Delays in shipping and fees levied on American importers have led to severe delays and new challenges for businesses over the last few years. However, a new act from Congress may signal an end to the egregious shipping delays plaguing American businesses. The Ocean Shipping Reform Act of 2022, a bipartisan bill introduced by Sen. Amy Klobuchar (D-MN) and Sen. Thune (R-SD), passed on March 31 and became public law on June 16. The act is meant to curb inflation, improve global trade, and decongest U.S. ports.
So how will it work? The act empowers the Federal Maritime Commission (FMC) to investigate formal complaints regarding late fees charged by common ocean carriers and determine whether those charges are reasonable. If deemed unreasonable, they are to issue refunds to domestic importers and exporters and penalize the offending party. Carriers will no longer be able to unjustly refuse cargo space where available and engage in other discriminatory or anti-competitive practices. As of June 16, the unreasonable denial of American imports and the levying of unfounded charges within the shipping industry is now under the scrutiny of the federal government. The hope is that the resulting reimbursements will alleviate the shipping quagmire, trickle down to the trucking industry, and lift the financial burden on American businesses.
The legislation is long overdue. Since 1984, the global shipping industry has been woefully deregulated, allowing a handful of companies to monopolize carriers around the globe and renege on their obligations to fair business practices at will. A trio of alliances currently control over 80% of the global shipping capacity, 95% of trade between the U.S. and Asia, and have driven up costs by more than 1000% since January 2020.
The COVID-19 pandemic and the ongoing war in Ukraine exacerbated the matter by causing massive shutdowns, which restricted the movement of goods and services globally. This labor shortage spurred shipping delays amid factors such as climbing e-commerce sales and international embargos.
Carriers have opted to capitalize on these developments by unfairly refusing to ship goods, charging unnecessary fees, and deliberately driving up costs. Business owners have all felt the burden of these unfair practices over the last three years. Why should your business bear the financial ramifications of this broken system?
Under the new law, the FMC and the Department of Justice will work in tandem to investigate claims of delays. They will then sanction violators and reimburse damages to importers and exporters. The act will force carriers to deliver and unload cargo at American ports in a timely manner. This regulation will trickle down to your business and decrease instances of delays and damages, whereby you might seek debt collection.
The expectation is that this will reduce disputes between shippers and importers over a carrier delay that the shipper had no control over. This will reduce an importer’s ability to refuse payment to shippers due to a carrier’s lateness.
If you have a debt collection matter you need assistance with, contact Frank, Frank, Goldstein, and Nager for a consultation. We have the experience that pays.
