The days of ocean carriers offering “lame excuses” for refusing to carry contracted cargo may soon be a thing of the past. The US Federal Maritime Commission (FMC) has introduced a new rule that will take effect on September 23rd, prohibiting shipping lines from denying space for booked containers and giving shippers more protection during negotiations.
A New Era of Accountability
This new regulation is a massive step forward for the shipping industry, addressing an issue that has long plagued shippers. During the pandemic, many Beneficial Cargo Owners (BCOs) found themselves at the mercy of carriers who, despite having contracts, refused to allocate space for their cargo. Instead, carriers pushed these shippers to the spot market, seeking to profit from higher rates.
Sara Dandan, founder of maritime law consultant FourOneOne, explains, “We saw a lot of cases during the pandemic where BCOs had contracts, but carriers refused to allocate contractual space and put them on the spot market in order to profit.” She adds that carriers often cited various excuses to justify their actions, but the underlying motive was clear – to gain leverage and position themselves better during negotiations.
The Ocean Shipping Reform Act and FMC’s New Rule
The 2022 Ocean Shipping Reform Act encouraged shippers to bring claims against carriers for alleged contract breaches, resulting in an estimated $70 million in damages sought by aggrieved shippers. Most claims focused on detention and demurrage fee practices, but many included allegations of improper space allocation.
The new rule protects shippers from such practices, ensuring carriers cannot refuse to carry booked cargo to gain negotiation leverage. Additionally, the FMC has rejected the carriers’ claims that this rule amounts to price regulation. Instead, it compares the rates a carrier offers during negotiations and the rates charged to the rest of the market.
Positive Reception from the Shipping Community
Despite carrier complaints, the FMC’s new rule has received strong support from retail and shipper stakeholders. By including protections for the right to file complaints, the FMC also addresses concerns about carrier retaliation – a common fear among shippers who previously hesitated to voice their grievances.
Why This Matters for Shippers
For shippers, this new rule represents a noteworthy win. It ensures fairer treatment and provides a level of security during the shipping process. No longer will carriers be able to manipulate space allocations to their advantage, leaving shippers scrambling to find alternative solutions at higher costs.
At Coppersmith Global Logistics, we are committed to helping our clients understand these changes and leverage the new protections offered by the FMC. Our expertise in international shipping and compliance ensures that your cargo moves smoothly without the fear of unfair practices.
Contact Coppersmith Global Logistics Today
Stay ahead in the ever-evolving logistics landscape with Coppersmith Global Logistics. Contact us today to learn how we can help optimize your shipping strategy and ensure compliance with the latest regulations. Our team is here to support your business every step of the way.
