Container lines will be better placed to ship more last-minute cargoes to and from the US after the Federal Maritime Commission (FMC) acquiesced to requests from the World Shipping Council (WSC) to ease rules regarding when shipping lines need to file original service contracts with US authorities.
The amendment formalises an existing waiver for shipping companies that allows them to file details of contracts up to 30-days after they go into effect, loosening former FMC regulations that require the filing of initial service contracts with the FMC before a carrier is permitted to receive and move cargo under the terms of that contract. The new rules will come into effect on 2 June 2021, when the existing waiver was due to lapse.
[s2If is_user_logged_in()]“The Commission was prompted to consider permanently amending its regulations following the positive response of the industry to the temporary service contract filing relief provided over the past year to minimise Covid-19 related impacts to the supply chain,” said the FMC in a statement. “That relief expires on 1 June 2021. As a result of this experience, the Commission determined to update the filing requirements to better reflect contemporary business practices. Additionally, these changes will set conditions that allow ocean carriers to contemplate new ways to make their services available to shippers.”
The new guidelines will facilitate carriers’ ability to book last-minute shipments through their online reservation systems and closes a regulatory contradiction between the rules governing contracts and amendments to those contracts. It will be easier for carriers to receive and ship last-minute cargoes contracted via online reservation systems.
As a consequence of the cyber-attack that crippled CMA CGM’s operations in November 2020, the FMC had agreed to a temporary waiver of these contract filings without incurring any negative complaints from shippers, prompting the FMC to undertake a review of the ruling.
Industry groups including the WSC and National Transportation League (NITL) invited to give their input on the matter, and other third-party logistics operators, De Well Group, Poseidon Logistics, and Fracht FWO all supported the proposal.
The only opposition to the ruling at the hearing came from BassTech International, a company that supplies specialty raw materials in the US.
BassTech argued that the real benefit carriers will see from the proposal is the ability to use single shipment “mini” service contracts through online rate quotation applications to offer small and medium shippers short-term pricing while circumventing the 30-day notice requirement for tariff increases. The relaxation of the rules, argued BassTech’s representative, Lori Fellmer, VP logistics & carrier management, will allow ocean carriers the ability to fill space not reserved for cargo moving under long-term service contracts at the best possible market levels. Carriers, she argued, will push requests for additional space outside of the existing long-term service contract to the carrier’s online rate-quote application.
BassTech further contended that the move will enable carriers to exclude small and medium shippers from long-term service contracts and could harm NVOCCs by improving the ease of entering into short-term service contracts with beneficial cargo owners (BCOs) directly.
The FMC rejected BassTech’s complaints saying that: “Delayed filing will provide benefits to the ocean transportation industry, addressing shipper and carrier contracting needs and avoiding commercial harm that can result from the current requirement that a service contract be filed before it can become effective.”
Rainbow Nelson
Americas Correspondent
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