a free-contract system, parties sometimes come to an agreement for longer deadlines in light of the circumstances applicable to a particular shipment for a given shipper or consignee's product supply chain.

The VOCCs and their trade associations also complained that the proposal is unfair. Hapag-Lloyd (America) LLC argued that the proposal provides no consequences for failure to timely submit a dispute to an invoice, so it is unclear what incentive billed parties have to respond quickly.[194] WSC said that billed parties would face no consequences for failing to meet the deadline to dispute an invoice, while billing parties forfeit contractual rights by missing the deadline. WSC argued that fundamental fairness, equal protection, and due process dictate the Commission must add language to impose similar requirements on billed parties, namely that they forfeit the right to request fee mitigation, refund, or waiver by failing to submit that request within 30-days from receiving the invoice. OCEMA focused on the fact that the rule includes no flexibility for delays outside the billing parties' control, for instance caused by third parties, that prevent compliance with the 30-day deadline to issue invoices. Finally, OCEMA argued that the 30-day deadline could turn out to create a disincentive principle since shippers or truckers in possession of equipment will no longer feel compelled to return it quickly as the unavailability of data or other tools to delay billing will prevent billing parties from meeting the 30-day deadline.

BassTech International LLC stated that the proposed rule's invoicing requirements do not address the need for invoicing “on demand” in instances where payment is a prerequisite for cargo release, such as is customary for import demurrage charges.[195] As such, they suggested revising § 541.7(a) to read as follows: “A billing party must issue a demurrage or detention invoice within thirty (30) days from the date on which the charge was last incurred or, when payment of charges is a precondition for delivery of cargo or containers, on demand. If the billing party does not issue demurrage or detention invoices within the required timeframe, then the billed party is not required to pay the charge.”

FMC response: The Commission will maintain the 30 days proposed in the NPRM. The Commission explained in the NPRM why a deadline of 30 days for issuing demurrage or detention invoices is reasonable.[196] WSC and OCEMA suggest the Commission should prove why other deadlines are unreasonable before proposing a deadline, but the Commission declines this invitation to try to prove a negative. WSC and OCEMA did not offer concrete examples of why billing parties could not comply with a 30-day deadline, and instead made reference to delays caused by third parties without offering specifics of the types of delays they routinely face or how long they take to resolve.[197] The Commission does not agree with the argument that the deadline in the rule is insufficiently supported.

Neither is the Commission persuaded by commenters stating that it should follow widely accepted and longstanding practices. The text of OSRA 2022 indicates it was written to help remedy dysfunctional, predatory, and unfair invoicing permitted by these accepted and longstanding practices.[198] The complaint that this proposal is unfair and inequitable to carriers misunderstands the regulation's approach to implementing OSRA. The rule provides a minimum time for the dispute of detention and demurrage invoices, after which billing parties are free to reject any further attempts at dispute as untimely. The rule does not lay out penalties for failure by a billed party to timely dispute an invoice, because it is up to the billing party to choose how to remedy that failure.

2. § 541.7(b), Invoices Sent to an Incorrect Party

Issue: The U.S. Department of Agriculture expressed concern about billed parties incurring additional costs of unexpected and harder-to-verify charges in situations where the invoice was originally sent to the wrong person.[199] USDA urged that the Commission remove from the rule the proposed grant of additional time to the billing party to issue an invoice to a billed party when the invoice was originally issued to an incorrect person (and that original recipient disputed the charges). USDA asserted that the carrier should, in all circumstances, have 30 days from the date charges stop accruing to bill the correct party.

Hapag-Lloyd (America) LLC noted that the rule provides no consequences for failing to timely dispute an invoice.[200] They asserted that, given the requirement that billing parties must issue corrected invoices within 60 days, the rule actively dissuades billed parties from timely settling disputes. The World Shipping Council pointed out that 46 CFR 541.7(b) sets a hard deadline of 60 days after the charges were last incurred by which the correct party must be invoiced but if a billing party uses 30 days to issue the invoice and the billed party takes 30 days to dispute the invoice, there is no time left to bill another party before the 60-day invoicing deadline.[201] WSC said that this would result in the correct party not having to pay the invoice and billed parties being incentivized to delay disputing invoices.

Another commenter requested that paragraph (b) be deleted from § 541.7 “and to leave this exceptional circumstance to be handled through reasonable and conventional business practice . . . .” [202] 

FMC response: The final rule removes the link between a billing party's ability to reissue an invoice with an incorrectly billed party's disputing of that invoice. With this reworded language, the billing party must reissue the invoice to the correct party within 30 calendar days of when the charges were last incurred. Otherwise, the billed party is not required to pay the charges. This penalty is consistent with the language and purposes of OSRA 2022. It also reflects the Commission's position that the billing party should only be issuing a demurrage and detention invoice to a billed party based on their contractual privity with that billed party, and that this invoice should be sent to the correct party in the first instance. Tying the issuance of the corrected invoice to when the demurrage and detention charges stop accruing is consistent with the incentive present in the rest of the rule. The burden of issuing a correct invoice should not rely on an incorrectly billed party to dispute the incorrect invoice. The change is also consistent with the comments received on the NPRM.

3. Timeframes for NVOCCs

Issue: The Commission solicited comments in the NPRM on whether different timeframes should apply to NVOCCs. Most commenters supported applying the same timelines to NVOCCs and VOCCs. However, when NVOCCs pass through demurrage or detention invoices assessed against their customers, it may be difficult for them to issue demurrage and detention invoices within the required timeframe if the NVOCC does not receive the initial invoice in a timely manner. Therefore, the Commission requested comments on how it could best reflect the application of the deadline to NVOCCs that pass through demurrage or detention charges. A number of NVOCCs commented that § 541.7's thirty (30) calendar-day timeframe for a billing party to issue an invoice did not allow time for an NVOCC to issue an invoice when it passes through the charges. Many of these comments supported adding additional time to § 541.7 for NVOCCs to issue an invoice. Some of the comments suggested specific extra time that ranged from 21 days to 60 days. Many suggested an extra 30 days because the initial billing party had 30 days to issue an invoice, and NVOCCs should be given the same amount of time. CMA CGM argued that it is vital that the deadline for resolution not be triggered until all the information required to support the dispute is submitted to the carrier and that the rule should emphasize, not undermine, the carriers' publicly available dispute resolution process.

FMC response: In response to these comments, the Commission has amended § 541.7 to state that NVOCCs have an additional thirty (30) calendar days in which to issue an invoice. This 30-day period runs from the date on which the invoice the NVOCC received was issued. In addition, the Commission recognizes the fact that an NVOCC can be both a billed party and a billing party with respect to the same transaction, and that in such a situation, the NVOCC may not be in a position to dispute an invoice with a VOCC until the NVOCC's customer has disputed the invoice with the NVOCC. As such, the Commission has added § 541.7(c) to require that when an NVOCC informs a VOCC that its customer has disputed its invoice, the VOCC must then allow the NVOCC additional time to dispute the invoice it received from the VOCC.

4. Ability To Cure an Invoice Not in Compliance With § 541.6

Issue: A number of commenters requested the ability to correct an invoice that lacked certain information or contained incorrect data. FedEx Trade Networks, for example, stated that the ability to cure an invoice error is reasonable, especially given that a billed party is not required to pay the invoice in the face of any error.[203] Commenters also sought clarification on the timing of amendments, if amendments are allowable. FedEx Trade Networks stated that each billing party should have the same amount of time to correct the invoice, as an error that originates with the VOCC may need to be remedied by the ocean carrier and each subsequent billing party. CV International suggested that the billing party have two working days from the time the billed party communicates the error to make the corrections, during which time no additional demurrage and detention charges should accrue.[204] The New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc. echoed these sentiments and also suggested that billed parties should be required to notify the billing party of any errors within a specific time frame, such as seven days.[205] John S. O'Connor Logistics made similar suggestions as well.[206] U.S. Dairy Export Council/National Milk Producers Federation requested clarification regarding a carrier's submission of a corrected invoice, and whether that must that be completed within the 30-day timeframe, or whether it restarts the clock.[207] Connection Chemical requested similar clarification.[208] 

FMC response: The Commission declines to add time for a billing party to correct its invoice. While billing parties have an obligation under 46 U.S.C. 41104(d)(2) to issue accurate invoices, issuing an invoice that does not comply with OSRA 2022's requirements does not permanently eliminate the billed party's obligation to pay those charges. In particular, 46 U.S.C. 41104(f) cancels the obligation to pay an invoice that does not conform to OSRA but does not prevent the carrier from reissuing the charges on an invoice/bill that does meet the statutory requirements. The correctly billed party has an obligation to pay charges billed via a compliant invoice. In addition, given the statutory obligation in 46 U.S.C. 41104(d)(2), the Commission also declines to add a requirement that billed parties inform billing parties of any inaccuracies.

5. § 541.7, General Comments

FedEx Trade Networks stated that the Commission should make clear that when a demurrage or detention charge is in dispute, the billing party should be prohibited from issuing further overdue statements.[209] In addition, FedEx Trade Networks recommended that the Commission explicitly state conditions under which the billing party may not charge demurrage and detention, such as when: the container has not arrived at the port; the container is not available within the terminal; the container cannot be released due to a hold by any government action; the container is in the terminal, but the ocean carrier fails to load it on the ocean vessel; the container is in a closed, blocked or inaccessible area; no appointments to pick-up freight are available; there is a “dual transaction,” in which a container cannot be picked up unless another piece of equipment is returned is required; and the equipment must be returned to a different location to be accepted.

FedEx Trade Networks also recommended that when demurrage and detention fees do have to be paid, the Commission should implement certain requirements to create greater efficiencies and serve the objective of demurrage and detention: demurrage bills should be separated from freight pick-up for credit-worthy customers; demurrage should be a standard amount per port and per day, with no tiered fees; more payment options, such as electronic funds transfers, credit cards (without fees), should be available, and credit should be universally accepted; charges should be fair and reasonable, with the goal of moving freight from the terminal; the amortized value of the equipment should be considered when setting detention rates; and the bill should be readily available, especially online.

FMC response: The Commission declines to make these changes to the final rule. The information required to be included in an invoice as per § 541.6 should discourage billing parties from issuing demurrage and detention invoices when charges have not yet accrued, such as when a vessel has not yet arrived in port, because an improperly issued invoice means that the billed party will not have to pay it under the terms of § 541.5. In addition, the rule contains a dispute resolution process that is designed to motivate the parties to a find a resolution within a short timeframe. This process should allow cargo to be released sooner, as well as discourage parties from repeated behaviors such as continuously issuing overdue invoices.

Furthermore, this rule provides the requirements for detention and demurrage invoices and is already designed to make the process more efficient. FedEx Trade Networks' suggestions are outside the process for demurrage and detention billing requirements. As such, they are outside the scope of this rulemaking.

H. § 541.8 Requests for Fee Mitigation, Refund, or Waiver

1. § 541.8(a), Request for Mitigation, Refund, or Waiver of Fees From the Billing Party

Issue: The Commission proposed giving billed parties 30 days to dispute demurrage and detention charges. Forty-five comments were submitted on this issue. Twenty-eight comments supported or supported with qualification the proposal (1 VOCC,[210] 5 NVOCCs/OTIs/3PLs,[211] 8 BCOs,[212] 13 Motor Carriers,[213] and 1 Federal agency [214]). One commenter that supported the proposal said that the 30-day time limit “will incentivize billing parties to ensure the accuracy of their invoices from the start.” [215] Fourteen comments were in clear opposition (11 BCOs [216] and 3 NVOCCs/3PLs [217]). Three additional commenters submitted comments on the matter that did not fall neatly into either support or opposition.[218]

As noted above, some of the commenters that supported the proposal, did so with qualification. The Agriculture Transportation Coalition said that 30 days is sufficient time for shippers to review invoices and submit requests for fee mitigation, refund, or waiver but that the clock should start once the shipper receives the invoice or after the invoice has been posted on-line in a location accessible to the shipper.[219] American Chemistry Council had similar views to Agriculture Transportation Coalition but said that the clock should not start until invoices are received by the billed party.[220] American Chemistry Council explained: “Carriers are increasingly moving to online systems where the billed party must search for new invoices. Because of resource constraints, small companies may track new invoices on a weekly basis, rather than daily.” [221] To address this concern, American Chemistry Council proposed amending § 541.8 by adding at the end “. . . or within thirty-seven (37) days of the billing party making the invoice available online” to ensure that these companies have the full 30-day window to review invoices. The National Association of Beverage Importers, Inc. supported the 30-day timeframe but said that it should be subject to a one-time additional 30-day extension.[222] Similarly, NYNJFF&BA supported a 30-day timeframe generally, but said the timeframe should be allowed to be extended if both parties agreed to the extension.[223] (NYNJFF&BA did not put a time limit on how far the deadline could be extended so long as both parties were in agreement.) NYNJFF&BA also said that the 30-day clock for a VOCC receipt of a dispute must be extended to accommodate the request if the dispute was raised within the proper timelines from the final party billed.

Billed parties, such as shippers and their trade associations, generally argued that 30 days is insufficient. They argued that they need more time because shippers do not have the administrative bandwidth to examine each invoice carefully within 30 days and to determine if a dispute should be filed, particularly considering that some charges have unique and complex scenarios that need to be investigated before they are disputed.[224] Commenters noted that low administrative bandwidth could be caused by a variety of factors, including: the billed party being a small business,[225] because of high transactional volume,[226] or because of the use of third-party auditors.[227] Some commenters pointed out that a billed party's primary business is not transportation, as opposed to billing parties, so shippers are at a disadvantage relative to carriers in validating and disputing invoices. Some expressed concern that a 30-day period for submitting invoice disputes could be construed as a legal “condition precedent” to filing a claim and essentially function to shorten the statute of limitations for claims brought before the Commission.[228] The National Retail Federation pointed out that while the Commission said in the NPRM that it was basing the 30-day deadline on the UIAA, that shippers have never been a party to the UIAA.[229] As an alternative, several of these commenters argued that a 60-day time period is more appropriate.[230] Other billed parties, however, argued that 30 days is insufficient without proposing an alternative timeframe,[231] or proposed eliminating the timeframe requirement entirely.[232] 

VOCCs and their trade associations asserted the proposal is unfair. Hapag-Lloyd (America) LLC argued that the proposal provides no consequences for failure to timely submit a dispute to an invoice, so it is unclear what incentive billed parties have to respond quickly.[233] The World Shipping Council said that billed parties face no consequences for failing to meet the deadline to dispute an invoice, while billing parties forfeit contractual rights by missing the deadline.[234] WSC argued that fundamental fairness, equal protection, and due process dictate the Commission must add language to impose similar requirements on billed parties, namely that they forfeit the right to request fee mitigation, refund, or waiver by failing to submit that request within 30-days from receiving the invoice. The Ocean Carrier Equipment Management Association, Inc. focused on the fact that the rule includes no flexibility for delays outside the billing parties' control, for instance caused by third parties, that prevent compliance with the 30-day deadline to issue invoices.[235] Finally, OCEMA argued that the 30-day deadline could turn out to create a disincentive principle since shippers or truckers in possession of equipment will no longer feel compelled to return it quickly as the unavailability of data or other tools to delay billing will prevent billing parties from meeting the 30-day deadline.

Commenters also expressed concern about the Commission setting strict deadlines for billing parties that could result in forfeiting contractual rights, with billed parties potentially facing no consequences for failing to meet the rule's deadlines. For instance, WSC, OCEMA, and Hapag-Lloyd all argued that it is unfair that billed parties face no consequences for failing to timely submit a dispute to an invoice. The Pacific Merchant Shipping Association (PMSA) agreed with WSC that the lack of consequences for billed parties is unfairly incongruous and inconsistent.[236] PMSA argued that if the consequences of failing to meet the prescribed deadlines are not removed for billing parties, then the rule should require billed parties to pay the charge if they have not disputed it within the 30-day deadline.[237] 

FMC response: The Commission must balance the benefits to billed parties against the detriment to billing parties of an extended timeline to dispute invoices. The longer billed parties take to investigate charges, validate them, and marshal evidence, the longer billing parties remain in limbo about whether the billed party intends to pay. Billed parties advocated for an extended timeframe but did not provide compelling evidence of how long each part of the dispute process takes, for instance investigating invoices or validating charges. Nor did they explain how an extended timeframe for billed parties to evaluate invoices helps facilitate the movement of cargo. The rule's new deadlines ensure billed parties are not scrambling to unearth ancient evidence to dispute stale invoices, and the Commission is not convinced by the evidence billed parties presented in support of extending the timeframe.

Further, the regulatory timeframe for disputes serves only as a minimum timeframe billed parties must permit dispute. The timeframes are not designed or intended to control in every dispute scenario. They are intended to ensure billing parties provide some minimum time for a billed party to dispute an invoice. The billing and billed parties can agree to extend the timeframe, or the billed party can file a complaint with the Commission at any time. Nothing in the final rule prevents a billed party from filing a complaint during the 30-day dispute deadline or prevents a billed party from filing a complaint with the Commission even though they did not dispute the charge with the billing party during the 30-day timeframe.

Based on this record, the Commission has removed the language from § 541.8(b) stating that a billed party was not required to pay an invoice if a billing party takes longer than 30 days to resolve a dispute. The Commission also added language to § 541.8(b) to allow the parties to agree to longer timeframes for the dispute resolution process. These changes better allow for the balancing of benefits that this process requires.

2. § 541.8(b), Resolution of Dispute

(a) 30-Day Timeframe

Issue: The Commission proposed giving parties 30 days to resolve a disputed demurrage or detention invoice charge. Thirty-nine comments were submitted on this issue. Thirty comments supported or supported with qualification the proposal (8 BCOs,[238] 5 NVOCCs/OTIs/Customs Brokers/3PLs,[239] 13 Motor Carriers,[240] 3 VOCCs/MTOs,[241] and 1 Federal agency [242]). Six comments were opposed (all BCOs).[243] The other three comments (all NVOCCs/OTIs/Customs Brokers/3PL) that were submitted neither clearly supported nor opposed the proposal.[244] 

Consumer Technology Association was concerned that the process would be subject to abuse and potentially undermine incentives of demurrage and detention charges.[245] The commenter was particularly concerned with the possibility of parties overwhelming a carrier with requests for waivers/refunds with the express intent of making it impossible for the carrier to act within 30 days. They said the Commission should make clear that:

(1) carriers may adopt reasonable documentation requirements for claims for waivers/refunds, and that carriers do not waive their right to collect charges when they do not act on claims that fail to comply with reasonable documentation requirements;

(2) claims that are not submitted to carriers via the informal dispute process are presumed reasonable and the burden of proof as to the unreasonableness of such charges shifts back to the entity challenging the charge;

(3) Abuse of the informal dispute resolution process (e.g.,by submitting excessive or frivolous claims) may constitute a violation of 46 U.S.C. 41102(a). (Alternatively, that abuse of the system creates a presumption that the charge was reasonable that must be overcome by the party challenging same);

(4) At an absolute minimum, indicate that: billed parties have an obligation to act in good faith when disputing invoices, that submission of excessive and/or frivolous disputes does not constitute good faith, and that charges that are the subject of waiver/refund requests not submitted in good faith are to be presumed reasonable.

Other commenters who opposed the proposed regulation, generally said that they disagreed with it because it did not account for those instances when more than 30 days is required to investigate and reach a final resolution.[246] 

Some commenters who generally supported the regulation agreed with these concerns. (The dividing line between support and opposition generally came down to those that supported some type of alternative timeframe to the strict 30 days in the NPRM and those that would eliminate a specified timeframe entirely.) For example, the World Shipping Council generally supported the proposal but recommended that the 30-day period be subject to a single extension request of a second 30-day period.[247] Maher Terminals supported having a specific timeframe but said that instead of 30 days, the timeframe should be extended to 90–120 days.[248] 

FMC response: The Commission has decided to maintain a 30-day dispute resolution timeframe, but in response to these comments has created an exception to allow for resolution beyond 30 days when a later date has been agreed to by both parties. The Commission has also clarified in the text that the 30-day deadline is 30 calendar days. The rule does not prescribe or prohibit the billing party from imposing reasonable consequences on the billed party for failing to dispute the charge during the 30-calendar-day period.

(b) What does “resolve” mean?

Issue: The Commission received several comments concerning what “resolve” means in the proposed regulation.[249] These commenters said it was unclear from the text of the proposed regulation whether a refund, if one were to be issued, or other final form of redress, needed to be completed within the 30-day deadline, or whether the parties merely needed to come to an agreement for resolution of the matter and final tender could be after the 30 day deadline. Two commenters, Mediterranean Shipping Company [250] and the World Shipping Council,[251] requested that the Commission formally define the term in the rule. American Chemistry Council had similar concerns, but instead of requesting that “resolution” be defined, they requested that the Commission codify into the regulation that final redress be completed within the 30-day limit.[252] Shippers Coalition expressed their concern that the proposed language would result in billing parties just saying “no” to a request for mitigation/refund/waiver, in order meet the 30-day deadline.[253] To address this concern, Shippers Coalition proposed amending § 541.8(b) to include an additional sentence such as: “In considering a request for mitigation, refund, or waiver of fees, a common carrier shall consider that under 46 U.S.C. 41310(b) a common carrier shall bear the burden of establishing the reasonableness of any demurrage or detention charges.” [254]

FMC response: The Commission has amended § 541.8(b) to: (1) require attempted resolution, rather than resolution, within 30 days; and (2) allow extension of the timeframe, if such a later date is agreed to by the parties. The Commission recognizes that this change will mean that the rule will no longer impose definite outer limits for closing out of a disputed transaction. These changes, however, further the goal of building better relationships in the demurrage and detention context between the billing and billed parties, the parties that know the most about the transaction. While parties can come to the Commission at any time during the process, the Commission wants to encourage to the fullest extent possible good-faith efforts for resolution between the parties when disagreements occur.

We decline to formally define “resolution” or “attempted resolution” because what these terms mean in any particular instance will be determined based upon mutual agreement of the involved parties. The Commission believes it is acceptable for some ambiguity, especially given that the Commission has removed the penalty of the billed party not having to pay the invoice if the parties do not come to a resolution. Applying the normal meaning of the word, resolution of a request includes payment by the billing party of any refund due to the billed party.

As noted above, § 541.8 does not impact a party's right to file a Charge Complaint with the Commission. Parties do not need to wait a certain period of time or for a triggering event to occur prior to filing a complaint under § 541.8. Parties interested in filing a Charge Complaints at the Commission may do so by following the Interim Procedures for Submitting “Charge Complaints.” [255] 

(c) Penalty

Pacific Merchant Shipping Association (PMSA) argued that voiding an invoice is a harsh result.[256] PMSA disagreed with the Commission's conclusion that voiding a charge in its entirety is the only potential remedy of consequence that the Commission could establish, or that this penalty is consistent the Commission's current practices or the Congressional mandates in OSRA 2022. PMSA stated that such a conclusion flies in the face of the Commission's charge compliant process and argued that even if this penalty were intended to be punitive, it exceeds the congressional direction and authority granted to the Commission in OSRA 2022. PMSA noted that OSRA 2022, at section 7(b), directs the Commission to conduct the present rulemaking in order to “further clarify reasonable rules and practices” regarding demurrage and detention, and to determine “which parties may be appropriately billed for any demurrage, detention, or other similar per container charges.” PMSA argued that Congress did not authorize the Commission to adopt new penalties whereby demurrage and detention charges would be eliminated as a punishment for violating a prohibited practice, and that the rule contravenes Congress' wishes in this regard.

Furthermore, PMSA argued that because the Charge Complaint process is available to any billed party, § 541.8(b) could have been set up in any number of more reasonable and less punitive ways to address a non-responsive billing party and still be within the scope of clarifying the process, such as introducing a rebuttable presumption against a non-responsive billing party or foreclosing certain defenses against a non-responsive billing party in the Complaint process.

FMC response: In consideration of these concerns, the Commission has removed the provision from § 541.8(b) that allows the billed party to avoid paying the invoice if the dispute is not resolved within 30 days. Although that provision had been added to speed up and incentivize the dispute resolution process, this was not a requirement that was mandated by OSRA 2022. By contrast, the rule keeps the requirement of 46 U.S.C. 41104(d)(1) and codified in 46 CFR 541.5, regarding voiding an invoice that does not include the necessary information, because this requirement was mandated by OSRA 2022.

(d) Release of Cargo During Dispute

Issue: The Commission received a few comments concerning the ability to hold cargo as a lien against demurrage and detention invoices when an invoice is disputed. Commenters were concerned not only about the cargo that is the subject of a dispute but also about the potential for lockouts of non-related cargo.

Mediterranean Shipping Company argued that cargo that is the subject of a disputed demurrage or detention invoice should be permitted to be maintained by the billing party pending payment.[257] FedEx Trade Networks argued, in contrast, that when a demurrage or detention charge is in dispute, the billing party should be required to release the cargo that is the subject of a disputed charge.[258] 

A third alternative was proposed by Consumer Technology Association.[259] CTA argued that during a dispute resolution period, the billing party should be required to release the billed party's property so long as the billed party pays the undisputed portion of an invoice.

The joint comment of the Meat Import Council of America and North America Meat Institute said that it is a common practice by VOCCs to hold additional, unrelated cargo from being released until all outstanding invoices are paid, even when the receiving party may be contesting the validity of those original invoices.[260] 

MICA/NAMI said that when invoiced charges are contested by the receiving party, it is unacceptable for VOCCs to “lock out” that entity from all future business with the VOCC until those outstanding fees are paid. MICA/NAMI argued that the current practice does not comport with the tenets of the Incentive Principle, and that allowing it to continue would dissuade importers and exporters, as well as third party service providers, from availing themselves of any dispute settlement mechanisms that are available given the need to service other, unrelated loads with the VOCC.

The Retail Industry Leaders Association echoed similar concerns of MICA/NAMI, stating that a common complaint among its members is the practice of ocean common carriers and MTOs refusing to provide additional bookings to a BCO unless the BCO or another entity in the supply chain pays outstanding detention and demurrage charges that are under dispute.[261] According to RILA, this practice is often used as a way of forcing a BCO to abandon a dispute with the carrier or MTO and pay the charges due. The Association noted that this practice could take several forms, including a demand for payment upon receipt of an invoice. The Association expressed its concern that this practice could be used to circumvent the text and purpose of the rule and recommended that the Commission thus prohibit it.

FMC response: This rule does not impact traditional cargo lien rights. This rule allows billing parties to make their own business decisions about whether or not they require demurrage and detention charges to be paid prior to releasing cargo or whether or not to release cargo conditionally or unconditionally.

The Commission does not believe that leaving the issue of not allowing additional bookings unaddressed will result in circumvention of the rule. The main purpose of this rule is to provide clarity and transparency of invoices and the billing process. This rule also eliminates the practice of issuing invoices to multiple parties in the hopes that one of them will pay it, which was one of the concerns raised by RILA.

I. Rail

1. Through Bill of Lading

Issue: One NVOCC/OTI requested that the Commission explicitly state in § 541.2 whether the rule applies demurrage and detention billing originating from the rail for the rail leg of a through bill of lading.[262] 

FMC response: Ocean cargo that is shipped under a through bill of lading to a final destination in the United States remains under Commission jurisdiction for any Shipping Act violations, including violations occurring under OSRA 2022, and associated implementing regulations.[263] These cases are discussed in greater detail below.

2. Storage and Demurrage Fees for Shipments Moving on Through Bill of Lading

Issue: National Customs Brokers & Forwarders Association of America, Inc. requested guidance as to whether the proposed definition of “demurrage and detention” would cover certain storage or demurrage fees for shipments moving on through bills of lading.[264] Two other commenters, John S. Connor, Inc.[265] and CV International,[266] specifically requested that inland rail be included in the definition of “demurrage and detention” to account for storage at inland rail terminals.

FMC response: The Commission declines to make a specific addition to the definition of “demurrage and detention” to add inland rail. This is an issue that has been raised in the National Shipper Advisory Committee (NSAC) and continues to be examined by the Commission.[267] The Commission has direct jurisdiction over common carriers, marine terminal operators (MTOs), and ocean transportation intermediaries (OTIs).[268] This includes jurisdiction over “through transportation,” meaning continuous transportation between the origin and destination and is offered or performed by one or more carriers, at least one of which is a common carrier under the Shipping Act. As such, ocean cargo that is shipped under a through bill of lading to a final destination in the United States remains under Commission jurisdiction for any Shipping Act violations. The Commission has long held that its jurisdiction extends to ocean cargo that is shipped under a through bill of lading to a final destination in the United States. The Supreme Court addressed this issue in Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14 (2004), which held that inland transportation pursuant to a through bill of lading does not change the fact that the bill of lading is a maritime contract. This case addressed the delivery of machinery from Australia to Huntsville, Alabama, on a through bill of lading. The machinery arrived in Savannah, Georgia, by way of an ocean vessel, where it was discharged and loaded onto a train whose ultimate destination was the inland port of Huntsville. The train derailed en route to Huntsville, causing damage to the machinery.[269] The Supreme Court decided Norfolk Southern Railway Co. under admiralty law even though the machinery's damage arose from the train crash because the inland rail portion was pursuant to through bills of lading, which the court noted were “essentially, contracts” for the transportation of the goods. These bills of lading were “maritime contracts because their primary objective is to accomplish the transportation of goods by sea from Australia to the eastern coast of the United States.” [270] 

This principle has become settled in Commission case law decided under the Shipping Act. For example, in Mitsui O.S.K. Lines Ltd. v. Global Link Logistics, Inc., Olympus Partners, Olympus Growth Fund III, L.P, Louis J. Mischianti, David Cadenas, Keith Heffernan, CJR World Enterprises, Inc. and Chad J. Rosenberg, the Commission stated that the Shipping Act of 1984's legislative history specifically recognized intermodalism “as an important component of ocean transportation, and the implications of intermodalism for ocean transportation were addressed.” [271] In particular, the legislative history “recognized that an ocean carrier's use of a single intermodal tariff could save shippers time and allow them to avoid having to arrange the transfer of cargo from one transportation mode to another.” The legislative history further stated that “when an ocean carrier offers an intermodal service, that carrier has the single responsibility for assuring the delivery of cargo from point to point, and only that carrier needs to be concerned with the arrangements for transferring the cargo between modes. Furthermore, this process involves a single bill-of-lading rather than multiple bills of lading.” [272] 

In Mitsui, the Commission also stated that “the intermodal nature of ocean transportation was reflected in the [Shipping] Act's inclusion of definitions of `through rate' and `through transportation,' ” which were “in recognition of the need to permit the employment of modern intermodalism concepts and practices in our foreign trade.” [273] As such, the Commission concluded that “given this legislative history, it appears that Congress intended to extend the Commission's jurisdiction to encompass through rates and through transportation. Congress specifically noted the use by ocean carriers of single intermodal bills of lading, such as those involved in this case, to cover shipments going to inland destinations or points.” [274] Given this discussion, it remains the Commission's position that it has jurisdiction over ocean cargo that is shipped under a through bill of lading to a final destination in the United States. This rulemaking does not change the Commission's authority over merchandise carried pursuant to a through bill of lading.

3. Amending the Definition of “Demurrage and Detention”

Issue: One commenter requested that the Commission add “storage” to the definition of “demurrage and detention,” as well as including rail/inland depot space in the definition.[275] There, the commenter reasoned that on through bills of lading, the VOCC is responsible for transporting cargo inland via rail, and that the same demurrage and detention billing regulations should apply to rail storage/demurrage.

FMC response: The Commission declines to add storage to the definition of “demurrage and detention.” The terms “detention and demurrage” are used extensively in the shipping industry, and they are not generally defined within the industry to include “storage.” Expanding the definition to include “storage” is beyond the scope of this rulemaking.

J. Paperwork Reduction Act

Issue: One commenter asserted that the Commission violated the Paperwork Reduction Act of 1995 (PRA) because “it does not appear that any effort was made to realistically assess the time or cost burdens imposed by the rule[.]” [276] 

FMC response: The Commission complied with PRA requirements. In accordance with 5 CFR 1320.11, in the NPRM, the Commission discussed costs associated with the information collection outlined in the proposed rule, and the bases for those costs.[277] The Commission requested comments on the information collection generally, and specifically requested comments on the accuracy of the burden estimate. Neither the commenter [278] nor anyone else submitted a comment on the proposed information collection. While some commenters on the NPRM, particularly MTOs, generally asserted concerns about potential burdens that the rule would impose on them, neither this particular commenter nor any other commenter provided data or information to the Commission that directly challenged the FMC's burden calculation or provided additional information to improve the calculation estimate.[279] 

K. Miscellaneous Comments

1. Requests for Additional Regulations

Issue:

While many commenters expressed support for this rulemaking, a number of them mentioned items they thought required further action by the Commission. In particular, the Cheese Importers Association of America (CIAA) noted that even with the regulation's change to billing practices, there are operational practices that are still harming food importers.[280] This included charging detention and demurrage even when parties cannot access their shipping containers, when the ship did not go to the proper port, and when the carrier failed to properly notify that the container was available for pick up. CIAA requested that the Commission develop a reasonable standard regarding delivery practices. Similarly, the Northwest Horticultural Council (NHC) stated that the Commission should take further action to clarify reasonable detention and demurrage practices and make sure shippers are not unreasonably charged in situations where delays are beyond their control, an issue that was echoed in a comment by an anonymous exporter.[281] This exporter also noted that a number of issues regarding earliest return dates could be ripe for Commission regulation.

Pacifica Trucks LLC stated that in addition to the invoicing rules that this regulation encompasses, the Commission should address ocean carriers' application of demurrage and detention fees in other situations that Pacifica Trucks considers unfair.[282] In particular, Pacifica Trucks opined that the Commission should ban ocean carriers from assessing demurrage and detention fees in the following situations: when the carrier's intermodal marine or terminal truck gate is closed; when the carrier's intermodal marine or terminal does not offer unrestricted appointments to pick up cargo; when the motor carrier documents an unsuccessful attempt to make an appointment for either a loaded or empty container and no other unrestricted appointments were available; when the intermodal marine container terminal diverts equipment from the original interchange location without 48 hours' notice to the motor carrier; when a loaded container is not available for pickup when the motor carrier arrives at the intermodal marine terminal, or the area containing the cargo is closed or inaccessible; when the intermodal marine terminal is too congested to accept the container and turns the motor carrier away; when the carrier's intermodal marine terminal unilaterally imposes transaction restrictions such as chassis matching or empty container requirements that prevent a transaction and fail to provide a return location or other conditions that impede the motor carrier's ability to pick up or return their containers.

In addition, the Harbor Trucking Association requested Commission action on the return of empty containers, as well as standardizing payment practices such as payment centers having differing hours of operation, delays in payment processing and the need for consistency as to how free days are applied.[283] Other commenters raised similar issues.

FMC response: The Commission agrees that these are important issues but concludes that they are outside the scope of this rulemaking. The Commission thanks commenters for their thoughtful input on these issues.

2. APA Challenge

Issue: Three commenters asserted that the NPRM violates the Administrative Procedure Act (APA).[284] 

The World Shipping Council argued that the proposed rule violates the APA “because the Commission's replacement of the Interpretive Rule and the Incentive Principle with a series of bright-line rules represents a clear departure from its past precedent on detention and demurrage without any reasonable explanation.” WSC elaborated, saying: 

[T]he Commission's proposed bright-line regulations on which parties can be billed cannot logically coexist with its current policies under the Interpretive Rule, which employs a case-by-case analytical tool and the Incentive Principle to determine if a carrier, MTO, or OTI's detention and demurrage billing practices are reasonable. The proposed rules and the Interpretive Rule cannot coexist because there are numerous instances when it is not only reasonable for carriers to take actions prohibited by this proposed regulation, but to do otherwise would disincentivize the fluid movement of freight through the supply chain. The predictable result is a proposal that is not only unworkable and unreasonable as a matter of policy, but per se arbitrary and capricious as a matter of law.

The National Association of Waterfront Employers and Port Houston said that in contravention of 46 CFR 545.4(b)'s requirement that an unjust and unreasonable practice must be something that occurs on a “normal, customary, and continuous basis,” this rule, as proposed would penalize MTOs for any isolated, one-off invoice omission, and apply the penalty to the entire invoice, including as to charges that may not be implicated by the mistake at issue. These commenters said that: “In effect, this regulation would be an implicit repeal of the existing regulatory definition of “unjust and unreasonable practices” under 46 CFR 545.5 as it relates to MTO demurrage charges, without an opportunity for public comment on such repeal, as required by the APA.”

FMC response: The Commission disagrees with the commenters' characterization of this action and assertion of APA violations. The rule's provisions have been extensively explained by the agency, and the rule is implemented by the Commission in accordance with the APA's rulemaking procedures under 5 U.S.C. 553. As noted above, the Commission has twice solicited public input on the proposal to regulate MTO invoicing. The Commission stated unequivocally in the NPRM that MTOs would be subject to this rule. MTOs have had repeated public notice that the Commission was considering regulating MTO demurrage and detention invoicing, so the Commission disagrees with concerns that the rule lacked adequate public notice and comment.

As for concerns that this rule implicitly overrules the Commission's Interpretive Rule at 46 CFR 545.4, these concerns have also been previously addressed. Any argument about what parts of the Interpretive Rules at 46 CFR 545.4 and 545.5 remain in force is inherently an argument about that guidance and not about whether this rule complies with the APA. OSRA 2022 specifically required the Commission to issue rules under 46 U.S.C. 41102(c) that further define the prohibited practices by common carriers, marine terminal operators, and shippers, regarding the assessment of detention or demurrage charges. The plain language of this direction and the plain language of 41104(d) do not require evidence of multiple violations. This view is further supported by 46 U.S.C. 41104(f) which functions to void an invoice if a single required element is not included, not when the complainant can show multiple instances of such behavior.[285] To the extent that this rule requires a change in the narrow context of the Commission's guidance on how it will apply 46 U.S.C. 41102(c) to MTO demurrage and detention invoicing, this rule merely implements changes made by Congress.

In response to NAWE and Port Houston, the Commission has amended § 541.5 to read “applicable charge” rather than “applicable invoice.” This change mirrors the statutory language of 46 U.S.C. 41104(f). It was not the Commission's intent to imply that a failure to include the mandatory invoice requirements related to detention and demurrage charges would void non-detention or demurrage charges that might appear on the same invoice.

3. Extended Implementation Time Period

Issue: The Commission received four requests for delayed implementation of the final rule. Two MTOs requested an implementation date of no less than 120 days from publication of any final rule.[286] The Intermodal Association of North America (IANA) requested no less than 90 days, saying that would be the minimum amount of time needed they would need to make necessary changes to the UIAA associated with implementation of § 541.7(a).[287] The third MTO requested delayed implementation but did not propose a specific timeframe.[288] 

FMC response: The agency is delaying the general effective date of this rule 90 days from publication in the Federal Register and § 541.6's implementation is delayed pending approval of the associated Collection of Information by the Office of Management and Budget. The Commission believes that the additional days of general implementation together with any additional waiting period for OMB approval of the Information Collection will provide industry with sufficient time to implement all changes required by this rule.

4. Requests for Hearing and Additional Public Comment Period

Issue: The Commission received two requests for a hearing so that the Commission could further hear from stakeholders about impacts and potential unintended consequences of implementing the rule.[289] 

FMC response: After careful consideration, the Commission declines to establish another round of public comments or to hold the requested hearings. The Commission has already issued an ANPRM and an NPRM on this subject. As such, there have been two opportunities for public comments on these matters. As demonstrated by the number and quality of the comments received, the Commission believes that the ANPRM and the NPRM have provided the public and interested parties with sufficient opportunity to comment on the underlying issues. As such, the Commission believes that a hearing or additional opportunity for public comment is unnecessary. In addition, the Commission is not making significant changes to the final regulations such that a Supplementary Notice of Proposed Rulemaking (SNPRM) would be warranted.

5. Costs and Benefits Analysis

Issue: Three commenters asserted that the Commission did not adequately assess costs and benefits of the proposed rule in the NPRM and that the Commission violated Executive Order 13579.[290] 

FMC response: The Commission provided an estimate of the costs for regulated entities to implement the proposed rule to be between $6.3 and $12.7 million.[291] As discussed above with regards to comments concerning the Paperwork Reduction Act, the Commission did not receive information from these, or any other commenters, to support changing that estimate. The Commission highlights for the awareness of these commenters that, as an independent agency, the Commission is not subject to the same cost benefit analysis requirements as non-independent agencies. Executive Order 13579 was written taking into account the unique nature of independent agencies. The Executive Order does not require independent agencies to take specific actions, nor does it impose mandates on independent agencies to comply with Executive Order 12866, Executive Order 13563, or any other Executive order.

IV. Summary of Final Rule and Changes From the NPRM

§ 541.1 Purpose

There are no changes from the text proposed in the NPRM.

§ 541.2 Scope and Applicability

This final rule makes minor changes to the text proposed in the NPRM. In paragraph (a), “to a billed party or their designated agent” has been removed. “To a billed party” has been removed because part 541 also covers demurrage or detention invoices that are sent to persons who are not a “billed party” as defined in § 541.3. “Or their designated agent” has been removed as the text is unnecessary. Traditional rules of agency remain applicable under the Shipping Act.[292] In paragraph (b), “regulation” has been replaced with “part.” “Regulation” was a scrivener's error in the proposed text. While “regulation” is sometimes used to describe a rule in totality, it more frequently is used to describe a single section or subsection of the Code of Federal Regulations. “Part” is more precise and, most importantly, aligns with the Code of Federal Regulation's organizational taxonomy.

Part 541 governs any invoice issued by an ocean common carrier or non-vessel-operating common carrier for the collection of demurrage or detention charges. Part 541 does not govern the billing relationships among and between ocean common carriers and marine terminal operators. The Commission has not received information about the relationships or interactions between VOCCs and MTOs that warrants regulating the format used by MTOs to bill VOCCs. At the present time, the Commission is confident that the strong commercial relationships between the parties is enough to ensure that the proper information is shared and that the party who ultimately receives the invoice is receiving accurate information. Part 541 does apply to all other demurrage and detention invoices issued by MTOs. MTOs often do not have direct contractual relationships with shippers. However, MTOs are entitled to separately assess demurrage as an implied contract provided that it is published as part of an MTO Schedule and there are some situations where marine terminal operators impose fees directly on shippers and NVOCCs. A primary concern of the Commission is to ensure billed parties understand the demurrage or detention invoices they receive. Therefore, in those cases where an MTO charges any party other than a VOCC detention or demurrage charges, the Commission finds that MTOs should be subject to the same regulations that apply to VOCCs and NVOCCs.

§ 541.3 Definitions

This final rule makes three changes from the text proposed in the NPRM. “Billing dispute” has been removed and “consignee” and “person” have been added as defined terms. “Billing dispute” does not need to be defined because it is not a term used in §§ 541.4–541.99, in either the NPRM or final rule.

Billed party. For purposes of part 541, “billed party” means the person receiving the demurrage or detention invoice and who is responsible for payment of any incurred demurrage or detention charge.

