The Disappearance Of Service Contract In Ocean Shipping

Posted by rakhi raghavan

The author paints the picture we are seeing a thousand fold in the current ocean shipping marketplace in the inbound or outbound Asia trade lanes. which underscores the serous disconnect currently between ocean common carriers and shippers.

The service contract has diminished as a serious legally binding document. Its regulatory status seems to be losing ground in view of shipper reluctance to seek legal regulatory remedies.

There is an inherent trepidation by shippers in this situation in view of a real fear of retaliation in a very fragile supply chain at the moment spearheaded by rolled cargo, equipment shortages, spot markets (as noted above), and port congestion. Spot pricing circumstances are such that they could theoretically be dealt with in a service contract context. 

At the moment there are real problems for the shipper segment of this industry for which there are only FMC traditional remedies either via Complaint cases in the federal courts, perhaps even class actions, or with the FMC or, hopefully, pursuant to FMC formal investigations, which can provide some badly needed attention to these glaring issues of national concern. However, in terms of more permanent solutions, serious amendments to the Shipping Act should be sought with U.S. shippers (importers/exporters) and the overall U.S. economy in mind.