OSRA - a deeper look at fees and ocean freight market collapse.
Your weekly All-Ways round-up of supply chain news.
It’s About Time
Imagine - you wrongfully get a parking ticket but you only get the bill in the mail three months later. At this point, you can’t even take a picture to fight the ticket.
That’s what shippers are experiencing. And they want change.
As part of the OSRA reform, the FMC received about 115 comments regarding detention and demurrage regulations. Commenters stated that the FMC should narrow the time between when the detention charge is incurred and when the invoice is sent.
“Most of the shipping companies tend to raise the invoice many days, sometimes months, after the container is returned back,” non-vessel-operating common carrier (NVO) Seagate Logistics Inc., said in a comment.
Some other issues highlighted are that carriers and terminals invoice for detention and demurrage fees when -
➡️ There are not always appointments available to pick up and drop off containers
➡️ The wrong party is fined
➡️ Key data points are conveyed inaccurately
These elements make it extremely difficult for shippers or their representatives to fight the fees incurred.
Terminal operators and carriers, on the other hand, feel that no drastic changes should be made to the current framework as these fees encourage timely pickup and dropoff. Restricting their ability to do so would potentially be harmful to the flow at US ports.
Deep Decline
The ocean freight market is correcting itself way earlier than expected.
Although it was projected to normalize sometime in 2023, after the peak in the second quarter, it only seemed to have declined from there. It’s still too early to tell if November will be the lowest point reached.
“Orders are definitely down. Volumes are way down,” said Joe Monaghan, CEO of Worldwide Logistics Group. “Overall vessel utilization is down even with the large number of blank (canceled) sailings.”
Despite the spot market collapse, major shipping lines were still highly profitable over the first three quarters.