Billing party. For purposes of part 541, “billing party” means the VOCC, NVOCC, or MTO who issues a demurrage or detention invoice. While in most cases, the billing party will be a VOCC, this term is defined broadly to incorporate the occasions when an MTO or an NVOCC may issue a demurrage or detention invoice.

Consignee. The definition of “consignee” that has been added to § 541.3 comports with the definition of “consignee” that appears in § 520.2.

Demurrage or detention. “Demurrage or detention” includes any charge assessed by common carriers and marine terminal operators related to the use of marine terminal space or shipping containers. The scope of the term in § 541.3 is the same as the scope of “demurrage or detention” in § 545.5(b). It encompasses all charges having the purpose or effect of demurrage or detention regardless of what those charges may be called by the billing party. The definition excludes charges related to equipment other than containers, such as chassis, because depending on the context, “per diem” can refer to containers, chassis, or both.

Demurrage or detention invoice. For purposes of part 541, “demurrage or detention invoice” means any statement, printed, written, or accessible online, that documents an assessment of demurrage or detention charges. This broad definition includes all currently existing methods of invoicing shipping (e.g., email and online portal), as well as those that may be developed in the future.

Person. The definition of “person” that has been added to § 541.4 aligns with § 515.2(n).

§ 541.4 Properly Issued Invoices

This final rule makes changes to the proposed § 541.4 text to allow consignees to be issued demurrage and detention invoices as an alternative billed party. The revised regulation makes clear that the consignee is an alternative billed party, and the same invoice may be not issued to both the shipper and the consignee. Additionally, the Commission has made minor, non-substantive changes that aid in clarity.

If the billed party has firsthand knowledge of the terms of a service contract with a common carrier, then they are in a better position to ensure that both they and the carrier are abiding by those terms. When demurrage or detention invoice disputes do arise, the billed party is in a better position than third parties such as truckers and customs brokers to analyze the accuracy of the charge. Further, when the billed party disputes a charge, they have an existing commercial relationship with the billing party and are in a better position to resolve the dispute. Therefore, under this final rule, a properly issued invoice is an invoice that is issued to: (1) the person that has contracted with the billing party for the ocean transportation or storage of cargo, or (2) the consignee (when in contractual privity with the carrier).

In the final rule, the Commission has changed the word “goods” to “cargo” in § 541.4(a)(1). “Cargo” is a broader term that puts the focus on the container, rather than the items inside it. As such, this comports with the rule's focus on the container, as demurrage and detention charges are levied on the container rather than the items inside it.

“Contract” in this rule has its normal and ordinary legal meaning.[293] Because contracts (other than contracts implied by law) require a meeting of the minds, merely listing a party on a bill of lading, or contract of affreightment, will not be sufficient for them to become a billed party for purposes of part 541 if they played no role in contracting for the ocean transportation or storage of cargo. Whether a meeting of the minds has occurred is something that can vary based on the specific circumstances of a given relationship. Because a contract can exist even if not memorialized in writing, the Commission declines to add a requirement that contracts need to be in writing for purposes of this rule. The Commission notes, however, that written contracts can provide important documentary evidence of agreement.

Consignees may be billed as an alternative to the shipper when the consignee is the party contracting for the shipping and is therefore in contractual privity with the carrier. Merely listing the consignee on the bill of lading is not sufficient to support billing the consignee. (Conversely, although rarer, it is possible to properly issue an invoice to a consignee that has not been listed on the bill of lading.)

This rule does not prohibit or otherwise limit an MTO from issuing any party—including BCOs or Motor Carriers—an invoice based on a Terminal Schedule, including charges for detention or demurrage, if the Terminal Schedule includes such charges and the Schedule has been made available in accordance with 46 CFR 525.3. As noted by the commenters, 46 U.S.C. 40501(f) and 46 CFR 525.2(a)(2) establish that such Schedules are enforceable as implied contracts. Under such a scenario, a Motor Carrier has a contractual relationship with the MTO and the terms of the contract (the Schedule) are known to the Motor Carrier in advance by operation of 46 CFR 525.3. This is a very different situation than where a Motor Carrier is billed for demurrage or detention and the Motor Carrier has no contractual relationship with the billing party and is not privy to the specifics of the contractual agreement (such as where a Motor Carrier is billed demurrage or detention based on an agreement between a shipper and a billing party).

This rule does require that when an MTO issues a bill for demurrage or detention for purposes of enforcing a Terminal Schedule, the billing must comply with part 541, including providing all the information required by § 541.6. The Commission recognizes that this may require MTOs to revise their current business practices. As discussed in the NPRM, the Commission's primary concern with this rule is to ensure that billed parties understand the demurrage or detention invoices they receive.[294] Any additional burden on MTOs to be able to provide the necessary data, which the Commission does not believe will be unduly burdensome, is outweighed by the benefits of transparency.

The Commission notes that other MTO billing relationships are also subject to part 541. For example, an MTO issuing a demurrage or detention invoice in order to collect on behalf of a VOCC or issuing a demurrage or detention invoice to an NVOCC must comply with part 541. However, MTOs sometimes require BCOs or their agents to pay freight charges prior to removal of cargo and those freight charges are excluded from the definition of “demurrage and detention” in § 541.3.

§ 541.5 Failure To Include Required Information

Under 46 U.S.C. 41104(f), failure to include any of the required minimum information in 46 U.S.C. 41104(d) eliminates the obligation of the charged party to pay the applicable charge. Section 541.5 is intended to mirror this requirement. To clarify that intent, the Commission has changed the paragraph from “applicable invoice” in the NPRM to “applicable charge” in this final rule. It was not the agency's intent to imply that non-demurrage or detention charges could be voided by failure to include the information in § 541.6.

Similarly, pursuant to 46 U.S.C. 41102(c), it is a prohibited practice for an MTO to fail to include the required minimum information in a demurrage and detention invoice sent to a party other than a VOCC. Sending incomplete bills that do not contain sufficient information for shippers to verify if the bills received are accurate would not constitute having just and reasonable practices relating to or connected with receiving, handling, storing or delivering property. Extending the elimination of charge obligations provision at 46 U.S.C. 41104(f) to MTOs issuing demurrage and detention invoices would enforce Congress' intent to have the Commission “further define prohibited practices by . . . marine terminal operators, . . . under section 41102(c) of title 46, United States Code, regarding the assessment of demurrage or detention charges” and ensure that all demurrage and detention bills sent to billed parties provide the necessary information for the bills to be paid or disputed quickly thereby ensuring efficiency across the shipping system.

§ 541.6 Contents of Invoice

This final rule makes minor changes to the proposed requirements regarding digital notification of how a billed party can request fee mitigation, refund, or waiver as well as minor, non-substantive changes to align language with OSRA 2022 and the defined terms in § 541.3.

The Commission has made changes throughout the regulation to align the text to the defined terms in § 541.3. “Invoice” has been replaced with “demurrage or detention invoice.” “Billing date” and “billing due date” have been changed to “invoice date” and “invoice due date.” Finally, “invoiced party” has been changed to “billed party.”

In response to comments, the Commission has added language that clearly specifies that the information submitted on the invoice must be accurate. Inclusion of the language aligns with the language used in 46 U.S.C. 41104(d)(2).

The Commission has amended the introductory sentences of paragraphs (a), (b), and (c) to make clear that these are minimum information elements. Billing parties may include additional information on the invoices and are encouraged to do so if they believe that such information will be useful to billed parties in verifying the validity of demurrage and detention charges.

The Commission has amended paragraph (c)(2) by adding terminal schedule to the listed examples of documents, and changing “i.e.,” to “e.g.,” to reflect that this is not an exhaustive list of all possible documents.

The Commission has amended paragraph (d)(2) to expand the means of digital notification to billed parties of what they need to do to successfully submit a fee mitigation, refund, or waiver request. The language in the proposed rule required that the invoice contain a URL address that directs the billed party to a publicly accessible website that provides the necessary information. This final rule has expanded that to any digital means, including QR codes, or digital watermarks.

§ 541.7 Issuance of Demurrage and Detention Invoices

This rule requires detention and demurrage invoices to be issued within specified timeframes. As the proposed timeframe language was ambiguous, in this final rule the Commission has clarified that all “days” in the regulation are calendar days.

The Commission is retaining the requirement as proposed in the NPRM that, generally, all demurrage and detention invoices must be issued in 30 days. The Commission has removed the language “required timeframe” from the version of § 541.7(a) that appeared in the NPRM in order to make this subsection clearer. The Commission has revised this subsection to more explicitly dictate the required timing for purposes of clarity.

In response to comments received during the NPRM, the Commission has revised § 541.7 to allow an exception for NVOCCs. That exception is located in paragraph (b) in this final rule. NVOCCs must issue demurrage and detention invoices within 30 days from the issuance date of the demurrage or detention invoice it received. If a billing party does not issue a demurrage or detention invoice within the required timeframe, then the billed party is not required to pay the charge. Paragraph (c) has been added to reflect situations where an NVOCC is acting as both a billing and billed party in relation to the same charge, and allows the NVOCC to inform its billing party that the charge has been disputed by the NVOCC's billed party. In that circumstance, the NVOCC must provide an additional 30 days for the NVOCC to dispute the charge upon notice.

The final language of § 541.7(d) has removed the link between a billing party reissuing an invoice with an incorrectly billed party's disputing of that invoice. This is consistent with the incentive present in the rest of the rule. The burden of issuing a correct invoice should not rely on an incorrectly billed party to dispute the incorrect invoice. Removing this link is also consistent with several comments that requested removing the 60-day requirement from § 541.7(d), which applied to bills sent to a correctly billed party following the billing of an incorrect party. Section 541.7(d) now gives a billing party 30 calendar days to issue a corrected invoice, which is consistent with the rule's purpose of a swift timeline for demurrage and detention billing.

The NPRM's linking a billing party's ability to reissue an invoice with an incorrectly billed party's disputing that invoice also caused confusion as to whether there was any interplay between § 541.7 and § 541.8. The changes to the rule text adopted in this final rule make clear that § 541.7 spells out the rules for issuing an invoice to the correctly billed party. By contrast, § 541.8 speaks to a process that assumes the invoice was sent to the correct party, as the term “billed party” encompasses the fact that it is the correct party.

§ 541.8 Requests for Fee Mitigation, Refund, or Waiver

This rule requires billing parties to allow at least 30 days for billed parties to submit a fee mitigation, refund, or waiver request. The Commission has retained the NRPM's proposal that if such a request is submitted by the billed party, the billing party must resolve the request within 30 days. However, based on public comments, the Commission has allowed an exception. A request for fee mitigation, refund, or waiver may be resolved later than 30 days if both parties agree to the later date. The Commission has added language to clarify that the timeframes in the regulation are calendar days. Also based on public comment, the Commission has removed the penalty provision proposed in the NPRM that if the billing party fails to resolve the fee mitigation, refund, or waiver request within the 30-day deadline, the billed party is not required to pay the charge at issue. This proposed penalty provision is not a requirement of OSRA 2022.

Section 541.8 does not impact a party's right to file a Charge Complaint with the Commission. Parties do not need to wait a certain period of time or for a triggering event to occur prior to filing a complaint. Parties interested in filing a Charge Complaints at the Commission may do so by following the steps outlined on the Commission's website.[295] 

When the Commission receives sufficient information, it will promptly initiate an investigation.[296] 

V. Rulemaking Analyses and Notices

A. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601–612, provides that whenever an agency is required to publish a notice of proposed rulemaking under the Administrative Procedure Act (APA), 5 U.S.C. 553, the agency must prepare and make available for public comment an initial regulatory flexibility analysis (IRFA) describing the impact of the proposed rule on small entities, unless the head of the agency certifies that the rulemaking will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 603, 605.

This final rule requires VOCCs, NVOCCs, and MTOs to include minimum billing information on detention and demurrage invoices. The rulemaking additionally requires billing parties that issue demurrage and detention invoices to follow certain billing practices; specifically, billing parties must issue demurrage and detention invoices within 30 calendar days from when charges stop accruing. See 87 FR at 27975–27976.

The Commission presumes that VOCCs and MTOs generally do not qualify as small entities under the guidelines of the Small Business Administration (SBA). The Commission previously stated that VOCCs and MTOs generally are large companies that exceed the employee (500) and/or annual revenue ($21.5 million) thresholds to be considered small business entities. However, the Commission presumes that NVOCCs are small business entities.

There are likely two types of costs imposed by the proposed rulemaking on the affected businesses. The imposition of a 30-calendar day deadline to issue an invoice from when demurrage and detention charges stop accruing could result in a loss of revenue to the billing party. In addition, the minimum billing information requirements imposed by the proposed rule may require the billing party to collect additional information and change its billing information technology system to include all the required information on invoices.

Most of the costs of the rulemaking will be borne by VOCCs and MTOs as they generally assess demurrage and detention charges, and not NVOCCs. As discussed above, in most cases, NVOCCs pass through detention and demurrage charges billed to them on invoices generated by VOCCs or MTOs. Accordingly, NVOCCs should receive the minimum billing information required by the proposed rule from either the VOCC or MTO issuing the invoice.

For these reasons, the Chairman of the Federal Maritime Commission certifies that this rule will not have a significant economic impact on a substantial number of small entities.

B. Congressional Review Act

The rule is not a “major rule” as defined by the Congressional Review Act (5 U.S.C. 801 et seq). The rule will not result in: (1) An annual effect on the economy of $100,000,000 or more; (2) a major increase in costs or prices; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based companies to compete with foreign based companies. 5 U.S.C. 804(2).

C. National Environmental Policy Act

The National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321–4347) requires Federal agencies to consider the environmental impacts of proposed major Federal actions significantly affecting the quality of the human environment, as well as the impacts of alternatives to the proposed action. When a Federal agency prepares an environmental assessment, the Council on Environmental Quality (CEQ) NEPA implementing regulations (40 CFR parts 1500–1508) require it to “include brief discussions of the need for the proposal, of alternatives [. . .], of the environmental impacts of the proposed action and alternatives, and a listing of agencies and persons consulted.” 40 CFR 1508.9(b). After an environmental assessment, the Commission issued a Finding of No Significant Impact (“FONSI”), 87 FR 73278 (Nov. 29, 2022), and explained that the FONSI would become final 10 days after publication unless a petition for review was filed with FMC by Dec. 9, 2022. (The World Shipping Council and Pacific Merchant Shipping Association jointly filed a petition for review on December 9, 2022.[297] FMC denied the petition on January 6, 2023.[298]). The FONSI and environmental assessment, as well as the petition and the Commission's denial of the petition are available for inspection in the docket at www.regulations.gov.

D. Paperwork Reduction Act

This final rule calls for a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). As defined in 5 CFR 1320.3(c), “Collection of Information” comprises reporting, recordkeeping, monitoring, posting, labeling, and other, similar actions. In compliance with the PRA, the Commission submitted the proposed information collection to the Office of Management and Budget. Notice of the information collections was published in the Federal Register and public comments were invited. 87 FR 62341, 62356 (Oct. 14, 2022). Neither the Commission nor OMB received any comments that impacted the FMC's burden calculation or provided additional information to improve the calculation estimate.The title and description of the information collections, a description of those who must collect the information, and an estimate of the total annual burden follow. The estimate covers the time for reviewing instructions, searching existing sources of data, gathering and maintaining the data needed, and completing and reviewing the collection.

Title: 46 CFR Part 541—Demurrage and Detention Billing Requirements

Summary of the Collection of Information: Title 46 U.S.C. 41104(a)(15) and (d)(2), as well as 46 CFR part 541 subpart A, require demurrage and detention invoices to contain certain additional information to increase transparency so that billed parties can identify the containers at issue, the applicable rate, dates for which charges accrued, and how to dispute charges. Further, 46 U.S.C. 41104(d)(2) and 46 CFR part 541 also require demurrage and detention invoices to certify that the charges comply with applicable regulatory provisions and that the invoicing party's behavior did not contribute to the charges.

Need for Information: The Commission identifies information that entities must include on demurrage and detention invoices to ensure compliance with the Shipping Act of 1984, as amended. Specifically, 46 CFR part 541 subpart A implements the billing information requirements contained in 46 U.S.C. 41104(d)(2) and adds additional minimum information that billing parties must include on demurrage and detention invoices.

Frequency: The frequency of demurrage and detention invoices is determined by the billing party. It is the billing entity's responsibility to ensure that their demurrage and detention charges comply with applicable statutory and regulatory provisions. The Commission estimates that between five and ten percent of all containers moving in U.S.-foreign trade will receive a demurrage and/or detention invoice or an estimated range of 1,135,000 and 2,270,000 invoices annually.

Type of Respondents: VOCCs, MTOs, and NVOCCs are required to include specific information on their demurrage and detention invoices sent to billed parties.

Number of Annual Respondents: The Commission anticipates an annual respondent universe of 354 VOCCs and MTOs. The Commission did not include NVOCCs in its annual respondent universe because in most, if not all cases, NVOCCs pass through the demurrage and detention charges it receives to their customers. Because NVOCCs are passing through the charges, they are not collecting the required minimum information themselves.

Estimated Time per Response: The Commission estimates a one-time burden of an estimated 25 hours per respondent to integrate the required billing information elements into their existing invoicing system. After this initial burden, the Commission anticipates that the estimated time to create and retain each demurrage or detention invoice to be six minutes or 0.1 hours.

Total Annual Burden: The Commission estimates a one-time burden for respondents to integrate the additional billing information elements, required by OSRA 2022 and by the proposed rule, into their existing invoicing system to be 8,850 person-hours and $882,522. After this initial integration, the Commission estimates the total annual burden to provide demurrage and detention invoices and to ensure accuracy to be 113,500–227,000 person-hours and $6,339,020–$12,678,040.

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), we have submitted a copy of this rule to the Office of Management and Budget (OMB) for its review of the collection of information. Before the Commission may enforce the collection of information requirements in this rule, OMB must approve FMC's request to collect this information. You need not respond to a collection of information unless it displays a currently valid control number from OMB.

E. Executive Order 12988 (Civil Justice Reform)

This rule meets the applicable standards in E.O. 12988, “Civil Justice Reform,” (61 FR 4729, Feb. 7, 1996) to minimize litigation, eliminate ambiguity, and reduce burden.

List of Subjects in 46 CFR Part 541

– Demurrage and detention; Common carriers; Exports; Imports; Marine terminal operators

For the reasons set forth in the preamble, the Federal Maritime Commission amends title 46 of the CFR by adding part 541 to read as follows:

1. Add part 541 to read as follows: 

PART 541—DEMURRAGE AND DETENTION

Subpart A—Billing Requirements and Practices

541.1           Purpose.

541.2           Scope and applicability.

541.3           Definitions.

541.4           Properly issued invoice.

541.5           Failure to include required information.

541.6           [Reserved]

541.7           Issuance of demurrage and detention invoice.

541.8           Requests for fee mitigation, refund, or waiver.

541.9–541.99    [Reserved]

Subpart B [Reserved]

Authority: 5 U.S.C. 553; 46 U.S.C. 40101, 40102, 40307, 40501–40503, 41101–41106, 40901–40904, and 46105; and 46 CFR 515.23.

Subpart A—Billing Requirements and Practices

§ 541.1 Purpose.

This part establishes the minimum information that must be included on or with demurrage and detention invoices. It also establishes procedures that must be adhered to when invoicing for demurrage or detention.

§ 541.2 Scope and applicability.

(a) This part sets forth regulations governing any invoice issued by an ocean common carrier, marine terminal operator, or non-vessel-operating common carrier for the collection of demurrage or detention charges.

(b) This part does not govern the billing relationships among and between ocean common carriers and marine terminal operators.

§ 541.3 Definitions.

In addition to the definitions set forth in 46 U.S.C. 40102, when used in this part:

Billed party means the person receiving the demurrage or detention invoice and who is responsible for the payment of any incurred demurrage or detention charge.

Billing party means the ocean common carrier, marine terminal operator, or non-vessel-operating common carrier who issues a demurrage or detention invoice.

Consignee means the ultimate recipient of the cargo; the person to whom final delivery of the cargo is to be made.

Demurrage or detention mean any charges, including “per diem” charges, assessed by ocean common carriers, marine terminal operators, or non-vessel-operating common carriers related to the use of marine terminal space (e.g., land) or shipping containers, but not including freight charges.

Demurrage or detention invoice means any statement of charges printed, written, or accessible online that documents an assessment of demurrage or detention charges.

Person means an individual, corporation, or company, including a limited liability company, association, firm, partnership, society, or joint stock company existing under or authorized by the laws of the United States or of a foreign country.

§ 541.4 Properly issued invoices.

(a) A properly issued invoice is a demurrage or detention invoice issued by a billing party to:

(1) The person for whose account the billing party provided ocean transportation or storage of cargo and who contracted with the billing party for the ocean transportation or storage of cargo; or

(2) The consignee.

(b) If a billing party issues a demurrage or detention invoice to the person identified in paragraph (a)(1) of this section, it cannot also issue a demurrage or detention invoice to the person identified in paragraph (a)(2) of this section.

(c) A billing party cannot issue an invoice to any other person.

§ 541.5 Failure to include required information.

Failure to include any of the required minimum information in this part in a demurrage or detention invoice eliminates any obligation of the billed party to pay the applicable charge.

§ 541.6 [Reserved]

§ 541.7 Issuance of demurrage and detention invoices.

(a) A billing party must issue a demurrage or detention invoice within thirty (30) calendar days from the date on which the charge was last incurred. If the billing party does not issue a demurrage or detention invoice within thirty (30) calendar days from the date on which the charge was last incurred, then the billed party is not required to pay the charge.

(b) If the billing party is a non-vessel-operating common carrier, then it must issue a demurrage or detention invoice within thirty (30) calendar days from the issuance date of the demurrage or detention invoice it received. If such a billing party does not issue a demurrage or detention invoice within thirty (30) calendar days from the issuance date of the demurrage or detention invoice it received, then the billed party is not required to pay the charge.

(c) A non-vessel-operating common carrier (NVOCC) can be both a billing and billed party in relation to the same charge. When an NVOCC is acting in both roles, it can inform its billing party that the charge has been disputed by the NVOCC's billed party. The NVOCC's billing party must then provide an additional thirty (30) calendar days for the NVOCC to dispute the charge upon this notice.

(d) If the billing party invoices an incorrect person, the billing party may issue an invoice to the correct billed party provided that such issuance is within thirty (30) calendar days from the date on which the charge was last incurred. If the billing party does not issue this corrected demurrage or detention invoice within thirty (30) calendar days from the date on which the charge was last incurred, then the billed party is not required to pay the charge.

§ 541.8 Requests for fee mitigation, refund, or waiver.

(a) The billing party must allow the billed party at least thirty (30) calendar days from the invoice issuance date to request mitigation, refund, or waiver of fees from the billing party.

(b) If a billing party receives a fee mitigation, refund, or waiver request from a billed party, the billing party must attempt to resolve the request within thirty (30) calendar days of receiving such a request or at a later date as agreed upon by both parties.

§ 541.9–541.99 [Reserved]

2. Delayed indefinitely, add § 541.6 to read as follows: 

§ 541.6 Contents of invoice.

(a) Identifying information. A demurrage or detention invoice must be accurate and contain sufficient information to enable the billed party to identify the container(s) to which the charges apply and at a minimum must include:

(1) The Bill of Lading number(s);

(2) The container number(s);

(3) For imports, the port(s) of discharge; and

(4) The basis for why the billed party is the proper party of interest and thus liable for the charge.

(b) Timing information. A demurrage or detention invoice must be accurate and contain sufficient information to enable the billed party to identify the relevant time for which the charges apply and the applicable due date for invoiced charges and at a minimum must include:

(1) The invoice date;

(2) The invoice due date;

(3) The allowed free time in days;

(4) The start date of free time;

(5) The end date of free time;

(6) For imports, the container availability date;

(7) For exports, the earliest return date; and

(8) The specific date(s) for which demurrage and/or detention were charged.

(c) Rate information. A demurrage or detention invoice must be accurate and contain sufficient information to enable the billed party to identify the amount due and readily ascertain how that amount was calculated and must include at a minimum:

(1) The total amount due;

(2) The applicable detention or demurrage rule (e.g., the tariff name and rule number, terminal schedule, applicable service contract number and section, or applicable negotiated arrangement) on which the daily rate is based; and

(3) The specific rate or rates per the applicable tariff rule or service contract.

(d) Dispute information. A demurrage or detention invoice must be accurate and contain sufficient information to enable the billed party to readily identify a contact to whom they may direct questions or concerns related to the invoice and understand the process to request fee mitigation, refund, or waiver, and at a minimum must include:

(1) The email, telephone number, or other appropriate contact information for questions or request for fee mitigation, refund, or waiver;

(2) Digital means, such as a URL address, QR code, or digital watermark, that directs the billed party to a publicly accessible website that provides a detailed description of information or documentation that the billed party must provide to successfully request fee mitigation, refund, or waiver; and

(3) Defined timeframes that comply with the billing practices in this part, during which the billed party must request a fee mitigation, refund, or waiver and within which the billing party will resolve such requests.

(e) Certifications. A demurrage or detention invoice must be accurate and contain statements from the billing party that:

(1) The charges are consistent with any of the Federal Maritime Commission's rules related to demurrage and detention, including, but not limited to, this part and 46 CFR 545.5; and

(2) The billing party's performance did not cause or contribute to the underlying invoiced charges.

3. Delayed indefinitely, add § 541.99 to read as follows: 

§ 541.99 OMB control number assigned pursuant to the Paperwork Reduction Act.

The Commission has received Office of Management and Budget approval for this collection of information pursuant to the Paperwork Reduction Act of 1995, as amended. The valid control number for this collection of information is 3072–XXXX.

Subpart B [Reserved]

By the Commission.

David Eng,

Secretary.


Footnotes

1. Federal Maritime Commission, 
Detention and Demurrage, https://www.fmc.gov/​detention-and-demurrage/#:~:text=In%20dollar%20terms%2C%20the%20nine,over%20the%20two%2Dyear%20period (last visited Oct. 11, 2023).

2. There are two types of common carriers: (1) vessel-operating common carriers (VOCCs), also called ocean common carriers, and (2) non-vessel-operating common carriers (NVOCCs). 46 U.S.C. 40102(7), (17), (18).

3. “Marine terminal operator” (MTO) is defined at 46 U.S.C. 40102(15).

4. See Fact Finding Investigation No. 29, Interim Recommendations at 6 (July 28, 2021) (Fact Finding 29 Interim Recommendations), available at: https://www2.fmc.gov/​ReadingRoom/​docs/​FFno29/​FF29%20Interim%20Recommendations.pdf/​.

5. Fact Finding 29 Interim Recommendations at 7.

6. Fed. Mar. Comm'n, Press Release, FMC to Issue Guidance on Complaint Proceedings and Seek Comments on Demurrage and Detention Billings (Sept. 15, 2021), https://www.fmc.gov/​fmc-to-issue-guidance-on-complaint-proceedings-and-seek-comments-on-demurrage-and-detention-billings/​.

7. Advance Notice of Proposed Rulemaking on Demurrage and Detention Billing Requirements, 87 FR 8506 (Feb. 15, 2022). See Docket No. 22–04, Demurrage and Detention Billing Requirements.

8. 87 FR at 8507, 8508–8509 (Questions 1 and 7).

9. 87 FR at 8507, 8509 (Questions 2 and 3).

10. 87 FR at 8508.

11. Id.

12 87 FR at 8509 (Question 6).

13. Id.

14. 87 FR at 8508, 8509 (Question 12).

15. The UIIA is a standard industry contract that provides rules for the interchange of equipment between motor carriers and equipment providers, such as VOCCs. Participation is voluntary.

16. 87 FR at 8508.

17. 87 FR at 8508, 8509 (Question 14).

18. Public Law 117–146, 136 Stat. 1272 (2022).

19. Public Law 117–146 at Sec. 7(a)(1), 136 Stat. at 1274 (codified at 46 U.S.C. 41104(a)(15)).

20. Public Law 117–146 at Sec. 7(a)(2), 136 Stat. at 1275 (codified at 46 U.S.C. 41104(d)(2)).

21. Public Law 117–146 at Sec. 7(a)(2), 136 Stat. at 1275 (codified at 46 U.S.C. 41104(f)).

22. Public Law 117–146 at Sec. 7(b)(1), 136 Stat. at 1275.

23. Public Law 117–146 at Sec. 7(b)(2), 136 Stat. at 1275 (emphasis added).

24. Id.

25. 87 FR 62341.

26. Bass Tech International (FMC–2022–0066–0230); National Industrial Transportation League (FMC–2022–0066–0230–0104).

27. E.g., Husky Terminal and Stevedoring, LLC (FMC–2022–0066–0248); Port Houston (FMC–2022–0066–0268).

28. Husky Terminal and Stevedoring, LLC (FMC–2022–0066–0248).

29. National Association of Waterfront Employers (FMC–2022–0066–0276); Port of NY/NJ Sustainable Services Agreement (FMC–2022–0066–0218). NAWE and PONYNJSSA also argued that: (1) the only way OSRA 2022 can be harmonized with 46 U.S.C. 41102(c) is by excluding MTOs from the proposed rule's substantive demurrage and detention billing requirements, and (2) if 46 U.S.C. 41102(c) and OSRA 2022 cannot be harmonized, the more specific statute, OSRA 2022, should control.

30. Port Authority of New York & New Jersey (FMC–2022–0066–0226); Port Houston (FMC–2022–0066–0268); West Coast MTO Agreement (FMC–2022–0066–0229).

31. Port Authority of New York & New Jersey (FMC–2022–0066–0226); American Association of Port Authorities (FMC–2022–0066–0255); West Coast MTO Agreement (FMC–2022–0066–0229).

32. Letter from Jake Auchincloss and Brian Babin, U.S. House Representatives (Aug. 17, 2023) (FMC–2022–0066–0282). The Congressmen also took issue with a recent Commission decision finding the imposition of equipment charges on a holiday weekend at odds with the incentive principle. That issue is outside the scope of this rulemaking.

33. Letter from John Garamendi, Dusty Johnson, Jim Costa, David Valado, Mike Thompson, and Jimmy Panetta, U.S. House Representatives (Jan. 2, 2023)(FMC–2022–0066–0279).

34. Id. (“Since enactment of the Ocean Shipping Reform Act of 2022, we have heard reports of marine terminal operators invoicing their own charges for demurrage and detention separate from those charged by ocean carriers. This practice directly contradicts written comments by the National Association of Waterfront Employers—the trade association for marine terminal operators—on the House discussion draft and to the Committee on Transportation and Infrastructure in 2021.”)

35. Id.

36. National Association of Waterfront Employers (FMC–2022–066–0276).

37. American Association of Port Authorities (FMC–2022–0066–0255); West Coast MTO Agreement (FMC–2022–0066–0229); Trapac, LLC (FMC–2022–0066–0136).

38. Interpretive Rule on Demurrage and Detention Under the Shipping Act, 84 FR 48850, 48852 (Sep. 17, 2019); Interpretive Rule on Demurrage and Detention Under the Shipping Act, 85 FR 29638 (May 18, 2020); Fact Finding Investigation No. 28, Final Report (Dec. 3, 2018), available at: https://www2.fmc.gov/​readingroom/​documents/​20973; Fact Finding Investigation No. 29, Final Report (May 31, 2022), available at: https://www.fmc.gov/​wp-content/​uploads/​2022/​06/​FactFinding29FinalReport.pdf; see also California v. United States, 320 U.S. 577, 584–85 (1944) (interpreting the analogous provision in the Shipping Act of 1916 as applying to demurrage); Am. Export-Isbrandtsen Lines, Inc. v. Fed. Mar. Comm'n, 444 F.2d 824, 829 (D.C. Cir. 1970) (interpreting the analogous provision in the Shipping Act of 1916 as applying to detention).

39. 46 U.S.C. 46105(a).

40. The Commission notes that canons of construction, such as reviewing legislative drafting history, are most useful in evaluating an interpretation of an ambiguous statute or regulation. See, e.g., Green v.  Bock Laundry Mach. Co., 490 U.S. 504, 508–09 (1989)(“We begin by considering the extent to which the text of [the disputed provision] answers the question before us. Concluding that the text is ambiguous with respect to [that question], we then seek guidance from legislative history . . .”). But that is not why the commenters raised the legislative drafting history. The commenters would have the Commission affirmatively read into existence a prohibition on regulating MTO demurrage and detention invoices because some versions of legislation contemplated by Congress laid out statutory requirements and others did not. The absence of a statutory requirement is not proof of a prohibition on issuing regulations. If Congress wanted to prohibit the Commission from regulating MTO demurrage and detention invoices, it could have done so. The Commission does not agree that the legislative history prohibits inclusion of MTOs in these regulations.

41. Public Law 117–146, 136 Stat. 1272, at 1275.

42. Garamendi, Johnson, Costa, Valado, Thompson, and Panetta, supra note 33.

43. See Balsam Brands (FMC–2022–0066–0095) (arguing that excluding MTOs potentially creates a loophole that would undermine the purposes and effectiveness of the regulation).

44. Auchincloss and Babin, supra note 32.

45. Many MTOs also made the argument that the legislative history of OSRA 2022 shows that Congress intended to exempt MTOs from demurrage and detention invoice requirements. American Association of Port Authorities (FMC–2022–0066–0255); West Coast MTO Agreement (FMC–2022–0066–0229); Fenix Marine Services, Ltd. (FMC–2022–0066–0186); Husky Terminal and Stevedoring, LLC (FMC–2022–0066–0248); Port of Houston (FMC–2022–0066–0268); Trapac, LLC (FMC–2022–0066–0136); National Association of Waterfront Employers (FMC–2022–0066–0276).

46. Garamendi, Johnson, Costa, Valado, Thompson, and Panetta, supra note 33.

47. “[T]he intent of this rulemaking is to ensure that the person receiving the bill understands the charges, regardless of whether the billing party is a VOCC, NVOCC, or an MTO.” See 87 FR at 62347.

48. Harbor Trucking Association (FMC–2022–0066–0261).

49. As noted above, demurrage and detention invoices between MTOs and VOCCs are not subject to this rule.

50. Garamendi, Johnson, Costa, Valado, Thompson, and Panetta, supra note 33.

51. Fenix Marine Services (FMC–2022–0066–0186); West Coast MTO Agreement (FMC–2022–0066–0229).

52. Trapac, LLC (FMC–2022–0066–0136).

53. Ports America/SSA Marine (FMC–2022–0066–0249).

54. Fenix Marine Services, Ltd. (FMC–2022–0066–0186).

55. Husky Terminal and Stevedoring, LLC (FMC–2022–0066–0248).

56. American Association of Port Authorities (FMC–2022–0066–0255).

57. See, e.g., Order of Investigation, Fact Finding Investigation No 28.

58. See, e.g., American Association of Port Authorities (FMC–2022–0066–0255); West Coast MTO Agreement (FMC–2022–0066–0229).

59. E.g., Cross Equip. Ltd. v. Hyundai Merch. Marine (Am.) Inc., 214 F.3d 1349 (Table) (5th Cir. 2000)(2000 WL 633596)(citing e.g., 4,885 Bags of Linseed, 66 U.S. (1 Black) 108, 109 (1861)).

60. Id. (citing e.g., The Bird of Paradise, 72 U.S. 545, 555 (1866)).

61. See also46 U.S.C. 41310(b) (Charge complaints authority states that Commission is required to investigate compliance with section 41102 of “the charge” received and does not specify that multiple instances must be alleged for the Commission to investigate and order a refund and/or civil penalty).

62. E.g., Landstar Exp. Am., Inc. v. Fed. Mar. Comm'n, 569 F.3d 493, 495 (D.C. Cir. 2009).

63. National Customs Brokers & Forwarders Association of America, Inc. (FMC–2022–0066–0180).

64. 87 FR 62341, 62347.

65. Maher Terminals, LLC (FMC–2022–0066–0269).

66. Shippers Coalition (FMC–2022–0066–0160).

67. Metro Group Maritime (FMC–2022–0066–0209).

68. New York New Jersey Foreign Freight Forwarders & Brokers Association, Inc. (FMC–2022–0066–0247).

69. Meat Import Council of America, Inc./North American Meat Institute (FMC–2022–0066–0188); Tyson Foods, Inc. (FMC–2022–0066–0225).

70. 87 FR 62341, 62350 (Oct. 14, 2022).

71. CV International, Inc. (FMC–2022–0066–0217).

72. BassTech International LLC (FMC–2022–0066–0230); National Retail Federation (FMC–2022–0066–0231); Pacific Merchant Shipping Association (FMC–2022–0066–0233); Ports America/SSA Marine (FMC–2022–0066–0249).

73. American Association of Port Authorities (FMC–2022–0066–0255).

74. 87 FR 62341, 62348.

75. Consumer Technology Association (FMC–2022–0066–0228).

76. 87 FR 62341, 62348.

77. FMC–2022–0066–0247.

78. FMC–2022–0066–0244.

79. Meat Import Council of America, Inc./North American Meat Institute (FMC–2022–0066–0188); Tyson Foods, Inc. (FMC–2022–0066–0225).

80. BassTech International, LLC (FMC–2022–0066–0230).

81. E.g, Harbor Trucking Association (FMC–2022–0066–0261).

82. See, e.g., Bipartisan House Comment (FMC–2022–0066–0279); T.G. Logistics, Inc. (FMC–2022–0066–0253); Retail Industry Leaders Association (FMC–2022–0066–0259); Meat Import Council of America, Inc./North American Meat Institute (FMC–2022–0066–0188); RPM Courier Systems (FMC–2022–0066–0120); Monica Rivera Beattie's Trucking Group (FMC–2022–0066–0115); Monk Transportation Ltd. (FMC–2022–0066–0117); Pacifica Trucks, LLC (FMC–2022–0066–0118); Harbor Freight Transport Corp. (FMC–2022–0066–0123); BBT Logistics, Inc. (FMC–2022–0066–0127); Golden State Logistics (FMC–2022–0066–0158); Dependable Highway Express (FMC–2022–0066–0164); Impact Transportation (FMC–2022–0066–0172); Tricon Transportation, Inc. (FMC–2022–0166–0174); RANTA Transport LLC (FMC–2022–0066–0175); Bridgeside Incorporated (FMC–2022–0066–0179); RED Trucking agents for Cowan Systems LLC (FMC–2022–0066–0181); FOX Intermodal Corp. (FMC–2022–0066–0185); Pacific Coast Container Inc. (FMC–2022–0066–0194); Bonelli Logistics, Inc. (FMC–2022–0066–0196); DELKA Trucking, Inc. (FMC–2022–0066–0221); A1 Dedicated Transport, LLC (FMC–2022–0066–0232); Mutual Express Company (FMC–2022–0066–0243); Dray Trucking, LLC (FMC–2022–0066–0258). Several commenters highlighted the importance of prohibiting common carriers from invoicing parties.

83. American Chemistry Council (FMC–2022–0066–0184).

84. See, e.g., Eagle Systems, Inc. (FMC–2022–0066–0203); Association of Bi-State Motor Carriers (FMC–2022–0066–0212); Harbor Trucking Association (FMC–2022–0066–0090).

85. Agriculture Transportation Coalition (FMC–2022–0066–0275).

86. Id.

87. Excargo Services Inc. (FMC–2022–0066–0151).

88. Reliable Transportation Specialist, Inc. (FMC–2022–0066–0214).

89. Association of Bi-State Motor Carriers (FMC–2022–0066–0212); Agriculture Transportation Coalition (FMC–2022–0066–0275); Intransit Container, Inc. (FMC–2022–0066–0227); Best Transportation (FMC–2022–0066–0090).

90. Association of Bi-State Motor Carriers (FMC–2022–0066–0212).

91. Andale Trucking (FMC–2022–0066–0146).

92. See, e.g., Cloud Trucking Inc. (FMC–2022–0066–0105).

93. FMC–2022–0066–0201.

94. FMC–2022–0066–0231.

95. FMC–2022–0066–0240.

96. 85 FR 29638, 29652.

97. FMC–2022–0066–0230.

98. “Service Contract” is defined at 46 U.S.C. 40102(21).

99. FMC–2022–0066–0180.

100. FMC–2022–0066–0160.

101. TraPac (FMC–2022–0066–0136); Fenix Marine Services (FMC–2022–0066–0186); West Coast MTO Agreement (FMC–2022–0066–0229). Furthermore, “schedule” is defined by FMC regulations at 46 CFR 525.1(c)(17).

102. See, e.g., Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 16 (2004) (“[C]ontracts for carriage of goods by sea must be construed like any other contracts: by their terms and consistent with the intent of the parties”); Contract, Black's Law Dictionary (11th ed. 2019).

103. E.g., Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14 (2004).

104. E.g.,87 FR 62341, 62347.

105. FMC Order of Investigation, Fact Finding Investigation No. 28, 2 (2018). The Order of Investigation and other materials related to Fact Finding 28 are available on the Commission's website at https://www.fmc.gov/​fact-finding-28/​.

106. 87 FR 62341, 62349–62350.

107. Meat Import Council of America, Inc./North American Meat Institute (FMC–2022–0066–0188); International Association of Movers (FMC–2022–0066–0222); and Consumer Technology Association (FMC–2022–0066–0228).

108. International Association of Movers (FMC–2022–0066–0222).

109. Consumer Technology Association (FMC–2022–0066–0228).

110. International Tank Container Organisation (FMC–2022–0066–0096); Flexport, Inc. (FMC–2022–0066–0111).

111. FMC–2022–0066–0096.

112. INTERCOMS (International Commercial Terms) are a set of standardized trade terms published by the International Chamber of Commerce (ICC) that are commonly used in international trade contracts.

113. Shippers Coalition (FMC–2022–0066–0160); FedEx Trade Networks Transport & Brokerage, Inc. (FMC–2022–0066–0165); American Association of Exporters and Importers (FMC–2022–0066–0168); National Customs Brokers & Forwarders Association of America, Inc. (FMC–2022–0066–0180); SM Line Corp. (FMC–2022–0066–0182); American Chemistry Council (FMC–2022–0066–0184); International Housewares Association (FMC–2022–0066–0187); A Customs Brokerage, Inc. (FMC–2022–0066–0200); Dole Ocean Cargo Express (FMC–2022–0066–0201) (would prefer no limits on who an invoice could be issued to but included statements that a consignee is sometimes the proper person to be billed); National Association of Chemical Distributors (FMC–2022–0066–0208); Metro Group Maritime (FMC–2022–0066–0209); Consumer Brands Association (FMC–2022–0066–0210); CV International (FMC–2022–0066–0217); Seafrigo USA Inc. (FMC–2022–0066–0223); West Coast MTO (FMC–2022–0066–0229); Bass Tech International LLC (FMC–2022–0066–0230); National Retail Federation (FMC–2022–0066–0231); Pacific Merchant Shipping Association (FMC–2022–0066–0233); Connection Chemical LP (FMC–2022–0066–0236); World Shipping Council (FMC–2022–0066–0242); Husky Terminal and Stevedoring LLC (FMC–2022–0066–0248); New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc. (FMC–2022–0066–0247); Ocean Carrier Equipment Management Association, Inc. (FMC–2022–0066–0257); Cheese Importers Association of America (FMC–2022–0066–0265).

