The Federal Maritime Commission (FMC) has released details of its plan to address the issue of ocean carriers unreasonably refusing vessel space, a key provision of the Ocean Shipping Reform Act of 2022, which became law earlier this year.
On September 13, the FMC announced its intention to seek public input on a proposed rule that aims to define what constitutes an unreasonable refusal by ocean carriers. This proposal also outlines the framework for situations in which the burden of proving an unreasonable refusal would shift from the shipper to the carrier.
In recent times, many ocean carriers have been motivated to depart from the United States with empty containers, destined for Asia, to rapidly reload them with goods due to high import demand. This practice often came at the expense of agricultural producers who struggled to secure transportation for their exports.
FMC Commissioners Max Vekich and Carl Bentzel emphasized the importance of supporting American exporters and fostering an ocean transportation system that promotes the growth of U.S. exports and the creation of jobs. They stated, “We must do all that we can to fulfill this mission.”
According to the proposed rule, the FMC will evaluate what constitutes an unreasonable refusal on a case-by-case basis. A shipper seeking relief must have made a good faith effort to secure vessel space accommodations, which goes beyond mere communication with no response or reply.
Under the rule, carriers will not be permitted to refuse space solely for “commercial convenience.” Additionally, it may be considered unreasonable for carriers to give preference to certain shippers over others or to ignore requests from shippers via telephone or email for an extended period.
If a shipper files a complaint regarding the unreasonable rejection of vessel space and it aligns with the FMC’s criteria, the ocean carrier will be required to justify why the refusal may have been reasonable. Nevertheless, the “ultimate burden of persuasion remains with the complainant to show that the refusal to deal or negotiate was unreasonable,” as stated in the rule.
Stakeholders will have a 30-day window to submit comments on the proposal. The FMC is obligated to deliver a final rule within six months of the Ocean Shipping Reform Act’s enactment.
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