As has been much covered, shipping problems are among several reasons for the current inventory and inflation issues that are impacting the economy. Last week, the U.S. House passed the Ocean Shipping Reform Act to take steps at addressing the issue. Passed on a vote of 364-60, the bill is the first in more than 30 years to change major federal regulations for the global shipping industry.
“Our ports are a critical part of our nation’s infrastructure, and grant access to the world’s largest consumer market on earth,” said Rep. Rick Allen (R-GA 12), one of the bill’s cosponsors. “Yet especially evidenced throughout the COVID-19 pandemic, farmers are facing high fees and barriers in getting their commodities onto shipping containers, with some perishable exports left sitting in warehouses to rot. This is unconscionable.”
H.R. 4996 would, among several things:
- Establish reciprocal trade to promote U.S. exports as part of the Federal Maritime Commission’s (FMC) mission.
- Require ocean carriers to adhere to minimum service standards that meet the public interest, reflecting best practices in the global shipping industry.
- Require ocean carriers or marine terminal operators to certify that any late fees —known in maritime parlance as “detention and demurrage” charges—comply with federal regulations or face penalties.
- Shift burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier.
- Prohibit ocean carriers from declining opportunities for U.S. exports unreasonably, as determined by the FMC in new required federal rulemaking.
- Require ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and twenty-foot equivalent units (loaded/empty) per vessel that makes port in the United States.
The legislation got a warm welcome from retailers and agriculture groups that rely on imports and exports to do much of their business. The National Retail Federation, the world’s largest retail trade association said the legislation “provides much-needed updates and reform to an archaic system that retailers and thousands of other businesses depend on each day to transport goods. These improvements could not come at a more critical time, as the amplification from the pandemic has been severe.”
The bill’s lead sponsors were Rep. Dusty Johnson (R-SD at-large) and Rep. John Garamendi (D-CA 3). Johnson’s district of all of South Dakota is obviously very agriculture-centric and he noted its help to that industry, as well as the bill’s efforts to push back on China’s unfair practices.
“We’ve all been impacted by the backlog in the supply chain and shipping delays,” said Johnson. “China and the foreign flagged ocean carriers aren’t playing fair, and accountability is long overdue. If you want to do business with American ports, you need to play by our basic rules. I am proud of the coalition Congressman Garamendi and I have worked to build over the last year. The Ocean Shipping Reform Act puts American consumers, farmers, ranchers, retailers, truckers, manufacturers, and small businesses first. Our bill passed the House with strong bipartisan support and I look forward to seeing it pass the Senate.”