114. FMC–2022–0066–0182.

115. Shippers Coalition (FMC–2022–0066–0160); National Association of Exporters and Importers (FMC–2022–0066–0168).

116. FedEx Trade Networks Transport & Brokerage, Inc (FMC–2022–0066–0165); Pacific Coast Council of Customs Brokers and Freight Forwarders Association (FMC–2022–0066–0224); John S. Connor, Inc. (FMC–2022–0066–0267); and Agriculture Transportation Coalition (FMC–2022–0066–0275).

117. New York New Jersey Foreign Freight Forwarders & Brokers Association, Inc. (FMC–2022–0066–0247); CV International, Inc. (FMC–2022–0066–0217); National Customs Brokers & Forwarders Association of America, Inc. (FMC–2022–0066–0180); FedEx Trade Networks Transport & Brokerage, Inc. (FMC–2022–0066–0165).

118. FMC–2022–0066–0165.

119. E.g., National Association of Waterfront Employers (FMC–2022–0066–0276); Ports America/SSA Marine (FMC–2022–0066–0249); Port Houston (FMC–2022–0066–0268).

120. FMC–2022–0066–0202.

121. TraPac, LLC (FMC–2022–0066–0136); Fenix Marine Services (FMC–2022–0066–0186); West Coast MTO Agreement (FMC–2022–0066–0229); National Association of Waterfront Employers (FMC–2022–0066–0276); Pacific Merchant Shipping Association (FMC–2022–0066–0233); Husky Terminal and Stevedoring, LLC (FMC–2022–0066–0248); Port Houston (FMC–2022–0066–0268).

122. 87 FR 62341, 62350 (Oct. 14, 2022).

123. FMC–2022–0066–0247.

124. National Customs Brokers & Forwarders Association of America, Inc. (FMC–2022–0066–0180); Mediterranean Shipping Company (FMC–2022–0066–0143); FedEx Trade Networks Transport & Brokerage, Inc. (FMC–2022–0066–0165); U.S. Dairy Export Council/National Milk Producers Federation (FMC–2022–0066–0235).

125. FMC–2022–0066–0143.

126. FMC–2022–0066–0274.

127. FMC–2022–0066–0188.

128. FMC–2022–0066–0168.

129. FMC–2022–0066–0180.

130. FMC–2022–0066–0217.

131. FMC–2022–0066–0247.

132. FMC–2022–0066–0267.

133. FMC–2022–0066–0277.

134. FMC–2022–0066–0223.

135. FMC–2022–0066–0188.

136. FMC–2022–0066–0274.

137. FMC–2022–0066–0186.

138. FedEx Trade Networks Transport & Brokerage, Inc. (FMC–2022–0066–0165).

139. See 85 FR 29638, 29654.

140. Seafrigo USA (FMC–2022–0066–0223); DHL Global Forwarding (FMC–2022–0066–0219).

141. Seafrigo USA (FMC–2022–0066–0223).

142. International Tank Container Organisation (FMC–2022–0066–0096).

143. 85 FR 29638, 29654 (May 18, 2020) (internal citation omitted).

144. Id.

145. 84 FR 48850, 48852 (Sept. 17, 2019) (internal citation omitted)

146. FMC–2022–0066–0189.

147. FMC–2022–0066–0096.

148. FMC–2022–0066–0095.

149. FMC–2022–0066–0262.

150. FMC–2022–0066–0247.

151. FMC–2022–0066–0208.

152. FMC–2022–0066–0236.

153. FMC–2022–0066–0217.

154. FMC–2022–0066–0267.

155. FMC–2022–0066–0188.

156. FMC–2022–0066–0180.

157. 88 FR 55697, 55698 (Aug. 16, 2023) (Question 6).

158. https://www.fmc.gov/​commissioner-dye-proposes-reforms-to-international-ocean-supply-chain-practices/ ​(July 26, 2023).

159. FMC–2022–0066–0136.

160. FMC–2022–0066–0228.

161. FMC–2022–0066–0230

162. 87 FR 62341, 62351.

163. Anonymous (FMC–2022–0066–0093).

164. BassTech International LLC (FMC–2022–0066–0230).

165. Seafrigo USA Inc. (FMC–2022–0066–0223).

166. National Retail Federation (FMC–2022–0066–0231).

167. International Tank Container Organisation (FMC–2022–0066–0096); International Dairy Foods Association (FMC–2022–0066–0244); and the Retail Industry Leaders Association (FMC–2022–0066–0259).

168. FMC–2022–0066–0244.

169. Meat Import Council of America, Inc. and the North American Meat Institute (FMC–2022–0066–0188); Tyson Foods Inc. (FMC–2022–0066–0225); and the Agriculture Transportation Coalition (FMC–2022–0066–0275)

170. FMC–2022–0066–0188.

171. FMC–2022–0066–0096.

172. FMC–2022–0066–0269.

173. Id.

174. A Customs Brokerage, Inc. (FMC–2022–0066–0200).

175. The National Association of Waterfront Employers (FMC–2022–0066–0276); Husky Terminal and Stevedoring, LLC (FMC–2022–0066–0248); and Ports America/SSA Marine (FMC–2022–0066–0249).

176. Maher Terminals LLC (FMC–2022–0066–0269).

177. The U.S Dairy Export Council/National Milk Producers Federation (FMC–2022–0066–0235).

178. International Dairy Foods Association (FMC–2022–0066–0244).

179. Id.

180. FMC–2022–0066–0090.

181. FMC–2022–0066–0210.

182. FMC–2022–0066–0184.

183. FMC–2022–0066–0275.

184. Greg Knowler, Key supply chain stakeholders commit to electronic bills of lading, Journal of Commerce, Sept. 5, 2023 (https://www.joc.com/​article/​key-supply-chain-stakeholders-commit-electronic-bills-lading_​20230904.html).

185. Ports America/SSA Marine (FMC–2022–0066–0249).

186. FMC–2022–0066–0274.

187. National Fisheries Institute (FMC–2022–0066–0256).

188. FMC–2022–0066–0157.

189. FMC–2022–0066–0227.

190. FMC–2022–0066–0242.

191. FMC–2022–0066–0255.

192. FMC–2022–0066–0268.

193. FMC–2022–0066–0257.

194. FMC–2022–0066–0240.

195. FMC–2022–0066–0230.

196. 87 FR 62341, 62354.

197. FMC–2022–0066–0242; FMC–2022–0066–0257.

198. See Testimony of Chairman Maffei before Congress: “Review of Fiscal Year 2024 Budget Request for the Federal Maritime Transportation Programs, and Implementation of the Ocean Shipping Reform Act of 2022,” March 23, 2023, available at https://www.fmc.gov/​testimony-of-chairman-maffei-before-congress-review-of-fy2024-budget/​; Statement by President Joe Biden on Congressional Passage of Ocean Shipping Reform Act, June 13, 2022, available at https://www.whitehouse.gov/​briefing-room/​statements-releases/​2022/​06/​13/​statement-by-president-joe-biden-on-congressional-passage-of-ocean-shipping-reform-act/#:~:text=Statement%20by%20President%20Joe%20Biden%20on%20Congressional%20Passage%20of%20Ocean%20Shipping%20Reform%20Act,-Home&text=Lowering%20prices%20for%20Americans%20is,American%20retailers%2C%20farmers%20and%20consumers.

199. FMC–2022–0066–0274.

200. FMC–2022–0066–0240.

201. FMC–2022–0066–0242.

202. BassTech International LLC (FMC–2022–0066–0230).

203. FMC–2022–0066–0165.

204. FMC–2022–0066–0217.

205. FMC–2022–0066–0247.

206. FMC–2022–0066–0267.

207. FMC–2022–0066–0235.

208. FMC–2022–0066–0236.

209. FMC–2022–0066–0165.

210. American Association of Exporters and Importers (FMC–2022–0066–0168).

211. International Tank Container Organisation (FMC–2022–0066–0096); Excargo Services Inc. (FMC–2022–0066–0151); Seafrigo USA Inc. (FMC–2022–0066–0223); APL Logistics Americas, Ltd (FMC–2022–0066–0271); New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc. (FMC–2022–0066–0247).

212. Northwest Horticultural Council (FMC–2022–0066–0178); American Chemistry Council (FMC–2022–0066–0184); International Housewares Association (FMC–2022–0066–0187); MICA/NAMI (FMC–2022–0066–0188); Tyson Foods, Inc. (FMC–2022–0066–0225); National Association of Beverage Importers, Inc. FMC–2022–0066–0238); International Dairy Foods Association (FMC–2022–0066–0244); Agriculture Transportation Coalition (FMC–2022–0066–0275)

213. BW Mitchum Trucking Co. (FMC–2022–0066–0110); GBA Transport (FMC–2022–0066–0152); Triple G Express (FMC–2022–0066–0154); MacMillan-Piper, Inc. (FMC–2022–0066–0159); Bridgeside Inc. (FMC–2022–0066–0179); Intermodal Motor Carriers Conference (FMC–2022–0066–0189); Eagle Systems, Inc. (FMC–2022–0066–0203); Bi-State Motor Carriers (FMC–2022–0066–0212); California Trucking Association (FMC–2022–0066–0220); Maryland Motor Truck Association, Inc. (FMC–2022–0066–0241); Virginia Trucking Association (FMC–2022–0066–0260); Harbor Trucking Association (FMC–2022–0066–0261); California Trucking Association (FMC–2022–0066–0270).

214. U.S. Department of Agriculture (FMC–2022–0066–0274).

215. Harbor Trucking Association (FMC–2022–0066–0261).

216. Shippers Coalition (FMC–2022–0066–0160); National Association of Chemical Distributors (FMC–2022–0066–0208); Consumer Brands Association (FMC–2022–0066–0210); Consumer Technology Association (FMC–2022–0066–0228); BassTech International LLC (FMC–2022–0066–0230); National Retail Federation (FMC–2022–0066–0231); National Milk Producers Federation/U.S. Diary Export Council (FMC–2022–0066–0235); Connection Chemical (FMC–2022–0066–0236); Retail Industry Leaders Association (FMC–2022–0066–0259); National Association of Manufacturers (FMC–2022–0066–0264); National Industrial Transportation League (FMC–2022–0066–0277).

217. DHL Global Forwarding (FMC–2022–0066–0219); CVI International (FMC–2022–0066–0217); International Association of Movers (FMC–2022–0066–0222).

218. Hapag-Lloyd (America) LLC (FMC–2022–0066–0240); World Shipping Council (FMC–2022–0066–0242); Maher Terminals LLC (FMC–2022–0066–0269).

219. FMC–2022–0066–0275.

220. FMC–2022–0066–0184.

221. Id.

222. FMC–2022–0066–0238.

223. FMC–2022–0066–0247.

224. E.g., Connection Chemical (FMC–2022–0066–0236); National Association of Chemical Distributors (FMC–2022–0066–0208).

225. National Association of Chemical Distributors (FMC–2022–0066–0208).

226. E.g., Consumer Technology Association (FMC–2022–0066–0228); Retail Industry Leaders Association (FMC–2022–0066–0259).

227. E.g., National Retail Federation (FMC–2022–0066–0231).

228. National Association of Chemical Distributors (FMC–2022–0066–0208).

229. Id.

230. Shippers Coalition (FMC–2022–0066–0160); Consumer Brands Association (FMC–2022–0066–0210); International Association of Movers (FMC–2022–0066–0222); National Milk Producers Federation/U.S. Dairy Export Council (FMC–2022–0066–0235); Retail Industry Leaders Association (FMC–2022–0066–0259).

231. E.g., Connection Chemical (FMC–2022–0066–0236); National Retail Federation (FMC–2022–0066–0231).

232. National Association of Chemical Distributors (FMC–2022–0066–0208); BassTech International LLC (FMC–2022–0066–0230); National Industrial Transportation League (FMC–2022–0066–0277).

233. FMC–2022–0066–0240.

234. FMC–2022–0066–0242.

235. FMC–2022–0066–0257.

236. FMC–2022–0066–0233.

237. Id.

238. Northwest Horticultural Council (FMC–2022–0066–0178); American Chemistry Council (FMC–2022–0066–0184); International Housewares Association (FMC–2022–0066–0187); MICA/NAMI (FMC–2022–0066–0188); Tyson Foods, Inc. (FMC–2022–0066–0225); National Association of Beverage Importers, Inc. (FMC–2022–0066–0238); International Dairy Foods Association (FMC–2022–0066–0244); Agriculture Transportation Coalition (FMC–2022–0066–0275).

239. International Tank Container Organisation (FMC–2022–0066–0096); Excargo Services Inc. (FMC–2022–0066–0151); Seafrigo USA Inc. (FMC–2022–0066–0223); New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc. (FMC–2022–0066–0247); APL Logistics, Ltd (FMC–2022–0066–0271).

240. BW Mitchum Trucking Co. (FMC–2022–0066–0110); GBA Transport (FMC–2022–0066–0152); Triple G Express (FMC–2022–0066–0154); MacMillan-Piper, Inc. (FMC–2022–0066–0159); Bridgeside Inc.(FMC–2022–0066–0179); Intermodal Motor Carriers Conference (FMC–2022–0066–0189); Eagle Systems, Inc. (FMC–2022–0066–0203); Bi-State Motor Carriers (FMC–2022–0066–0212); California Trucking Association (FMC–2022–0066–0220); Maryland Motor Truck Association, Inc. (FMC–2022–0066–0241); Virginia Trucking Association (FMC–2022–0066–0260); Harbor Trucking Association (FMC–2022–0066–0261); California Trucking Association (FMC–2022–0066–0270).

241. American Association of Exporters and Importers (FMC–2022–0066–0168); World Shipping Council (FMC–2022–0066–0242); Maher Terminals LLC (FMC–2022–0066–0269).

242. U.S. Department of Agriculture (FMC–2022–0066–0274).

243. Consumer Technology Association (FMC–2022–0066–0228); National Retail Federation (FMC–2022–0066–0231); National Milk Producers Federation/U.S. Diary Export Council (FMC–2022–0066–0235); Retail Industry Leaders Association (FMC–2022–0066–0259); National Association of Manufacturers (FMC–2022–0066–0264); National Industrial Transportation League (FMC–2022–0066–0277).

244. CVI International (FMC–2022–0066–0217); DHL Global Forwarding (FMC–2022–0066–0219); International Association of Movers (FMC–2022–0066–0222).

245. Consumer Technology Association (FMC–2022–0066–0228).

246. E.g., National Retail Federation (FMC–2022–0066–0231); Retail Industry Leaders Association (FMC–2022–0066–0259).

247. FMC–2022–0066–0242.

248. FMC–2022–0066–0269.

249. E.g., International Tank Container Organisation (FMC–2022–0066–0096); Dole Ocean Cargo Express, LLC (FMC–2022–0066–0201); Mediterranean Shipping Company (FMC–2022–0066–0142); World Shipping Council (FMC–2022–0066–0242); American Chemistry Council (FMC–2022–0066–0184); Shippers Coalition (FMC–2022–0066–0160); New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc. (FMC–2022–0066–0247).

250. FMC–2022–0066–0142.

251. FMC–2022–0066–0242.

252. FMC–2022–0066–0184.

253. FMC–2022–0066–0160.

254. Id.

255. Industry Advisory—Interim Procedures for Submitting “Charge Complaints” Under 46 U.S.C. 41310—Federal Maritime Commission—Federal Maritime Commission (fmc.gov) (posted July 14, 2022) (https://www.fmc.gov/​industry-advisory-interim-procedures-for-submitting-charge-complaints/​).

256. FMC–2022–0066–0233.

257. FMC–2022–0066–0143.

258. FMC–2022–0066–0165.

259. FMC–2022–0066–0228.

260. FMC–2022–0066–0188.

261. FMC–2022–0066–0259.

262. FedEx Trade Networks Transport & Brokerage, Inc. (FMC–2022–0066–0165).

263. See Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14; see also Mitsui O.S.K. Lines Ltd. v. Global Link Logistics, Inc., Olympus Partners, Olympus Growth Fund III, L.P, Louis J. Mischianti, David Cadenas, Keith Heffernan, CJR World Enterprises, Inc. and Chad J. Rosenberg (2011 WL 7144008 (F.M.C.) January 30, 2014).

264. FMC–2022–0066–0180.

265. FMC–2022–0066–0267.

266. FMC–2022–0066–0217.

267. https://www.fmc.gov/​industry-oversight/​national-shipper-advisory-committee/​.

268. See46 U.S.C. 40901–40904, 41104, 41106.

269. 543 U.S. at 18–19.

270. Id. at 24 (internal citations omitted).

271. 2011 WL 7144008 (F.M.C.) January 30, 2014.

272 Id. at 6, citing H.R. REP. NO. 98–53, pt. 1, at 13 (1983).

273. Id. at 6, citing H.R. REP. NO. 98–53, pt. 1, at 29.

274. Id. at 6.

275. CV International, Inc. (FMC–2022–0066–0217).

276. Ocean Carrier Equipment Management Association, Inc. (FMC–2022–0066–0257).

277. 87 FR 62341, 62356.

278. Ocean Carrier Equipment Management Association, Inc. (FMC–2022–0066–0257).

279. Regulations.gov, Docket FMC–2022–0066 and https://www.reginfo.gov/​public/​do/​PRAViewICR?​ref_​nbr=​202210-3072-001# (last visited June 12, 2023).

280. FMC–2022–0066–0265.

281. FMC–2022–0066–0178.

282. FMC–2022–0066–0118.

283. FMC–2022–0066–0261.

284. World Shipping Council (FMC–2022–0066–0242); National Association of Waterfront Employers (FMC–2022–0066–0276); Port Houston (FMC–2022–0066–0268).

285. See also46 U.S.C. 41310(b) (Charge complaints authority states that Commission is required to investigate compliance with section 41102 of “the charge” received and does not specify that multiple instances must be alleged for the Commission to investigate and order a refund and/or civil penalty).

286. West Coast MTO Agreement (FMC–2022–0066–0229); Fenix Marine Services, Ltd. (FMC–2022–0066–0186).

287. West Coast MTO Agreement (FMC–2022–0066–0229).

288. CMA CGM (America) LLC (FMC–2022–0066–0183).

289. National Retail Federation (FMC–2022–0066–0231); National Industrial Transportation League (FMC–2022–0066–0277).

290. TraPac, LLC (FMC–2022–0066–0136); National Association of Waterfront Employers (FMC–2022–0066–0276); Port Houston (FMC–2022–0066–0268).

291. 87 FR 62342, 62356 (Oct. 14, 2022).

292. E.g., Landstar Exp. Am., Inc. v. Fed. Mar. Comm'n, 569 F.3d 493, 495 (D.C. Cir. 2009).

293. See, e.g., Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 16 (2004) (“[C]ontracts for carriage of goods by sea must be construed like any other contracts: by their terms and consistent with the intent of the parties”); Contract, Black's Law Dictionary (11th ed. 2019).

294. E.g.,87 FR 62341, 62347.

295. Industry Advisory—Interim Procedures for Submitting “Charge Complaints” Under 46 U.S.C. 41310—Federal Maritime Commission—Federal Maritime Commission (fmc.gov) (posted July 14, 2022) (https://www.fmc.gov/​industry-advisory-interim-procedures-for-submitting-charge-complaints/​).

296. Id.

297. FMC–2022–0066–0162.

298. FMC–2022–0066–0278.

[FR Doc. 2024–02926 Filed 2–23–24; 8:45 am]

BILLING CODE 6730–02–P

The post Full Text of FMC’s New/Final Demurrage and Detention Billing Requirements appeared first on Universal Cargo.

As we continue to see the beginnings of how the recent and ongoing changes to U.S. shipping law affect businesses’ imports and exports as well as carriers’ and other industry stakeholders’ operations within maritime shipping, let’s keep digging into the exact changes made to U.S. maritime law. At Universal Cargo, we want to help shippers know how law changes affect them. What exactly does the Ocean Shipping Reform Act (OSRA) say and do? This blog series goes through it section by section, so you can see exactly what our lawmakers changed in the U.S. Code dealing with shipping.

If you’re new to this series, we give you the OSRA text; the text of the U.S. Code, usually in Title 46, before and after its amendments and/or additions; and consider what the changes mean for U.S. importers and exporters. However, this section is a little different.

Section 16 does not amend any title of U.S. Code as sections of OSRA typically do. Rather, this section of OSRA creates regulation within its own text that is not a permanent change to U.S. Code.

Previously covered in this series:

• Series Introduction & Quick Coverage of Section 1
• Section 2
• Section 3
• Section 4
• Section 5
• Section 6
• Section 7
• Section 8
• Section 9
• Section 10
• Section 11
• Section 12
• Section 13
• Section 14
• Section 15

Now let’s move forward with Section 16 of OSRA. Exactly what does it say and do…

Quick Overview

As stated above, Section 16 does not amend or insert text into Title 46. That doesn’t mean it does nothing at all.

This section mandates reporting of information about dwell time of intermodal transportation equipment, particularly TEU (twenty foot equivalent unit) shipping containers and chassis. The data collected will then be published statistically for the public. All that is, however, if available allocations allow it. If it is decided the money cannot be made available for these tasks, Section 16 could be rendered moot.

Section 16 Text

SEC. 16. DWELL TIME STATISTICS.

    (a) Definitions.--In this section:
            (1) Director.--The term ``Director'' means the Director of 
        the Bureau of Transportation Statistics.
            (2) Marine container.--The term ``marine container'' means 
        an intermodal container with a length of--
                    (A) not less than 20 feet; and
                    (B) not greater than 45 feet.
            (3) Out of service percentage.--The term ``out of service 
        percentage'' means the proportion of the chassis fleet for any 
        defined geographical area that is out of service at any one 
        time.
            (4) Street dwell time.--The term ``street dwell time'', with 
        respect to a piece of equipment, means the quantity of time 
        during which the piece of equipment is in use outside of the 
        terminal.

    (b) Authority to Collect Data.--
            (1) In general. – <<NOTE: Determination.>> Each port, marine 
        terminal operator, and chassis owner or provider with a fleet of 
        over 50 chassis that supply chassis for a fee shall submit to 
        the Director such data as the Director determines to be 
        necessary for the implementation of this section, subject to 
        subchapter III of chapter 35 of title 44, United States Code.
            (2) Approval by omb. – <<NOTE: Deadline.>> Subject to the 
        availability of appropriations, not later than 60 days after the 
        date of enactment of this Act, the Director of the Office of 
        Management and Budget shall approve an information collection 
        for purposes of this section.

    (c) Publication. – <<NOTE: Deadline. Time period.>> Subject to the 
availability of appropriations, not later than 240 days after the date 
of enactment of this Act, and not less frequently than monthly 
thereafter, the Director shall publish statistics relating to the dwell 
time of equipment used in intermodal transportation at the top 25 ports, 
including inland ports, by 20-foot equivalent unit, including--
            (1) total street dwell time, from all causes, of marine 
        containers and marine container chassis; and
            (2) the average out of service percentage, which shall not 
        be identifiable with any particular port, marine terminal 
        operator, or chassis provider.

    (d) Factors.--Subject to the availability of appropriations, to the 
maximum extent practicable, the Director shall publish the statistics 
described in subsection (c) on a local, regional, and national basis.
    (e) Sunset.--The authority under this section shall expire December 
31, 2026.

Original Title 46 Text

N/A.

Amended Text

N/A.

I left these sections in here to show how OSRA normally amends text of Title 46 and display the way posts of this series usually work.

Paragraph (a) Observations

The first paragraph, with its four subparagraphs, of OSRA’s sixteenth section is made up of definitions to add clarity to the regulation Section 16 creates in later paragraphs.

I won’t break down each definition or redefine their terms, but I will make an observation. It is clear from this set of definitions that the lawmakers are concerned with information about shipping equipment, and standard shipping containers in particular, that are not at the ports. And it’s easy to understand why.

Maldistribution of shipping containers, after hundreds of blanked (cancelled) sailings early in the pandemic, factored into the “supply chain crisis” that inspired politicians on both sides of the aisle to make shipping law changes. Information about the percentage of shipping containers that are unavailable is clearly relevant information for a smoothly operating supply chain and, thus, on the minds of the lawmaker(s) who wrote this section.

Paragraph (b) Observations

Paragraph (b) breaks down into two subparagraphs that are very distinct from each other, so let’s break down this section of today’s post into two subsections.

Subparagraph (1)

Subparagraph (1) defines who (ports, marine terminal operators, and chassis owners or providers) are to report information to the Director of the Bureau of Transportation Statistics (who “Director” was defined as previously). The Director of the Bureau of Transportation Statistics is to determine exactly what information needs to be reported. Here, subparagraph (1) references Title 44 because it sets regulation or policy around government required information in Chapter 35.

There’s nothing too difficult to understand here. The one observation is that the lawmakers didn’t put it upon themselves to decide exactly what information should be reported; they gave leeway to the Bureau of Transportation Statistics to figure out the specifics.

Subparagraph (2)

I find the second subparagraph of Paragraph (a) to be a little more interesting than the first. Only a little. According to this subparagraph, the Office of Management and Budget has to approve the information collection we were just talking about. That approval is to be based on the amount of government money available. It doesn’t make the information collection, and therefore Section 16, seem as important to the lawmakers as previous sections. Perhaps that’s why this little piece of legislation doesn’t get written directly into Title 46. On the other hand, the two month timeline from when OSRA is enacted puts a ticking clock on getting this information reporting in place and approved, which might give it some sense of urgency.

This subparagraph could be interpreted in the positive light of there being some monetary oversight regarding what Section 16 requires. Alternately, some might see it in the negative light that the government might be making unnecessary levels of legislation here, possibly causing more spending of resources on this than necessary.

Paragraph (c) Observations

The third main paragraph of this section is where the real meat is found. This brings together what a reader likely would have already suspected from the definitions and reporting paragraphs. Here we learn exactly what the lawmakers of OSRA want reported with the inclusion of Section 16: statistics relating to the unavailability of shipping containers and chassis at America’s top 25 ports.

While Paragraph (c) reveals the specific things the lawmakers want reported about to the Bureau of Transportation Statistics, it also gives the purpose of it and instructions to the bureau. The lawmakers want this data published for the public at least once a month. But again, the lawmakers make it clear this is all dependent upon available appropriations, which again makes it feel like this is not a top priority in OSRA.

Paragraph (d) Observations

Paragraph (d) is very short. It does again point out that this is “subject to the availability of appropriations,” but I won’t pound what that says to me into the ground. The lawmakers want the Director of the Bureau of Transportation Statistics to publish reports on the percentages of shipping containers and chassis that are unavailable on a local, regional, and national level. Perhaps collecting the data and publishing such reports every single month seems like a lot to OSRA’s writers, and they put the condition of available appropriations as an out for the Bureau of Transportation Statistics if the task seemed like too much. Ultimately, there’s nothing in this section that I can see that you wouldn’t be able to see for yourself, dear reader, so I won’t belabor it.

Paragraph (e) Observations

No real observation here. This just provides an end date for this reporting and publishing business, which is probably the real reason this doesn’t go into Title 46 itself. Section 16’s legislation comes to an end on December 31, 2026.

Conclusion

Section 16 sets up the reporting and publishing of data on the percentage of standard shipping containers and chassis that are away from the port terminals, thus, unavailable. It’s not a permanent rule and is, in fact, subject to available appropriations.

The lawmakers who wrote OSRA obviously see value in this data, but it is not one of the highest priorities of the act.

If you noticed something in Section 16 of OSRA that you think deserves more attention, please let us know in the comments section below. Perhaps you have a take on it that I didn’t consider or disagree with an observation I’ve made. We’d love to hear from you.

Stay tuned for when Decoding OSRA continues, looking at Section 17….

The post Decoding OSRA: Section 16. Dwell Time Statistics appeared first on Universal Cargo.

If you’re ever at a major U.S. port, take a look at the cranes looming over the container ships and see if you can spot any Made in China stickers on them. Did you know that about 80% of the cranes that lift containers off ships and put them on the docks in the U.S. are made by China? Now imagine China using those cranes for espionage and cyber attacks. I’m not describing the plot of some James Bond-type spy movie. The government is warning us right now that that’s a real possibility.

New Regulation Around Threat from Chinese-Made Cranes

U.S. ports are getting a new set of regulations to follow in case their cranes really are spy devices, as John Gallagher reports in a FreightWaves article:

Owners and operators of over 200 Chinese-made container cranes at U.S. ports will be subject to new cyber-risk management requirements aimed at reducing China’s ability to spy on America’s domestic supply chains.

The Coast Guard, on behalf of the Department of Homeland Security, announced yesterday that owners and operators of the Chinese-made cranes “should immediately contact their local Coast Guard Captain of the Port (COTP)” to obtain copies of Maritime Security Directive 105-4. The directive gives the new “cyber risk management actions” to follow.

I won’t be able to share the directive and new rules that will have to be followed at the ports because “The directive contains security-sensitive information and, therefore, cannot be made available to the general public.” But I will share the full text of the Coast Guard announcement at the end of this post.

How Are Cranes a Threat?

The Coast Guard announcement contains some explanation of how and why the Chinese-manufactured ship to shore (SPS) cranes are a threat:

By design, these cranes may be controlled, serviced, and programmed from remote locations, and those features potentially leave PRC-manufactured STS cranes vulnerable to exploitation, threatening the maritime elements of the national transportation system.

As such, additional measures are necessary to prevent a Transportation Security Incident in the national transportation system due to the prevalence of PRC-manufactured STS cranes in the U.S., threat intelligence related to the PRC’s interest in disrupting U.S. critical infrastructure, and the built-in vulnerabilities for remote access and control of these STS cranes.

Hunt for Threats on Cranes

The Coast Guard says an examination of the cranes for security threats is well underway, as Gallagher reports in his FreightWaves article:

At a White House briefing on Tuesday, Coast Guard Rear Adm. John Vann, who heads the agency’s cybercommand, said that his teams have “assessed cybersecurity or hunted for threats” on 92 of the cranes so far.

“Those assessments determine the cybersecurity posture, and the hunt missions actually look for malicious cyberactivity on the cranes,” Vann said. “We’ve almost canvassed about 50% of the existing cranes,” he added, but did not state whether security concerns were discovered on those cranes.

President Biden Allocates Billions for American-Made Cranes

The Biden Administration announced that serious money will be put into the American manufacture of STS cranes, as reported by Michael Angell in the Journal of Commerce:

The Biden Administration plans to spend $20 billion to bring the manufacturing of ship-to-shore cranes back to the US as the White House raises an alarm over the potential of Chinese-made cranes being used to launch a cyberattack on America’s port infrastructure. 

The White House said in a statement Wednesday the funding — to be made available over the next five years through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act — will bring “port crane manufacturing capabilities back to the US for the first time in 30 years.”  

Government Coordinates Warnings of Chinese Espionage

Meanwhile, the FBI and Department of Transportation’s Maritime Administration are getting in on the warnings of possible Chinese espionage in the U.S. supply chain. Angell reports:

FBI Director Christopher Wray testified before Congress this week that the Chinese government’s attempts at planting spyware and mounting cyberattacks on US infrastructure are “at a scale greater than we’d seen before.” US intelligence experts have warned that sensors and remote monitoring software installed in ZPMC cranes make the equipment vulnerable to hacking attacks.

…

…the Department of Transportation’s Maritime Administration (MARAD) issued an advisory that US ports need to be alert to the security risks of ZPMC [China’s Zhenhua Heavy Industries] cranes because the remote monitoring and similar features make them “vulnerable to exploitation.” 

MARAD also advised caution regarding the use of Logink, a logistics management software system developed by a Chinese government agency that is in use at 24 ports globally. The agency also warned about X-ray and cargo scanning equipment from a Chinese state-controlled entity called Nuctech due to its inability to screen for certain types of radioactive material. 

Conclusion

Foreign entities in the economically and security crucial U.S. ports have long been an issue. When I started writing about international shipping more than a decade ago, around 80% of U.S. port terminals were owned and operated by foreign companies. I touched on this issue last year when yet another such company, CMA CGM, acquired two more U.S. terminals at the Port of New York and New Jersey. The previous administration found it particularly concerning when a Chinese state owned company was gaining control of a Port of Long Beach Terminal.

President Trump, who launched a trade war against China, forced the sale of the Long Beach terminal because of the national security threat of China owning and operating the terminal. So the idea of China being a threat at the ports isn’t new, but it hasn’t gotten a great deal of attention.

The idea of cranes being espionage tools for China makes for good headlines. That’s also why it’s easy to suspect this as a political ploy in an election year. Is, has, or will China use the cranes for espionage or cyber attack on the U.S. supply chain? I don’t know, but if the possibility results in a bit more attention to the security of U.S. ports, and foreign entities in them, that at least seems like a good thing.

As promised, the full text of the Coast Guard’s announcement of Directive 105-4 is below.

Full Text of Coast Guard Announcement

This document is scheduled to be published in the
Federal Register on 02/23/2024 and available online at
https://federalregister.gov/d/2024-03822, and on https://govinfo.gov


DEPARTMENT OF HOMELAND SECURITY
Coast Guard
[Docket No. USCG-2024-0049]
Issuance of Maritime Security (MARSEC) Directive 105-4; Cyber Risk
Management Actions for Ship-to-Shore Cranes Manufactured by People’s Republic
of China Companies
AGENCY: Coast Guard, DHS.
ACTION: Notice of availability.
________________________________________________________________________

SUMMARY: The Coast Guard announces the availability of Maritime Security
(MARSEC) Directive 105-4, which provides cyber risk management actions for owners
or operators of ship-to-shore (STS) cranes manufactured by People’s Republic of China
(PRC) companies (PRC-manufactured STS cranes). The directive contains security-
sensitive information and, therefore, cannot be made available to the general public.
Owners or operators of PRC-manufactured STS cranes should immediately contact their
local Coast Guard Captain of the Port (COTP) or District Commander for a copy of
MARSEC Directive 105-4.

DATES: MARSEC Directive 105-4 is available on February 21, 2024.

FOR FURTHER INFORMATION CONTACT: For information about this document
call or e-mail Brandon Link, Commander, U.S. Coast Guard, Office of Port and Facility
Compliance; telephone 202-372-1107, e-mail Brandon.M.Link@uscg.mil.

SUPPLEMENTARY INFORMATION:

Background and Purpose

MARSEC Directive 105-4 provides cyber risk management actions for owners or
operators of PRC-manufactured STS cranes. Owners or operators of PRC-manufactured
STS cranes should immediately contact their local COTP or cognizant District
Commander for a copy of MARSEC Directive 105-4.
The Maritime Transportation Security Act’s implementing regulations in 33 CFR parts
101-105 are designed to protect the maritime elements of the national transportation
system. Under 33 CFR 101.405, the Coast Guard may set forth additional security
measures to respond to a threat assessment or to a specific threat against those maritime
elements. In addition, per 33 CFR 6.14-1, the Commandant “may prescribe such
conditions and restrictions relating to the safety of waterfront facilities and vessels in port
as the Commandant finds to be necessary under existing circumstances.”
PRC-manufactured STS cranes make up the largest share of the global ship-to-shore
crane market and account for nearly 80% of the STS cranes at U.S. ports. By design,
these cranes may be controlled, serviced, and programmed from remote locations, and
those features potentially leave PRC-manufactured STS cranes vulnerable to exploitation,
threatening the maritime elements of the national transportation system.
As such, additional measures are necessary to prevent a Transportation Security Incident
in the national transportation system due to the prevalence of PRC-manufactured STS
cranes in the U.S., threat intelligence related to the PRC’s interest in disrupting U.S.
critical infrastructure, and the built-in vulnerabilities for remote access and control of
these STS cranes.

Procedural

COTPs and District Commanders can access all MARSEC directives on Homeport by
logging in and going to Missions > Maritime Security > Domestic Ports and Waterway
Security > Policy. Owners and operators of PRC-manufactured cranes must contact their
local COTP or cognizant District Commander to acquire a copy of MARSEC Directive
105-4. COTPs or cognizant District Commanders may provide this MARSEC Directive
to appropriate owners and operators in accordance with SSI handling procedures.
Pursuant to 33 CFR 101.405, we consulted with the Department of State, Department of
Defense, Department of Transportation/Maritime Administration, Department of
Homeland Security, Transportation Security Administration, Cybersecurity and
Infrastructure Security Agency, and National Maritime Intelligence-Integration Office.
All MARSEC Directives issued pursuant to 33 CFR 101.405 are marked as SSI in
accordance with 49 CFR Part 1520. COTPs and District Commanders will require
individuals requesting a MARSEC Directive to prove that they meet the standards for a
“covered person” under 49 CFR 1520.7, have a “need to know” the information, as
defined in 49 CFR 1520.11, and that they will safeguard the SSI in MARSEC Directive
105-4 as required in 49 CFR 1520.9.

This notice is issued under authority of 33 CFR 6.14-1 and 101.405(a)(2) and 5 U.S.C.
552(a).

Dated: February 21, 2024.

Amy M. Beach,
Captain, U.S. Coast Guard,
Director of Inspections and Compliance.

The post Are Cranes at U.S. Ports Chinese Spy Tools? appeared first on Universal Cargo.

Crew Must Abandon Ship After Houthi Attacks

Perhaps the most damaging attacks in the Red Sea area so far happened on Sunday. Iran-backed Houthi rebels executed missile attacks upon a cargo ship in the Gulf of Aden, forcing the crew to abandon ship. There are conflicting reports, but the Houthi rebels claim they sank the ship. If it was not fully sunk, it certainly was taking on water and damaged badly enough that the crew had to evacuate. By all reports, the whole crew made it out and have been escorted to safety.

David Gritten & Joshua Cheetham reported in the BBC that the cargo ship was the Belize-flagged and British-registered Rubymar. They wrote that the UK government “condemned the attacks as ‘completely unacceptable’ and said the UK and its allies reserved the right to respond appropriately.”

Military Responses Only See Escalation Thus Far

So far, US and UK responses to Houthi attacks, largely in the form of air strikes, have obviously not stopped the attacks from continuing. It doesn’t even seem like they have slowed the Houthi attacks down at all.

According to the BBC article:

The Houthi movement’s spokesman also claimed its forces had attacked two US-owned cargo vessels, the Sea Champion and the Navis Fortuna, in the Gulf of Aden.

He added that Houthi air defences in the Red Sea province of Hudaydah had shot down a US MQ-9 Reaper unmanned aerial vehicle (UAV) “while it was carrying out hostile missions against our country on behalf of [Israel]”.

The Houthis’ evil anti-Jewish agenda of violence in the Red Sea began with attacks on ships that were somehow linked to Israel, even if it was old and out-of-date intel sometimes used to connect the ships to Israel. UK- and US-linked ships quickly became targets as well. Whether that was initially because the UK and US are ally countries of Israel or because they were protecting ships in the Red Sea is hard to tell.

Ultimately, no ships can truly feel safe in the Red Sea or Gulf or Aden. However, showing some sort of alignment with values of Iran and the Houthi might help secure passage. For example, Patrick Sykes reported in a Bloomberg article about a ship that changed its call sign to “All Crew Muslims” in order to safely sail through.

Of course, no one should want to align with the Houthi terrorists, whose attacks appear to be getting even more extreme.

Increasing Attack Capabilities

Gritten and Cheetham reported on newly discovered abilities for the Houthi rebels to execute “swarm attacks”:

US Central Command said its forces had carried out five strikes against three mobile anti-ship cruise missiles, one unmanned underwater vessel (UUV) and one unmanned surface vessel (USV) in Houthi-controlled areas of Yemen on Saturday after determining that they presented an imminent threat to US Navy ships and merchant vessels in the region.

It was the first time that US forces had identified a UUV, or submarine drone, being employed by the Houthis since the attacks began.

BBC security correspondent Frank Gardner says the discovery that the Houthis are deploying both USVs and UUVs is a worrying development. The concept of a “swarm attack” – launching a number of relatively cheap missiles and drones simultaneously at an enemy in the hopes of confusing and overwhelming their defences – is straight out of the playbook of the navy of Iran’s Revolutionary Guards.

It’s not surprising the Houthi would take strategy out of Iran’s playbook as Iran backs the Houthi, as well as Hamas and other terror organizations in the region. Under the Biden Administration’s watch, Iran has had a great deal more money for funding such terrorists, including ones who’ve made direct attacks on, and killed, U.S. soldiers. In apparent pursuit of an Iran nuclear deal that it’s hard to believe would be worth the paper it’s written on, the administration has softened sanctions, extended sanction waivers, and either failed or have not bothered with sanction enforcement on Iran. The results have been billions upon billions of dollars pouring into Iran’s coffers.

Thus, there’s a near unlimited funding source for the Houthi to continue attacks in the Red Sea. At this moment, there’s nothing to give any confidence they will stop anytime in the near future.

Ocean Freight Planning Looking Forward

The strategy carriers have mostly taken of diverting ships away from the Gulf of Aden, Red Sea, and, therefore, Suez Canal, will definitely continue. Perhaps I should say continue indefinitely. Attacks on container ships that do dare to sail the area, like the Rubymar, reinforce the decision to move ocean freight away from the sea portal that previously was traversed by about 12% of global ocean shipping.

Carriers currently have overcapacity, which helps absorb the problem of needing more ships to cover the same global shipping services because of the increased amount of sailing time in avoiding the Suez Canal. But perhaps a bigger danger is the availability of shipping containers.

One of the biggest factors during the pandemic’s supply chain crisis was maldistribution of shipping containers. Hundreds of blanked (cancelled) sailings at the beginning of the pandemic caused shipping containers to be in the wrong places in the world. Soon, carriers would deny containers to some shippers, like U.S. agricultural exporters, in favor of sending empty containers faster to more lucrative shipping routes. Hundreds of ships now redirected with longer shipping routes runs the risk of similar issues appearing with the availability of shipping containers.

At least shippers have gotten some good news recently with improvement at the Panama Canal. That gives some relief to the situation, as simultaneous disruption at the two canals presents incredible levels of difficulty for ocean shipping. So shippers really needed that relief. For now, they should be looking down the road, even to the peak season, without expecting relief at the Suez Canal. Shippers should plan on not being able to utilize the Suez Canal for the foreseeable future.

The post Red Sea Crisis Getting Worse Not Better appeared first on Universal Cargo.

It’s been a while since our last entry in this series, where we go through the Ocean Shipping Reform Act (OSRA) section by section, but we haven’t forgotten. We’re still only beginning to see how the changes to U.S. shipping law will affect businesses’ imports and exports as well as carriers’ and other industry stakeholders’ operations within maritime shipping. At Universal Cargo, we want to help shippers know how law changes will affect them. So what exactly does OSRA say and do? That’s what we find out in this series. And we’re over half way through examining exactly what our lawmakers changed in the U.S. Code dealing with shipping.

You probably know how it works by now, but in case you’ve stumbled upon this series in the middle, we give you the OSRA text; the text of the U.S. Code, usually in Title 46, before and after its amendments; and consider what those changes mean for U.S. importers and exporters.

