Background

Soaring shipping container costs are causing increasing concern among both importers and exporters. The situation is starting to draw attention from government regulators and policymakers as well.

Container costs are now more than four times what they were a year ago due to a combination of higher demand and lower capacity. Finding space on a carrier is thus increasingly difficult to begin with, plus shipments that have been accepted may be bumped in favor of shippers willing to pay more. The result can be substantial delays in transit time.

The federal government is beginning to focus on the problem amid concerns that supply chain struggles could hinder the post-COVID economic recovery. Earlier this month President Biden issued an executive order recognizing the situation and calling on the Federal Maritime Commission to take action, including (1) vigorously enforcing the prohibition on unjust and unreasonable practices with respect to detention and demurrage charges on cargo containers, (2) seeking recommendations for improved detention and demurrage practices and enforcement from a new advisory committee, and (3) considering additional regulations on this issue.

The FMC has begun taking steps to respond to this direction, including by launching a new audit program that will analyze the top nine carriers by market share for compliance with a May 2020 rule on detention and demurrage charges. Information supplied by these carriers may be used to establish industry best practices, but the FMC has said it “will take appropriate action” if the audits uncover prohibited activities. The FMC also plans to stand up a new dedicated audit team that will focus on other areas, such as company practices related to billing, appeals procedures, penalties assessed by lines, and other restrictive practices.

Congress is looking into the matter as well. At a recent hearing a House Transportation and Infrastructure subcommittee heard from FMC representatives and private and non-governmental entities about the impact of the crisis and what might be done to mitigate the effects on U.S. businesses, consumers, and workers.

While these measures are a good start, a multi-faceted solution is needed to both provide immediate relief and address the longer-term implications of the current situation. To that end, Sandler, Travis & Rosenberg is offering clients the opportunity to participate in a grassroots advocacy campaign that will (1) advocate with the FMC to devise policies that will provide real benefits to traders, (2) lobby Congress to encourage legislation or regulation against exorbitant detention and demurrage fees, and (3) identify other solutions that ensure availability and access to instruments of international commerce, including shipping containers.

“It’s important to act now while we have the government’s attention and there is active debate on transportation-related action and legislation,” said ST&R’s Ned Steiner. “And our established contacts with key FMC professionals and congressional offices give ST&R the ability to advocate for companies whose interests may not be adequately represented by associations or other large industry groups.”

For more information on participating in this campaign, please contact Ned Steiner at (202) 730-4970 or via email.

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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