Shipping and Tariff Developments
On Feb. 26, 2024, the Federal Maritime Commission (FMC) published the final rule “Demurrage and Detention Billing Requirements.” Most of the rule went into effect on May 28 and the catalyst was the Ocean Shipping Reform Act (OSRA) of 2022, which IHA lobbied for to authorize regulations making demurrage and detention billing timelier and more transparent.
As explained in the FMC’s Feb. 26 Federal Register notice, “This final rule requires common carriers and marine terminal operators to include specific minimum information on demurrage and detention invoices, outlines certain detention and demurrage billing practices, such as determination of which parties may appropriately be billed for demurrage or detention charges, and sets timeframes for issuing invoices, disputing charges with the billing party, and resolving such disputes.”
The FMC adopted these requirements from its Oct. 14, 2022, rulemaking as supported in IHA President Derek Miller’s comments to the agency. IHA also supported changes now allowing cosignees to be billed and that clarify the timeframe for non-vessel-operating common carriers passing through demurrage and detention charges to issue their own invoices.
The FMC’s new demurrage and detention regulations essentially clamp down on ocean carrier billing practices that hit shippers and truckers with big penalties for failing to move cargo out of ports and returning empty containers in a timely fashion. As explained in IHA’s comments, “Container costs drove IHA’s support for OSRA because it reforms demurrage and detention by placing greater emphasis on carrier due diligence (more responsibility on the front end) before submitting invoices.”
Another issue of concern to IHA-member companies is tariffs and particularly the Section 301 China tariffs. On May 14, 2024, the Office of the United States Trade Representative (USTR) issued the long-awaited results of its statutorily required four-year “Review of Necessity” for the 301 tariffs. The review started in 2022 and USTR will not be eliminating or reducing any of the current tariffs.
In fact, USTR’s review results were announced in connection with Sec. 301 tariff increases on fourteen products. These include electric vehicles (100%), EV batteries (25%), semiconductors (50%), solar cells (50%), medical gloves (25%), facemasks (25%), steel and aluminum products (25%), and ship to shore cranes (25%).
USTR initiated a 30-day comment period on these proposed tariff modifications from May 29 through June 28. USTR is proposing that 2024 tariff increases be effective August 1, and 2025 and 2026 increases be effective January 1 of the corresponding year. However, the notice also includes a list of Harmonized Tariff Schedule (HTS) lines for machinery equipment eligible for a new exclusion process, and temporary exclusions for solar manufacturing equipment effective through May 31, 2025.
Finally, on May 24, USTR issued a decision on current Sec. 301 tariff exclusions, stating it has decided not to renew 102 of the current 429 product-specific exclusions. All 429 exclusions were set to expire on May 31, 2024, with most extended to May 31, 2025. The remaining 102 that have not been renewed will be extended until June 14 to allow for a transition in status.