Previously covered in this series:

• Series Introduction & Quick Coverage of Section 1
• Section 2
• Section 3
• Section 4
• Section 5
• Section 6
• Section 7
• Section 8
• Section 9
• Section 10
• Section 11
• Section 12
• Section 13
• Section 14

That means today we’re covering Section 15 of OSRA. Let’s see exactly what it says and changes…

Quick Overview

This section of OSRA makes four changes to Title 46 of the U.S. Code. However, those changes are more clerical than anything else. As lawmakers went about amending the code – changing, deleting, and adding sections, paragraphs, and subparagraphs – it sometimes requires references within the code to other parts of it to be amended. That’s all this section does. It corrects references in accordance with changes the lawmakers made to the code.

Section 15 Text

SEC. 15. TECHNICAL AMENDMENTS.

    (a) Section 41108(a) of title 46, United States Code, is amended by 
striking ``section 41104(1), (2), or (7)'' and inserting ``paragraph 
(1), (2), or (7) of section 41104(a)''.
    (b) Section 41109(c) of title 46, United States Code, as amended by 
section 8 of this Act, is further amended by striking ``section 41102(a) 
or 41104(1) or (2) of this title'' and inserting ``subsection (a) or (d) 
of section 41102 or paragraph (1) or (2) of section 41104(a)''.
    (c) Section 41305 of title 46, United States Code, as amended by 
section 12 of this Act, is further amended--
            (1) in subsection (c), by striking ``41104(3) or (6), or 
        41105(1) or (3) of this title'' and inserting ``paragraph (3) or 
        (6) of section 41104(a), or paragraph (1) or (3) of section 
        41105''; and
            (2) in subsection (d), by striking ``section 41104(4)(A) or 
        (B) of this title'' and inserting ``subparagraph (A) or (B) of 
        section 41104(a)(4)''.

Original Title 46 Text

§41108. Additional penalties

(a) Suspension of Tariffs.—For a violation of section 41104(1), (2), or (7) 1 of this title, the Federal Maritime Commission may suspend any or all tariffs of the common carrier, or that common carrier's right to use any or all tariffs of conferences of which it is a member, for a period not to exceed 12 months.

(b) Operating Under Suspended Tariff.—A common carrier that accepts or handles cargo for carriage under a tariff that has been suspended, or after its right to use that tariff has been suspended, is liable to the United States Government for a civil penalty of not more than $50,000 for each shipment.

(c) Failure To Provide Information.—

(1) Penalties.—If the Commission finds, after notice and opportunity for a hearing, that a common carrier has failed to supply information ordered to be produced or compelled by subpoena under section 41303 of this title, the Commission may—

(A) suspend any or all tariffs of the carrier or the carrier's right to use any or all tariffs of conferences of which it is a member; and

(B) request the Secretary of Homeland Security to refuse or revoke any clearance required for a vessel operated by the carrier, and when so requested, the Secretary shall refuse or revoke the clearance.

(2) Defense based on foreign law.—If, in defense of its failure to comply with a subpoena or discovery order, a common carrier alleges that information or documents located in a foreign country cannot be produced because of the laws of that country, the Commission shall immediately notify the Secretary of State of the failure to comply and of the allegation relating to foreign laws. On receiving the notification, the Secretary of State shall promptly consult with the government of the nation within which the information or documents are alleged to be located for the purpose of assisting the Commission in obtaining the information or documents.

(d) Impairing Access to Foreign Trade.—If the Commission finds, after notice and opportunity for a hearing, that the action of a common carrier, acting alone or in concert with another person, or a foreign government has unduly impaired access of a vessel documented under the laws of the United States to ocean trade between foreign ports, the Commission shall take action that it finds appropriate, including imposing any of the penalties authorized by this section. The Commission also may take any of the actions authorized by sections 42304 and 42305 of this title.

(e) Submission of Order to President.—Before an order under this section becomes effective, it shall be submitted immediately to the President. The President, within 10 days after receiving it, may disapprove it if the President finds that disapproval is required for reasons of national defense or foreign policy.

§41109. Assessment of penalties

(a) General Authority.—Until a matter is referred to the Attorney General, the Federal Maritime Commission may, after notice and opportunity for a hearing, assess a civil penalty provided for in this part. The Commission may compromise, modify, or remit, with or without conditions, a civil penalty.

(b) Factors in Determining Amount.—In determining the amount of a civil penalty, the Commission shall take into account the nature, circumstances, extent, and gravity of the violation committed and, with respect to the violator, the degree of culpability, history of prior offenses, ability to pay, and other matters justice may require.

(c) Exception.—A civil penalty may not be imposed for conspiracy to violate section 41102(a) or 41104(1) or (2) 1 of this title or to defraud the Commission by concealing such a violation.

(d) Prohibited Basis of Penalty.—The Commission or a court may not order a person to pay the difference between the amount billed and agreed upon in writing with a common carrier or its agent and the amount set forth in a tariff or service contract by that common carrier for the transportation service provided.

(e) Time Limit.—A proceeding to assess a civil penalty under this section must be commenced within 5 years after the date of the violation.

(f) Review of Civil Penalty.—A person against whom a civil penalty is assessed under this section may obtain review under chapter 158 of title 28.

(g) Civil Actions To Collect.—If a person does not pay an assessment of a civil penalty after it has become final or after the appropriate court has entered final judgment in favor of the Commission, the Attorney General at the request of the Commission may seek to collect the amount assessed in an appropriate district court of the United States. The court shall enforce the order of the Commission unless it finds that the order was not regularly made and duly issued.

§41305. Award of reparations

(a) Definition.—In this section, the term "actual injury" includes the loss of interest at commercial rates compounded from the date of injury.

(b) Basic Amount.—If the complaint was filed within the period specified in section 41301(a) of this title, the Federal Maritime Commission shall direct the payment of reparations to the complainant for actual injury caused by a violation of this part.

(c) Additional Amounts.—On a showing that the injury was caused by an activity prohibited by section 41102(b), 41104(3) or (6), or 41105(1) or (3) of this title, the Commission may order the payment of additional amounts, but the total recovery of a complainant may not exceed twice the amount of the actual injury.

(d) Difference Between Rates.—If the injury was caused by an activity prohibited by section 41104(4)(A) or (B) of this title, the amount of the injury shall be the difference between the rate paid by the injured shipper and the most favorable rate paid by another shipper.

(e) Attorney Fees.—In any action brought under section 41301, the prevailing party may be awarded reasonable attorney fees.

Amended Text

§41108. Additional penalties

(a) Suspension of Tariffs.—For a violation of paragraph (1), (2), or (7) of section 41104(a) 1 of this title, the Federal Maritime Commission may suspend any or all tariffs of the common carrier, or that common carrier's right to use any or all tariffs of conferences of which it is a member, for a period not to exceed 12 months.

(b) Operating Under Suspended Tariff.—A common carrier that accepts or handles cargo for carriage under a tariff that has been suspended, or after its right to use that tariff has been suspended, is liable to the United States Government for a civil penalty of not more than $50,000 for each shipment.

(c) Failure To Provide Information.—

(1) Penalties.—If the Commission finds, after notice and opportunity for a hearing, that a common carrier has failed to supply information ordered to be produced or compelled by subpoena under section 41303 of this title, the Commission may—

(A) suspend any or all tariffs of the carrier or the carrier's right to use any or all tariffs of conferences of which it is a member; and

(B) request the Secretary of Homeland Security to refuse or revoke any clearance required for a vessel operated by the carrier, and when so requested, the Secretary shall refuse or revoke the clearance.

(2) Defense based on foreign law.—If, in defense of its failure to comply with a subpoena or discovery order, a common carrier alleges that information or documents located in a foreign country cannot be produced because of the laws of that country, the Commission shall immediately notify the Secretary of State of the failure to comply and of the allegation relating to foreign laws. On receiving the notification, the Secretary of State shall promptly consult with the government of the nation within which the information or documents are alleged to be located for the purpose of assisting the Commission in obtaining the information or documents.

(d) Impairing Access to Foreign Trade.—If the Commission finds, after notice and opportunity for a hearing, that the action of a common carrier, acting alone or in concert with another person, or a foreign government has unduly impaired access of a vessel documented under the laws of the United States to ocean trade between foreign ports, the Commission shall take action that it finds appropriate, including imposing any of the penalties authorized by this section. The Commission also may take any of the actions authorized by sections 42304 and 42305 of this title.

(e) Submission of Order to President.—Before an order under this section becomes effective, it shall be submitted immediately to the President. The President, within 10 days after receiving it, may disapprove it if the President finds that disapproval is required for reasons of national defense or foreign policy.

§41109. Assessment of penalties

(a) General Authority.—Until a matter is referred to the Attorney General, the Federal Maritime Commission may, after notice and opportunity for a hearing, assess a civil penalty provided for in this part. The Commission may compromise, modify, or remit, with or without conditions, a civil penalty.

(b) Factors in Determining Amount.—In determining the amount of a civil penalty, the Commission shall take into account the nature, circumstances, extent, and gravity of the violation committed and, with respect to the violator, the degree of culpability, history of prior offenses, ability to pay, and other matters justice may require.

(c) Exception.—A civil penalty may not be imposed for conspiracy to violate subsection (a) or (d) of section 41102 or paragraph (1) or (2) of section 41104(a) 1 of this title or to defraud the Commission by concealing such a violation.

(d) Prohibited Basis of Penalty.—The Commission or a court may not order a person to pay the difference between the amount billed and agreed upon in writing with a common carrier or its agent and the amount set forth in a tariff or service contract by that common carrier for the transportation service provided.

(e) Time Limit.—A proceeding to assess a civil penalty under this section must be commenced within 5 years after the date of the violation.

(f) Review of Civil Penalty.—A person against whom a civil penalty is assessed under this section may obtain review under chapter 158 of title 28.

(g) Civil Actions To Collect.—If a person does not pay an assessment of a civil penalty after it has become final or after the appropriate court has entered final judgment in favor of the Commission, the Attorney General at the request of the Commission may seek to collect the amount assessed in an appropriate district court of the United States. The court shall enforce the order of the Commission unless it finds that the order was not regularly made and duly issued.

§41305. Award of reparations

(a) Definition.—In this section, the term "actual injury" includes the loss of interest at commercial rates compounded from the date of injury.

(b) Basic Amount.—If the complaint was filed within the period specified in section 41301(a) of this title, the Federal Maritime Commission shall direct the payment of reparations to the complainant for actual injury caused by a violation of this part.

(c) Additional Amounts.—On a showing that the injury was caused by an activity prohibited by paragraph (3) or (6) of section 41104(a), or paragraph (1) or (3) of section 41105, the Commission may order the payment of additional amounts, but the total recovery of a complainant may not exceed twice the amount of the actual injury.

(d) Difference Between Rates.—If the injury was caused by an activity prohibited by subparagraph (A) or (B) of section 41104(a)(4), the amount of the injury shall be the difference between the rate paid by the injured shipper and the most favorable rate paid by another shipper.

(e) Attorney Fees.—In any action brought under section 41301, the prevailing party may be awarded reasonable attorney fees.

Commentary on Section 15?

There’s not much to say about Section 15, as even its title informs that the changes it makes are only technical. If it weren’t for the commitment to go through OSRA section by section, I probably would have skipped past 15. It is, of course, important that when referencing activities expressly defined by the Title 46, as the parts amended by Section 15 of OSRA do, that they reference the correct sections. Thus, Section 15 of OSRA importantly does cleanup duty.

I did include the full sections of Title 46 to which this section of OSRA makes clerical corrections. All three sections deal with penalties and reparations for breaking shipping law.

Conclusion

Perhaps you, the reader, have more to say on Section 15 than I do. If so, please do share in the comments. Otherwise, just know that this is a necessary section, cleaning up references rather than actually making any substantial changes to the law.

Stay tuned for when Decoding OSRA continues, looking at Section 16….

The post Decoding OSRA: Section 15. Technical Amendments appeared first on Universal Cargo.

The Panama Canal Situation

The drought that lowered the water level of Gatun Lake, which feeds the Panama Canal, made mainstream news with many using it to feed into the climate change narrative. With it also being a naturally occurring El Niño year, which tends to cause less rainfall in Panama, feared rose that the drought conditions would get much worse. October seemed to confirm those fears. October is part of Panama’s “rainy” season, but precipitation levels were reported as the lowest since 1950.

By the time November hit, restrictions tightened on the Panama Canal. Rainfall actually started improving in November, but by the time December hit, the Iran-backed Houthi attacks on ships in the Red Sea captured the news. With restrictions still going strong on the Panama Canal, now both of international shipping’s major canals were suffering disruption.

Despite shippers facing double bad news, conditions at the Panama Canal were quietly improving in December. In fact, on December 15th, the Panama Canal Authority put out an advisory to shippers, announcing a loosening of its restrictions on the number of ships allowed to cross the canal. Things were not back to normal, but the outlook for January and February majorly improved.

Restrictions were supposed to limit the number of ships allowed to transit the Panama Canal per day from a normal of about 36 to 22 in December, 20 in January, and only 18 in February. Instead of a decrease in January, the Panama Canal Authority changed course to increasing the number of ship crossings per day to 24. Improvement has helped things move from looking bleak for the canal in February to extremely optimistic.

Carriers Returning Services to Panama Canal

Keith Wallis reported in the Journal of Commerce (JOC) yesterday (February 12th) on services carriers are bringing back to the Panama Canal:

Hapag-Lloyd said THE Alliance restored transits through the canal on some of its trans-Pacific to US East Coast EC2 services from January. 

“Yes, the EC2 service is transiting through the Panama Canal again,” a Hapag-Lloyd spokesperson told the Journal of Commerce. 

Ocean Network Express (ONE) said Panama Canal transits would be fully restored on east and westbound sailings on the EC2 service from Feb. 11 with the departure of Tayma Express from Norfolk, Va. At least four eastbound EC2 services are due to use the canal in February, schedules showed. 

ONE, in a customer advisory last week, said due to the improving situation at the canal, other services are also being considered for a resumption of Panama transits. And the carrier said it was ending its Panama Canal contingency surcharge on US and Canadian exports “due to operation improvements within the canal.” 

THE Alliance has also increasingly switched its EC6 service back to using the canal rather than via the Cape of Good Hope, although a final decision is still made “on a case-by-case basis depending on available vessel bookings through the canal,” the Hapag-Lloyd spokesperson added. 

ONE vessel schedules show three EC6 eastbound sailings from Mobile have used the Panama Canal since Jan. 28, while a March 3 sailing is also expected to use the waterway. 

The EC2 service calls at US East Coast ports including Norfolk, Charleston and Savannah and ports in China and South Korea such as Shanghai, Ningbo and Busan. The EC6 service connects the US Gulf ports of Mobile and Houston with Busan, Kaohsiung and ports in China including Hong Kong, Shenzhen and Shanghai. 

The situation on the Europe-Latin America trade is “OK, since for the LatAm-Europe services — South America West Coast Express [SWX] and Mediterranean, Central America and South America West Coast Express [MSW] — we have most of the canal transits pre-booked,” the Hapag-Lloyd spokesperson said. 

Things are not 100% back to normal at the Panama Canal, but that the situation is improving is clear. And it couldn’t be needed more.

Additionally, there are also truck and rail options across Panama that carriers are still utilizing, which help the situation too. I won’t share all the details here, but Wallis wrote about them and other boosting services to help international cargo flow, so you can get more information of how carriers are using those options in his JOC article.

Ultimately, shippers could probably use some good news right now, so I’m happy to be able to share this with Universal Cargo blog readers who haven’t already heard about the much needed improvement at the Panama Canal.

The post Good News Shippers: Panama Canal Situation Is Much Improved appeared first on Universal Cargo.

During a five-year time span, the ILWU executed illegal labor actions against the Port of Portland. Despite rulings against it, the union persisted in slowing down operations at the port in order to gain control over two jobs that had always belonged to another union, the International Brotherhood of Electrical Workers (IBEW). The jobs involved plugging and unplugging reefer containers. You know, electricity-related work that it’s not surprising electrical workers did. But, hey, the jobs were at a port, and the ILWU is adamant about taking control of every job at the ports.

ILWU’s slowdowns became so disruptive to operations at the Port of Portland that ocean freight carriers had to stop calling on the port with container ships altogether. This was, of course, extremely expensive for the terminal operator ICTSI Oregon, but also for shippers, and even for the ILWU itself.

Before even getting to the millions the union is now paying, there were about three years when no container ships were calling on the Port of Portland. That means three years of lost union jobs. But maybe it was worth it to the union for those members’ jobs to no longer be there. After all, the ILWU got to flex its muscle, showing everyone how powerful it is.

The ILWU won’t be paying ICTSI nearly as much as it could have been. Originally, the US District Court ordered the ILWU to pay $93 million. So, the ILWU and its Local 8 chapter, which executed the labor actions, filed for bankruptcy. Now the union has settled with ICTSI, as Bill Mongelluzzo reported last week in a Journal of Commerce (JOC) article:

The International Longshore and Warehouse Union (ILWU) and ICTSI Oregon said Thursday they have settled a long-running legal dispute in a deal that will pay ICTSI $20.5 million and end the ILWU’s Chapter 11 bankruptcy case. 

“The ILWU settlement arises from the parties’ participation in several days of mediation during ILWU’s chapter 11 bankruptcy case, which will be voluntarily dismissed as part of the terms of the settlement,” the parties said in a joint statement. 

If you want to revisit the drama, here are some related posts Universal Cargo published through the years:

The post Sad Port Story Finally Concludes with ILWU Paying Over $20M appeared first on Universal Cargo.

So are shippers right to complain? Are the surcharges carriers hitting shippers with unfair cost increases?

Tomorrow, the U.S. Federal Maritime Commission (FMC) will hold a public hearing on the issue.

FMC Hearing on Red Sea-Related Surcharges

The surcharges carriers implemented were approved by the FMC. They had to be in order to be put in place as quickly as they were. The commission will have to explain why it allowed the surcharges in the hearing tomorrow. Certainly, the issue of the fairness of the charges will be raised.

There’s no secret freight rates shot way up after Iran-backed Houthi Rebels began attacking ships in the Red Sea. In fact, Michael Angell reports in the Journal of Commerce (JOC):

Since major liner operators began rerouting container ships via southern Africa’s Cape of Good Hope in mid-December, spot container rates have, on average, doubled globally, according to Drewry. The world container index from the maritime consultancy has risen from $1,661 per FEU on Dec. 18 to $3,824 per FEU by Jan. 29.

There has been some recent relief to the hikes imposed on shippers, but freight rates remain very high compared to the period leading up to the attacks. Certainly, the attacks have added costs to carriers. Hundreds of sailings have been diverted away from the Red Sea and Suez Canal, taking many ships on the long trip around the southern tip of Africa, where the Cape of Good Hope is located.

However, many complain that the cost of those diversions is nowhere near the amount carriers are billing in surcharges. In a JOC article about the FMC hearing, Teri Errico Griffis reports:

Some shippers, such as the US-based Agriculture Transportation Coalition (AgTC) have pushed the FMC to force carriers to offer more transparency into the economics behind the recent surcharges, citing analysts’ reports that show the charges exceeding the costs of ship diversions. Peter Friedmann, AgTC’s executive director, cautioned in a Jan. 2 commentary in the Journal of Commerce that the surcharges could become a new “profit center” for ocean carriers. 

Ocean Carriers Making Money Off Red Sea Crisis

Indeed, reports are coming out of improved financial outlooks for carriers in the wake of the Red Sea situation. For example, Mike Wackett reported in the Loadstar about the Japanese ocean carrier One Network Express (ONE) going from an operating of loss of $248M in the last three months of 2023 to expectations of profits for the first quarter of 2024, thanks directly to the huge rate increases because of the Red Sea crisis.

In his article, Wackett quoted another major carrier, MOL, as saying “it expected its containership business to ‘secure a certain profit level, due to the recent situation in the Middle East’.”

Special Surcharge Rules

Perhaps carriers should have the right to increase freight rates as much as market conditions allow. However, the surcharges resulting from the Red Sea crisis are special charges and come with special rules, particularly when dealing with U.S. shipping law. Griffis reports:

Under the US Shipping Act, carriers must provide 30 days’ notice to customers before implementing special charges but can petition the FMC for a waiver of that rule. The commission in recent weeks has granted waivers as carriers were forced to quickly reroute vessels around southern Africa to avoid escalating attacks on commercial shipping by Houthi militants based in Yemen. 

The surcharges sought for a dry FEU range from $400 to $2,700, while refrigerated surcharges vary from $600 to $3,000 per FEU, according to FMC filings by APL, CMA CGM, Hapag-Lloyd, Maersk, Mediterranean Shipping Co., and Ocean Network Express (ONE). 

Shippers Want Transparency

Especially for small to medium shippers, these kinds of charges have enormous impacts on their businesses. It’s no wonder they would want at least some semblance of transparency in how these kinds of numbers are reached by carriers. Plus, the fees are separate from the actual spot market for freight rates. Or perhaps it would be better to call them “in addition to” the spot market freight rate increases.

Griffis writes:

[FMC Chairman Daniel Maffei] said in a situation such as what’s occurring in the Red Sea, “there’s no question that there will be added costs” to keep carriers and their crew safe. But customers have an equal interest in how the surcharges are determined, how they’re implemented and what happens if the carriers’ diversions end up costing less, or more, than anticipated, he said.

The surcharges are a particularly sensitive topic because they are being implemented amid fast-rising spot rates linked to the Red Sea shipping crisis. Ultimately, however, whether customers pay the surcharges is not guaranteed, as the final price paid comes down to negotiations between the carrier and the shipper or forwarder. 

Hearing Shouldn’t Change Much

Shippers will be able to dispute fees but shouldn’t expect the FMC to change its position on granting the carriers permission to implement them. That’s clear from the FMC quotes Griffis shares at the end of his article:

If shippers want to dispute any surcharges, Maffei said they can go through the typical FMC channels, adding more information will be provided at the Feb. 7 hearing. But Maffei noted that the FMC granting special permission for the surcharges is not necessarily “exceptional” — the uncertain security situation in the Red Sea is.  

“This is precisely the situation when these permissions come up unexpectedly. There is no way the carrier could have provided 30 days’ notice,” he said. “And if you don’t [grant the waiver] the implications could be far worse, such as a breakdown in [shipping] lanes.” 

Carriers Targeting Freight Forwarders and Small to Medium Shippers?

Large shippers probably aren’t complaining as reports are showing minimal financial impact for them. Meanwhile, medium to small shippers, using freight forwarders to deal with carriers, are feeling targeted. That appears to be a rightful feeling for them and their freight forwarders, as reports are showing they are being targeted.

Angell reported in his JOC article:

Three ocean forwarders and four beneficial cargo owners (BCOs) that spoke to the Journal of Commerce about their contract of carriage terms agreed that ocean carriers have been opportunistically targeting certain customers for higher rates and surcharges.  

An US agent for a Hong Kong-based ocean freight consolidator said ocean carriers were pushing FAK rates on ocean forwarders of $5,000 per FEU to the US West Coast and $7,000 per FEU to the East Coast for cargo loading in the second half of January. 

However, he said major BCOs with contract commitments that move upward of 60,000 FEUs annually are still paying their contracted rates of $1,250 per FEU to the West Coast and $2,350 per FEU to the East Coast.  

“Only the non-vessel-operating common carrier [NVO] is taking the big increases,” the agent said. The source said other generous contract terms for higher-volume shippers, such as 15 days of free time for containers and chassis, also remain intact, indicating an unwillingness by ocean carriers to upset larger customers. 

“They don’t want to rip off the big boys for short-term gain since the market is still soft,” the agent added. “But many small importers who use NVOCCs can’t ship anymore.” 

Stay Up to Date

Universal Cargo is closely monitoring the crisis in the Red Sea as it does constantly with the international shipping industry and situations that impact it. You can keep up to date with the things that affect your importing and exporting by subscribing to Universal Cargo’s blog. And, of course, we’re always here to help you with your international shipping needs.

The post As Carriers Squeeze Shippers, FMC to Hold Hearing on Red Sea-Related Surcharges appeared first on Universal Cargo.

Parisa Hafezi and Andrew Hayley reported in Reuters:

Chinese officials have asked their Iranian counterparts to help rein in attacks on ships in the Red Sea by the Iran-backed Houthis, or risk harming business relations with Beijing, four Iranian sources and a diplomat familiar with the matter said.

The discussions about the attacks and trade between China and Iran took place at several recent meetings in Beijing and Tehran, the Iranian sources said…

“Basically, China says: ‘If our interests are harmed in any way, it will impact our business with Tehran. So tell the Houthis to show restraint’,” said one Iranian official briefed on the talks, who spoke to Reuters on condition of anonymity.

China is Iran’s biggest trade partner. The lopsided nature of the trade between China and Iran, as described by Hafezi and Hayley, should give China significant leverage on Iran:

Chinese oil refiners, for example, bought over 90% of Iran’s crude exports last year, according to tanker tracking data from trade analytics firm Kpler, as U.S. sanctions kept many other customers away and Chinese firms profited from heavy discounts.

Iranian oil, though, only accounts for 10% of China’s crude imports and Beijing has an array of suppliers that could plug shortfalls from elsewhere.

China’s leverage would be stronger if the Biden administration hadn’t loosened sanctions on Iran since President Biden took office, increasing the country’s koffers by billions of dollars, which helped Iran pump money into terrorist organizations like Hamas and the Houthi rebels. Iran has even funded scores of attacks directly on U.S. soldiers in the region.

U.S. officials said the drone used to kill 3 U.S. soldiers and injure many more in Jordan was Iran-made. President Biden vowed to respond against Iran. The president now has even said he’s decided on the response. We’ll have to wait and see what that response is. However, with his history of moves made abroad, from his botched exit from Afghanistan to now, doesn’t give much confidence in his decisions.

Unfortunately, China getting Iran to rein in the attacks in the Red Sea seem more realistic than the Biden Administration succeeding there.

The language used in the Reuters article isn’t as strong as China telling Iran it will cut off trade if Iran doesn’t stop the attacks. However, there is a subtext of threat to the friendlier-sounding words reported:

The Iranian sources said Beijing had made it clear it would be very disappointed with Tehran if any vessels linked to China were hit, or the country’s interests were affected in any way.

Very disappointed. I’ll bet you’ve heard that language from your own parents growing up. “I’m not angry, just very disappointed.” Yeah, we all know really means you’re angry as hell, Mom.

I don’t think Iran wants to test what what a very angry–ahem–very disappointed China will do. Hopefully, that will result in Iran reining in the Houthi rebels, if they’re even controllable by Iran at this point, and quelling the attacks on ships in the Red Sea.

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Smoothly navigating international trade requires mastering your approach to using Incoterms to define your shipping terms and responsibilities. Therefore, let’s explore the world of Incoterms, unlocking their power to streamline your global business operations and offering clarity in your import and export endeavors.

Understanding Incoterms

When doing international shipping, understanding Incoterms is essential. These three-letter abbreviations, like FOB and CIF, serve as codes that define responsibilities and costs in a trade transaction. Incoterms specify who is responsible for transportation, insurance, and customs clearance tasks. By grasping the significance of Incoterms, you can avoid misunderstandings, reduce risks, and negotiate more effectively with your trading partners.

These terms help clarify global commerce, safeguarding buyers’ and sellers’ understanding of their roles and obligations. Thus, whether you’re an importer or exporter, mastering using Incoterms guarantees successful international trade.

Key Incoterms Explained: EXW and FOB

Two key Incoterms, EXW (Ex Works) and FOB (Free On Board) play significant roles in international trade. EXW places the responsibility on the buyer, as the seller’s obligations end once the goods are made available at their premises. This option gives buyers control but requires more logistics effort. In contrast, FOB transfers responsibility to the seller until the goods are loaded onto the ship.

FOB is commonly used for sea freight, and it simplifies the process for buyers by involving the seller in the transportation process. When deciding between EXW and FOB, consider factors like your familiarity with the shipping process, logistical capabilities, and risk tolerance. EXW may suit experienced importers, while FOB provides a smoother transition for newcomers to international trade, making choosing the right Incoterm for your specific situation crucial.

Key Incoterms Explained: CIF and DDP    

Two important Incoterms in international trade are CIF (Cost, Insurance, and Freight) and DDP (Delivered Duty Paid). CIF places the seller’s responsibility to cover transportation and insurance costs until the goods reach the port of destination. This option is beneficial for buyers as it minimizes risk. On the other hand, DDP makes the seller responsible for all costs, including duties and taxes, until the goods are delivered to the buyer’s location.

DDP offers convenience to the buyer but requires significant effort from the seller. When deciding between CIF and DDP, consider factors like your familiarity with international trade regulations, your ability to handle customs clearance, and your risk tolerance. CIF is suitable when you want to control the transportation and insurance aspects, while DDP simplifies the process for buyers by offering a comprehensive solution.

Avoiding Common Pitfalls

Avoiding common pitfalls when you use Incoterms to define your shipping and responsibilities is important for successful logistics risk mitigation. Misunderstandings, documentation errors, and misapplied Incoterms can lead to costly disputes. Establishing clear communication with your trading partners to avoid these issues is important. Verify that both parties fully understand the chosen Incoterms and their respective responsibilities. Thoroughly document all aspects of the transaction, including contracts, invoices, and shipping records.

In addition, stay informed about ever-evolving trade regulations and customs procedures to prevent compliance issues. Finally, consider working with experienced professionals or logistics experts who can offer guidance in navigating complex international trade scenarios. By proactively addressing these common pitfalls, you can reduce risks, improve efficiency, and build stronger relationships with your international business partners, certifying the smooth flow of goods across borders.

Negotiating Incoterms in Your Contracts 

Negotiating Incoterms in your contracts is an important step in establishing clear terms and expectations in international trade. When finalizing agreements with your trading partners, engaging in open and transparent discussions regarding the chosen Incoterms is essential. Check that both parties are on the same page, fully understanding their roles and responsibilities throughout the shipping process.

Seek legal counsel to draft contracts that accurately reflect the agreed-upon Incoterms and mitigate any potential disputes if necessary. Effectively negotiating Incoterms can help prevent misunderstandings, reduce risks, and lead to smoother international trade operations. Clear and well-negotiated Incoterms strengthen partnerships, fostering trust and cooperation in the global business landscape! Therefore, invest the time and effort needed to get your Incoterms right in your contracts, and it will pay off in the long run.

Use Incoterms to Define Your Shipping Terms and Responsibilities: Logistics and Storage Solutions

Logistics and storage play an important role in supporting the use of Incoterms in international trade. That is where a trusted partner like Helix Moving & Storage DC can make a significant difference. They offer top-notch moving and storage services tailored to the unique needs of businesses engaged in global trade. At the same time, they provide state-of-the-art storage facilities in DC, and not only, with climate control and 24/7 security, providing safety and integrity for your products.

However, when selecting storage and logistics solutions for your goods, also consider factors such as the location of the storage facility, security measures, and accessibility. Whether temporarily storing inventory or needing assistance with transportation and warehousing, a good partner can always help streamline your supply chain.

Documenting Incoterms in Your Transactions     

Properly documenting Incoterms in your transactions is fundamental to improving your import and export logistics. Including these terms in your contracts, invoices, and shipping documents helps all parties understand their roles and responsibilities. Accurate documentation helps prevent disputes and facilitates the smooth movement of goods across international borders.

In addition, maintaining organized records of past transactions can be invaluable for future reference and analysis. You demonstrate professionalism and contribute to efficient and compliant international trade operations by consistently documenting Incoterms in your transactions. Make it a standard practice in your business, and you’ll find that it enhances your import and export logistics.

Using Technology to Manage Incoterms

Leveraging technology to use Incoterms is a great approach in today’s global marketplace. Advanced software solutions can streamline choosing and implementing Incoterms for international trade transactions. These tools help you select the most suitable terms and automate tasks like generating compliant documentation. Technology enhances the efficiency and accuracy of your supply chain operations by reducing manual work and the risk of errors.

Additionally, these platforms often provide access to up-to-date information on trade regulations and industry best practices, keeping you compliant. Embracing technology in Incoterms management guarantees you stay competitive, minimize risks, and optimize your import and export logistics.

The Boons of Mastering Incoterms

Harnessing the knowledge of how to use Incoterms to define your shipping terms and responsibilities is pivotal for success in international trade. Making solid choices and having mutual understanding with your partners can minimize risks, reduce disputes, and optimize your import and export logistics. So, embark on this journey confidently, knowing that mastering Incoterms will propel your global business endeavors toward prosperity.

This was a guest post by Juan Turcios.

Author Bio

Juan Turcios is a seasoned expert in the transportation and moving industry, with a keen focus on the intricacies of international shipping and logistics. His extensive experience in the field is reflected in his in-depth knowledge of Incoterms and their practical applications in global trade. Juan’s insights are invaluable for businesses that streamline their import and export operations, ensuring compliance and efficiency in a complex international market.

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These three carrier alliances, tying all of the world’s major ocean shipping lines together with vessel sharing agreements, have dominated international shipping for almost a decade. When news broke, a year ago, that the 2M Alliance, between the two largest ocean freight carriers (MSC and Maersk), is splitting, it was only a matter of time before a shift happened with the other two alliances.

Speculation felt like guessing the plot points of a cheesy novel. Which alliances would fall or split? What new alliances might form? The first big turning point after the inciting incident of Maersk and MSC breaking up came last week.

Hapag-Lloyd Is Leaving THE to Form Gemini with Maersk

News dropped that Hapag-Lloyd is leaving the THE Alliance to form a new one with Maersk. Greg Knowler knows all about it, and reported on the news in a Journal of Commerce (JOC) article:

Maersk and Hapag-Lloyd on Wednesday unveiled a new operational partnership called “Gemini Cooperation” that will begin early next year and revolve around a global “hub-and-spoke” network of owned or controlled terminals in key locations. 

Hapag-Lloyd will exit THE Alliance and link up with Maersk in February 2025 after the dissolution of the Maersk-Mediterranean Shipping Co. 2M Alliance. The Gemini Cooperation will operate a fleet of 290 vessels with an overall capacity of 3.4 million TEUs serving the major global trade lanes. 

The cornerstone of the new partnership will be the hub-and-spoke network the carriers believe will enable them to achieve schedule reliability above 90%, a level that has not been achieved in years and would differentiate Gemini from other alliances.

Majorly Improved Carrier Reliability?

That 90% reliability mark would be incredible for the international shipping industry, in which carriers are notoriously unreliable when it comes to reaching ports with goods on schedule. To be fair to carriers, there are many factors outside of their control that contribute to this problem. Congestion at any major shipping hub around the world can send ripples through supply chains, causing a chain reaction of delayed arrivals. However, carriers’ practices around blanked (cancelled) sailings, often to limit capacity and put upward pressure on freight rates, come into play. A lot.

The arrangement of the carriers into three alliances controlling global shipping has given carriers much higher control over capacity. It’s something I’ve been outspoken about, calling on regulatory agencies to reconsider approval of these massive vessel sharing agreements that result in reduced competition and increased risk in the international shipping industry. Warnings like mine were validated when the alliances coordinated for hundreds of blanked sailings at the beginning of the pandemic for fear of losses from expected reduced demand. The mass blanked sailings massively contributed to the supply chain crisis that followed.

If Maersk and Hapag-Lloyd’s Gemini Cooperation does achieve 90% reliability, it may spark competition from other carriers and their alliances to increase their reliability. Shippers would welcome that kind of competition in the industry.

What Now for THE and Ocean Alliances

Over a quarter of THE Alliance’s tonnage comes from Hapag-Lloyd. It’s hard to imagine that won’t cause the alliance, or its individual remaining members, to scramble, maybe even attempt to poach carriers from the Ocean Alliance. Despite this, THE is saying “it’s business as usual in 2024,” according to another JOC article from Knowler:

Ocean carriers within THE Alliance on Wednesday pledged their “unwavering commitment” to the vessel-sharing agreement — for at least this year — following last week’s surprise announcement by Hapag-Lloyd that it was leaving to join the new Gemini Cooperation with Maersk. 

“We wish to emphasize our unwavering commitment to maintaining a robust cooperation throughout 2024, ensuring that the highest standards of cooperation and exceptional service are delivered to our stakeholders and the industry at large,” member lines Hapag Lloyd, HMM, Yang Ming Marine Transport and Ocean Network Express (ONE) said in a joint statement. 

Of course, that’s only an unwavering commitment for the rest of this year. It sounds like they’re already trying to figure out what they’ll do afterward. I expect we’ll hear more big carrier alliance arrangement news well before this year is out. So far, the Ocean Alliance is the only one to stand pat. We’ll see if that will last long.

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The seamless movement of goods across international boundaries is crucial for businesses involved in global commerce. Among the many terms and regulations controlling these transactions, “Freight on Board” (FOB) is a critical idea that defines the crucial point at which ownership and responsibility for goods shift between sellers and buyers.

This guide intends to simplify the complexities of FOB, serving as a helpful resource for importers and exporters alike. From its basic meanings to the subtle differences between FOB Origin and FOB Destination, let’s explore the core principles that underpin this international trade term.

Key Takeaways

• Crucial for importers and exporters, FOB outlines the location where the buyer assumes shipping costs and risks, influencing trade agreement terms. Clarity minimizes uncertainty, ensuring a smooth transfer and enhancing the efficiency of global trade.
• FOB terms play a pivotal role in a sales contract, necessitating a precise definition of ownership transfer, responsibilities, and the allocation of risks.
• Strict adherence to FOB terms is paramount, providing clarity on financial implications in unforeseen events during transportation and ensuring effective risk mitigation strategies are in place.

Definition of Basics of FOB

It is an international trade term indicating the starting point at which responsibility and ownership for goods move from the seller to the buyer during shipment. It is also known as Free on Board. The terms are used interchangeably to describe a shipping agreement and signify the same rules and conditions regarding the transfer of risk and costs in international transactions.

Understanding FOB is crucial for importers and exporters as it outlines essential aspects of the shipping and delivery process. In global trade, FOB defines the location where the buyer pays the freight shipping costs and risks associated with transporting the goods, influencing the terms and conditions of the trade agreement.

This clarity minimizes uncertainty, ensuring a smooth transfer of goods and facilitating transparent negotiations. Determining ownership and responsibility at a defined location enhances the efficiency and reliability of global trade transactions.

FOB Origin Vs FOB Destination

FOB Origin and FOB Destination represent two variations of the FOB international shipping term, specifying when ownership and responsibility for goods transfer between the seller and the buyer.

FOB Origin

In FOB Origin transactions, the buyer assumes control of freight costs, and risks associated with transportation from the moment of loading. This arrangement gives the buyer more control over the shipping process, carrier selection, and shipment timing, influencing the overall logistics strategy.

Ownership Transfer

It occurs when the shipping goods are loaded onto the carrier at the seller’s premises. At this point, the buyer assumes ownership, taking on transportation’s associated costs and risks. This transfer outlines when the buyer gains control over the shipped goods, influencing logistics decisions and contractual obligations in the trade transaction.

Responsibilities

In FOB Origin transactions, the seller’s responsibilities include:

• Preparing and packaging the goods for export.
• Loading the goods onto the specified carrier at their premises.
• Completing export customs clearance.

On the other hand, the buyer assumes responsibilities such as

• Paying for transportation costs.
• Managing import customs clearance.
• Unloading and transporting the goods from the destination port onwards.

This division of duties traces each party’s distinct responsibilities in facilitating the seamless movement of goods from the seller’s warehouse to the buyer.

FOB Shipping Point

Under FOB Origin, the buyer has the majority of the shipping control. The buyer takes responsibility for the shipping process as ownership and responsibility are transferred when the seller’s location is where the carrier is loaded with the goods. This involves planning the shipment, selecting the carrier, and deciding on the routing. The buyer’s influence extends to logistics decisions, and freight charges, allowing for strategic choices in transportation methods and ensuring alignment with their specific requirements and preferences.

FOB Destination

In FOB Destination transactions, the seller retains control, bears costs, and assumes risks associated with transportation until the goods reach the agreed-upon destination. With this arrangement, the seller has greater control over the logistics planning, carrier selection, and shipping process until the items arrive at the buyer’s location.

Ownership Transfer

It occurs when the goods reach the buyer’s specified destination. Until this point, the seller retains ownership, covering the associated costs and risks of transportation. The transfer marks the exact moment in the transaction where the buyer takes custody of the received items, affecting contractual obligations and logistical choices.

Responsibilities

In FOB Destination transactions, the seller’s responsibilities include:

• Preparing and packaging the goods for export.
• Loading them onto the specified carrier.
• Completing export customs clearance.

Additionally, the seller is responsible for transportation costs, import customs clearance, and the unloading and transportation of the goods from the destination port to the buyer’s specified location. This distribution of responsibilities delineates each party’s distinct roles in ensuring the secure and efficient delivery of goods to the buyer’s destination.

FOB Shipping Point

In FOB Destination, shipping control primarily rests with the seller’s shipping dock. Until the goods reach the buyer’s specified destination, the seller maintains authority over the shipping process, including carrier selection, routing, and overall logistics planning.

The seller’s influence extends until the goods reach the agreed-upon destination. This arrangement allows the seller to strategically manage the transportation process and ensure the secure and timely delivery of the goods to the buyer’s designated location.

FOB and Incoterms

Apart from FOB, there are other International Commercial Terms (Incoterms) that you need to learn about. These terms are a universal language, providing clarity and consistency in trade agreements. These standardized terms, published by the International Chamber of Commerce, define the rights and responsibilities of buyers and sellers in international transactions, resolving risks and uncertainties.

FOB vs EXW

FOB designates ownership transfer when goods are loaded on the carrier at the seller’s location, with the buyer taking responsibility for the shipping. In contrast, EXW (Ex Works) places maximum responsibility on the buyer, as the ownership transfers at the seller’s premises, and the buyer manages the entire shipping process. The buyer pays the costs and covers the risks from the point of origin to the destination.

FOB vs CIF

FOB transfers ownership at the loading point onto the carrier at the seller’s location, with the buyer taking responsibility for shipping. In CIF (Cost, Insurance, Freight), ownership transfers when the ship’s rail goods are loaded, but the seller covers main carriage costs and provides insurance until the destination port. With a CIF agreement, the seller has more responsibility, paying for the transport costs and insurance, influencing cost distribution and risk allocation.

FOB vs DAP

FOB transfers ownership, with transport cost and insurance responsibilities, at loading on the carrier at the seller’s location, with the buyer taking control. DAP, however, shifts ownership and responsibility at the buyer’s specified destination, while the seller pays all the costs and risks until unloading. With FOB, the buyer takes responsibility. Meanwhile, DAP places more responsibility on the seller for the transport costs, streamlining the delivery process to the buyer’s designated destination.

