Congress Passes Ocean Shipping Reform; Biden Plans To Sign Soon

 

The first major overhaul of regulations governing U.S. container trades since 1998 was easily approved by Congress on Monday and President Biden is expected to sign the bill into law shortly.

By a vote of 369-42, the U.S. House of Representatives passed the Ocean Shipping Reform Act (OSRA) of 2022, which is the Senate's version of a reform bill passed by the House in December.

The legislation, which broadens the powers of the Federal Maritime Commission to address unfair business practices on the part of ocean carriers and marine terminal operators, is supported by a wide array of associations, including the National Industrial Transportation League, Agriculture Transportation Coalition, American Association of Port Authorities, National Retail Federation, American Trucking Associations, and the Harbor Trucking Association.

"This week, as 570 agriculture exporters and service providers are gathered for our 34th annual meeting in Tacoma, Washington, we applaud Congress 3,000 miles away advancing OSRA 2022," Peter Friedmann, AgTC's executive director, told FreightWaves.

"The passage of OSRA is the result of five years of intensive efforts by U.S. agriculture exporters and importers to gain effective control over out of control ocean carrier practices. But it is not a culmination. It is the beginning of the next steps in which the Federal Maritime Commission increases its role as the agency Congress has empowered to protect and advance the interests of the U.S. shipping public."

NRF sees the potential for the legislation to address both port congestion and inflation.

"Making OSRA federal law helps to address the long-standing, systemic supply chain and port disruption issues that existed well before the pandemic by providing the [FMC] the additional authorities it needs," NRF Sr. Vice President of Government Relations David French said in a statement.

"These improvements come at a time when inflation has reached a 40-year high. NRF has championed the effort to pass OSRA as one of the steps necessary to ‘Lower Inflation Now' and ease pressure on American businesses, workers and consumers."

The legislation updates the Shipping Act of 1984, as amended in 1998. The 40-page Senate bill passed on Monday had increased from its initial 17 pages when it was introduced in February after additional provisions were added during the Senate's markup process in March.

Still, carriers consider the legislation less onerous than the House OSRA bill, which would have given the FMC power to mandate how carriers manage their import and export container capacity. The Senate bill, on the other hand, is less proscriptive because it gives the FMC more flexibility to consider carrier concerns.

Among the bill's provisions, it will:

  • Shift the burden of proof regarding the reasonableness of detention or demurrage charges from the invoiced party to the ocean carrier.
  • Prohibit ocean carriers from unreasonably declining shipping opportunities for U.S. exports, as determined by the FMC in new required 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 call ports in the United States.
  • Establish new authority for the FMC to register shipping exchanges. 
  • Study intermodal chassis pool best practices to deal with chassis supply and positioning issues.

The legislation also boosts the FMC's funding levels from $32.9 million in 2022 to $49.2 million in 2025 – a 50% increase over four years – to help the agency increase the staff needed for its expanded oversight of the container trades.

The World Shipping Council, which represents the world's largest container line operators, said in a statement that it looks forward to engaging with the FMC to help implement OSRA's provisions.

The group took issue, however, with recent assertions from President Biden that a lack of competition among ocean carriers is to blame for inflation, high consumer costs and supply chain disruptions — for which Biden and others consider OSRA to be a remedy.

"We are appalled by the continued mischaracterization of the industry by U.S. government representatives and concerned about the disconnect between hard data and inflammatory rhetoric," WSC stated.

"The increased rate levels we have seen over the past years are a function of demand outstripping supply and landside congestion, exacerbated by pandemic-related disruption. Until the import congestion is remedied, export congestion will persist. Ocean carriers continue to move record volumes of cargo and have invested heavily in new capacity — America needs to make the same commitment and invest in its landside logistics infrastructure."

Image credit: Freightwaves

Posted In: FreightwavesPartner ContentGovernment

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