Source: POLITICO'S MORNING AGRICULTURE, 6/27/22

Federal Maritime Commission General Counsel S.J. Andersen last week warned ocean carriers that they “must comply with all relevant statutory requirements” of the newly minted Ocean Shipping Reform Act of 2022, including those related to detention and demurrage charges.

While not a binding ruling by the Commission, the opinion is an aggressive new stance for the historically sleepy agency responsible for regulating ocean shippers and is being hailed by U.S. agricultural exporters.

What it means: Andersen said that certain pieces of the new law are “self-executing” and will take effect immediately, and specifically targeted the new rules around detention and demurrage.

The section Andersen is referring to also contains language aimed at prohibiting ocean carriers from abandoning ag goods at the docks, but he did not specifically reference that in his opinion. Those provisions are subject to an FMC rulemaking to define what constitutes an “unreasonable refusal to deal or negotiate with respect to vessel space.”

Big words carry weight: Detention and demurrage charges are a holding fee applied to shippers whose goods are left in containers in the port for longer than an agreed to grace period or shippers who do not return the container in time.

While the fees are seen as essential to keep cargo flowing, ag shippers have become outraged over being charged exorbitant fees without good reason – like a ship leaving with empty containers and stranding their goods or backups causing a container to be physically stuck through no fault of the shipper.

The new law requires carriers to certify any charges and take responsibility — including potential fines — if the certification proves faulty.

Meanwhile, humble pie on food inflation: The administration said the new law would help bring down inflation. But food economists aren’t so sure the impact will be detectable anytime soon in grocery bills.

Marc Bellemare, an agronomics professor at the University of Minnesota who studies food prices, said he’s “skeptical because 75% of the food in the world is consumed in the country where it’s produced,” and not brought in on ocean ships.

Another economist and supply chain expert Erkut Sonmez, a professor at the University of Nebraska, told MA that while it’s “not going to have a very short term direct effect on the food prices,” it could have a “domino effect or a long-term effect on actually managing supply chains in a more cost efficient way.”