Benefits of FOB

The use of FOB in international shipping offers several benefits for both sellers and buyers:

• Clear Allocation of Freight and Shipping Costs. FOB delineates costs, specifying when the buyer assumes responsibility for transportation expenses. This transparency aids in budgeting and financial planning.
• Control Over Transportation. FOB allows the buyer to control the shipping process, carrier selection, and the timing of shipments. This can offer benefits to businesses with particular logistics needs.
• Flexibility in Shipment Carrier Option. FOB enables the buyer to choose the carrier based on their preferences and requirements, providing flexibility in managing the transportation of goods.
• Risk Mitigation. FOB helps in clarifying the transfer of risks. Once ownership transfers, any damages or losses during transportation are typically the buyer’s responsibility, reducing ambiguity and potential disputes.
• Simplified Logistics Planning. The clear transfer point in FOB simplifies logistics planning for both parties, making it easier to coordinate the shipment and ensuring a smoother process.
• Cost-Efficiency. FOB can lead to cost savings for buyers who choose cost-effective shipping methods and carriers based on their specific needs.
• Negotiable Terms. Negotiations between the buyer and the seller determine the FOB terms, allowing them to tailor the agreement to their specific circumstances and preferences.
• Sustainability for Certain Industries. FOB is particularly suitable for industries where the buyer understands transportation logistics, allowing them to optimize shipping processes and costs.

To harness the advantages of FOB, one must engage in meticulous negotiation and take into account the distinct needs and preferences of both parties participating in the global trade transaction.

FOB and Insurance

FOB in global trade does not inherently include insurance coverage for the goods transported. While FOB outlines the transfer of ownership and responsibility, it is crucial to note that insurance is not automatically provided. Specifying insurance paid separately on freight invoice is essential to safeguard against potential risks, damages, or losses when transporting goods.

This separation allows parties to tailor insurance coverage to their needs, ensuring comprehensive protection. Please clarify insurance terms to ensure the buyer can avoid unforeseen events. Therefore, explicit agreement on insurance details is essential for a well-defined and secure global trade transaction under FOB terms.

Documentary Requirements

In FOB transactions, several key shipping documents are vital in facilitating the smooth transfer of goods from the seller to the buyer. Two crucial documents in this context are the Bill of Lading (B/L) and the Commercial Invoice.

Bill of Lading

The Bill of Lading is a crucial document issued by the arrival port to the carrier or its representative, confirming the receipt of goods and detailing their type, quantity, and condition.

Functions

• Receipt. It is a receipt for the goods, confirming that they are now on the carrier.
• Document of Title. Acts as a document of title, allowing the buyer to claim the goods upon arrival at the destination’s shipping port.
• Transfer of Ownership. The transfer of the Bill of Lading may signify the transfer of ownership rights.

Commercial Invoice

The Commercial Invoice is a document issued by the seller, providing a detailed account of the goods being sold.

Functions

• Identification. Identifies the buyer and seller, specifying the goods’ quantity, description, and value.
• Customs Clearance. Aids in customs clearance by providing the necessary tax assessment and compliance information.
• Payment. Serves as a basis for payment, enabling the buyer to understand the costs associated with the purchased goods.

Shipping Costs with FOB

In an FOB arrangement, the allocation of shipping costs between the seller and the buyer depends on whether it’s FOB Origin or FOB Destination:

FOB Origin

• Seller’s Responsibility. The seller bears the costs related to transporting the goods to the port of shipment, covering expenses such as inland transportation, export duties, and loading onto the vessel.
• Buyer’s Responsibility. The buyer takes on the responsibility and costs of loading the goods onto the vessel. This includes ocean freight, unloading costs at the destination port, import duties, and further transportation to the final destination.

FOB Destination

• Seller’s Responsibility. The seller assumes the expenses for transporting the goods to the destination port, encompassing inland transportation, export duties, and loading onto the vessel.
• Buyer’s Responsibility. The buyer assumes responsibility and covers the costs from the destination port onward. This includes ocean freight, unloading costs, import duties, and transportation to the final destination.

Key Considerations

Negotiability of FOB Terms

Negotiable between the buyer and the seller, FOB terms offer flexibility to customize the agreement according to their needs. The parties can collaboratively determine various aspects, such as the precise point of transfer, the selection of the carrier, and specific responsibilities. This negotiation allows for a customized arrangement that aligns with both parties’ preferences and logistical considerations.

Legal Implications and Obligations

Comprehending the legal ramifications of FOB terms is essential to prevent disputes and ensure a seamless international trade transaction. These legal considerations include the following:

• Contractual Agreement. FOB terms are typically outlined in a sales contract. Both parties must clearly define their obligations, responsibilities, and the specific terms governing the transfer of ownership and risk.
• Risk of Loss. FOB outlines the shift of the risk of damage or loss of goods to the buyer from the seller. Adhering to this agreement is crucial to ascertain which party assumes the financial consequences of any unforeseen events during transportation.
• Customs Compliance. The buyer and seller must comply with customs regulations and documentation requirements. Please do so to avoid delays, fines, or other legal issues.
• Incoterms Compliance. FOB is one of the Incoterms published by the International Chamber of Commerce. Adhering to the agreed-upon FOB terms ensures compliance with international trade standards and regulations.
• Documentary Requirements. Proper documentation, including the Bill of Lading and Commercial Invoice, must be prepared and exchanged by the FOB terms to facilitate the smooth movement of goods and customs clearance.
• Dispute Resolution. Clear FOB terms can serve as a basis for resolving disputes. If disagreements arise, parties can refer to the agreed-upon terms to find resolutions, preventing protracted legal battles.

Both parties must fulfill their obligations, mitigate risks, and maintain a positive and trustworthy business relationship to ensure clarity, transparency, and legal compliance in FOB agreements.

Final Thoughts

Understanding freight on board or free on board (FOB) is essential for importers and exporters in the complex world of global trade. As businesses delve into the negotiation process, the flexibility of FOB terms allows tailoring agreements to align with unique circumstances and preferences.

Legal implications, documentary requirements, and dispute-resolution mechanisms form the pillars of a secure and transparent FOB agreement. In conclusion, armed with this comprehensive guide, businesses can confidently embark on international trade journeys, leveraging FOB’s power for efficient, reliable, and legally compliant global transactions.

This was a guest post by Diana Zheng.

Author Bio

Diana leads the growth marketing initiatives at Stallion Express. As a personal trainer turned digital marketer, Diana is obsessed with equipping eCommerce entrepreneurs with everything they need to scale their online businesses. You can catch her doing yoga or hitting the tennis courts in her spare time.

The post Freight on Board (FOB) Explained: A Comprehensive Guide for Importers and Exporters appeared first on Universal Cargo.

Embarking on the global trade journey brings unparalleled opportunities, but it’s not without its challenges. International shipping comes with its own set of risks that can jeopardize your cargo. From damaged goods to the risk of theft, the hazards are real.

So, in this guide, we’ll show you how to steer clear of these risks and insure your cargo for the better. We’ll also share a step-by-step guide on how to choose the right insurance partner.

Let’s dive in!

Potential Risks & Threats to Cargo

An uninsured cargo is always vulnerable to these threats and risks:

1.   Damaged Cargo

Shipping across borders exposes cargo to handling uncertainties, where mishandling or unforeseen incidents can lead to damage. Fragile items (such as glassware, musical instruments, technology products, etc.) are particularly at risk. 

2.   Lost Cargo

The vast expanse of international routes increases the likelihood of cargo going astray. Sometimes shipments are lost completely — and sometimes, misplacement could lead to delayed arrival on destination. If the items being shipped are time-sensitive (such as eatables), they may expire due to the delay .

3.   General Average

General average basically refers to a large loss or a deliberate loss during shipment. For example, when a fire occurs, lots of goods may be lost. Similarly, in certain situations — some goods may be offboarded to secure the rest of the goods for a safe journey ahead. These situations may occur due to legal issues, natural accidents, or as a consequence of human error. 

4.   Stolen Products

Theft is an unfortunate reality in the logistics landscape. Whether due to organized crime or opportunistic theft, cargo security is paramount. This is particularly true for small-sized products like Peshawari chappals, shawls, spoons, or other such good that are being transported in quantities of hundreds or thousands. It’s difficult to track if a pair of Peshawari chappal or one shawl is stolen. But if small thefts occur at multiple checkpoints, the loss can be significant.

How Does Insurance Help?

1.   Peace of Mind

In the unpredictable world of international shipping, peace of mind is a priceless commodity. Insurance alleviates the stress of potential financial losses, allowing businesses to focus on growth and expansion without the constant worry of unforeseen circumstances.

2.   Protects Cash Flow

Unforeseen events can disrupt cash flow and strain financial resources. Cargo insurance acts as a financial safeguard. It ensures that your business remains resilient in the face of unexpected challenges, along with protecting your bottom line and financial stability.

3.   Acts as a Safety Net

According to the NCSC  (National Cargo Security Council), the global financial loss due to damaged freight is over $50 billion. Most shipment carriers only offer a compensation of $2 per pound, meaning you’ll only get $2,000 for a shipment of 10,000 pounds. It’s nearly nothing!

Insurance, on the other hand, guarantees that you retrieve an almost equivalent amount. Even if the loss occurs, the insurance acts as a safety net!

4.   Safeguards Against Theft

Theft is a pervasive risk in international shipping. Cargo insurance serves as a robust defense against theft. It offers financial compensation that enables businesses to recover swiftly and maintain the integrity of their supply chain.

How to Insure Cargo?

As promised, here’s a practical guide to help you ensure that your cargo is adequately protected:

1. Assess Your Needs

Before diving into the insurance market, conduct a comprehensive assessment of your cargo and shipping requirements. Consider the nature of your products, shipping routes, and the potential risks involved. This foundational step will guide you in selecting the most suitable insurance coverage for your specific needs.

2. Understand Insurance Types

Cargo insurance comes in various forms, each tailored to specific risks. Common types include:

• All-Risk
• Named Perils
• Total Loss Only

Familiarize yourself with these options and choose coverage that aligns with the unique challenges your cargo may face during transit.

3. Work with Reputable Insurers

Research and choose insurers with a proven track record in cargo insurance. Look for companies with a global presence and a history of efficiently handling claims. Read customer reviews and seek recommendations to ensure the credibility and reliability of your chosen insurer.

4. Negotiate Terms and Coverage

Engage in open and transparent discussions with your insurance provider. Clearly communicate your cargo’s specifics and negotiate terms that offer comprehensive coverage.

Be mindful of deductibles, coverage limits, and potential exclusions that could be applicable. Customizing your insurance policy to fit your unique needs is key to maximizing its effectiveness.

5. Implement Risk Management Practices

While insurance provides financial protection, implementing proactive risk management practices is equally crucial. So, consider investing in robust packaging, proper labeling, and secure loading practices to minimize the likelihood of damage or loss.

6. Document and Communicate Clearly

In order to be able to claim your insurance, you need to have documented proof. So, maintain accurate records of your shipments, including invoices, packing lists, and shipping documents.

Communicate clearly with your insurer throughout the process. Make sure you provide timely and detailed information in the event of a claim.

8. Monitor and Evaluate Performance

Regularly monitor the performance of your chosen insurance coverage. Evaluate its effectiveness in mitigating risks and providing the expected financial protection.

If necessary, be prepared to adjust your insurance strategy to better align with the evolving demands of your business and the global shipping landscape.

Final Words

When it comes to global trade, securing your cargo with insurance is not just a choice; it’s a strategic imperative. It can effectively tackle unpredictable challenges and serve as your guardian.

Before we sign off, here’s a bonus tip: focus on cultivating robust relationships with your logistics partners; a collaborative approach enhances the protective shield of insurance!          

This was a guest post by Arslan Hassan.

Author Bio:

Arslan Hassan, an electrical engineer and the founder of The Pro Linkers, has assisted numerous businesses in building a robust online presence. His passion lies in facilitating the online growth of brands and companies.

The post International Shipping: Why Insuring Your Cargo Is Important? appeared first on Universal Cargo.

A CBS News video reports that the Iran-backed Houthi rebels, who have been attacking ships in the Red Sea, hit the U.S. cargo ship Gibraltar Eagle with a missile strike off the coast of Yemen in the Gulf of Aden, which connects the Indian Ocean and Arabian Sea to the Red Sea. From the anti-ship ballistic missile, “the vessel suffered limited damage to a cargo hold but is stable and is heading out of the area.” There were no injuries reported.

The attack follows U.S. and U.K. cooperative air strikes across Yemen, targeting Houthi forces in response to the Houthi attacks that have been happening in the Red Sea. The air raids obviously did not deter Houthi rebels from launching missiles at ships. They also fired an anti-ship cruise missile, after the air raids, at the U.S.S. Boone Destroyer in the Red Sea, but the missile was shot down by a fighter jet.

Unfortunately, this means the situation in the Red Sea is only escalating, which for shippers means…

Ongoing Diversions from Red Sea for Foreseeable Future, According to Geopolitical Analylists

According to a Journal of Commerce (JOC) article by Mark Szakonyi, geopolitical analysts see ship diversions from the Red Sea and Suez Canal to down and around southern Africa’s Cape of Good Hope to stay away from Houthi attacks to continue for the foreseeable future.

While it’s too soon to determine what impact joint US-UK air strikes on the Houthis will have, experts warn it’s unlikely to deter the Iran-backed group from future attacks. The Houthis — seeing their regional influence rise and galvanized by wider anger among Arab states amid the Israel-Hamas war — have plenty to gain by keeping up their attacks via drones and cruise and ballistic missiles, according to Jack Kennedy, associate director of country risk for the Middle East and North Africa at S&P Global Market Intelligence.

“The group is unlikely to be deterred,” Kennedy told the Journal of Commerce….

A US aircraft carrier and submarines hit more than 60 Houthi-linked targets at 16 sites in Yemen last week, followed up by two subsequent strikes. 

While the attacks may have helped US forces weaken the ability of militants to target commercial ships, they won’t likely deter the Houthis or their Iranian backers, said Bruce Jones, a geopolitical analyst at the Brookings Institution. Being widely dispersed across western Yemen, the Houthis can easily move, hide and launch drone strikes from anywhere, he said. 

“We should expect to see continued uncertainty in the Red Sea in the days and probably weeks ahead,” Jones said. 

There’s nothing surprising about what the geopolitical experts said. Frankly, with this article being published today (January 16th), after the Houthi militants have continued attacking after the air raids, any layman following the news could tell you the U.S.-U.K. air strikes did not stop Houthi attacks and ship diversions will continue.

With the much longer transit times of ships going around the whole continent of Africa…

It Takes More Ships

More ships are required to handle the longer routes around Africa while keeping all the other port to port services carriers offer going. Bottom line, it takes more ships to transport the same amount of cargo.

Regular readers of Universal Cargo’s blog likely already know that more ships and capacity have been and are entering the international shipping waters. Many analysts thought carriers were bringing too many ships, too much capacity, into the market. That increased capacity beyond likely growth of demand was likely to put downward pressure on freight rates, which shippers like but can be very bad for ocean freight carriers. Now, those added ships look like a good thing for carriers, at least in the short-term.

Szakonyi points to the new and incoming vessels as the capacity being available to handle longer transits:

… container lines have plenty of ships to deploy on these now-longer services that require more vessels to keep to schedule. Container capacity is expanding 10% this year from 2023 while demand growth will be between 3% to 4%, according to the Baltic and International Maritime Council (BIMCO).

However, all the carriers don’t seem quite as set on ships as Szankonyi makes it sound. According to a Miller Time (Greg Miller) article in FreightWaves, container lines are scrambling to rent more ships to handle the situation.

This scrambling demand means higher rates for chartering ships. Of course, the higher cost of shipping will likely be passed on to shippers, who have already seen freight rates spike in the wake of the Red Sea attacks.

Miller Time reports:

“This week saw a scramble for prompt tonnage,” said MB Shipbrokers (formerly Maersk Broker) in a market report on Friday, referring to ships that can be chartered immediately.

“Owners have certainly become more bullish and are pushing for higher-than-last-done levels in all segments and most regions.” Charter rates are headed higher, “specifically for short periods of three to six months’ duration,” said MB Shipbrokers.

Shipbroker Braemar reported Sunday: “Chartering activity [has] further improved. Various prompt vessels across all sizes and regions [are] seeing increased interest. Charter rates as well as periods are witnessing a firming trend.”

…

“Despite a continued influx of newbuilding tonnage of all types, demand for most sizes of charter-market ships … remains strong. The crisis in the Red Sea, with most carriers now avoiding the area, is in part contributing to the market’s brisk activity,” said Alphaliner.

Because of the already mentioned ships entering the waters, 2024 was expected to be a weak year for chartering ships. That means the current supply of ships available to be chartered is not up to the influx in demand, putting even more upward pressure on chartering costs. Miller Time writes about how most of the charter tonnage out there from non-operating owners (NOOs) is already tied up in long-term leases.

During the supply chain crisis, there was heavy demand to charter ships, so NOOs were able to dictate terms for not only historically high rates but also forcing container lines to take multi-year leases. Miller Time demonstrated how most of these ships are already chartered with the following data:

Among the U.S.-listed NOOs, Danaos (NYSE: DAC) has 90% of its fleet already locked up on charters through the end of 2024. Charter coverage of Costamare (NYSE: CMRE) is 87% for 2024, with Global Ship Lease (NYSE: GSL) at 82% and Euroseas (NASDAQ: ESEA) at 70%.

It all adds up to…

Conclusion

Ultimately, the ongoing and intensifying situation in the Red Sea and longer shipping routes to avoid it mean continuing upward pressure on freight rates. I know that’s something shippers don’t like to hear, but at least we are coming up on a slower time of year for international shipping. The lower demand after the Chinese New Year starts is a downward pressure on rates. The potential for some relief for shippers in the near future is something you can read about in our post:

Good News for Shippers in Wake of Red Sea Attacks & High Freight Rates

In the meantime, we’re looking at overall upward pressure on freight rates at the moment. And for a look at freight rate behavior projections for the year, check out our last post:

2024 Expert Freight Rate Outlook in Wake of Red Sea Attacks & Rate Spikes

The post Escalations in Red Sea, More Diversions, More Ships, More Freight Rate Pressure appeared first on Universal Cargo.

How even did the experts expect freight rates to behave in 2024?

Let’s round up a bunch of industry professional opinions for 2024 freight rates and see some updated expert outlooks in the wake of the Red Sea attacks.

General Combined Outlook Heading into 2024

Not surprisingly, experts’ outlooks on freight rates for 2024 are mixed. However, a majority of international shipping industry professionals expected freight rates to decline in the first half of the year. The second half is where opinions diverged more often. Some experts believed freight rates would continued to decline while others predicted a potential rebound in the latter half of 2024.

Five common key factors influencing freight rates are often brought up by the experts….

Factors Influencing Freight Rates in 2024:

• Global Economic Slowdown: A potential global recession could lead to decreased demand for goods, putting downward pressure on freight rates.
• Excess Shipping Capacity: The ongoing supply chain issues of 2021 and 2022 led to a surge in new ship orders, which are now entering the market and creating an oversupply of shipping capacity. That will potentially drive down freight rates.
• Port Congestion: While port congestion has eased compared to the peak of the pandemic, it can still cause delays and disruptions, impacting costs and influencing rates.
• Geopolitical Tensions: Ongoing conflicts and political instability, like but not limited to what we’ve seen with the wars in Ukraine and Israel, can disrupt trade routes and raise insurance costs, impacting freight rates. This often creates upward pressure on rates.
• Fuel Prices: Fluctuations in oil prices can significantly impact shipping costs, with higher prices leading to increased freight rates.

Let’s get more specific with…

Expert Outlooks

Despite a mixed bag in outlooks, freight rates declining in 2024 was a common theme before the freight rate spike following the Red Sea attacks took place. Here are some of the expert companies and their outlooks for the year:

• UPS Supply Chain Solutions: They predict relatively flat rates for the first nine months of 2024, with a potential for growth and a return to peak season in Q4.
• S&P Global: They expect freight rates to continue declining in 2024, with significant pressure on shipping company profitability.
• Xeneta: Their 2024 Ocean Freight Shipping Outlook report highlights six key factors impacting the market, with a cautious outlook for the first half of the year and a potential for upward correction later.
• Wicker Park Logistics: They see a mixed picture, with LTL (less than container load) rates remaining stable, TL (truckload) contract rates potentially improving, and continued challenges for the ocean freight market.

Here’s a prominent voice from different sectors of the international shipping industry on 2024 freight rates:

Air Freight:

• Eric Kulstad, Vice President of Global Accounts at Airblox: “We expect air freight rates to remain under pressure in Q1 due to continued economic uncertainty and weak demand. However, a gradual recovery is possible later in the year, particularly for certain high-value goods and industries.”

Ocean Freight:

• Maersk Line CEO Søren Skou: “The first half of 2024 will likely see continued downward pressure on ocean freight rates due to overcapacity and weak demand. However, we remain optimistic about a gradual recovery in the second half, especially if peak season demand rebounds.”

Intermodal:

• Jett McCray, President of the Intermodal Association of North America: “We’re seeing renewed interest in intermodal transportation from shippers seeking cost-effective alternatives to truckload shipping. This could lead to some stabilization or even modest growth in intermodal rates in 2024.”

LTL:

• Gene Seroka, Chairman and CEO of the American Trucking Associations: “The LTL market remained relatively stable in 2023, and we expect this trend to continue in 2024. Capacity may tighten slightly later in the year, but overall rates are likely to remain predictable.”

Overall, the outlook for freight rates in 2024 was uncertain before the Red Sea attacks happened. However, downward pressure was generally expected for the beginning of the year. Economic and capacity factors played largely into first half falling freight rates. Looking across expert opinions, there was a decent amount of optimism (though maybe not such a positive from shippers’ perspective) for a potential rebound in freight rates later in the year. That potential rebound was dependent upon economic recovery and peak season demand.

However, because of Houthi Rebels, backed by anti-Israel Iran, targeting container ships in the Red Sea, keeping container ships from traversing the Suez Canal when tightening restrictions for crossing the Panama Canal were already happening, the start of 2024 for freight rates was very different than expected.

Impact of Red Sea Attacks

Freight rates soared in the immediate aftermath of the Red Sea attacks. The fallout on shipping included the following:

• The attacks have caused port closures, rerouting, and increased insurance costs, adding significant surcharges to shipping routes traversing the Red Sea.
• These disruptions directly impact Asian-European and Asian-East Coast US lanes, which previously saw significant price drops.
• Uncertainty regarding future attacks creates a volatile market environment, making long-term predictions challenging.

Additional Considerations:

• Geopolitical developments in the region and potential escalation of violence could further exacerbate the Red Sea situation.
• Alternative routes bypassing the Red Sea, like the Cape of Good Hope, are longer and more expensive, but may become more popular if disruptions continue.
• The long-term impact of the attacks on supply chains and regional trade patterns remains to be seen.

After the Red Sea attacks, many industry professionals updated their 2024 freight rates outlook….

Updated Expert Outlooks

• S&P Global: While they still predict overall downward pressure on freight rates in 2024, they acknowledge the Red Sea situation could lead to shorter-term spikes and regional imbalances.
• Xeneta: Their revised outlook emphasizes the Red Sea disruptions as a wild card, increasing their caution for the first half of the year and suggesting a more volatile market than previously anticipated.
• Maersk Line CEO Søren Skou: While maintaining optimism about a second-half recovery, he acknowledges the Red Sea situation creates additional uncertainty and may delay the normalization of freight rates.
• FreightWaves: Recent articles highlight the significant impact of the attacks on specific lanes, with experts predicting sustained high rates for affected routes even if overall market trends show decline.

Conclusion:

The Red Sea attacks have injected a new layer of complexity and uncertainty into the 2024 freight rate outlook. While predictions for a general downward trend in rates still hold, expect volatility and potential spikes, especially on affected routes. Shippers should closely monitor the situation, explore alternative options, and – for BCOs (beneficial cargo owners who deal directly with carriers – seek flexible contracts to navigate the evolving market landscape.

The decreased shipping demand from the arrival of the Chinese New Year next month could help bring spiking freight rates down and improved stability of freight as carriers adjust to alternative and longer shipping routes, as discussed in the previous blog post.

By staying informed and adaptable, shippers can minimize the impact of situations like the attacks in the Red Sea on their shipping costs and increase smoother deliveries of their goods throughout 2024. It’s an ongoing objective of Universal Cargo’s blog to do just that: keep you updated on information that provides a more comprehensive and current perspective on international shipping and its freight rate outlooks, factoring in the recent developments like what’s happening in the Red Sea.

Thus, keep coming back for more about what’s happening in international shipping, and feel free to contact us anytime to help you with your importing and exporting needs.

The post 2024 Expert Freight Rate Outlook in Wake of Red Sea Attacks & Rate Spikes appeared first on Universal Cargo.

However, relief could be coming soon thereafter, once the Chinese New Year arrives on February 10th.

Michael Angell, like a messenger of God, delivered words of hope in a Journal of Commerce (JOC) article

… [Philip Damas, the head of Drewry Shipping’s supply chain practice] said he expects the rate surge to subside as demand eases following Lunar New Year and ocean carriers deploy more ships in their service strings and update schedules to account for longer transits.  

“The next five weeks leading to Chinese New Year will be very difficult for shippers and for shipping, but Drewry believes shipping has more than enough capacity to do the ship diversions around Africa and that spot rates will decline again after Chinese New Year,” he said. 

Obviously, that doesn’t mean freight rates will plummet instantly and ships will have smooth sailing through the Suez Canal on February 10th, but we should see a period of improving rates and stability for shippers that begins in February. The largest driving force will be the decrease in shipping demand that takes place during the Chinese New Year.

With the Chinese New Year comes the Chinese Spring Festival holiday. While the holiday itself is 7 days long, celebration goes on for 15 days, shutting down factories in China. It’s usually a month before factories can resume normal operations, and it is not uncommon for them to be impacted for two months. That’s why there’s typically a shipping surge that takes place right before the Chinese New Year as retailers and other businesses that import from China rush to restock after the Christmas and holiday shopping season has ended and the shutdowns in China take place.

The time of year of the attacks in the Red Sea, causing hundreds of container ships to divert routes from the Suez Canal during the shipping industry’s surge before Chinese New Year, is an aggravating factor for the situation shippers are in.

Panama Canal Movement Improvement

Another timing-related aggravating factor is the drought already happening at the Panama Canal. Carriers were planning to route more ships through the Suez Canal because the drought has been limiting the number of ships that can go through the Panama Canal per day. But Angell has good news on that front as well:

…with Panama Canal transits now expected to reach a total of 24 ships per day compared with an earlier forecast of 18, trans-Pacific services face less disruption than originally thought, according to a report issued last week by M+R Spedag Group. 

That’s very good news for U.S. shippers. Prognostications were extremely bad when Suez Canal disruption was first added to Panama Canal congestion. The drought and ship restrictions at the Panama Canal are certainly not over, but the route is far from unviable. And shipping stability for U.S. shippers is much better than many shipping industry experts feared. Angell’s JOC article elaborates with more from the M+R Spedag Group report:

While carriers in THE Alliance made a Suez routing a contingency plan for US East and Gulf coast services, 2M’s Maersk and MSC and Ocean Alliance’s CMA CGM and Cosco Shipping have kept routing ships via Panama Canal, the report said.  

Vessels still face delays between five and seven days going through the Panama Canal, but those delays are “still significantly less than the additional steaming time for a Suez/Cape transit,” according to M+R Spedag.  

“When lines announced plans to reroute services from Panama to the Suez Canal, then subsequently altered those plans further by bypassing Red Sea routes, many were quick to assume that a massive wave of service disruption would impact the trans-Pacific trade,” the report said. “Despite the noise, trans-Pacific services have remained relatively stable.”

That’s the good news I’d like to leave you with as we continue into the new year of 2024. Shipping stability is much better for U.S. shippers than expected when the Red Sea attacks began and improvement on that stability along with some relief from the high freight rates we’re seeing right now should be arriving soon.

The post Good News for Shippers in Wake of Red Sea Attacks & High Freight Rates appeared first on Universal Cargo.

Myanmar’s maritime landscape boasts seven major ports, each playing a vital role in the nation’s international trade. The primary gateway, the Port of Yangon, shoulders approximately 90% of Myanmar’s international maritime trade, strategically positioned at the confluence of the Yangon River, Pazundaung Creek, and Bago River.

Amidst these ports, the Myanmar International Terminal, known as Thilawa Port, stands out as the largest terminal in the country. Situated near the Thilawa Special Economic Zone, it accommodates RoRo ships and container vessels, handling diverse cargo types with cutting-edge port equipment.

Despite these advancements, Myanmar’s shipping industry has encountered significant challenges since 2020. Widespread protests and a military coup led to suspended shipping lines, causing container shipment delays and reducing imports. Logistic hurdles surfaced due to insufficient labor at shipping ports, hindering the movement of containers.

As of March 2021, container exports decreased by roughly 70%, reflecting the impact of these disruptions. Exports in Myanmar also witnessed a decline from the first to the second quarter of 2023, emphasizing the ongoing challenges faced by the shipping industry.

For international shippers engaging with Myanmar, it’s crucial to understand the diverse cargo handled at these ports. From rice and coal to metal, general cargo, and RoRo shipments, the range of goods transiting Myanmar’s ports is extensive.

In terms of vessels, a total of 23 ships, including container ships, general cargo ships, tankers, and those carrying palm oil, frequent the ports. Despite challenges, over 55% of cargo ships arrive on time, highlighting the resilience of the shipping sector amidst adversity.

However, payment problems add an additional layer of complexity. Government actions, including hoarding diesel imports, have led to power shortages, while the deepening fuel crisis and rising costs pose challenges for companies involved in the shipping industry.

To address these issues, international shipping companies must navigate the evolving landscape of Myanmar’s ports. Shifting from ocean freight to inter-modal transportation, leveraging strategic storage facilities, and understanding the intricacies of payment structures can contribute to smoother operations in this dynamic environment.

As Myanmar strives to overcome its challenges, collaboration between international shipping entities and local stakeholders becomes imperative. By adapting to the changing dynamics and supporting the resilience of Myanmar’s shipping sector, companies can navigate the complexities and contribute to the nation’s economic recovery.

This was a guest post by James Raussen, Eaint Hmue Htut, and Ye Yint Zaw Win.

Author Bios

Eaint Hmue Htut, is a year 12 student at Kings Yangon International School in Yangon. Her research and interests include Global Affairs, and Race Cars. 

Ye Ying Zaw Win is also a year 12 student at Kings Yangon International School in Yangon, Myanmar. He enjoys Economics, Architecture, and an avid singer when not studying. 

Both are Level A students (the UK terminology for Advanced Placement), 18 years of age, and plan on studying in the U.K. hopefully next year. 

The post Navigating Myanmar’s Maritime Challenges: Insights for International Shipping appeared first on Universal Cargo.

Usually, the biggest shipping news stories of the year will be covered in the year’s top blog posts. Of course, if most of the top-viewed posts are about the same storyline (like the ILWU contract negotiations), we’ll go with shipping news storylines countdowns to give more variety. That wasn’t the case this year, with the 2M alliance breaking up, trouble at the canals, and – of course – ILWU contract negotiations and port disruption making the list.

Going with the top viewed international shipping blog posts also means we get an extra bonus: finding out how many guest contributors made the top ten list!

I’ll give you a hint. It’s three. But I’m not telling you who they are or where they landed on the list. You’ll have to scroll below to find out.

I did post these a little differently this year. Instead of writing a little blurb on each post as we count them down, I dropped in our preview links to each story. These include excerpts from the beginning of each post, so you can read and find out if you want to click on the post’s title to read the full article.

All right, that’s enough preamble. Let’s count them down from number ten to the most viewed blog post of 2023!

#10 COSCO Predicted to Take Down Ocean Alliance

#9 The Challenges of Shipping Oversized Cargo and How to Navigate Complex Logistics

#8 ILWU & PMA Finally Resume Contract Negotiations

#7 How MSC and Maersk’s 2M Alliance Split Will Affect Shippers

#6 What Do Shippers Do When Longshore Negotiations Happen Across the Continent?

#5 Explaining the Freight Forwarding Process – 8 Best Steps

#4 Trouble at Suez & Panama Canals as Iran-Backed Attacks Raise Uncertainty

#3 Highly Paid ILWU Workers Want More, So Shippers Pay the Price

#2 Must-See “Sound of Freedom” Depicts Kids Trafficked in Shipping Container

#1 Exploring the Advantages and Disadvantages of Nearshoring

The post Top 10 International Shipping Blog Posts of 2023! appeared first on Universal Cargo.

Spot rates were already on the rise with general rate increases (GRIs) on December 1st and 15th. But with nearly 90% of ships heading for the Red Sea, which connects to the Suez Canal, getting rerouted at a time when the Panama Canal is experiencing disruption because of a drought, freight rates are really spiking.

Reports (such as in this CNBC article from Lori Ann LaRocco) have come out of shipping container quotes in the $10,000 range. All-Ways sent a shipping newsflash in which the international shipping company wrote, “Surcharges can reach up to $1 million in added voyage time through the Cape of Good Hope or in the high fares and long wait times of crossing the Panama Canal without an appointment.”

The kind of freight rate numbers being talked about are not only massive but outrageous. Additionally, here at Universal Cargo, we were sent a warning that carriers would add $1,000 GRIs to freight rates on January 1st.

Air freight rates are also increasing as shippers are looking to the sky for alternatives.

The post Shipper Alert: Soaring Freight Rates in Wake of Red Sea Attacks appeared first on Universal Cargo.

Container ships are the unsung heroes of global trade, transforming the movement of goods worldwide. Their role is vital, as these colossal vessels serve as the backbone of international commerce, ferrying goods across oceans efficiently. However, their story isn’t just about moving cargo; it’s about adaptation and change. The evolution of container ship design has been profound and continues to shape global trade today.

In this blog, we delve into how these design changes aren’t merely about bigger ships but about revolutionizing international trade.

The Birth of Container Shipping

Container shipping emerged in the mid-20th century, revolutionizing global trade practices. Its origins can be traced back to the 1950s when entrepreneur Malcolm McLean envisioned a more efficient cargo transport system. He introduced the concept of using standardized containers for transporting goods, a departure from the traditional “break-bulk” method. This shift marked a significant departure from loading individual items onto ships, transforming how goods were packed, loaded, and shipped.

The pivotal moment arrived in 1956 when McLean’s company, SeaLand, successfully loaded fifty-eight containers onto a tanker. It was that moment, Logicstics argues, that inaugurated the era of container shipping.

The standardization of container sizes soon followed, fostering compatibility across various transportation modes – ships, trucks, and trains. This innovation drastically reduced loading time, labor costs, and pilferage while exponentially increasing cargo capacity.

As a result, ports worldwide began adapting to accommodate these standardized containers, igniting a rapid evolution in maritime logistics. The introduction of container shipping fundamentally altered the landscape of international trade, fostering efficiency and propelling globalization to unprecedented heights.

The Evolution of Container Ship Design

This paradigm shift was gradual, however. In many ways, it offered a response to changing needs and circumstances and a feasible way forward for others.

Efficiency and Size

For one, this gradual evolution showcases a remarkable transition from older models to the cutting-edge vessels of today. Early container ships were relatively smaller, with limited carrying capacities compared to the massive giants dominating modern maritime landscapes. Older designs emphasized functionality over size, lacking the colossal dimensions seen in today’s vessels.

However, technological strides have redefined these ships, introducing innovations that boost efficiency and capacity. Advanced propulsion systems, automated cargo handling, and improved navigation technologies have significantly enhanced the operational efficiency of modern vessels.

Here, one standout trend in this evolution is the rise of larger container ships. These mammoth vessels, capable of carrying staggering numbers of containers, have reshaped the industry. While their size offers economies of scale and reduces shipping costs per container, it also presents logistical challenges. For instance, larger ships demand deeper ports and specialized infrastructure. As such, they require significant adaptations in global shipping routes and port facilities. Still, the shift towards these colossal vessels reflects a continuous quest for enhanced efficiency and cost-effectiveness in the industry.

Environmental Considerations and Sustainability

Second, the evolution of container ship design has brought substantial environmental concerns to light. These massive vessels emit considerable amounts of greenhouse gases, contributing significantly to carbon footprints in the maritime industry. Moreover, increased cargo capacity exacerbates the strain on marine ecosystems, potentially leading to higher pollution levels and disturbances to marine life.

In order to counter these environmental impacts, the industry has steered toward sustainability – initiatives like slow steaming aim to cut fuel consumption and emissions. Additionally, there’s a growing emphasis on cleaner propulsion technologies such as LNG (liquefied natural gas) and hydrogen-powered engines. Innovations like hull coatings that reduce drag and the adoption of alternative fuels align with the industry’s commitment to sustainability. Stricter regulations, like the International Maritime Organization’s (IMO) sulfur emission cap, have also spurred the implementation of eco-friendly technologies and practices.

Regulatory Changes

And third, on the note of regulations, this evolution is tightly interwoven with a wave of regulatory changes. In many cases, such regulations directly inform the future of ocean and air freight.

Global institutions like IMO have implemented stringent regulations to curb emissions and enhance environmental sustainability in the maritime industry. Initiatives like the IMO’s MARPOL Annex VI, which sets limits on sulfur emissions from ships, exemplify this shift. These regulations require vessels to use cleaner fuels or install exhaust gas cleaning systems (scrubbers) to reduce harmful emissions. Moreover, the Ballast Water Management Convention aims to prevent the spread of invasive species by regulating ships’ ballast water.

The Impact of the Evolution of Container Ship Design on Global Trade

Such a drastic shift has, understandably, impacted global trade as well. While the ways in which it has done so are numerous, the main ones are as follows.

Economic Impact and Trade Dynamics

For one, this trajectory has significantly enhanced global connectivity. Advanced designs have facilitated the establishment of more efficient trade routes, drastically reducing shipping times. For instance, the introduction of the Suez Canal in 1869 and the Panama Canal in 1914 revolutionized global trade. They have done so by creating shorter routes between major trading regions, significantly impacting transit times and costs.

Moreover, the advent of larger container ships has allowed for economies of scale, reducing shipping costs per container. These cost efficiencies have made international trade more accessible for businesses, enabling them to expand their markets and supply chains across continents. Additionally, modern container ship designs have encouraged direct connections between previously isolated ports, fostering trade growth between regions.

Cost Efficiency

In addition, on the note of cost efficiency, container ship design has significantly bolstered cost efficiency in global trade. The introduction of larger vessels has notably reduced shipping costs per container. For instance, the deployment of Triple-E class container ships by Maersk Line has led to a reduction in cost per container by around 20% compared to older vessels. These ships accommodate more containers, leveraging economies of scale and substantially decreasing the cost of transporting goods across international waters. In this regard alone, the evolution of container ship design has had a profound impact.

Furthermore, the efficiency gains from technological advancements, such as improved fuel efficiency and automated systems, have contributed to cost reductions. These enhancements streamline operations, minimize fuel consumption, and decrease labor expenses, ultimately benefiting businesses engaged in import and export activities.

Market Adaptations

Finally, the market at large has adapted with remarkable efficiency to these changing tides. Businesses the world over have swiftly adapted, as the trend toward larger vessels has prompted adaptations in supply chain logistics.

Initially, companies adjusted their inventory management systems to accommodate larger shipment sizes and optimize logistics operations. This includes smaller players and international juggernauts like Walmart and Amazon alike. Additionally, businesses have strategically positioned distribution centers and warehouses closer to ports capable of handling these larger ships. In turn, they’ve reduced transportation costs and improved overall efficiency.

Moreover, the increased capacity of container ships has enabled companies to engage in bulk shipping. In turn, this has allowed for more competitive pricing and improved inventory management. E-commerce giants have capitalized on these changes as well. By leveraging the capacity of these ships, they now move larger quantities of goods, meeting the growing demand for global online retail.

Conclusion

In closing, the evolution of container ship design is a story of adaptation and change. Today, it is a testament to its transformative power over global trade. From humble beginnings to the colossal vessels navigating the seas today, it has reshaped the very foundations of international commerce. It’s not merely about ships; it’s about revolutionizing how goods traverse the globe.

Looking ahead, this trajectory seems set to continue. Ongoing advancements in container ship design will likely continue to steer the course of global trade. The relentless pursuit of efficiency, sustainability, and technological innovation will shape the future of international commerce for years to come. As businesses adapt and industries evolve, this ongoing evolution will continue to foster a connected and efficient global marketplace.

This was a guest post by Dylan Jacobson.

Author Bio

Dylan Jacobson is an SEO writer, economist, and avid tech enthusiast. He frequently writes about the relocation and logistics industries, as well as the common ground between the two in an increasingly digitized world.

The post The Evolution of Container Ship Design and Its Impact on Global Trade appeared first on Universal Cargo.

No New Gas-Engine Trucks from 2024 Forward

California is utilizing the power of law to remove all trucks with internal combustion (or gas-powered) engines from the supply chain in the state. Actually, they’re coming for residents’ cars, lawnmowers, generators… basically anything powered by gas. But that’s big picture over several years. We’re all about international shipping and the supply chain in this blog, so let’s focus on the trucks. And January 1st. In less than two weeks, we hit the first big, big date of California’s Advanced Clean Fleets (ACF) rule.

Truck companies have until the end of the year to register new trucks with internal combustion engines. Afterward, only ZEVs can be added. Then, a year after that, companies must remove “legacy trucks” from the California fleet when the vehicles “reach the end of their minimum useful life.” Don’t worry, the state has defined that. Senate Bill 1 (Beall, Statutes 2017, Chapter 5) puts the end of a truck’s minimum useful life at 18 years or 800,000 miles, whichever comes first.

While buying traditional trucks for drayage in California to replace previous ones now makes little sense, eventually, it won’t even be legal. By 2036, manufacturers will only be allowed to sell medium- and heavy-duty vehicles that are zero emissions.

Milestones to 100% ZEV

Ultimately, businesses in California as well as federal, state, or local governments must eventually phase out traditional trucks to get to 100% zero-emission vehicle fleets in California. CARB gives an option of, instead of using the minimum useful life rule (or Model Year Schedule) of when a truck has to be retired and replaced by a ZEV, using a set of ACF milestones. Then fleets must have a high enough percentage of ZEVs by given dates:

ZEVs are much more expensive than traditional vehicles. In 2019, according to Statistica, “Heavy-duty [internal combustion engine] commercial vehicles had an average selling price of 126,000 U.S. dollars, 29,000 U.S. dollars less than electric heavy-duty trucks.”

The costs of zero-emission trucks, as with everything else, seem to have skyrocketed from its 2019 average price ($155,000).

According to a 2021 International Council on Clean Transportation (ICCT) study by Ben Sharpe and Hussein Basma, “battery-electric tractor truck up-front costs range from about $200,000 to $800,000, and generally costs increase with increased driving range as a function of total battery capacity.” But don’t worry. They expect battery pack and fuel cell system costs to reduce significantly over the next decade, making the cost of these trucks lower. I’m sure that cheery outlook, and reversal of the current cost trend, isn’t tinted by ICCT’s goal of decarbonizing transport.

Hopefully, a study the ICCT commissioned from Ricardo Strategic Consulting is correct in “that battery-electric tractor truck costs will be reduced by 23% in 2025 and 40% in 2030.” Even still, ZEVs are very expensive. But don’t worry, California taxpayers will help fleet owners. Some fleet owners.

California’s 2021 and 2022 state budgets “invest” $10 billion over 6 years to reduce CO₂ emissions from the transportation sector by supporting ZEVs and ZEV infrastructure. To no one’s surprise, the funding will be administered by CARB as well as the California Energy Commission, the California State Transportation Agency, and the Governor’s Office of Economic and Business Development.

