New law to crack down on shipping costs and ease supply chain

Further to our news article in May (Soaring International Freight Costs & Coffee Supply), we have another industry update courtesy of  The International Forwarders and Customs Brokers Association of Australia.

(IFCBAA) is an International Federation of Freight Forwarders Associations (FIATA) member and the international voice for Australian freight forwarders addressing global and domestic shipping, freight forwarding and supply chain matters. 

The decision of the US Federal Maritime Commission (FMC) in its Final Rule on Demurrage and Detention has been welcomed by FIATA as a landmark decision in laying out key considerations to assess the reasonableness of demurrage and detention practices.

These demurrage and detention charges have also been addressed by US President Joe Biden by signing of the Ocean Shipping Reform Act into law. The law will crack down on skyrocketing international ocean shipping costs and ease supply chain backlogs that are raising prices for consumers and making it harder for U.S. farmers and exporters to get their goods to the global market. 

Whilst there are country and port-related variances, the FMC findings apply globally as demurrage and detention is a common and widespread topic of contention. 

If the FMC has identified demurrage and detention practices that are likely to be considered as unjust for the USA, these practices are also unjust and unreasonable for the rest of the world. Governments must therefore have greater scrutiny over demurrage and detention practices to ensure that they are considerate and reasonable for the good of their own economies. 

In an Australian context, the expected release of the draft Productivity Commission report examining Australia’s Maritime Logistics Systems will reveal the key recommendations to be considered by the new Federal Government. The draft report was due to be released in May but has been delayed because of the timing of the recent election. It will be interesting to see if the Productivity Commission will take notice of the US developments to determine if increased maritime regulation is good or bad for the Australian shippers and freight forwarders.