NVOCCs Caught in the Middle of U.S. Ocean Shipping Reform Act

SEATTLE - Sept. 13, 2022 - PRLog -- The Ocean Shipping Reform Act of 2022 has left the industry in a difficult position regarding how to comply with the new requirements for invoicing demurrage and detention (D&D) charges.

At issue is the Container Availability Date, which must now be included on all invoices as the critical piece of information that determines the fair assessment of D&D charges. However, container availability differs from the date a container is discharged from a vessel, which has been the current trigger date for demurrage.

In fact, ocean carriers and/or terminals have been unwilling or unable to provide this critical piece of information to Non-Vessel-Operating Common Carriers (NVOCCs). There is no interface currently between the parties that communicates cargo availability information. As a result, they are having difficulty providing this information on their customers' invoices.

What's more, it shifts the burden of proof for accurate D&D charges to the ocean carriers and/or NVOCCs, who act as intermediaries between the shippers and ocean carriers.

Further, the law stipulates that failure to include the information required on an invoice with any D&D charge shall eliminate any obligation of the charged party to pay that applicable fee. Shippers and others may also file complaints with the Federal Maritime Commission (FMC) regarding inaccurate D&D invoices. As a result, carriers could be forced to pay refunds and penalties if they are unable to demonstrate the reasonableness of their D&D charges.

To complicate matters further, each ocean carrier has its own ocean tariff and rules for each trade. So, the rules could state that free time begins at midnight the day after discharge, or they could state something else. Each carrier, however, has its own set of rules. As a result, free time begins when the carrier's tariff specifies. Another moving target is when cargo is available, which is unknown to the carrier until informed by the terminal.

How will the carriers put those invoices together when there is no standard for reporting when the cargo is available? Codifying these definitions, which are not currently reflected in the Ocean Shipping Reform Act, will be critical.

We see the temporary solution to this cargo availability reporting problem being two-fold:

• There should be a grace period for the industry to adjust to the new cargo availability and D&D reporting requirements.
• If not, a temporary FMC ruling mandating D&D's payment on credit in order to prevent cargo from being held for pickup should be issued.

We do not oppose its intent, however, this is a significant change that does not appear to be registering clearly within the supply chain industry.