There will be programs to help fund early-adapting companies on a combination of first-come, first served and “equity” bases. CARB says:

These investments will focus on an equitable ZEV transition by continuing to find ways to support disproportionately impacted communities.

Several funding programs are available to support the use of advanced technologies, and because funding programs only pay for early adoption not for compliance, more funding opportunities exist for those fleets that act early. These programs are administered by State agencies, federal agencies, and local air districts.

CARB also points to lower costs in maintenance and electricity over gasoline to offset the initial costs of ZEVs. Still, shippers should expect trucking companies to pass some of those initial costs on to them. Hundreds of thousands of trucks will have to be replaced with ZEVs thanks to the ACF regulation alone. And there’s other California regulation pushing out combustion for electric engines too.

“CARB staff estimate that, of the 1.8 million medium- and heavy-duty vehicles operating daily in California, 532,000 will be subject to ACF,” CARB reported. How that cost will spread out through the next several years is unclear. CARB expects the ACF regulation with California’s Advanced Clean Trucks regulation will result in about 510,000, 1,350,000 and 1,690,000 ZEVs in the state in 2035, 2045, and 2050, respectively.

What shippers pay for trucking should be expected to pay a portion of the costs for that.

Zero-Emissions Is a Misnomer

It should be pointed out that zero-emission vehicles don’t actually produce zero emissions.

First, there are greater CO2 emissions in the creation of ZEVs than that of traditional internal combustion engine vehicles. According to Argonne National Laboratory’s Greenhouse Gases, Regulated Emissions, and Energy use in Technologies Model, sponsored by the U.S. Department of Energy, building a ZEV can create 80% more CO2 emissions than building a new traditional vehicle creates.

While the vehicle itself doesn’t emit CO2, the power plants required to produce the electricity ZEVs draw from do. Over the life of the vehicles, ZEVs should be responsible for less CO2 emission, but it is extremely far from zero.

Speaking of electricity…

California’s Power Grid Can’t Handle ZEV Legislation

California doesn’t produce enough electricity for all the mandates its lawmakers have created to switch gas-powered vehicles to electric ones. In fact, California doesn’t have enough electricity for its needs without adding ZEV mandates into the mix. The state doesn’t generate close to enough electricity for its needs.

In 2022, 30% of California’s electricity had to be imported from other states, according to the California Energy Commission. And this isn’t an issue that has seen improvement.

Indeed, it’s getting worse. According to the U.S. Energy Information Administration, California imported “only” 25% of its total electricity supply in 2019. And California’s net electricity imports then were already the largest of any state in the union.

California residents already experience rolling brownouts and blackouts because of the state’s inability to manage its electrical grid. Plus, laughably, only days after CARB announced all cars sold in California will have to be ZEVs by 2035, Governor Newsom asked residents not to charge their electric vehicles because the power grid wouldn’t be able to handle it with an expected heat wave likely to cause more electricity usage for air conditioning.

California might have to do something like embrace <GASP> nuclear power in order to solve its electricity problems. If things get worse, power issues could also create disruptions to shippers’ supply chains.

The post Trucks Have to Go Electric in California, But at What Cost? appeared first on Universal Cargo.

Yemen’s Iranian-backed Houthi rebels continue to attack ships in the Red Sea. They hit the Liberian-flagged cargo ship Al Jasrah today, which set the ship on fire, as reported by Jon Gambrell in a Times of Israel article. I highly recommend reading the article for more details, as this is just a quick news flash for shippers.

Shippers’ goods trying to pass through the Suez Canal, not to mention the lives of the crews manning the ships, are in danger. Simultaneously, cargo is being delayed at the Panama Canal because of a drought in the area. For more on the shipping uncertainty created between risks at both canals, check out our post on it from last week.

The post Shipping Alert! Iranian-backed Missile Sets Cargo Ship Ablaze in Red Sea appeared first on Universal Cargo.

Extended producer responsibility laws are creating ripples of change in international supply chains, from packaging to product design. Over the past several years, numerous jurisdictions have enacted laws and regulations surrounding extended producer responsibility, or EPR, which refers to business sustainability. How are these laws impacting businesses and their international supply chain partners? 

Accelerating the Shift to Green Packaging

One of the most notable results of new EPR regulations is a faster shift toward green packaging. Businesses need to make a concentrated effort to adopt more sustainable packaging in order to comply with the recycling goals outlined in EPR regulations. 

For example, the EU has established standards for packaging recycling. According to the official directives published by the EU, at least 65% of all packaging waste must be recycled by 2025. Seventy-five percent of paper and cardboard waste specifically must be recycled. These are ambitious targets, but that may be what’s needed to spark widespread change. 

Many EPR directives have been law since 2020 or even earlier, but the pressure to meet recycling targets is increasing as deadlines approach. As of 2023, only 49% of municipal waste is recycled in the EU. This creates a challenge for businesses since a lack of recycling means a lack of material for recycled packaging options. 

While the EU was the first region to enact EPR regulations, the U.S. is now following suit. As of 2023, several states have passed or reviewed similar legislation. California has the most comprehensive EPR regulations, which closely mirror those in the EU. 

The Plastic Pollution Prevention and Packaging Producer Responsibility Act requires 100% of packaging in California to be recyclable by 2032. This includes at least 65% of all single-use plastic packaging. 

The shift to green packaging in the EU and states like California might specifically include increased collaboration with international supply chain partners. For example, California businesses might begin working more closely with international recycled packaging suppliers. While that is good for stimulating widespread growth in the supply chain, it may also mean local suppliers will lose some business if they can’t adapt to green packaging needs.  

Increasing Investment and Innovation

Extended producer responsibility is forcing businesses to reconsider everything from product design to packaging to the product life cycle. Regulations like green packaging directives are motivating businesses to invest time and resources into improving sustainability at every stage of product development. This activity could have major long-term implications for international supply chains. 

For example, pressure to reduce supply chain waste is increasing innovation in sustainable packaging, leading to some amazing innovations. Bioplastics are one such innovation to emerge over the past several years. These biodegradable plastics are designed to deteriorate naturally without hurting the environment. They offer the benefits of plastic packaging without the harmful side effects or long-term waste. 

Businesses are also increasing investments in new product life cycle designs. Conventional product development typically does not consider end-of-life plans. However, EPR laws are changing that. 

The fashion industry is a perfect example. The EU’s EPR regulations are already impacting the global fashion supply chain. Europe has long been the heart of the fashion world, so new business practices in the EU have a major impact on the entire market. 

EPR laws are driving many fashion brands to reduce textile waste and use more recycled fabrics. New strategies range from a growth in clothing resale markets to increased use of sustainable fabric dyes. 

Shifting investment in sustainable clothing is changing the way suppliers and manufacturers around the world operate. For instance, with more European fashion brands leaving toxic dyes behind, textile manufacturers need to transition to clean, water-based alternatives. 

In the U.S., states like California are hubs for some of the world’s biggest packaging consumers, such as Amazon. Big companies like this can face intense scrutiny and fines if they fail to meet EPR regulations. 

New legislation around green packaging may spur leading e-commerce companies to rapidly shift their investments into developing new types of packaging. For example, in 2022, Amazon announced plans to reduce packaging and begin shifting away from non-recyclable packaging. While this move is good for the environment, it may have a temporary negative impact on manufacturers and suppliers as they adjust to new business models. 

Improving Awareness of Supply Chain Sustainability

EPR laws are pushing businesses to change their approach to consumer waste. Government agencies aren’t the only voices calling for improved sustainability, though. EPR laws reflect a growing desire for green products among consumers. 

Surveys show that consumers are buying more sustainable goods and considering environmental impact more when shopping. This is particularly true among Millennials and Generation Z. For young people, sustainability can be a deal breaker. 

EPR laws are forcing businesses to improve their awareness of their supply chains’ impact on the environment. Doing so will eventually result in reduced carbon footprints and help businesses align with modern shoppers’ priorities. 

Unfortunately, many businesses simply aren’t aware of all the negative side effects conventional supply chain practices can have. Complying with EPR laws around the world requires expanding supply chain visibility so these negative impacts finally come to light. Once businesses are able to identify where they can improve on sustainability, they can take action to reduce waste and emissions. 

EPR laws apply to businesses most, but their positive impact on sustainability awareness will trickle down through international supply chains. As brands work to improve their products’ environmental impact, suppliers and manufacturers will also need to adopt more sustainable practices. Over the next several years, this could lead to a significant decrease in non-recyclable packaging and other consumer goods waste. 

Building Cleaner Supply Chains With EPR

Extended producer responsibility is motivating businesses to expand their supply chain visibility and take initiative to improve sustainability. EPR laws around the world emphasize ambitious goals for reducing packaging waste. As businesses strive to meet these goals, they will spark a ripple effect of positive change throughout international supply chains. Eventually, it could result in significant declines in waste from packaging and other consumer goods.

This was a guest post by Ellie Gabel.

Ellie is a freelance writer who loves exploring the latest advancements in tech and science and how they’re impacting the world we live and work in. She’s also the associate editor of Revolutionized.com.

The post How Are EPR Laws Impacting the International Supply Chain? appeared first on Universal Cargo.

That means, as of yesterday, no goods produced by these companies are allowed to enter the U.S. Importers should always strive to be aware of the business practices of goods producers before working with those companies, particularly in China, where there is a major issue with forced labor.

According to the U.S Department of Labor:

The People’s Republic of China has arbitrarily detained more than one million Uyghurs and other mostly Muslim minorities in China’s far western Xinjiang Uyghur Autonomous Region. It is estimated that 100,000 Uyghurs and other ethnic minority ex-detainees in China may be working in conditions of forced labor following detention in re-education camps. Many more rural poor workers also may experience coercion without detention.

The UFLPS Entity List provides U.S. companies some support in knowing Chinese companies from which not to import goods. It is, in fact, illegal to import goods from companies on the list, as they’ve been identified as companies whose goods, wares, articles, or merchandise has been mined, produced, or manufactured wholly or in part with forced labor.

With new companies just getting added onto the list yesterday, it is obvious that not every company in China that utilizes forced labor has already been identified. U.S. importers should always perform due diligence into the foreign companies with which they work to do their utmost to avoid having forced labor inside their supply chains.

I’m sure there are companies who conceal their practices well enough that’s it’s difficult to discover they’re utilizing forced labor. However, the UFLPA Entity List is published for the public, so when it comes to working with Chinese companies already discovered to be using forced labor, U.S. shippers have no excuse.

If you’re thinking about importing from China, here’s the complete UFLPA Entity List (as of December 12th, 2023) for your convenience:

A list of entities in Xinjiang that mine, produce, or manufacture wholly or in part any goods, wares, articles and merchandise with forced labor
Section 2(d)(2)(B)(i)

A list of entities working with the government of Xinjiang to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of Xinjiang
Section 2(d)(2)(B)(ii)

A list of facilities and entities, including the Xinjiang Production and Construction Corps, that source material from Xinjiang or from persons working with the government of Xinjiang or the Xinjiang Production and Construction Corps for purposes of the ‘‘poverty alleviation’’ program or the ‘‘pairing-assistance’’ program or any other government-labor scheme that uses forced labor
Section 2(d)(2)(B)(v)

The post 3 More Chinese Companies Sanctioned by U.S. for Forced Labor (plus Full UFLPA Entity List) appeared first on Universal Cargo.

Navigating the complexities of international trade requires a strategic approach to handling unexpected ocean freight issues. In a world where global supply chains play a pivotal role, businesses must be prepared to address disruptions efficiently and proactively. So, let’s get into the strategies you can implement to ensure the flow of goods even when faced with challenges!

1. Understanding Ocean Freight Risks

Understanding ocean freight risks is crucial for businesses engaged in international trade. While ocean freight offers cost-effective transportation, it’s not without its challenges. Factors like weather-related disruptions, port congestion, and trade regulations can lead to having to handle unexpected ocean freight issues. So, to ensure the long-term longevity of ocean freight as a viable option, businesses must proactively manage these risks.

2. Building Resilience in Supply Chains

Building resilience in supply chains is paramount to smoothly handling unexpected ocean freight issues. To achieve this, diversifying supplier and sourcing options is key. Relying on a single source for critical components or materials can leave a supply chain vulnerable to disruptions.

Implementing just-in-time inventory management is another effective strategy, reducing the need for excessive stockpiles while ensuring a steady supply.

Additionally, establishing strong vendor relationships fosters trust and flexibility in times of crisis, facilitating faster problem-solving and smoother operations.

3. Effective Communication Strategies

Effective communication strategies are the lifeblood of a resilient supply chain, and it’s crucial to note that this applies throughout your supply chain. Clear and transparent communication is essential whether you’re coordinating with suppliers, manufacturers, or partners.

As eaglemoves.com can certify, excellent communication between two parties is a must! Timely updates, real-time tracking, and proactive problem-solving are vital to successful logistics management.

Collaborative communication helps anticipate and address issues promptly, ensuring that your goods move smoothly through the supply chain. It fosters trust, reduces delays, and enhances overall efficiency, making adapting to unexpected challenges easier.

4. Risk Assessment and Contingency Planning

Risk assessment and contingency planning are fundamental aspects of supply chain management that ensure the safe transit of your goods.

Before embarking on international trade, conducting comprehensive risk assessments is crucial, identifying potential disruptions such as weather-related issues, port delays, or regulatory changes. These assessments serve as the foundation for developing tailored contingency plans. These plans outline specific actions to take when unexpected events occur. So, they essentially provide a roadmap for maintaining the flow of goods even in challenging circumstances.

By proactively addressing risks and having a solid plan, businesses can enhance their resilience and protect their bottom line in the face of uncertainty.

5. Insurance and Financial Safeguards

There are some problems you just can’t predict or are out of your hands, so that marine cargo insurance can be a lifesaver. It shields your goods from potential loss or damage during transit, ensuring that unforeseen events don’t result in financial catastrophe. So, evaluating the need for insurance coverage is a prudent step in risk management.

Additionally, risk-sharing strategies and financial safeguards can help protect your business from the economic fallout of disruptions. By allocating resources wisely and establishing financial safety nets, you can absorb the impact of supply chain hiccups without endangering your overall financial health.

6. Compliance and Regulatory Considerations

Staying up-to-date with the ever-evolving world of international trade regulations is paramount. Failure to do so can result in costly delays, fines, and reputational damage.

Collaborating with customs brokers and compliance experts can be a major boon, as they possess the expertise to navigate the intricate web of global regulations. Moreover, meticulous adherence to compliance mitigates risks associated with trade disputes and sanctions and even fosters trust among stakeholders.

7. Technology Solutions for Risk Mitigation

Leveraging advanced supply chain management software empowers businesses to monitor, control, and optimize their logistics operations precisely. These tools provide real-time visibility, helping identify potential disruptions before they escalate.

Additionally, data analytics plays a crucial role by offering predictive insights into supply chain vulnerabilities, enabling proactive risk management.

Implementing blockchain technology also enhances transparency and traceability, reducing fraud and ensuring the integrity of the supply chain. These technology-driven approaches bolster risk mitigation, streamline operations, improve efficiency, and cut costs.

8. Supply Chain Resilience in Times of Crisis

Maintaining supply chain resilience in times of crisis is essential to weather them. Lessons from the COVID-19 pandemic have shown that adaptability and foresight are paramount.

Businesses must keep an eye on global logistics, anticipating disruptions and diversifying suppliers to reduce risk. Flexibility in production and inventory management can help meet sudden fluctuations in demand.

Furthermore, contingency plans like alternate transportation routes and safety stock ensure that operations can continue despite unforeseen challenges. Embracing digital solutions for real-time monitoring and data analytics can also provide a competitive edge by enhancing visibility and predictive capabilities. So, crisis-tested supply chains combine proactive risk management, strategic partnerships, and technology to navigate turbulent waters successfully.

9. Collaborative Risk Mitigation

Collaborative risk mitigation is the way forward in today’s interconnected business world. Engaging in industry collaborations and partnerships fosters collective resilience.

Sharing best practices and risk insights with peers can also provide valuable perspectives. By working together, businesses can collectively strengthen their industry-wide resilience, especially in the face of complex, global challenges.

So, collaborative risk mitigation encourages the free flow of information, helping companies stay one step ahead of potential disruptions.

Conclusion – Keep Your Import and Export Business Well-Protected

In the ever-evolving landscape of international trade, handling unexpected ocean freight issues is a crucial skill. By embracing the above strategies, particularly proactive risk mitigation, effective communication, and collaboration, businesses can safeguard their supply chains and maintain resilience.

So, always work to prioritize these coping methods and keep your imports and exports safe!

This was a guest post by Evelyn Thistlewood.

Author Bio

Evelyn Thistlewood is a seasoned logistics and export specialist. With a passion for optimizing supply chains and mitigating risks, she has navigated the intricate world of international trade, offering valuable insights and solutions to businesses worldwide.

The post Logistics Risk Mitigation: 9 Strategies to Handle Unexpected Ocean Freight Issues appeared first on Universal Cargo.

Two of the world’s most important international shipping route connections are being disrupted simultaneously: the Panama Canal and the Suez Canal. When one important international shipping hub experiences disruption, the effects tend to ripple across the oceans to supply chains around the world. When disruption happens at more than one major shipping focal point, those ripples turn into waves, and the negative effects on supply chains can grow exponentially rather than just multiply.

Panama Drought Diverts Cargo through Suez Canal

We’ve previously covered drought in Panama causing the restrictions on the size and number of ships that can traverse the Panama Canal. The situation is ongoing, causing shippers and carriers to reroute cargo and vessels to avoid the bottleneck. In fact, just today Supply Chain Brain posted a Bloomberg article about a diesel ship sailing down and around the southern tip of South America instead of waiting to get through the Panama Canal.

More commonly when there is disruption at the Panama Canal, carriers and shippers reroute goods in a way that includes the Suez Canal. That is particularly the case when talking about cargo from Asia to the U.S. East Coast or vice versa. Imagine goods normally shipped from Asia across the Pacific Ocean, through the Panama Canal, and to ports at the Atlantic Ocean or the Gulf of Mexico. If the Panama Canal connection needed to be avoided, carriers and shippers could do something like the following:

Let’s say the cargo starts around the South China Sea. It’s sailed over to the Arabian Sea, into the Gulf of Aden, and through the Red Sea, which takes it to the Suez Canal. The cargo ship comes out of the Suez Canal into the Mediterranean Sea, through the Strait of Gibraltar, and into the Atlantic Ocean. Without the Suez Canal, ships would have to instead sail all the way down and around Africa.

But that brings us to the problems over at the Suez Canal.

Attacks in Gateway to Suez Canal Escalates Problems

Since the terrorist organization Hamas savagely attacked Israel on October 7th, launching the Israel-Hamas war, there has been a big increase of attacks on ships trying to sail through the Red Sea.

Like Iran backed the October 7th Hamas attacks on Israel, Iran also backs Houthi rebels attacking merchant ships with Israeli connections in the Red Sea and the Gulf of Aden. Apparently, the Houthi rebels don’t have the best intelligence, targeting ships with outdated information that has led them to attack at least one ship that is not linked to Israel. Lori Ann LaRocco reported on it in a FreightWaves article:

Geopolitical tensions and attacks in the Red Sea have increased since the commencement of the Israel-Hamas conflict. Iran-backed Houthi rebels have focused their attacks in the Red Sea and Gulf of Aden on any merchant shipping that they believe is affiliated with Israel. Following this weekend’s four attacks on three civilian ships near Yemen, the U.S. Navy destroyer USS Carney responded, thrusting the security of trade into the spotlight.

…

The Suez has seen an increase in U.S. energy and grain exports as well as U.S. eastbound container imports as the Panama Canal drought restrictions are constricting the flow of trade.

… A Houthi military spokesperson confirmed it targeted a container ship with a drone and another bulk grain vessel because it claimed both vessels were linked to Israel. One, however, was not. Houthis reportedly had outdated information, according to maritime security firm Ambrey.

According to the U.S. Central Command (Centcom), the bulk vessel — Number 9 — that was attacked Sunday is owned by U.K.-based Castle Harbour and operated by U.K.-based Bernhard Schulte Shipmanagement (BSM) and not connected to Israel. The operator appeared to change from Zim in November 2021, according to Ambrey. MarineTraffic shows the vessel left Singapore on Nov. 22 and was slated to go through the Suez Canal this Wednesday.

Ambrey has advised company security officers to assess whether their vessels were owned or managed by an Israel-affiliated company within the last year. But the Israel connection seems to go to the individual level.

Centcom reported that another one of the four vessels attacked was the Bahamas-flagged Unity Explorer. While owned and operated in the U.K., the Israel connection is among its management. Unity Maritime is controlled by Danny Ungar, the son of Israeli shipping businessman Abraham “Rami” Ungar. In November, Ungar’s shipping company, Ray Car Carriers, had its 5,100-unit car carrier Galaxy Leader hijacked by the Houthis.

Unity Explorer is a dry bulk ship that was loaded with grain from the U.S. Cargill grain elevator and transported from the Gulf of Mexico. The vessel left Nov. 2 bound for Singapore and traveled through the Suez Canal approximately six days ago, according to MarineTraffic.

In a statement following the attacks, Centcom said, “These attacks represent a direct threat to international commerce and maritime security. They have jeopardized the lives of international crews representing multiple countries around the world. We also have every reason to believe that these attacks, while launched by the Houthis in Yemen, are fully enabled by Iran. The United States will consider all appropriate responses in full coordination with its international allies and partners.”

But given the misidentification by Houthis of the Number 9, should any ocean carrier that was once linked to Israel consider itself a target because the militants may be working with old information?

What Does This Mean for Shippers?

LaRocco goes on to write about the possibility of increased shipping costs through the area from “war risk premiums.” Obviously, risks go far beyond that.

Shippers will have to keep watch (or have company’s like Universal Cargo keep watch for them) as the risk is high for severe disruption at the Suez Canal simultaneous to worsening bottlenecks at the Panama Canal. Delays, blanked (cancelled) sailings, heavy cargo and vessel rerouting, and increased shipping costs are all likely to happen as a result of current events. Only time will tell the level of severity.

Escalating Geopolitical Situation

Even more disconcerting than its international shipping effects is how much the geopolitical situation could escalate. Iran’s “death to Israel” and “death to America” slogans are more than just words. The country has been backing those words up against Israel, although cowardly, behind the cover Hamas and Houthi as discussed above. But, since Hamas attacked Israel, there have also been over 70 attacks on U.S. troops in the Middle East, all of which are believed to have been by Iranian proxies. The U.S. shooting down a few Iranian-backed drones attacking merchant ships gives no confidence that Iran won’t escalate aggression.

Unfortunately, the track record of the current Commander and Chief of the United States when it comes to foreign affairs and military leadership is dreadful. Worse, the Wall Street Journal’s editorial board reports the Biden Administration’s relaxed sanctions on Iran keeps billions of dollars flowing into the country, even after its proxied attacks on U.S. troops and Israel.

Just a couple weeks before Hamas’s Iranian-backed attack on Israel happened, the U.S. House Committee on Oversight and Accountability reported in a release:

… the Biden Administration has participated without transparency in unlawful negotiations with Iran, facilitated a ransom payment [of $6 billion] to Iran to free five Americans, and provided no explanation for the removal of a top special envoy. Members also discussed how the Biden Administration’s reversal of the “maximum pressure” strategy has allowed Iran to skirt sanctions, supply U.S. adversaries like China and Russia with oil and weapons, and decrease stability in the Middle East.

Funding the country that chants “Death to Israel” and “Death to America” and then funds the worst attack on Israel the country has ever seen? Some of that blood on Israel’s streets may belong on President Biden’s hands.

The post Trouble at Suez & Panama Canals as Iran-Backed Attacks Raise Uncertainty appeared first on Universal Cargo.

There is a lot of red tape involved in customs export paperwork, making international shipping a risky business. This article will go over nine shipping documents that are necessary for an export shipment to go smoothly and in accordance with international trade laws and customs regulations, so that your products can arrive at their destinations undamaged and on time. So, let’s get started!

1. Commercial Invoice

The following items are typically seen on a commercial invoice:

• Item description
• Price
• Quantity
• Packaging fees
• Weight/Volume
• Payment conditions
• Shipment details
• Goods insurance

This form must be completed and sent in to clear products for export. The information therein is used by customs to decide whether the shipment should be released. Thus, this document is crucial for a shipment’s paperwork because mistakes in it might lead to penalties, additional duties, or delays in shipments.

2. Export Packing List

An export packing list is a standard document in shipment records that includes information like:

• Shipment type
• Places of origin and destination
• Safety precautions
• Packaging and product information
• Names and addresses of exporter, receiver, shipper
• Voyage number
• Departure date
• Verified signature

With this document in hand, all parties participating in the shipment can rest assured that the products are stored, handled, and shipped correctly. Thus, the export packing list guarantees that everyone knows what is being transported so that they can handle it properly and safely.

3. Licenses & Permits

Certain goods, such as pharmaceuticals, dangerous chemicals, weapons, and defense equipment, require a specific export license. Depending on the type of commodities, several authorities may issue these licenses along with any necessary accompanying permissions. Serious repercussions, including shipment delays, confiscations, penalties, or even litigation, may ensue from a failure to get these licenses and permits.

4. Bill of Lading (BoL)

Between the shipper and the goods forwarder (or carrier), there exists a legally enforceable contract known as the Bill of Lading (BoL). This verifies the shipment’s dispatch and delivery by all parties involved, includes the cargo’s receipt, and lays out the rules of carriage. The goods can be released before or after transportation after this document is signed. It is essential to thoroughly check the BoL to avoid claims if the shipment gets damaged or lost. Also, a signed BoL by the carrier can be used as legal evidence in court to protect against asset theft.

5. Warehouse Receipt

The futures market relies on warehouse receipts, which are official documents attesting to the quantity and quality of commodities stored in a certified warehouse, to facilitate trade.

By integrating the best delivery management software, you can expedite the creation of warehouse receipts and simplify the tracking of stored items. Practical in-transit goods transfer over various chain links is also made possible by this software, along with precise stock & inventory management.

6. Air Waybill

An air waybill (AWB) gives the airline all the information they need regarding air-shipped items. The forwarder/shipper and the airline have entered into a legally enforceable agreement with this document. That way, the goods can be safely and easily transported along the aviation logistics chain.

7. Export License and Certificate Free Sale

This license allows goods to be sold or distributed in their home country. Consumers and throughout the world can buy them without any qualms because this document verifies that they meet all necessary safety and quality standards. While other nations may not require it, this document is often required for exports of certain products such as food items, cosmetics, biologics, or medical devices.

8. Insurance Certificate

An insurance certificate, as the name suggests, details the policy’s coverage and terms. It gives exporters peace of mind because they know that the products listed on this document are covered against damage and liability. Also, cargo insurance requirements vary. In some cases, insurance may not be required by law or carrier policy, but it is a smart safety net in case of unforeseen events like theft or transportation damage.

9. Certificate of Origin

This certificate serves as an exporter’s certification that the goods included in the cargo were manufactured or obtained from a specific country. It also verifies the export eligibility of the commodities, which is a requisite to ensure compliance with the requirements of the country of destination. When it comes to deciding what taxes and tariffs are payable on goods, this document is crucial, even in countries where it isn’t required or where a free trade agreement is in place.

Conclusion

Shipped products’ final destination, place of origin, and nature all play a role on how they are handled throughout transit. However, as we mentioned in our blog post, there are a few export documents that customs agents need in order to verify the legitimacy of a shipment, ascertain its entry or exit status, and collect any applicable fees or taxes.

This was a guest post by Rabab Toor.

Author Bio:

Rabab Toor is a content manager at the Squarepeg and a freelance writer. With a keen interest in technology, the latest trends in digital marketing, logistics, and crypto, she enjoys sharing her insights and expertise on Medium.

The post <a></a><strong>Your Guide to Custom Export Documents: Their Types and Why They Matter</strong> appeared first on Universal Cargo.

How many is a bunch? It’s a little unclear.

In a White House briefing room release, a summary sentence said, “President Biden will unveil more than 30 new actions to strengthen America’s supply chains,” but the first sentence of the actual statement said, “President Biden is announcing nearly 30 new actions to strengthen supply chains critical to America’s economic and national security.” More than 30, nearly 30… let’s just say around 30. The Biden Administration is announcing around 30 new actions aimed at the American supply chain. Maybe.

When the release got to listing actions, there appeared to be only about half as many actions as the statement claimed. I counted 14. I included the text listing and describing the new actions below. The Biden Administration could be counting multiple actions, which aren’t clearly delineated yet, within the new actions the release listed. Or maybe the release only listed some of the actions that would be announced at the first meeting of the Council on Supply Chain Resilience (the formation of which is one of the new actions).

With the inaugural meeting also happening yesterday, I read the transcript of President Biden’s speech at the inaugural meeting. That didn’t contain the 30 actions (instead, it contained things like the president saying, “this Thanksgiving dinner was the fourth-cheapest ever on record”). Maybe he announced the actions just to the council itself rather than to the public in his speech. Maybe there are simply more actions he’s announcing in the near future.

It’s possible the Biden Administration, when counting the number of new actions, included how it “continues to deepen engagement with allies and partners to strengthen global supply chains.” The release listed several examples. However, it listed them as “in addition to the announcements above,” which made me think the deepening engagements the Biden Administration is allegedly making with other countries and global partners are separate from the new actions Biden and his administration are announcing.

That list included things like establishing a trilateral Sub-Committee on Emergency Response with Canada and Mexico through the United States-Mexico-Canada Agreement (USMCA), which was negotiated by the Trump Administration. The trilateral sub-committee was formed close to a year ago, back in February. Other items on this additional list go back further than that, making them not exactly feel new. However, there are 12 items on this additional list. That doesn’t quite get us to 30, but maybe close enough at 26. So let’s count them as new actions – “new” is a subjective term, after all.

Including all the text below that lists actions and partnerships from the White House’s release gives 30-ish new-ish actions-ish from the Biden Administration. The administration’s spin on the items won’t give us exactly how these actions will be implemented or what their results will be. Unfortunately, increased government involvement in an industry or sector often results in it being bogged down by overregulation and it becoming more expensive, particularly for consumers. Hopefully, that won’t end up being the case here with the supply chain. However, President Biden’s track record doesn’t fill me with confidence.

White House Text Listing Biden Administration’s “New Actions to Strengthen America’s Supply Chains, Lower Costs for Families, and Secure Key Sectors”

• The creation of the Council on Supply Chain Resilience. Today, President Biden will convene the inaugural meeting of the White House Council on Supply Chain Resilience, which will advance his long-term, government-wide strategy to build enduring supply chain resilience. The Council will be co-chaired by the National Security Advisor and National Economic Advisor, and include the Secretaries of Agriculture, Commerce, Defense, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, the Interior, Labor, State, Transportation, the Treasury, and Veterans Affairs; the Attorney General; the Administrators of the Environmental Protection Agency and the Small Business Administration; the Directors of National Intelligence, the Office of Management and Budget, and the Office of Science and Technology Policy; the Chair of the Council of Economic Advisers; the U.S. Trade Representative; and other senior officials from the Executive Office of the President and other agencies.
   
• Use of the Defense Production Act to make more essential medicines in America and mitigate drug shortages. President Biden will issue a Presidential Determination to broaden the Department of Health and Human Services’ (HHS) authorities under Title III of the Defense Production Act (DPA) to enable investment in domestic manufacturing of essential medicines, medical countermeasures, and critical inputs that have been deemed by the President as essential to the national defense. HHS has identified $35 million for investments in domestic production of key starting materials for sterile injectable medicines. HHS will also designate a new Supply Chain Resilience and Shortage Coordinator for efforts to strengthen the resilience of medical product and critical food supply chains, and to address related shortages. HHS intends to institutionalize this coordination to advance the department’s supply chain resilience and shortage mitigation goals over the long term. The Department of Defense (DOD) will also soon release a new report on pharmaceutical supply chain resilience aimed at reducing reliance on high-risk foreign suppliers. These actions are a subset of the Administration’s broader work to increase access to essential medicines and medical products.
   
• New cross-governmental supply chain data-sharing capabilities. The Administration has developed several cross-government partnerships to improve supply chain monitoring and strategy, including:
  • The Department of Commerce’s new, first-of-its-kind Supply Chain Center is integrating industry expertise and data analytics to develop innovative supply chain risk assessment tools, and is coordinating deep-dive analyses on select critical supply chains to drive targeted actions to increase resilience. This Center is building broad partnerships across government, industry, and academia, including collaborating with the Department of Energy (DOE) to conduct deep-dive analyses on clean energy supply. Additionally, Commerce is partnering with HHS to assess industry and import data that can help address foreign dependency vulnerabilities and points of failure for critical drugs.
  • The Department of Transportation’s (DOT) Freight Logistics Optimization Works (“FLOW”) program is a public-private partnership that brings together U.S. supply chain stakeholders to create a shared, common picture of supply chain networks and facilitate a more reliable flow of goods. DOT is announcing a new milestone for FLOW, in which participants are beginning to utilize FLOW data to inform their logistics decision making, helping to avoid bottlenecks, shorten lead times for customers, and enable a more resilient and globally competitive freight network through earlier warnings of supply chain disruption. As the effort continues to mature, DOT will work with the Department of Agriculture (USDA) to increase data transparency for containerized shipments of agricultural products in the United States, efforts that can help producers and sellers avoid disruptions that can increase food prices.
  • These new analytical capabilities will enable the Council to coordinate a more complete, whole-of-government critical supply chain monitoring function.

Additional actions to support stronger supply chains and access to affordable, reliable energy and critical technology:

Investing in critical supply chains:

• DOE today announced $275 million in grant selections for its Advanced Energy Manufacturing and Recycling Grant Program, investments that will revitalize communities affected by coal mine or coal power plant closures through investment in clean energy supply chains, including production of critical materials, components for grid-scale batteries and electric vehicles, onshore wind turbines, and energy conservation technologies. DOE also announced up to $10 million of funding for a “critical material accelerator” and a $5.6-million prize to develop circular clean energy supply chains. These efforts build on action by President Biden to authorize DOE’s use of the DPA to increase domestic production of five key clean energy technologies—including electric heat pumps—as well as DOE’s recently announced $3.5-billion investment through the Bipartisan Infrastructure Law to boost domestic production of advanced batteries and battery materials needed for essential clean energy technologies such as stationary storage and electric vehicles.
• USDA is making investments worth $196 million to strengthen our domestic food supply chains and create more opportunity for farmers and entrepreneurs in 37 states and in Puerto Rico. These investments—which build on prior investments in diversified food processing, resilient agricultural markets, and fertilizer production—expand farmer income opportunities, create economic opportunities for people and businesses in rural areas, and lower food costs.
• DOD, building on the $714 million in DPA investments it has made in 2023 to support defense-critical supply chains, will publish the first ever National Defense Industrial Strategy (NDIS). The NDIS will guide engagement, policy development, and investment in the defense industrial base over the next three to five years. It will ensure a coordinated, whole-of-government approach to and focus on the multiple layers of suppliers and sub-suppliers that make up these critical supply chains.

Planning for long-term industrial resilience and future supply chain investments:

• Launch of the quadrennial supply chain review. The Council will complete the first quadrennial supply chain review by December 31, 2024. As part of the review, the Council will update criteria on industries, sectors, and products defined as critical to national and economic security. In addition, 12 months after the Council promulgates the criteria, and annually thereafter, the Council will apply the criteria to review and update the list of critical sectors, as appropriate.
• Smart manufacturing plan. DOE’s Office of Energy Efficiency and Renewable Energy (EERE) Advanced Materials and Manufacturing Technologies Office (AMMTO) is sponsoring a study by the National Academies of Science, Engineering, and Medicine to develop a nationwide plan for smart manufacturing. The report will establish key priorities for investment to support new digital and artificial intelligence technologies. These investments will enhance the productivity and security of the manufacturing systems that are critical for maintaining domestic supply chains.

Deploying new capabilities to monitor existing and emerging risks:

• New Resilience Center and tabletop exercises for supply chain disruptions. The Department of Homeland Security (DHS) is announcing the launch of a new Supply Chain Resilience Center (SCRC), which will be dedicated to ensuring the resilience of supply chains for critical infrastructure needed to deliver essential services to the American people. Near-term priorities will include addressing supply chain risks resulting from threats and vulnerabilities inside U.S. ports. Additionally, in 2024, in collaboration with other federal agencies and foreign governments, DHS will facilitate at least two tabletop exercises designed to test the resilience of critical cross-border supply chains. Further, DHS and the Department of Commerce will collaborate to continue to strengthen the semiconductor supply chain and further the implementation of the CHIPS and Science Act.
• Launch of DOT Multimodal Freight Office. As part of the Bipartisan Infrastructure Law (“BIL”) implementation, DOT is launching its Office of Multimodal Freight Infrastructure and Policy (“Multimodal Freight Office”). This office is responsible for maintaining and improving the condition and performance of the nation’s multimodal freight network including through the development of the National Multimodal Freight Network, review of State Freight Plans, and the continued advancement of the FLOW initiative in partnership with the Bureau of Transportation Statistics.
• Monitoring of climate impacts. The White House National Security Council, Office of Science and Technology Policy, and the Council of Economic Advisers will co-lead an interagency effort in partnership with the National Oceanic and Atmospheric Administration to monitor global developments related to El Niño, including this climate phenomenon’s impact on U.S. and global commodity prices, agriculture and fishery output, disruptions to global and trade supply chains, and resulting impacts on food security, human health, and social instabilities.
• Energy and critical mineral supply chain readiness. To more consistently track risk and opportunity across energy supply chains, DOE is developing an assessment tool that accounts for raw materials, manufacturing, workforce, and logistics considerations. Additionally, to help assess the potential for trade disruptions of select critical minerals and materials, the Department of the Interior’s U.S. Geological Survey (USGS) will map and develop geospatial databases for select global critical product supply chains, with a current focus on semiconductor components; and will seek designation by the Chief Statistician of the United States of a federal statistical unit providing the nation’s official minerals statistics. Additionally, the National Science and Technology Council’s Critical Minerals Subcommittee plans to launch a new criticalminerals.gov website in January 2024 that will highlight cross-governmental supply chain efforts.
• Defense supply chain mapping and risk management. DOD is increasing supply chain visibility through the creation of a Supply Chain Mapping Tool to analyze supplier data for 110 weapon systems. This capability will be used to develop defense industrial base wargaming scenarios to identify vulnerabilities and develop mitigation strategies.
• Risk mapping for labor rights abuses. The Department of Labor (DOL) updated its Comply Chain guidance for identifying and addressing labor rights violations in global supply chains. In addition, DOL is providing $8 million for two four-year projects to identify supply chain traceability methods and technologies to address child labor or forced labor risks in diverse supply chains, such as the cobalt and cotton sectors. DOL will also undertake new supply chain research on mining and agriculture products across Asia, Africa, and Latin America.

In addition to the announcements above, the Administration continues to deepen engagement with allies and partners to strengthen global supply chains, including:

Deepening international early warning systems to detect and respond to supply chain disruptions in critical sectors with allies and partners, including:

• With the European Union. In May 2023, the United States and the EU established an early warning system for semiconductor supply chain disruptions under the U.S.-EU Trade and Technology Council.
• With Japan and the Republic of Korea. In August, the United States, Japan, and the Republic of Korea committed at Camp David to launch early warning system pilots, starting by identifying priority products and materials such as critical minerals and rechargeable batteries and establishing mechanisms to rapidly share information on disruptions to critical supply chains.
• With Mexico and Canada. Through the United States-Mexico-Canada Agreement (USMCA), the United States, Canada, and Mexico established a trilateral Sub-Committee on Emergency Response to coordinate North American efforts to maintain regional trade flows during emergency situations.
• With Australia, Canada, the European Union, Japan, the United Kingdom, and the World Health Organization. The Global Regulatory Working Group on Drug Shortages, currently chaired by the U.S. Food and Drug Administration, meets quarterly to discuss product shortages participating jurisdictions are encountering and ways such shortages are being addressed. The group’s exchange of information helped address product shortages experienced by each partner during the COVID-19 pandemic and subsequent “tripledemic” including COVID-19, influenza, and respiratory syncytial virus.
• With global partners. Through the President’s Emergency Plan for Adaptation and Resilience (PREPARE), the U.S. government funds activities to improve the weather, water, and climate observing capabilities and data sharing in regions and countries that are needed to produce actionable local, regional, and global climate information and minimize impacts upon infrastructure, water, health, and food security.

Strengthening global supply chains through other innovative multilateral partnerships:

• Indo-Pacific Economic Framework for Prosperity (IPEF) Supply Chain Agreement. The United States and 13 IPEF partners concluded a first-of-its-kind Supply Chain Agreement that gives partners new tools to build diversified, competitive supply chains for critical sectors, including an IPEF Supply Chain Council to coordinate action. The Department of Commerce is kickstarting this effort through pilot projects to enhance the resilience of key supply chains, including those related to semiconductors, critical minerals, and cold chain services. In addition, the Supply Chains Agreement establishes a Crisis Response Network that will allow IPEF partners to better prepare for and respond to supply chain disruptions through emergency communication channels and joint crisis simulations, as well as a Labor Rights Advisory Board to promote worker rights across supply chains.
• Americas Partnership for Economic Prosperity (Americas Partnership). The Americas Partnership is focused on, among other things, strengthening and diversifying supply chains. In its first year of work, the Americas Partnership will focus on the development of regional competitiveness plans in three critical sectors: semiconductors, clean energy, and medical supplies.
• North American Leaders’ Summit (NALS). Through NALS, the United States, Canada, and Mexico are enhancing the resilience of North America’s supply chains for critical minerals, semiconductors, and other essential goods. This trilateral effort includes partnering with regional industry and academia to create quality jobs, promote investment, grow talent, and catalyze innovation.
• Partnership for Global Infrastructure and Investment (PGI). Through PGI, the United States is mobilizing public and private financing to incentivize investments and develop transformative economic corridors to diversify global supply chains and create new opportunities for American workers and businesses. From the development of the Lobito Corridor, connecting the Democratic Republic of the Congo and Zambia with global markets through Angola, to the launch of the landmark India-Middle East-Europe Economic Corridor—through PGI, the United States is creating novel interconnections across regions to facilitate trade and secure clean energy, digital, food security, and other critical supply chains.
• Global Labor Directive. On November 16, President Biden signed the Presidential Memorandum on Advancing Worker Empowerment, Rights, and High Labor Standards Globally. The President directed several departments to address labor rights abuses in global supply chains and identify innovative approaches to promote internationally recognized labor rights throughout the supply chain, including by collaborating with labor organizations, workers, and other labor stakeholders to consider efforts that support worker-led monitoring of labor rights compliance.
• The Mineral Security Partnership (MSP). The Department of State, along with partners including Australia, Canada, Finland, France, Germany, India, Italy, Japan, Norway, the Republic of Korea, Sweden, the United Kingdom, and the European Union (represented by the European Commission), established the MSP to accelerate the development of diverse and sustainable critical energy minerals supply chains. The MSP works with host governments and industry to facilitate targeted financial and diplomatic support for strategic projects along the value chain with an emphasis on those projects which adhere to and promote the highest labor, environmental and sustainability standards.
• International Technology Security and Innovation (ITSI) Fund. Created by the CHIPS and Science Act of 2022, the ITSI Fund promotes the diversification of the global semiconductor supply chain. State will partner with countries to develop the most attractive economic environments for private investment. With ITSI Fund support, the Organization of Economic Cooperation and Development has established the Semiconductor Exchange Network allowing policymakers in the semiconductor industry to examine risks and interdependencies on the current state of the semiconductor ecosystem. Additionally, the ITSI Fund is supporting ecosystem reviews in key partner countries that will inform future collaboration on developing this critical sector.

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Air freight regulations, often intricate and dynamic, demand unwavering attention from U.S. business professionals involved in import and export. Navigating this regulatory landscape requires both compliance and an understanding of its intricacies. So, let’s go over the crucial facets of these processes, offering insights and guidance to ensure smooth shipping operations.

Understanding the Regulatory Landscape

Navigating the complex world of air freight regulations can be daunting for U.S. businesspeople involved in import and export operations.

You must first grasp the regulatory landscape to embark on a successful journey. This landscape consists of various governing bodies, such as the Federal Aviation Administration (FAA), Transportation Security Administration (TSA), and the International Air Transport Association (IATA). These entities set the rules that ensure air cargo transportation’s safety, security, and efficiency.

In addition, international agreements, like the Chicago Convention, play a vital role in harmonizing air transportation standards across borders. Thus, understanding this regulatory ecosystem is the foundation for smooth shipping operations, providing the context needed to comply with air freight rules and regulations.

Cargo Classification and Documentation

Understanding cargo classification and documentation is a pivotal aspect of air freight operations for U.S. businesses.

Cargo classification involves categorizing goods accurately based on size, weight, and hazard level. This classification determines how you should handle, package, and transport cargo.

In addition, precise documentation is essential to ensure a smooth shipping process. It includes essential paperwork like bills of lading, invoices, and certificates of origin. Properly completing these documents is crucial for customs clearance and regulatory compliance. Errors or discrepancies in cargo classification and documentation can lead to delays, fines, or even the rejection of shipments. Therefore, you must invest time in training your staff on these critical aspects of air freight to avoid costly mistakes and ensure your goods reach their destination efficiently.

Packaging and Labeling Compliance

Packaging and labeling compliance are fundamental aspects that go beyond mere aesthetics. They serve a vital purpose in ensuring the safe storage of your goods in transit.

Proper packaging safeguards your cargo from damage during handling, turbulence, and unforeseen circumstances. It also ensures that hazardous materials are securely contained, reducing potential risks. At the same time, accurate labeling and marking help carriers and handlers identify the nature of the cargo, facilitating its proper handling and storage. Non-compliance with packaging and labeling requirements can result in serious consequences, including damage to your goods or even fines for violations. Therefore, you must pay meticulous attention to these compliance standards.

However, if you lack the time or staff to deal with this, Harris Movers Sudbury, ON, recommends hiring packing services. These experts know all about the current packing and labeling regulations and dispose of the appropriate packing supplies. Therefore, they can take this daunting task off your hands and ensure your goods reach their destination safely.

Security Measures and Screening

Security measures and screening ensure the safe and secure transportation of goods.

The Transportation Security Administration (TSA) plays a central role in setting stringent security requirements that U.S. businesses must adhere to. These measures encompass cargo screening procedures, technology utilization, and employee training. Cargo screening, often involving X-ray and other advanced technologies, aims to detect and prevent unauthorized items from being loaded onto aircraft.

Moreover, ensuring that employees are well-trained in security protocols is vital to maintain compliance and minimize risks. By prioritizing security measures and screening, businesses can comply with regulations, protect their shipments, and uphold the integrity of the air freight industry.

Hazardous Materials Transportation

Transporting hazardous materials is a complex and crucial facet of air freight operations. These materials, including chemicals, flammable substances, and radioactive materials, demand strict adherence to regulatory guidelines to ensure safety.

Businesses must thoroughly understand hazardous materials regulations, as misclassification or improper handling can pose severe risks to personnel and the environment. Proper labeling, packaging, and documentation are also mandatory for these shipments, and obtaining the necessary permits and approvals is paramount. By taking these precautions and diligently following established safety protocols, you can safely transport hazardous materials through air freight, mitigating potential hazards and environmental concerns.

Customs and Import/Export Regulations  

The process of navigating customs regulations for international shipments is a vital consideration. Customs and import/export regulations govern the flow of goods across borders, ensuring compliance with trade laws and tariffs. Properly completing customs documentation, such as import/export permits and declarations, is essential to prevent delays and legal issues.

Understanding the specific requirements of the countries you are shipping to and from is crucial, as these regulations can vary widely. Failing to comply with customs and import/export regulations can result in confiscated shipments or significant financial penalties. Therefore, staying well-informed about the customs requirements of the origin and destination countries is crucial for ensuring smooth international shipping operations.

Compliance Training and Employee Education    

Compliance training and employee education play a pivotal role in ensuring the success of U.S. businesses involved in air freight operations. Well-informed and trained employees are better equipped to navigate the intricacies of air freight, from cargo classification to security measures.

Furthermore, investing in comprehensive training programs helps employees understand their responsibilities and fosters a culture of compliance within the organization. Moreover, it makes your operations smoother and more reliable. Employees well-versed in compliance standards are less likely to make errors or overlook critical details, reducing the risk of costly mistakes and disruptions!

Compliance Audits and Recordkeeping      

Conducting compliance audits and maintaining meticulous records are crucial aspects of air freight operations for U.S. businesses.

Regular audits help ensure that all aspects of air freight, from cargo classification to labeling and security measures, align with standards. These audits are a proactive means of identifying and rectifying potential compliance issues before they escalate.

Simultaneously, maintaining accurate records and documentation is essential for demonstrating compliance with regulations. Records such as cargo manifests, safety certificates, and audit reports provide a clear trail of compliance efforts. They help businesses adhere to regulatory requirements and also prove invaluable in case of external audits or investigations.

Trade Sanctions and Embargoes

Navigating trade sanctions and embargoes is critical. The U.S. government imposes these sanctions to restrict trade with specific countries, entities, or individuals for various reasons. These include national security and foreign policy objectives.

Thus, ensuring compliance with them is essential to avoid severe legal consequences, including hefty fines and legal liabilities. So, it’s crucial to employ comprehensive screening processes to identify and avoid prohibited parties and entities when conducting air freight. Staying informed about changes in sanction lists and regulations is equally vital, as these can evolve. As such, businesses must implement robust compliance measures, including proper due diligence and risk assessment, to safeguard their operations.

Environmental Regulations and Sustainability

Environmental regulations and sustainability practices are becoming increasingly important. Adhering to environmental guidelines ensures compliance and even contributes to reducing the carbon footprint of your import and export operations.

Besides, embracing eco-friendly initiatives aligns with regulatory standards and enhances your corporate reputation.

Furthermore, sustainable practices help protect the environment and improve your import and export efficiency. For instance, adopting efficient supply chain management and eco-friendly packaging can save costs and reduce environmental impact.

Conclusion on Air Freight Regulations

With everything we covered on air freight regulations, it’s clear that compliance is not just a box to tick. In fact, it is a vital aspect of successful international trade.

Thus, navigating them can be intricate, but the benefits of doing so are immense, ensuring the safety and security of your shipments and even the seamless flow of global commerce. So, stay informed, stay compliant, and thrive in the industry!

This was a guest post by Evelina Thorne.

Author Bio

Evelina Thorne, a distinguished authority in logistics and compliance, brings unparalleled expertise to freight regulations. With an extensive background in navigating complex regulatory landscapes, Ms. Thorne offers invaluable insights to U.S. businesses engaged in import and export operations. Her profound knowledge ensures the smooth flow of global commerce while upholding the highest compliance and security standards.

The post Air Freight Regulations: Compliance Guidelines for Smooth Shipping Operations appeared first on Universal Cargo.

We’re still only beginning to see how the recent and ongoing changes to U.S. shipping law will affect businesses’ imports and exports as well as carriers’ and other industry stakeholders’ operations within maritime shipping. At Universal Cargo, we want to help shippers know how law changes will affect them. What exactly does the Ocean Shipping Reform Act (OSRA) say and do? This blog series goes through it section by section, so you can see exactly what our lawmakers changed in the U.S. Code dealing with shipping.

We’ll give you the OSRA text; the text of the U.S. Code, usually in Title 46, before and after its amendments; and consider what those changes mean for U.S. importers and exporters.

Previously covered in this series:

• Series Introduction & Quick Coverage of Section 1
• Section 2
• Section 3
• Section 4
• Section 5
• Section 6
• Section 7
• Section 8
• Section 9
• Section 10
• Section 11
• Section 12
• Section 13

Obviously, that means today we’re covering Section 14 of OSRA. Let’s see exactly what it says and changes…

Quick Overview

This section of OSRA doesn’t have a direct impact on shippers, but it could make a difference for them down the road. The section mandates the Federal Maritime Commission (FMC) reports on any concerning practices by ocean carriers, particularly those owned or controlled by foreign countries or corporations.

Thus, if ocean freight carriers are found acting in ways that are unfair to shippers, there could be laws created or changed in the future to address those practices. Of course, suspicious activities from carriers wouldn’t have to involve their interactions with shippers. I don’t want to go down the rabbit hole of potential ocean carrier activities or responses Congress could have to those practices because there are just too many hypotheticals.

Overall, Section 14 continues a theme in OSRA of increased scrutiny on ocean freight carriers.

Section 14 Text

SEC. 14. ANNUAL REPORT TO CONGRESS.

    Section 46106(b) of title 46, United States Code, is amended--
            (1) in paragraph (5), by striking ``and'' at the end;
            (2) in paragraph (6), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(7) an identification of any otherwise concerning 
        practices by ocean common carriers, particularly such carriers 
        that are controlled carriers, that are--
                    ``(A) State-owned or State-controlled enterprises; 
                or
                    ``(B) owned or controlled by, a subsidiary of, or 
                otherwise related legally or financially (other than a 
                minority relationship or investment) to a corporation 
                based in a country--
                          ``(i) identified as a nonmarket economy 
                      country (as defined in section 771(18) of the 
                      Tariff Act of 1930 (19 U.S.C. 1677(18))) as of the 
                      date of enactment of this paragraph;
                          ``(ii) identified by the United States Trade 
                      Representative in the most recent report required 
                      by section 182 of the Trade Act of 1974 (19 U.S.C. 
                      2242) as a priority foreign country under 
                      subsection (a)(2) of that section; or
                          ``(iii) subject to monitoring by the United 
                      States Trade Representative under section 306 of 
                      the Trade Act of 1974 (19 U.S.C. 2416).''.

Original Title 46 Text

§46106. Annual report

  (a) In General.—Not later than April 1 of each year, the Federal Maritime Commission shall submit a report to Congress. The report shall include the results of its investigations, a summary of its transactions, the purposes for which all of its expenditures were made, and any recommendations for legislation.

  (b) Report on Foreign Laws and Practices.—The Commission shall include in its annual report to Congress—

    (1) a list of the 20 foreign countries that generated the largest volume of oceanborne liner cargo for the most recent calendar year in bilateral trade with the United States;

    (2) an analysis of conditions described in section 42302(a) of this title being investigated or found to exist in foreign countries;

    (3) any actions being taken by the Commission to offset those conditions;

    (4) any recommendations for additional legislation to offset those conditions;

    (5) a list of petitions filed under section 42302(b) of this title that the Commission rejected and the reasons for each rejection; and

    (6) an analysis of the impacts on competition for the purchase of certain covered services by alliances of ocean common carriers acting pursuant to an agreement under this part 1 between or among ocean common carriers, including a summary of actions, including corrective actions, taken by the Commission to promote such competition.

  (c) Definition of Certain Covered Services.—In this section, the term "certain covered services" has the meaning given the term in section 40102.

Amended Text

§46106. Annual report

  (a) In General.—Not later than April 1 of each year, the Federal Maritime Commission shall submit a report to Congress. The report shall include the results of its investigations, a summary of its transactions, the purposes for which all of its expenditures were made, and any recommendations for legislation.

  (b) Report on Foreign Laws and Practices.—The Commission shall include in its annual report to Congress—

    (1) a list of the 20 foreign countries that generated the largest volume of oceanborne liner cargo for the most recent calendar year in bilateral trade with the United States;

    (2) an analysis of conditions described in section 42302(a) of this title being investigated or found to exist in foreign countries;

    (3) any actions being taken by the Commission to offset those conditions;

    (4) any recommendations for additional legislation to offset those conditions;

    (5) a list of petitions filed under section 42302(b) of this title that the Commission rejected and the reasons for each rejection;

    (6) an analysis of the impacts on competition for the purchase of certain covered services by alliances of ocean common carriers acting pursuant to an agreement under this part 1 between or among ocean common carriers, including a summary of actions, including corrective actions, taken by the Commission to promote such competition; and

    (7) an identification of any otherwise concerning practices by ocean common carriers, particularly such carriers that are controlled carriers, that are--

      (A) State-owned or State-controlled enterprises; or

      (B) owned or controlled by, a subsidiary of, or otherwise related legally or financially (other than a minority relationship or investment) to a corporation  based in a country--

        (i) identified as a nonmarket economy country (as defined in section 771(18) of the Tariff Act of 1930 (19 U.S.C. 1677(18))) as of the date of enactment of this paragraph;

        (ii) identified by the United States Trade Representative in the most recent report required by section 182 of the Trade Act of 1974 (19 U.S.C. 2242) as a priority foreign country under subsection (a)(2) of that section; or

        (iii) subject to monitoring by the United States Trade Representative under section 306 of the Trade Act of 1974 (19 U.S.C. 2416).

  (c) Definition of Certain Covered Services.—In this section, the term "certain covered services" has the meaning given the term in section 40102.

Observations on Section 14’s Paragraphs

Section 14 is a longer section than many of the sections we’ve recently gone through. However, that doesn’t mean there’s a whole lot more to it than most of those sections. The FMC already had an annual report the commission had to turn in to Congress. Section 14 adds one additional item to the list of things the 106th section of Title 46 requires the FMC include in that report.

Let’s quickly break down the three paragraphs of Section 14:

Paragraph (1) gets rids of the “and” at the end of the fifth item in the listed things the FMC is to include in its annual report to Congress. This indicates the list is about to get longer by at least one item.

Paragraph (2) lets us know that there is just one more item being added to the list, as it replaces the period with “; and” at the end of what was previously the last item on the list.

Paragraph (3) gets us to the real meat of the Section 13. This gives us the seventh thing the FMC must now include in its annual report. And it’s all about ocean freight carriers.

Observations on Inserted Text

The text of the new 7th item the FMC is to include in its annual report to Congress is a paragraph (7) with two subparagraphs (A and B), the second of which (B) is divided into three clauses (i, ii, and iii).

The paragraph is simple. If there are any carrier activities the FMC finds to be suspect or “concerning” that the commission isn’t already required to report, it is now to also report those.

Congress is particularly concerned with carriers that are owned or controlled by foreign countries or corporations. Thus, Congress emphasizes “controlled” carriers in the paragraph. Subparagraphs (A) and (B) then define what entities controlling carriers make those carriers of more particular concern.

Subparagraph (A) points to state owned or controlled carriers. Perhaps the most obvious example of this that comes to my mind is COSCO, the world’s fourth largest ocean freight carrier by capacity. This shipping giant is state-owned by China. It’s not surprising that the U.S. government would want to know about any of its concerning practices.

Subparagraph (B) adds ocean carriers controlled by foreign corporations to those of particular concern. The thing is none of the major ocean freight carriers are U.S. companies. This would seem to make concerning practices of every major ocean carrier of particular concern.

The clauses give more specifics to what countries those corporations being based in makes them of particular concern. These are countries the U.S. already has particular concerns with, are monitoring, or find to be nonmarket countries – which is to say the U.S. government finds they don’t have market principles of cost and pricing structure, leading to sales that do not reflect a product’s fair value.

Conclusion

Basically, Congress calls upon the FMC to be its watchdog on ocean freight carriers. If these companies are doing anything the FMC finds concerning, the commission is to report it to Congress.

Congress is especially concerned with ocean freight carriers that are controlled by foreign contries and corporations. But frankly, that’s pretty much all ocean freight carriers. Still, the countries that the U.S. already finds concerning are of particular interest when it comes to corporations based there. When an actual state controls an ocean freight carrier, Congress seems most concerned. But that is a bit of an assumption from the fact Congress made state-owned or -controlled explicit before being controlled by foreign corporations, which it diluted by specifying the type of countries those corporations being based creates the particular concern.

If you noticed something in Section 14 of OSRA that you think deserves more attention, please let us know in the comments section below. Perhaps you have a take on it that I didn’t consider. We’d love to hear from you.

Stay tuned for when Decoding OSRA continues, looking at Section 15….

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Last week, I wrote about the International Longshoremen’s Association (ILA) using the word shippers most fear hearing from one of the giant unions that control the jobs at the ports all along U.S. coasts: strike.

A strike by the ILA or International Longshore & Warehouse Union (ILWU) would shut down all the ports along a whole side of the country, massively disrupting national (and global) supply chains while costing the U.S. economy billions of dollars per day. That’s not an exaggeration. A study by the National Association of Manufacturers and the National Retail Federation found such a strike, lasting at least five days, would cost the economy $2.5 billion per day. Granted, that was almost a decade ago and specifically for the ILWU. However, with the high amount of inflation we’ve seen since that 2015 study, the dollar cost would now likely be significantly higher, no matter which side of the country gets its ports shut down.

Luckily, threats of strike are much more common than actual strikes, but the more you dig into what the ILA and its president, Harold Daggett, are saying, the more serious this potential threat is. And Daggett’s words are worse than merely warning there’s a chance of a strike. Three things stand out to make this story even worse than it appeared in the blog I wrote last week.

First, and unsurprisingly, Daggett is drawing a hard line on automation. This will create contention in negotiations, and it is hard to imagine the issue will be worked out before the current contract expires.

Second, the ILA wants no White House mediation, even if negotiations go south.

Third, if union demands are not met before the current contract expires, Daggett says ILA dockworkers will not continue working under current contract terms until a new contract is reached. “We will be in the streets,” he said, clearly referring to picketing during a strike.

Last week was Miller Time; I used an excellent article by Greg Miller in FreightWaves as my main source for what Daggett and the ILA were saying. Today, I lean on the heraldry of Michael Angell in a Journal of Commerce (JOC) article.

Automation

Here’s what Angell reported on Daggett drawing a line between the ILA and its contract negotiations versus those of the ILWU on the issue of automation:

In 2008, the ILWU agreed to language in their collective bargaining agreement that conceded “new technologies … necessarily displaces traditional longshore work and workers.” The ILWU’s current leadership, whom the ILA supported throughout their negotiations, inherited the concession as part of their current collective bargaining agreement. 

Daggett said the ILA will again seek strong protections against the introduction of full automation at any East or Gulf coast marine terminals. Reading a letter from a “casual” ILWU member about the impact of automation on full-time longshore employment, Daggett said the casual was a “casualty” due to the lack of protection against automation at West Coast ports. 

“We are not the ILWU, we are nothing like the ILWU,” Daggett said. The automation that was implemented at terminals at the Ports of Los Angeles and Long Beach under the ILWU’s earlier contracts “should have never happened, but it happened anyway,” he said. 

It’s not surprising that the dockworkers unions would fight against automation. They see automation as an existential issue. In theory, a 100% automated port would need no dockworkers, right?

However, the ports need automation to create the ability to handle larger and larger amounts of cargo that move through them. Unions fighting against automation at U.S. ports has caused our ports to fall behind ports in Asia and parts of Europe in efficiency and capacity. This played a large role in the bottlenecks and port congestion we saw during the shipping boom of the pandemic. Ports simply were not able to handle the high level of cargo moving through them.

Typically, cargo volume moving through the ports increase year after year. If ports fail to upgrade their ability to handle more cargo, they will not be able to meet the demands ahead of them. Employers at the ports and the ILA are going to have trouble seeing eye to eye on this issue.

Daggett acknowledged ILA dockworkers are not reaching the number of moves per hour the union promised the USMX during previous contract negotiations in order to stave off automation. He urged locals to up efficiency in order to help get them a good contract.

Mediation

I expect to start hearing about letters to the White House from groups of shippers begging the president to ensure a smooth transition to a new ILA contract very soon. The ILA wants none of it.

[Daggett] said the union will reject any efforts by the federal government to intervene in the talks should the ILA and USMX [United States Maritime Alliance] not come to terms.  

… “We will not be interested in Biden sending us a mediator if negotiations are not going well.” 

To me, these words are worse than the strong things Daggett had to say about automation. Automation is always a contentious point in union contract negotiations, whether you’re talking about the ILWU or ILA. But a preemptive refusal of mediation? That sounds like a side is only interested in getting its demands met rather than actually negotiating.

Mediation can obviously be a powerful tool for helping two sides reach resolution in negotiations. Mediation has often been necessary in union contract negotiations at the port.

President Biden has called himself “the most pro-union president in American history.” If the ILA isn’t interested in supposedly the most union-friendly president’s administration acting as mediator between it and its employers, I don’t like the chances of a new contract being reached before the current one expires.

Strike as Soon as Contract Expires

The way Daggett is talking, it doesn’t sound like he’s merely threatening strike for leverage. It sounds like he’s planning to lead the ILA in a strike. He’s not willing to negotiate on any terms until the union’s pay raise demands are met, and he’s not willing to let dockworkers keep working once the current contract expires if there’s not a new one in place. Here’s what Angell reported on this:

[USMX and the ILA] failed last month to agree on new pay raises, the union’s president said Tuesday, slowing further progress in contract talks and prompting the union to warn members they should “start saving money” to prepare for the possibility of the first coastwide strike in 47 years in 2024.  

… at a meeting in Nashville for ILA locals along the South Atlantic and Gulf Coast, [Daggett] said maritime employers need to provide a “substantial” increase in hourly wages before talks on other contract terms can begin, adding that ILA’s 45,000 members will walk off the job if there’s no signed deal in place before the current contract expires on Sept. 30, 2024.  

…

“The ILA has not had a coastwide strike since 1977, but we must be prepared if our demands are not met,” Daggett said. He told local representatives at the meeting they need to prepare their members for a potential loss of income from a walkout. 

“Start saving money because that day may come,” Daggett said.  

…

“I want wages done first, and then we’ll sit down and negotiate the contract,” he said. “Our current contract expires in less than a year and we are facing the most challenging negotiations in our history.” 

Daggett said the ILA outlined its most recent wage increase proposal to the [USMX] at an October meeting in Newark, New Jersey. But he said ILA walked out of the meeting after two and a half hours after it appeared the USMX was not interested in the proposal but “wanted to play hardball.”  

“I wish I could report that the exploratory talks we have had with the USMX have led to an understanding, but I can’t,” Daggett said.  

He did not say what the union is seeking for a pay raise. But he pointed to the recent contract that the United Auto Workers secured from Ford Motors that will bring the lowest hourly straight-time wage autoworker from $18 per hour up to $40 over four years as an example of the strong wage increases that other unions have been able to secure recently.  

“The ILA expects the companies to compensate its workforce with a substantial increase in hourly pay,” Daggett said. 

Daggett also rebuffed the idea that the ILA would remain on the job, as did members of the [ILWU] when their contract expired in July 2022….

“There will be no extensions like the ILWU did. We will be in the streets,” Daggett said.

As I talked about in the previous blog, reaching a new contract before the current expires goes against the unions’ traditional modus operandi. However, we’ve seen much smoother contract transitions over the last decade. Unfortunately, we now seem to be moving back in the wrong direction.

A new ILA contract before the current one expires doesn’t look likely, and the ILA says it will strike if a new contract isn’t reached by then. Thankfully, there’s still the better part of a year before the contract expires on September 30th, 2024, so there still is time. But shippers would be wise spending that time preparing for the eventuality of a strike at East and Gulf Coast ports.

The post ILA Stance Is Worse Than Just Threatening Strike appeared first on Universal Cargo.

If there’s one word shippers hate to hear in relation to the dockworkers and their unions that control the jobs up and down the U.S. coasts, it’s strike. We’re a little under a year away from the contract between the International Longshoremen’s Association (ILA), representing dockworkers at the East and Gulf Coast ports, and the United States Maritime Alliance (USMX), representing employers at those ports, expiring. However, the ILA is already talking strike.

We’ve barely gotten past the long, contentious, on-again and off-again contract negotiations between the International Longshore & Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) on the West Coast, which to no one’s surprise included port-disrupting labor action and had shippers diverting imports and exports through East and Gulf Coast ports. Now, shippers have to get ready to deal with unpredictable labor action, which could include a strike, at those East and Gulf Coast ports.

It’s Miller Time. For those of you who regularly read this blog, you know that doesn’t mean the unions are driving me to drink. Miller Time means we’re checking out a FreightWaves article by Greg Miller. Sometimes, I even use Miller Time as a nickname for the man himself. Here’s what Miller Time reported:

“Members should prepare for the possibility of a coastwide strike in October 2024,” the International Longshoremen’s Association (ILA) — the union representing 45,000 East and Gulf Coast dockworkers — warned in a press release on Saturday.

The current six-year agreement expires on Sept. 30, 2024. “The union will hold firm on its pledge not to extend the contract beyond its expiration date,” said the ILA.

Relatively Smooth Decade

Traditionally, the dockworker unions don’t agree to a new contract before the previous one expires. That’s long documented and basically a matter of policy for both the ILA and ILWU. This policy allows the unions to use their biggest weapons of leverage in negotiations: slowdowns, strikes, and threats of strike.

While ILWU contract negotiations pretty much always mean labor action and port disruptions, ILA contract negotiations have actually been surprisingly smooth over the last decade.

Backlash from massive port disruptions during the 2014-15 ILWU negotiations led to market share gains for East and Gulf Coast ports. It also seemed to make the ILA and USMX realize change needed to happen with how labor negotiations at the ports was handled.

Only about a year before the messy and costly negotiations on the West Coast, negotiations between the ILA and USMX on the East Coast were contentious, with the ILA threatening to strike. Ships were being diverted from East and Gulf Coast ports and market share was being gained by the West Coast ports. Here in Universal Cargo’s blog, we were keeping shippers informed with the 2012/13 ILA Strike Watch.

The ILA and USMX seemed to have learned a lesson that they were better off keeping negotiations smooth instead of trading back and forth discretionary cargo with the West Coast depending on who was disrupting supply chains because of contract negotiations that year. The ILA’s move toward more port stability with smooth new contract negotiations or extensions seemed to rub off on the ILWU as well. In 2017, the ILWU actually reached a contract extension agreement before their contract at the time expired. We were living in new, unprecedented times.

Unfortunately, they didn’t last.

Labor Action Ramps Up

Now is a time when unions in various industries all over the globe, and especially in North America, are ready to strike for higher pay. Business be damned. It appears to be paying off for them. The ILWU’s contentious negotiations resulted in massive pay gains. Of course, the ILA wants to get big pay raises for its members as well (and more control of the jobs at the ports). It may take port disruption. It may result in higher costs for shippers and consumers. It may even cost union jobs down the road. But the dockworker unions seem to be done diverted from their traditional, disruptive contract negotiation tactics. With the ILWU executing port disruptions during their drawn-out negotiations and the ILA already talking strike, the lesson learned from the 2012-13 ILA strike threat and 2014-15 ILWU port congestion appears to be lost.

The ILA is ready to stop the flow of goods through East and Gulf Coast ports to get its extremely high wage demands met. Miller Time reports:

“If it goes to the wire, I will guarantee there will be no extensions and we will be out on the street,” said Daggett at the July convention. “Don’t come back and say we cannot afford that kind of raise. You definitely can afford it — and you know it.”

The United States Marine Alliance (USMX) represents dockworker employers at East and Gulf Coast ports and shipping lines serving those facilities. The ILA is seeking a new contract from USMX that includes “a landmark compensation package,” prohibitions against terminal automation and tightened language ensuring all work at new terminals goes to ILA members.

ILA Already Showing It’s Serious with Terminal Stranglehold

Of course, over the last couple years, the ILA has been showing it still has the will to flex its muscle and stop the flow of goods to get what it wants. In 2021, I wrote about the ILA putting a stranglehold on what was a new terminal at the Port of Charleston. We’re approaching three years since the Hugh K. Leatherman Terminal opened at the Port of Charleston, but it has gone largely unused despite great need for it, particularly during the shipping boom.

The ILA is fighting for control of all the jobs at the terminal instead of the traditional hybrid labor model of employing union members and state employees there. The ILA sued over the issue, and the case could make it to the Supreme Court. Getting rid of the hybrid model, so the ILA controls all jobs at the East and Gulf Coast ports could play a big role in the upcoming contract negotiations, as could the issue of automation.

In the meantime, shippers may want to start planning ahead for shipping options in October of 2024 that divert cargo away from East and Gulf Coast ports as much as possible.

The post ILA Already Threatening Strike appeared first on Universal Cargo.

This is a guest post by Patrica Garcia.

Customs regulations when shipping internationally are a crucial aspect of global trade. For U.S. businesspeople, understanding these rules is not just about compliance—it’s about ensuring a smooth, efficient transfer of goods across borders. This guide will explain the essentials of customs regulations, helping you avoid delays, reduce costs, and confidently manage your international shipments.

Understanding Customs Regulations

Customs regulations form the framework for international trade, dictating the flow of goods across borders. These rules are in place to control the import and export of merchandise, ensuring that all items are legally allowed, properly documented, and taxed accordingly. Failure to comply can lead to significant setbacks, including fines, delays, or confiscation of goods.

Key terms you’ll encounter include duties, tariffs, and import/export restrictions. Duties and tariffs are the country’s fees on imported and exported goods. These can vary widely, depending on the product and the country. Import/export restrictions can include quotas or bans on certain goods, often based on health, security, or environmental protections.

Leveraging Technology for Compliance

In today’s digital age, leveraging technology can significantly streamline the customs process. Many businesses are now turning to software solutions that automate the creation of shipping documents, ensuring that they are filled out correctly and consistently. These systems can also keep up-to-date records of changing customs regulations, which is invaluable in maintaining compliance.

Staying Informed on Trade Agreements

A less discussed yet vital aspect of international shipping is staying abreast of trade agreements between countries. These agreements can significantly affect customs regulations, duties, and tariffs. For instance, being aware of preferential trade programs or free trade agreements that your home country has with the destination country can offer substantial savings on tariffs and provide a competitive edge in pricing your products.

Emphasizing Ethical Compliance

In the complex web of international shipping, ethical compliance often takes center stage. It’s not just about following the rules; it’s about upholding a standard of integrity that reflects on your business and its practices. That includes ensuring that no part of your supply chain is involved in unlawful activities such as smuggling or violating trade sanctions. Businesses that prioritize ethical compliance not only protect themselves from legal repercussions but also build their reputation as trustworthy and responsible international traders.

Calculating Duties and Taxes

Duties and taxes are an inevitable part of international shipping. They are calculated based on the harmonized system (HS) code, the value of the goods, and the country of origin. Online duty calculators can provide estimates, but for precise figures, consulting with a customs broker or the destination country’s customs authority is advisable.

Strategic planning can help manage these costs. For example, navigating high international shipping costs can be crucial, especially during peak seasons when expenses escalate.

Preparing Your Shipment

Preparation is paramount. Begin by researching the specific customs regulations of your destination country. That can include product restrictions, documentation requirements, and labeling standards. For instance, some countries have strict regulations on the packaging material due to pest control.

In international relocation, companies like Professional Movers Ottawa have noted the importance of meticulous organization when preparing for a move. That includes creating a detailed inventory of items being shipped, which not only helps in keeping track of the goods but also simplifies the process of obtaining customs clearance, as authorities often require a comprehensive list of the contents.

Documentation is your shipment’s passport. Commonly required documents include a commercial invoice, which details the transaction between the exporter and importer, and a certificate of origin, which verifies where the goods were manufactured. Ensure that all paperwork is complete, accurate, and readily available.

Proper packaging and labeling are also critical. Incorrect labeling can lead to misunderstandings, delays, and even penalties. Labels should include information such as contents, country of origin, and any handling instructions in the language of the destination country if required.

Working with Customs Brokers

Customs brokers act as the liaison between your business and the customs authorities. They are experts in the field and can navigate the complexities of customs regulations with ease. Their services can be particularly beneficial during the international shipping peak season when the volume of shipments can lead to delays and increased scrutiny from customs officials.

The benefits of hiring customs brokers include their ability to handle all necessary documentation, their knowledge of duty reduction programs, and their capacity to expedite customs clearance. When choosing a customs broker, look for experience, good references, and a track record of success with your particular type of goods and destination countries.

Dealing with Customs Clearance

The customs clearance process is the final hurdle in international shipping. This stage involves the assessment and collection of duties and taxes and the enforcement of other customs regulations. Common issues that can arise include discrepancies in documentation, misclassification of goods, and unpaid duties.

To ensure a smooth customs clearance, double-check all documentation for accuracy and completeness. Be proactive in addressing any requests from customs officials, and be prepared to provide additional information if necessary. Remember, a delay in clearance can lead to increased storage fees and disrupt your supply chain. That is where you can truly unleash your shipping potential by ensuring that all processes are optimized for efficiency and compliance.

Navigating Environmental Regulations

Environmental considerations are increasingly becoming a part of international shipping customs regulations. Many countries are now implementing stricter controls on the transportation of goods to minimize environmental impact. That includes regulations on emissions, waste management, and the use of certain materials in packaging. Staying informed about and compliant with these environmental guidelines contributes to the global effort to protect the planet, resonates with eco-conscious consumers, and can enhance your brand’s image.

Manage Customs Regulations When Shipping with Succes

Navigating customs regulations when shipping internationally is a complex but manageable task. However, by understanding the regulations, preparing your shipment correctly, calculating duties and taxes, and dealing with customs clearance efficiently, you can ensure that your goods reach their destination without issue. Mastering these regulations is key to the success of your international business endeavors.

This was a guest post by Patrica Garcia.

Author Bio

BIO: Patrica Garcia is a distinguished international trade consultant with a decade of experience in customs and logistics. Her expertise in simplifying complex customs regulations has made her a sought-after speaker and contributor to trade publications. With a Master’s in International Business and a passion for travel, Patrica infuses her work with a rich global perspective, making her a valued resource in the business community.

The post How to Navigate Customs Regulations When Shipping Internationally appeared first on Universal Cargo.

That might sound a little hyperbolic, as large container ships are still passing through the Panama Canal, but weight restrictions have indeed limited container ships, Neo-Panamax ones in particular. Additionally, the Panama Canal Authority (ACP) continues to cut the number of ships that can move through the Panama Canal as well as the weight they can carry. Decreases are scheduled in the number of ships allowed through the canal per day all the way through February. That certainly has an impact on international shipping, particularly for U.S. shippers importing goods from Asia to the East Coast.

The decrease of ships able to get through the Panama Canal has already helped U.S. West Coast ports gain back some of the market share they lost to East and Gulf Coast ports in the lead-up to and over a year of on-again, off-again contract negotiations between the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU). The contentious negotiations led to uncertainty at the West Coast ports for shippers and plenty of port disruption from dockworker labor action.

Shippers go from one uncertainty to the next as congestion at the Panama Canal looks likely for at least the next few months.

Meteorologist Orelon Sydney reported in a Weather Channel video, “Because El Niño typically causes drier conditions in the region, officials have plans to further reduce shipping transit in the coming months.”

Panama Canal Restriction Details

Greg Miller (yes, the one I regularly refer to as Miller Time in Universal Cargo’s blog) reported yesterday in a FreightWaves article about the situation. He gave details of the tightening restrictions limiting the number of ships the ACP is allowing through the canal:

… The ACP had previously reduced daily transit reservation slots from 36 to 32. On Tuesday, it announced that reservation slots will be limited to 25 as of Friday, 24 starting Nov. 8 and 22 on Dec. 1. The number of reservation slots will fall to 20 on Jan. 1, 2024, then 18 starting Feb. 1.

He even put the details into a nice table form:

Panama Canal Restrictions’ Effects on Container Shipping

I already mentioned the Panama Canal situation helping to restore import market share to U.S. West Coast ports, but Miller Time provides more details on how tightening capacity at the canal affects container shipping:

Larger container ships sailing from Asia to U.S. East and Gulf Coast ports already feel the effect of Panama’s drought, because they need more than 44 feet of draft [to which the Panama Canal is being limited] when fully loaded. Vasquez said that for every foot of lost draft, container ships lose capacity for 350 twenty-foot equivalent units.

Thus, this year’s loss of 6 feet of draft equates to 2,100 TEUs of cargo. Liners have either had to sail with lower utilization or unload 2,100 TEUs on the Pacific side of Panama, rail them across the isthmus and reload on the Atlantic side.

The just-announced transit restrictions avert or delay further draft reductions that would force liner companies to unload and reload even more containers.

However, the transit reservation cap itself looks likely to affect schedules.  

Over the next two months, the number of Neopanamax transit reservation slots will be cut in half, from 10 currently to five as of Jan. 1.

During the past two fiscal years (the ACP’s fiscal year ends Sept. 30), there was an average of 4.7 container ships transiting the Neopanamax locks per day, according to FreightWaves calculations based on ACP transit data.

That historical container-ship average is right at the Feb. 1 limit for total Neopanamax reservation slots (for all ship types) — and it’s just an average, meaning that on many days over the past two fiscal years, there were more than five container ship transits through the Neopanamax locks. 

Container shipping flows, as with other ocean cargo flows, rise and fall seasonally. Thus, some container service scheduling changes appear likely while restrictions are in place.

Conclusion

Unfortunately, supply chain disruptions are a regular part of the international shipping industry.

During the pandemic, we saw exceptional port disruption from a combination of things, including hundreds of blanked (cancelled) sailings maldistributing shipping containers around the world right before shipping demand exploded to record levels for which the ports were not prepared. That’s not to mention lockdowns, shutdowns, Covid restrictions, and a ship getting wedged in the middle of the Suez Canal adding to the chaos. Then there were the disruptions with the ILWU contract negotiations on the U.S. West Coast followed by the ILWU Canada strike. More labor strikes have hit logistics around the world too, with rippling effects across supply chains. Now we have the restrictions at the Panama Canal, which will probably be followed by some other disruptive event before uncertainty centering around the International Longshoremen’s Association (ILA) contract negotiations on the East Coast starts making headlines.

Many shipping disruptions are unforeseeable. Cargo insurance is an obvious necessity to protect against disasters no one sees coming, but shippers should partner with experienced logistics experts who prepare ahead of disruptions that can be foreseen. Regular readers of Universal Cargo’s blog were not surprised when disruptions hit during the ILWU contract negotiations. Disruption is pretty much a guarantee during ILWU negotiations, and we were warning our readers and customers well before negotiations began.

Likewise, trusted and experienced freight forwarders can help you right now to protect your imports and exports by informing you of what’s happening at the Panama Canal and helping you choose the best and least risky routes for your international shipping. Universal Cargo’s account executives also communicate directly and promptly with customers (who can also contact them anytime), so you know exactly what’s happening with your shipments, even when the unexpected happens.

The post Watch Out Shippers – Panama Canal Further Tightening Capacity appeared first on Universal Cargo.

Your business can’t do without shipping, yes. But who says you have to do the shipping yourself?

Let’s face it; the complexities of import and export demand significant time and resources that could be invested in other parts of your business. For example, not knowing where your cargo is can be really scary. And with good reason – over 2,675 containers are lost at sea each year. 

That’s where a reliable freight forwarder comes in handy. Universal Cargo is THE go-to freight forwarder when it comes to your US import/export operation. They take the burden of shipping goods worldwide off your shoulders and calm your fears. 

Freight forwarders handle shipping processes like warehousing, tracking onshore transport, securing cargo space, arranging cargo, sorting freight charges, and managing documentation, among others. 

But a freight forwarder isn’t all you need to transform your business operations in this digital age  – you need a robust transportation management system (TMS). 

Thankfully, there are new technologies that, if integrated into your transportation management system, will boost it and revolutionize your business operations. These are the technologies we’ll be discussing in this article. Let’s jump right in.  

How a TMS Will Benefit Your Import/Export Operations

A transportation management system is a logistic platform used in supply chain management to plan, optimize, and implement the transportation of goods. TMS helps businesses manage and improve the daily workflow of their transportation operations. Here are reasons to invest in a TMS for a more efficient business. 

Logistics Optimization

A transportation management system (TMS) helps you manage your entire supply chain and logistics process, making it more efficient and cost-effective. It covers every process from the time you receive orders to when you deliver them. This software assists you in route optimization, load consolidation, real-time tracking, and inventory management, among others. 

Document Flow Simplification

Documentation is critical to the import/export business, yet it can be a mess. Handling different documents throughout the whole supply chain process can be tasking and disorderly if done manually. TMS automates and simplifies the whole documentation process in your business. 

It improves the status visibility of all documents, letting you access them easily. With TMS, you generate accurate and consistent documents, saving you time and minimizing errors. A transportation management software also improves internal and external communications, allowing you to carry all stakeholders along and resolve issues sufficiently.

Real-Time Tracking and Visibility

There’s nothing as frustrating as not being able to track your goods. Even if you’re outsourcing your shipping to a freight forwarder, you must be able to know where your goods are at any point in time. TMS puts your mind at rest in this regard. It gives you an up-to-the-minute update of where your shipment is at every stage of the supply chain. 

Real-time tracking of your products improves your efficiency, letting you allocate resources more effectively. It also enables you to detect any delays or issues on time so they can be resolved before they get out of hand. With TMS, your customers can also get real-time updates on their goods, leading to improved customer experience. 

Compliance with Agreements and Regulations

To be successful in any business, including import/export, you must comply with the relevant regulations and agreements. This sounds easy but the process can be complicated. But TMS has got your back. It helps you simplify tasks relating to compliance management. As a result, you will not only be avoiding fines and penalties, you will also be running a reputable and sustainable business. 

On-time Delivery

The best way to lose customers is by delivering their goods late. Fortunately, a transportation management system helps you reduce and even eliminate this occurrence. Route adjustment features in TMS enable you to route your goods more efficiently to avoid delays. In addition, the real-time tracking data you get from a TMS calculates the exact expected time of arrival (ETA) of goods and relays the information to customers. 

Businesses that can benefit from a transportation management system include the following:

• Food and beverage businesses
• Ecommerce businesses
• Distributors
• Retailers
• Healthcare and pharmaceutical companies
• Building materials and construction companies
• Agricultural businesses
• Oil and gas companies
• Textile companies 

To revolutionize your business operations, TMS is not a should-have, it’s a must-have. It eases your supply chain operations, letting you optimize your resources. The benefits you get from adopting a transportation management system not only help you run your business smoothly, they place you among the top-tier companies in your field. 

5 Technologies to Boost TMS Growth

TMS is a fantastic innovation but it stops being so if you don’t expand it to meet evolving technological demands. For example, what the computer was 20 years ago is not what it is now. It has been upgraded many times to meet present needs. The same principle applies to TMS. It has to be continually boosted by being integrated with other software to make it more robust. Here are five technologies that can boost TMS growth. 

1. Equipment management software 

Equipment management software improves the allocation and utilization of assets in your business. Say goodbye to days of endless spreadsheets and manage your equipment data in one central location. Whether you’re into manufacturing or supply, every piece of equipment you own must be well-managed. 

Integrating an equipment management system into your TMS ensures you never lose track of your equipment and power tools. Not only are you able to collaborate more effectively, you also gain full control of your equipment and enhance accountability. 

2. Battery management software 

Battery management software (BMS) unlocks performance, improves safety, and enhances the lifespan of batteries in any application. BMS  improves the efficiency of your transportation management system in several ways. First, it helps optimize routes for electric vehicles (EVs), enabling them to complete their journeys without running out of charge. 

Another benefit of integrating a BMS into your TMS is that it can route EVs through charging stations, ensuring that they recharge as and when needed. Also, if you’re using an energy management system to optimize power usage in your facility, BMS works like magic. It helps coordinate your EVs to charge during off-peak hours, saving energy and promoting sustainability. 

3. Enterprise resource planning systems

An enterprise resource planning (ERP) system is a rounded integrated software that assists businesses of all sizes to harmonize and streamline their core processes. An ERP system provides by-the-minute visibility of workflows, boosts operations and improves decision-making.

When you integrate TMS and ERP, you facilitate smooth data sharing between the transportation unit and other units of the company. The centralized database that the ERP provides ensures that only valid and accurate information guides transportation decisions. This information can cover aspects like customer orders, supplier details and inventory status.

4. Supplier relationship management software

Supplier relationship is crucial to a vibrant supply chain and indeed the success of the company. Thus, the need to manage suppliers successfully is what birthed the supplier relationship management (SRM) software. This software improves the procurement process, boosts supplier collaboration and ensures the efficient operation of the company’s supply chain.

If integrated with the TMS, the SRM software helps enhance relationships with suppliers and partners in the transportation unit like freight forwarders. Data collected from SRM enables TMS to manage transportation operations more efficiently. 

Generally, the integration of TMS and SRM leads to better logistic planning, cost-effectiveness, and an enhanced supply chain process. 

5. Warehouse management system

Warehouse management systems (WMSs) are software solutions developed for managing warehouse operations. They ensure the efficient processing of goods from arrival till they leave the warehouse. The software covers functions like inventory management, order management, shipping, and task management. 

When integrated with TMS, WMS helps streamline and optimize the transportation workflow, resulting in reduced errors, short fulfillment times and improved order accuracy. 

Why the Need for Technological Advancements in TMS

Still not sold? Then a deeper dive into the need for an advanced tech-driven TMS will change your mind. Here are five solid reasons you need to jump onboard and boost your TMS with improved technology. 

1. Growing complexities of the supply chain process 

We’re in a digital age where the business landscape has changed drastically. The supply chain industry is not left behind – the process has become more complex, transcending borders and becoming global. And this digital transformation is not stopping anytime soon. That’s why you must embrace the latest technological advancements for your TMS growth.

2. The need to save costs 

It’s a fact that technological solutions help businesses manage their operations better and save costs. TMS-boosting software are no exception. They streamline your workflows, block loopholes, and save you tons of money. 

3. Customer expectations 

You’re in business because of your customers. Remove them from the equation and you’ll be out of business pretty soon. And today’s customers have high demands that can only be met with the latest technologies. So, to ensure you keep your customers and gain new ones, you must integrate modern solutions into your TMS. 

4. Data-driven age 

The whole world is driven by data – from governments to corporations and NGOs. Anyone who’s serious about making any impact in this age has to use data in one form or the other. What better way to leverage up-to-date data than by adopting software designed to help you use data to your advantage? All the solutions mentioned here are data-equipped to enable you to manage your transportation operations more effectively. 

5. Regulatory compliance  

Regulations guide the business landscape and keeping up with them can be stressful. But with these innovative technologies, it becomes easier. For example, the centralized data an ERP software provides gives you immediate access to any data needed for regulatory purposes in the transportation unit. Also, a battery management software helps you comply with sustainability rules.

See? The transportation management software (TMS) is good but it can be better with supporting digital solutions. With these software, not only will you be able to effectively use data, your operations will become smoother and more productive. 

The Difference Between You and Your Competitors

Do you know that in the US, exports of goods increased from $3.2 billion to $168.4 billion in July 2023? Guess who those are raking in such humongous amounts? You’re right – your competitors. And how are they able to do such incredible numbers? You’re right again – by leveraging innovative technologies. 

See why you can’t fold your arms and settle for a TMS that’s not optimized for growth? Here are other benefits you derive from boosting your TMS.

• Reduced costs: benefits like load consolidation and route optimization gained from an improved TMS helps reduce costs. 
• Improved decision-making: with access to up-to-date data that these technologies provide, decision-making becomes easier and better informed.  
• Better customer experience: these software enable you to improve your operations and service delivery, leading to enhanced customer experience. 
• Efficient use of labor: TMS-boosting software promotes the visibility of all your supply chain processes, enabling you to efficiently deploy labor. 
• Compliance with industry regulations: these technologies make it easy to comply with industry regulations, helping you avoid fines and penalties that come with non-compliance.
• Achievement of sustainability goals: your corporate sustainability goals are seamlessly met with advanced TMS technologies like equipment management software and battery management software.

These benefits are too juicy and numerous to pass on. And there’s no better time to integrate TMS growth-boosting technologies than now. Remember, the difference between import/export businesses that are doing great numbers and those performing poorly is the technology they leverage. 

Time to Grow Your Export/Import Business with Advanced TMS Technology

It’s not business as usual. The world is changing fast and tech gurus are constantly churning out digital solutions to ease business processes and promote growth. It’s a great time in history and an opportunity to move your business to the next level with an enhanced transportation management system. 

Your TMS will do much more if integrated with growth-boosting solutions like the equipment management software, battery management software, enterprise resource planning, supplier relationship management software, and warehouse management system. 

Even if you don’t want to take advantage of these digital transformation tools, necessities like the growing complexities of the supply chain process, cost saving, customer expectations, data-driven age, and regulatory compliance are valid reasons to jump in. 

Not to worry, your investments are not a waste. They come with dividends like reduced operational costs, better decision-making, improved customer experience, efficient use of labor, compliance with industry regulations, and achievement of corporate sustainability goals. 

So, the best time to integrate these solutions with your TMS was yesterday. The next best time is now. You have the ball; you have the court. 

This was a guest post by Moyofade Ipadeola.

Author Bio

Moyofade Ipadeola is an SEO writer, UX writer, and editor. Witty, she loves personal development and helping people grow. Mo, as she’s fondly called, is fascinated by all things tech. She can be reached on Linkedin. 

The post Revolutionize Business Operations: How Technology Can Boost TMS Growth appeared first on Universal Cargo.

Hamas is a terrorist organization. It doesn’t believe the Jewish people have a right to a nation or even to live. Earlier this month, Hamas launched terrorist attacks on Israel with a death toll around 1,400 people. Hamas terrorists murdered children and babies. They raped women. They took hostages. Israel is responding as it must: with a war effort. A Jewish friend put it to me this way over the weekend, “There are three types of people. Those who think a Jewish state has the right to exist. Those who don’t. And those who are indifferent.” I am not indifferent.

Israel has a right to exist. The terrorist organization called Hamas does not. Its goals are evil. Its actions are evil. If allowed to continue on, we’ll just see more horrific days like October 7th, 2023 orchestrated by Hamas. Its an organization that called for Jihad in its original 1988 charter and has carried out act after act of terrorism in the decades that followed. There’s nothing complicated about that.

Israel Needs Goods

Now I can turn my attention to global trade. Conflicts around the globe generally affect international shipping, and the war in Israel is no different. One of the biggest results of this war, when it comes to international trade, is Israel needs more imports.

Eric Kulisch reported in a FreightWaves article:

Israel will need to import more goods because the war effort makes domestic production more difficult…

…

The call-up of tens of thousands of army reservists will limit Israel’s economic output and ability to support itself, driving a need for imported goods and related logistics support, Brian Bourke, global chief commercial officer at Seko Logistics, told reporters on a conference call. Seko has 65 employees in the country.

If you’re an exporter, or even a manufacturer who doesn’t normally export goods, one way to support Israel is simply to export goods there. Perhaps, if you’re in the indifferent category my Jewish friend spoke of, the altruistic motivation isn’t necessary. Where there’s an increased demand, there’s an increased opportunity. Israel certainly has an increased demand.

Kulisch wrote:

The departure of Israeli citizens from their regular jobs to join the Israel Defense Forces “has impacts on supply chains because factories are not going to be producing as much, distribution centers aren’t going to be moving goods as much,” said Bourke. “And so Israel as a country is going to be needing to import a lot more than they were before. And traditionally they import quite a bit.” 

Israel is a big market for sectors like high-tech, although much of the trade flow in technology is outbound. In 2022, Israel imported $107.7 billion worth of merchandise from the world, led by raw materials and consumer goods, according to the U.S. International Trade Administration.

Supply Chain Stressed But Israeli Government Uses Exemptions to Ease It

Along with the increased demand for goods, there are strains on the supply chain in Israel. However, the Isreali government is doing what it can to make it as easy as possible to get imports into the country.

Kulisch continues in his article:

The Israeli government last week exempted many high-priority imported products from inspections and document requirements to ease their entry into the country, according to Reuters.

The Port of Ashdod is open, but working at less efficiency with workers having to take shelter when there are rocket attacks and some personnel called up for military duty. The northern Port of Haifa and Tel Aviv Airport are open and operating close to normal. 

Jonathan Saul, in a Reuters article, describes how the workers at the Port of Ashdod are keeping the supply chain going under the threat of rocket strikes from Gaza:

When wailing sirens warn of incoming rockets from Gaza, workers at Israel’s Port of Ashdod stop operations within moments and quickly resume their work minutes later when the all clear is given.

It’s an unusual way for a port to keep operational but it has become the only means to keep supply lines moving in time of war.

…

A combination of practice drills, protective shelters and an Iron Dome air defence battery nearby have meant the government-owned port, which is 40 km (30 miles) from Gaza, can minimise any supply chain disruptions amid concerns over tightening supplies for the home front.

The entire port is dotted with protective shelters and the waiting time for staff under protection is around 10 minutes to ensure that even after a rocket falls there is no risk of falling shrapnel, port foreman Yigal Ben Kalifa told Reuters.

Diverted Ships and Flights Add to Import Need

The war isn’t only a problem for port operations on the ocean shipping side of supply chains in Israel but for air freight as well.

Kulisch reports:

Operating in a conflict zone is challenging for commercial transportation providers. Many international passenger and cargo airlines have suspended flights to Tel Aviv until hostilities subside. Aviation experts say there is a risk that an aircraft could be accidentally struck by a missile fired by Hamas in Gaza or Iran-backed forces in southern Lebanon or by Israel’s antimissile defense system. Interference with GPS signals also could cause aircraft to move off their intended flight paths and into more dangerous skies. Israeli authorities counter that their mitigation measures make it safe to fly into Tel Aviv.

It’s not surprising airlines would be afraid to fly through the area. According to Saul’s Reuters article, Israeli government data shows that more than 7,600 rockets have been fired from Gaza towards Israel since Hamas’s October 7th terrorist attacks on Israel civilians.

Back on the ocean side, diverted ships add to canceled flights in preventing cargo from reaching Israel.

Saul also reports in his Reuters article:

At least 20 ships have opted to divert from Ashdod to the northern Israeli port of Haifa in recent weeks, and the port has seen a 30% drop in volume week-on-week, said Shaul Schneider, chairman of the Port of Ashdod’s board of directors.

An average container ship transports thousands of shipping containers of goods. All those diverted cargo containers, as well as the freight on cancelled flights, add to the need Israel will be having for goods. On top of regular goods, there will be a particular need for medical supplies.

If you decide to donate goods, medical supplies, or money to Israel, make sure you do it through an organization you know and trust or have researched thoroughly.

The post Israel Needs More Imports Because of Hamas Terrorist Attacks & Resulting War Effort appeared first on Universal Cargo.

We’re still only beginning to see how the recent and ongoing changes to U.S. shipping law will affect businesses’ imports and exports as well as carriers’ and other industry stakeholders’ operations within maritime shipping. At Universal Cargo, we want to help shippers know how law changes will affect them. What exactly does the Ocean Shipping Reform Act (OSRA) say and do? This blog series goes through it section by section, so you can see exactly what our lawmakers changed in the U.S. Code dealing with shipping.

We’ll give you the OSRA text; the text of the U.S. Code, usually in Title 46, before and after its amendments; and consider what those changes mean for U.S. importers and exporters.

Previously covered in this series:

• Series Introduction & Quick Coverage of Section 1
• Section 2
• Section 3
• Section 4
• Section 5
• Section 6
• Section 7
• Section 8
• Section 9
• Section 10
• Section 11
• Section 12

Obviously, that means today we’re covering Section 13 of OSRA. Let’s see exactly what it says and changes…

Quick Overview

Like a nice cabernet sauvignon with a filet mignon, Section 13 of OSRA pairs nicely with Section 8. Actually, make that a light pinot noir because Section 8 is another short section, not nearly full-bodied enough to be a cab. And, of course, we’re talking about shipping law here, so it’s nowhere close to as enjoyable as red wine and steak. However, it is still pretty good for shippers. Sticking with the simile, Section 8 would have been the main course whereas Section 13 is what you put with it to complete the meal.

Section 8 added refunds to penalties the Federal Maritime Commission (FMC) can assess against violators of U.S. shipping code. Now Section 13 adds the refunds to reparations that violators can be enforced to pay should they not comply with such orders from the FMC. Thus, shippers can go to a district court to force carriers to pay them refunds awarded by the FMC.

Section 13 Text

SEC. 13. ENFORCEMENT OF REPARATION ORDERS.

    Section 41309 of title 46, United States Code, is amended--
            (1) in subsection (a), by striking ``reparation, the person 
        to whom the award was made'' and inserting ``a refund of money 
        or reparation, the person to which the refund or reparation was 
        awarded''; and
            (2) in subsection (b), in the first sentence--
                    (A) by striking ``made an award of reparation'' and 
                inserting ``ordered a refund of money or any other award 
                of reparation''; and
                    (B) by inserting ``(except for the Commission or any 
                component of the Commission)'' after ``parties in the 
                order''.

Original Title 46 Text

§41309. Enforcement of reparation orders

(a) Civil Action.—If a person does not comply with an order of the Federal Maritime Commission for the payment of reparation, the person to whom the award was made may seek enforcement of the order in a district court of the United States having jurisdiction over the parties.

(b) Parties and Service of Process.—All parties in whose favor the Commission has made an award of reparation by a single order may be joined as plaintiffs, and all other parties in the order may be joined as defendants, in a single action in a judicial district in which any one plaintiff could maintain an action against any one defendant. Service of process against a defendant not found in that district may be made in a district in which any office of that defendant is located or in which any port of call on a regular route operated by that defendant is located. Judgment may be entered for any plaintiff against the defendant liable to that plaintiff.

(c) Nature of Review.—In an action under this section, the findings and order of the Commission are prima facie evidence of the facts stated in the findings and order.

(d) Costs and Attorney Fees.—The plaintiff is not liable for costs of the action or for costs of any subsequent stage of the proceedings unless they accrue on the plaintiff's appeal. A prevailing plaintiff shall be allowed reasonable attorney fees to be assessed and collected as part of the costs of the action.

(e) Time Limit on Bringing Actions.—An action under this section to enforce an order of the Commission must be brought within 3 years after the date the order was violated.

Amended Text

§41309. Enforcement of reparation orders

(a) Civil Action.—If a person does not comply with an order of the Federal Maritime Commission for the payment of a refund of money or reparation, the person to which the refund or reparation was awarded may seek enforcement of the order in a district court of the United States having jurisdiction over the parties.

(b) Parties and Service of Process.—All parties in whose favor the Commission has ordered a refund of money or any other award of reparation by a single order may be joined as plaintiffs, and all other parties in the order (except for the Commission or any component of the Commission) may be joined as defendants, in a single action in a judicial district in which any one plaintiff could maintain an action against any one defendant. Service of process against a defendant not found in that district may be made in a district in which any office of that defendant is located or in which any port of call on a regular route operated by that defendant is located. Judgment may be entered for any plaintiff against the defendant liable to that plaintiff.

(c) Nature of Review.—In an action under this section, the findings and order of the Commission are prima facie evidence of the facts stated in the findings and order.

(d) Costs and Attorney Fees.—The plaintiff is not liable for costs of the action or for costs of any subsequent stage of the proceedings unless they accrue on the plaintiff's appeal. A prevailing plaintiff shall be allowed reasonable attorney fees to be assessed and collected as part of the costs of the action.

(e) Time Limit on Bringing Actions.—An action under this section to enforce an order of the Commission must be brought within 3 years after the date the order was violated.

Observations on Section 13

Because of how short and straightforward Section 13 is, for me to go through it line by line would be repetitive and redundant. Sorry for the old dad joke there. However, there is something of note beyond adding refunds to reparations as something that is enforceable when the violating party does not comply.

After two amendments adding refunds, there’s a third amendment that adds the parenthetical “(except for the Commission or any component of the Commission).”

This exception of the FMC makes it explicit that the Commission cannot become one of the defendants in cases where plaintiffs are seeking enforcement of money awards the FMC ruled the plaintiffs should receive. Lawmakers made a clear protection for the FMC here. Shippers can’t say to the FMC, “You awarded us this money and the carriers won’t pay, so you give us our reparations or refunds in the meantime.”

The government won’t be held responsible for paying plaintiffs who lost money or were damaged by someone violating shipping law against them.

Conclusion

Section 13 returns to the idea of refunds of money when shippers or other parties are in a situation like having been charged unfair detention or demurrage fees. That’s not the only situation Section 13 could apply to, but it is one of the main things lawmakers focused on while writing OSRA.

With Section 13, if a shipping law violator does not comply with an FMC order to refund money, that violator can be taken to court for the enforcement of the award. Section 41309 of Title 46 of the U.S. Code, which Section 13 of OSRA amends, already granted this enforcement for reparations the FMC awarded to complainants.

Additionally, Section 13 protects the FMC from being added to the defendants in seeking award enforcement in court.

Now, there may be something you notice in Section 13 of OSRA that I didn’t. Or there’s another take you have on it that I didn’t consider. If there is, please share it in the comments section below.

Stay tuned for when Decoding OSRA continues, looking at Section 14….

The post Decoding OSRA: Section 13. Enforcement of Reparation Orders appeared first on Universal Cargo.

In the dynamic world of importing and exporting, ensuring the safe storage of your goods in transit is paramount. Every step, from packing to transportation, holds potential risks – and protecting your cargo means safeguarding your investments. As we look toward the future of ocean and air freight, such discussions must be held.

From adverse weather conditions to the hustle and bustle of handling, challenges abound. Still, there are essential techniques that can help fortify your supply chain, ensuring your goods reach their destination unscathed. Embracing these practices will shield your investments and pave the way for a seamless and successful trade journey. So, let’s delve into the world of safe storage, ensuring your goods arrive as they should – intact and on time.

Understanding the Risks

Initially, exploring this subject requires a clear understanding of the potential risks goods face in transit. As experienced readers, you likely don’t need details on this front, but an outline is still warranted:

• For one, weather conditions play a crucial role. Extreme temperatures or humidity can harm sensitive items. Therefore, proper temperature control, like climate-controlled storage, is vital.
• Physical damage is another concern. Rough handling or improper packaging can lead to costly losses. To counter this, secure packaging and careful handling are essential.
• Security is paramount, too. Theft during transit is a real threat. So, implementing robust security measures, such as surveillance and tracking systems, is imperative.

In brief, it’s these risks our exploration will hinge on. Comprehending these risks lays the foundation for a secure and successful transit journey, ensuring your goods reach their destination in optimal condition. And as supply chain disruptions remain likely, this robust foundation will often be necessary moving forward.

Safe Storage of Your Goods: Implementing Best Practices

Unfortunately, absolute security can never be guaranteed. Weather phenomena, accidents, mishandling, security breaches, and other risks can never be truly nullified. However, there are ample best practices that can help significantly.

Choosing the Right Storage Solutions

Of course, safe storage starts with choosing the right storage solutions. When it comes to containers and packaging materials, opt for sturdy options that suit the nature of your cargo. Reinforced boxes and cushioning materials provide an added layer of protection.

Evaluating storage facilities and warehouses is equally crucial. Ensure they meet security standards and are equipped to handle your specific goods. Keep in mind that Pack & Go Movers NY advises due diligence in this process, as they keenly understand the importance of secure storage.

Finally, climate-controlled storage is a game-changer for goods sensitive to temperature fluctuations. It provides a controlled environment, shielding your items from extreme conditions. Prioritize this option for items like electronics, perishables, and delicate materials.

Labeling and Documentation

Effective labeling and documentation are paramount. Proper labeling allows for easy identification of your cargo, ensuring it reaches its destination accurately. Detailed documentation also plays a crucial role in tracking and maintaining accountability throughout the transit process. It provides a clear record of the journey, aiding in any necessary investigations or audits.

Compliance with customs regulations and labeling requirements is non-negotiable. Failure to adhere to these guidelines can result in delays or even loss of goods. So, ensure all necessary information is accurately and prominently displayed on labels and documents. This is particularly important in the case of oversized cargo, as we’ve discussed before.

Monitoring and Surveillance

Robust monitoring and surveillance measures are essential to ensure the safe storage of your goods in transit. Installing security systems and cameras provides a vigilant eye on your cargo, deterring potential threats. What’s more, employing trained personnel for on-site monitoring adds an extra layer of protection. Their presence helps maintain a secure environment and ensures immediate response in case of any suspicious activity.

Additionally, leveraging advanced tracking technology allows real-time monitoring of your goods’ whereabouts. This technology provides valuable insights and alerts for any deviations from the planned route. Needless to say, prioritizing monitoring and surveillance is a critical step towards a successful and secure transit journey for your valuable goods.

Training and Education

Training and education are also pivotal. Staff members should be well-versed in proper handling and storage techniques. This knowledge equips them to securely pack, load, and arrange goods for transit, reducing the risk of damage. Moreover, regular safety drills and simulations reinforce these techniques. They provide practical experience in handling emergency situations, ensuring a swift and efficient response if the need arises.

In this regard, keeping employees informed about security protocols is equally crucial. This ensures that everyone understands and adheres to the established measures for safeguarding goods. A well-informed team is an integral part of maintaining a secure transit process.

Emergency Preparedness and Response

Any team can falter – and issues may still arise. So, in ensuring the safe storage of your goods during transit, being prepared for emergencies is paramount. This begins with developing contingency plans for unforeseen circumstances. These plans outline clear steps to take in case of unexpected events throughout the forwarding process, minimizing potential damage or loss.

Establishing robust communication channels for emergencies is equally vital. It ensures that timely information can be relayed and acted upon swiftly. Finally, collaborating with local authorities and emergency services enhances the effectiveness of response efforts. This ensures that, even in unforeseen situations, measures are in place to protect your valuable cargo throughout its transit journey.

Regular Inspections and Audits

Regular inspections and audits are crucial components of the process. Conducting routine checks for any signs of damage or tampering allows for immediate action if any issues are detected. This proactive approach helps to secure systems and prevent further harm or loss. Carrying out comprehensive audits of storage practices provides a thorough assessment of the security measures in place. It identifies areas for improvement and strengthens overall safety protocols.

Importantly, implementing corrective measures promptly is key. Any identified weaknesses or breaches should be addressed swiftly to maintain the integrity of the storage process. By adhering to these practices, you establish a vigilant system that continuously monitors and fortifies the security of your goods throughout their transit journey. This diligence ensures that your cargo arrives at its destination intact and secure.

Conclusion

Prioritizing the safe storage of your goods in transit is not just a precaution; it’s a smart business move. Weather conditions, physical handling, and security risks are ever-present challenges. By choosing the right storage solutions, implementing robust monitoring, and providing proper training, you build a strong defense against potential harm. Labeling, documentation, and regular inspections further fortify this defense. Being prepared for emergencies and collaborating with local authorities ensure a swift response in critical situations, while regular audits solidify the security of your storage practices.

Remember, safe storage of your goods isn’t just about protection; it’s about safeguarding your investments and ensuring your business’s success. By following these practices, you can confidently navigate the complexities of transit, knowing that your valuable cargo is in safe hands from start to finish.

This was a guest post by Samuel Davis.

Author Bio

Samuel Davis is a freelance marketer and SEO enthusiast with a keen interest in the relocation industry and logistics. He often writes about supply chain management and logistics challenges, with an eye on emerging technologies.

The post How to Ensure Safe Storage of Your Goods in Transit appeared first on Universal Cargo.

Has the situation changed or are air freight rates still favorable for shippers?

Traditionally, this is the peak season time of year for the international shipping industry. Freight rates, in general, are up this time of year as retailers prepare for the holiday shopping season, with Christmas especially creating an increase in consumer spending. However, we’re getting to the part of the peak season when ocean freight shipping often starts slowing down and air freight shipping really takes off.

Unfortunately, the economy could be better. Consumers’ budgets are stretched thin under Bidenomics’ inflation on goods and gas, the final residual pandemic measures like loan moratoriums and child-care subsidies are over or expiring, and extra money people accrued from government stimuli and reduced travel and services during the pandemic seems mostly spent. That means lower expectations for the holiday shopping season and, generally, less importing of goods by retailers.

There is some good news in that for shippers though. The reduced demand means peak season air freights are less likely to fly as high as they normally do this time of year.

Obviously, every individual business is different when it comes to its shipping needs. However, if you need to import goods quickly, particularly for the holiday shopping season, this could be a good peak air freight shipping season for you. The seasonal demand has been enough to uptick air freight rates a little. However, analysts appear doubtful there will be a big jump in November and December air freight rates as would be typical.

In fact, Eric Krulisch wrote in a FreightWaves article published yesterday, “The [air freight] market is essentially flat versus an anemic final stretch in 2022, according to the latest data…. More industry experts now say real growth in the air cargo sector is still a year away.”

Air Freight Turnaround Not Happening

Last year, things were not looking good for the air freight industry. In September, I was writing about how air freight might be a better option, even for some traditional ocean freight shippers, than shipping over the seas was. The cost gap, which is usually extraordinarily large, between ocean and air shipping narrowed to a point where it was worth it for many ocean freight carriers to consider air. The supply/demand balance simply was not good for air carriers. As I mentioned above, that overcapacity trend continued into this year.

Frankly, the market hasn’t been good for air freight carriers throughout the year. Demand also hasn’t been the strongest this year for ocean freight shipping, so lower ocean freight rates kept the price gap from shrinking enough for a large chunk of shipping market share to switch from ocean to air. That, too, is unfortunate for air freight carriers. However, just recently, air freight demand and rates ticked up a little bit. Many in the industry seemed to have their hopes shoot up that the poor air freight market was turning around.

Not so fast, according to Krulisch’s article:

Many media outlets jumped on the International Air Transport Association’s recent announcement that air cargo traffic grew 1.5% in August — the first year-over-year (y/y) gain in 19 months — as a sign of a turnaround. A more complete analysis, taking into account different methodologies and IATA’s distance multiplier on tonnage, indicates the industry’s economic cycle has hit bottom. Market intelligence firm Xeneta previously reported airfreight demand was negative 1% in August. Taken together, growth for the month was essentially zero.

And it didn’t change in September. Xeneta reported global demand increased 6% month over month. But demand didn’t budge from the September 2022 level, when cargo bookings were quickly sinking.

Meanwhile, cargo capacity in September grew at the slowest pace in 11 months as passenger airlines entered the shoulder season and pulled flights from the market to match lower travel interest, but it is still about 10% more than a year ago. 

Bottom line, there’s no turnaround here. That means air freight rates should still be favorable for shippers. However…

Air Freight Market Is Improved for Carriers But Better for Shippers

Just because a full turnaround is not being seem doesn’t mean it’s all gloom and doom for air freight carriers. The market is better for them than it was a year ago, according to Krulisch:

U.S. import tonnage from the Asia-Pacific, the United States’ largest air trade corridor, in August was below the rolling eight-year average, U.S. Commerce Department statistics show.

Still, the airfreight market is in a better spot now than 10 months ago. Cargo volume is down 6% to 7% year to date through August versus the same period in 2022, an improvement from the double-digit contraction at the start of the year.

Krulisch’s FreightWaves article does speak of Apple moving supplies of its new iPhone 15 and rushes to beat holiday factory shutdowns in China as creating shipping rate surges rather than any actual increase in consumer demand. This sort of activity can create a mirage of improvement in air freight and ocean freight markets.

At Universal Cargo, we’ll obviously be paying attention to the air freight market to give our customers the best service in that department as possible. It could always behave differently than expected, but while there likely will be a little seasonal increase in November and December air freights, demand does not seem like it will be high enough to make those air rates really take off.

Expert expectations for demand growth in the near future are not good. In fact, Krulisch ended his article by quoting Niall van de Wouw, Xeneta’s chief airfreight officer:

“I still hear very little hope of demand growth before the third quarter of 2024.”

That means air freight rates for air freight shippers should be relatively good through at least the first half of next year. Air freight is still much more expensive than ocean shipping. Thus, it will mainly be reserved for shippers who need to move their goods with speed or special handling. But if you are one of those shippers, this could be a good time for the logistics end of your business.

The post Is This a Good Time to Import Via Air Freight? appeared first on Universal Cargo.

We’re still only beginning to see how the recent and ongoing changes to U.S. shipping law will affect businesses’ imports and exports as well as carriers’ and other industry stakeholders’ operations within maritime shipping. At Universal Cargo, we want to help shippers know how law changes will affect them. What exactly does the Ocean Shipping Reform Act (OSRA) say and do? This blog series goes through it section by section, so you can see exactly what our lawmakers changed in the U.S. Code dealing with shipping.

We’ll give you the OSRA text; the text of the U.S. Code, usually in Title 46, before and after its amendments; and consider what those changes mean for U.S. importers and exporters.

Previously covered in this series:

• Series Introduction & Quick Coverage of Section 1
• Section 2
• Section 3
• Section 4
• Section 5
• Section 6
• Section 7
• Section 8
• Section 9
• Section 10
• Section 11

Obviously, that means today we’re covering Section 12 of OSRA. Let’s see exactly what it says and changes…

Quick Overview

Section 12 has to be the shortest section of OSRA we’ve covered so far. However, what it does is not insignificant.

Section 12 adds a prohibition previously established in Title 46 of the U.S. Code to a list of things for which the Federal Maritime Commission (FMC) can make ocean freight carriers, terminal operators, or even intermediaries like freight forwarders pay additional damages beyond injury to shippers. Prohibition is almost a weird way to say it. It’s actually something carriers, terminal operators, or intermediaries must not fail to do, or they could be punished if it turns out costly to shippers.

Specifically, for the failure “to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property,” carriers, terminal operators, or intermediaries could have to pay shippers.

Section 12 Text

SEC. 12. AWARD OF ADDITIONAL AMOUNTS.

    Section 41305(c) of title 46, United States Code is amended by 
striking ``41102(b)'' and inserting ``subsection (b) or (c) of section 
41102''.

Original Title 46 Text

§41305. Award of reparations

(a) Definition.—In this section, the term "actual injury" includes the loss of interest at commercial rates compounded from the date of injury.

(b) Basic Amount.—If the complaint was filed within the period specified in section 41301(a) of this title, the Federal Maritime Commission shall direct the payment of reparations to the complainant for actual injury caused by a violation of this part.

(c) Additional Amounts.—On a showing that the injury was caused by an activity prohibited by section 41102(b), 41104(3) or (6), or 41105(1) or (3) of this title, the Commission may order the payment of additional amounts, but the total recovery of a complainant may not exceed twice the amount of the actual injury.

(d) Difference Between Rates.—If the injury was caused by an activity prohibited by section 41104(4)(A) or (B) of this title, the amount of the injury shall be the difference between the rate paid by the injured shipper and the most favorable rate paid by another shipper.

(e) Attorney Fees.—In any action brought under section 41301, the prevailing party may be awarded reasonable attorney fees.

Amended Text

§41305. Award of reparations

(a) Definition.—In this section, the term "actual injury" includes the loss of interest at commercial rates compounded from the date of injury.

(b) Basic Amount.—If the complaint was filed within the period specified in section 41301(a) of this title, the Federal Maritime Commission shall direct the payment of reparations to the complainant for actual injury caused by a violation of this part.

(c) Additional Amounts.—On a showing that the injury was caused by an activity prohibited by section subsection (b) or (c) of section 
41102, 41104(3) or (6), or 41105(1) or (3) of this title, the Commission may order the payment of additional amounts, but the total recovery of a complainant may not exceed twice the amount of the actual injury.

(d) Difference Between Rates.—If the injury was caused by an activity prohibited by section 41104(4)(A) or (B) of this title, the amount of the injury shall be the difference between the rate paid by the injured shipper and the most favorable rate paid by another shipper.

(e) Attorney Fees.—In any action brought under section 41301, the prevailing party may be awarded reasonable attorney fees.

Observations on Section 12

Normally, I’m going through these sections subsection by subsection, even sentence by sentence within those. However, Section 12 is so short, it can’t be broken down that way.

Like last time, there does seem to be a small mistake the lawmakers made in the text. I think they should have struck “section 41102(b)” instead of just “41102(b)” from the original text. Now, the text reads “section subsection (b) or (c) of section 41102” instead of just “subsection (b) or (c) of section 41102” as Section 41305 of Title 46 begins a list of subsections that prohibit actions.

Again, I won’t judge the lawmakers too harshly on this, as it is easy to make editing errors. On the other hand, there is only one sentence that Section 12 changes. You would think they could have double checked to make sure they got it right.

As stated in the Quick Overview, this text simply adds one new prohibited action (or more correctly, failure of action) to a list of actions for which the FMC can order the offender to pay extra damages to an injured party beyond the injury. As the text just points to elsewhere in Title 46 to define the action, here’s Subsection 41102(c), which it points to (subsection 41102(b) is not included because it was already part of the list):

(c) Practices in Handling Property.—A common carrier, marine terminal operator, or ocean transportation intermediary may not fail to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property.

There is definitely some vagueness to “just and reasonable regulations and practices.” It wouldn’t be hard to imagine a carrier and shipper arguing over whether the carrier’s regulations and practices were or are “just and reasonable.” The assumption is, as usual, the FMC will be the final judge of that when investigating shippers’ complaints. Of course, the FMC’s decision could potentially be appealed through the courts.

On top of the vagueness just pointed out, “connected with receiving, handling, storing, or delivering” is quite broad. Thus, this could potentially pertain to any point, part, or parts of the supply chain.

It is worth pointing out that a limit does exist on how much the FMC can award to a shipper against a carrier, terminal operator, or intermediary. The limit is twice the amount of the actual injury.

Conclusion

Section 12 continues the trend we’ve seen in OSRA of protecting shippers. It seems that protecting shippers, who were particularly loud in their complaints during the “supply chain crisis” caused largely by reaction to the COVID-19 pandemic, was lawmakers’ top priority when writing OSRA.

This section adds one more way shippers could suffer financial loss at the fault of carriers, terminal operators, or intermediaries for which those shippers could be awarded additional money beyond the injury. For shippers, there’s probably nothing not to like here. For carriers, terminal operators, and intermediaries, it’s another story.

Of course, there may be something you notice in Section 12 of OSRA that I didn’t. Or there’s another take you have on it that I didn’t consider. If there is, please share it in the comments section below.

Stay tuned for when Decoding OSRA continues, looking at Section 13….

The post Decoding OSRA: Section 12. Award of Additional Amounts appeared first on Universal Cargo.

The Future of Ocean and Air Freight: Ensuring the Longevity of Your Logistics Strategy

This is a guest post by Cris Mark Baroro.

Today’s intricate global trade system demands efficient and dependable international transportation of goods. Consequently, the successful exchange of commodities across nations underpins the core operations of many companies worldwide.

A staggering number of containers shuttle between countries, underscoring the substantial daily traffic in the freight industry. Access to innovative technology and robust machinery is vital for businesses as they navigate the complexities of this industry. This article dissects the future of the ocean and air freight sectors, elucidating potential impacts on the sustainability of your logistics plans, particularly for those businesses reliant on freight forwarders for international shipments.

The Evolution of Freight

Businesses banking on timely, effective delivery of goods have profited enormously from the progression made in air freight. Before the 1960s, airplanes primarily served military purposes and offered very limited freight capacity. Commercial air freight operations kicked off in the early 1960s, spurred by advancements in technology and aircraft design that allowed larger cargo hordes to be transported concurrently.

The 1980s witnessed air freight morphing into a cost-effective alternative to ocean shipping, thanks to technology.

For instance, innovative engine designs boosted the payload for each aircraft trip and lowered fuel usage. Consequently, the potential routes that could be economically viable mushroomed. Streamlined turnaround times at airports and rigorous scheduling control also became feasible due to the advent of computerized reservation systems.

As technology further materializes and the dynamics of international trade evolve, air and maritime freight sectors are witnessing enormous changes. Developments in technology have fostered improvements in efficiency, safety, and tracking capabilities across both sectors.

Nevertheless, global events and shifting business trends shape the courier of goods.

Technological Innovation: A Cornerstone of the Freight Industry

In the freight industry, technology has been a catalyst for unparalleled operational improvements, enhancing efficiency, safety, and tracking capabilities. Key innovations have fueled the transforming landscape of the sector.

Unmanned Vehicles

Instead of being ubiquitously operational, unmanned vehicles are in their testing phase and show the potential to stimulate efficiency—especially regarding the delivery process. These vehicles offer expedited loading and unloading capabilities, potentially enabling coverage of both short and long distances and serving as a swift and more accurate option in the future.

Digital Platforms for Bookings and Operations

Digital platforms can simplify freight booking and business operations, offering real-time status updates and seamless dialogue between involved parties. Digitalization can help optimize workflows and drastically curtail delays.

Secure Transactions via Blockchain Technology

Blockchain technology can instigate industry transformation by significantly reducing the susceptibility to fraud and security violations. It accomplishes this by offering transparent and tamper-proof transactions.

Real-Time Tracking

The ability to track shipments in real-time has curtailed delivery uncertainties and dramatically enhanced customer satisfaction levels.

Trade Management Platforms

Technological improvements are redefining how freight forwarders operate—particularly enhancing trade management platforms. These platforms aid in easy shipment management, workflow streamlining, trade compliance improvement, and collaboration enhancement. This translates to a comprehensive solution for freight forwarders.

Towards More Transparent Tracking and Shipping

Advancements in tracking technology have made real-time data readily available, enhancing transparency in shipping operations. Customers can now accurately track their shipments, predict delivery timelines, and monitor goods movement. This promotes operational efficiency and facilitates informed decision-making.

The Pulse of Global Trade

Global trade dynamics deeply influence the future trajectory of freight forwarding. Several factors affecting trade volumes, routes, and freight pricing encompass these dynamics.

Geo-Political Forces

The political climate and relations status significantly affect global trade, shaping policy choices and trade hurdles. Businesses should keep abreast of such changes to preemptively mitigate potential impacts on their freight operations.

Trade Policies

Policies instituted by national governments and international trade bodies can impact freight forwarding. Tariffs, quotas, and similar restrictions can alter supply chain strategies and cost structures.

Economic Fluctuations

Economic downturns or upturns can considerably affect supply and demand, altering the volume of commodities transported and freight rates. Currency strength can also influence the cost of freight services directly.

Climate Change and Environmental Policies

As countries pledge to decrease their carbon footprints, environmental policies that impact freight forwarding will likely emerge, including alternative fuel requirements or emission restrictions.

Global Health Events

World health crises like pandemics can trigger sudden, drastic modifications in global trade dynamics, as evidenced by the COVID-19 pandemic. Such events can disrupt supply chains, necessitating adjustments in freight forwarding strategies.

Looking Ahead: The Future of Ocean Freight

As new markets burgeon, many businesses are strategically establishing production units overseas. Moreover, customers globally now enjoy broader choices in sourcing products from different parts of the world. Given its cost-effectiveness and capacity to transport colossal cargo loads, ocean freight remains a linchpin of international trade.

Key focus areas as we voyage into the future include:

Sustainable Shipping

With escalating environmental concerns, the future of ocean freight will demand sustainability. The industry is already probing cleaner fuels and low-emission technology, which is anticipated to set new standards.

Smart Ships

With strides in automation and AI, the industry is moving towards developing Smart Ships, aiming to minimize human errors, augment safety, and bolster speed and efficiency.

eCommerce Logistics

The surging popularity of online shopping and the meteoric growth of Amazon necessitate the logistics industry’s evolution to cater to this transition. These involve novel technologies, methods, and strategies to expedite and enhance retail deliveries.

Air Freight: Future Directions

Air freight remains the preferred choice for shippers of time-sensitive and high-value items, thanks to its speed and reliability. Below are trends shaping its future:

Airships and Drones

Airships and drones target enhancing speed and accessibility, especially in remote regions or during natural calamities. Airships are an intriguing alternative to traditional planes and helicopters, as they can carry heavier loads while consuming less fuel and are more eco-friendly. Drones, although in their nascent stages, already facilitate deliveries to remote areas in some parts of the world.

Bolstering Security

In response to increased cyber vulnerabilities, the air freight sector will employ advanced security measures to maintain customer and business confidence. Expect the application of artificial intelligence and machine learning in identifying and mitigating risks.

A Sneak Peek into Innovative Tools in Freight

As we explore emerging opportunities, let’s glance at the innovative tools making their presence felt within the freight industry. Enhancements in technology are not limited to merely boosting freight operations efficiency. Instead, they’re revolutionizing how businesses convey their brand using tools like MP4 compressors, video editors, and AI avatars.

An MP4 compressor can aid in managing large video files related to freight operations. For instance, operational centers use security cameras, time-lapse videos, and other video-based documentation to monitor and ensure the secure movement of cargo. High-quality video provides transparency and efficiency, though it often comes with large file sizes that can make sharing and storing challenging.

On the other hand, a video editor and AI avatar could help your business narrate its story in an engaging virtual tour. In the face of intensifying competition, companies need to provide innovative solutions tailored to today’s consumers.

Strengthening Your Business With Knowledge

Grasping the prevailing trends and future expectations in ocean and air freight grants businesses the insight necessary to make informed decisions about their shipping methods and strategies for international trade. Following these shifts puts your business in a stronger position, ensuring your logistics plans are flexible, resilient, and ready for the future. As we steer into this new era of freight forwarding, boundless opportunities await those eager to adapt and overcome.

This was a guest post by Cris Mark Baroro.

Author Bio

Cris is currently working in VEED.io. He is a tech enthusiast who loves photography, videography and technology innovations. He enjoys video editing, programming, QA system testing, and writing.

The post Logistic Longevity: The Future of Ocean and Air Freight appeared first on Universal Cargo.