The US House of Representatives approves major Maritime Transport Reform Act law, and USA’s president, Biden, is ready to enact it, says Logisticsmgmt.com.
Following its passage by the US Senate in late March, the US House of Representatives followed suit last night and passed the Ocean Shipping Reform Act (OSRA). ) of 2022 by a margin of 369-42. The bill now heads to President Biden’s desk to become law, marking the first renewal of US shipping laws dating back to 1998.
This represents the latest and most important sign of progress for OSRA, including: approval by voice vote; gain bipartisan approval from the US Senate Committee on Commerce, Science, and Transportation on March 22; and OSRA passed in December 2021 by the US House of Representatives with a convincing vote of 364-40 and its subsequent introduction in the Senate in February by Sen. Amy Klochubar (D-Minn.) and Sen. John Thune (R-S.D.). The House version of the bill was introduced by Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD) in August 2021, with the goal of making the Federal Maritime Commission (FMC) “a regulator more effective federal
Key components of the House version of the Shipping Reform Act of 2022 include:
- Prohibit ocean carriers from unreasonably denying cargo space for US exports and from discriminating against US exporters;
- Promote transparency by requiring common ocean carriers to report to the FMC each calendar quarter on total import/export tonnage and twenty-foot equivalent units (teu) (loaded/empty) per vessel calling at a U.S. port ;
- Authorize the FMC to initiate investigations of the commercial practices of common ocean carriers on its own and apply enforcement measures, as appropriate; Y
- Establishing new authority for the FMC to register maritime exchanges to improve the negotiation of service contracts, among others
The House’s passage of this bill in December followed an endorsement issued by the White House in November, amid several federal efforts to help reduce port congestion and global supply challenges stemming from the pandemic.
At the time, the White House noted that Congress should provide the FMC with the updated tools necessary to protect exporters, importers, and consumers from what it called unfair practices, adding that this bill serves as a good first step in the path to “Longer-Term Shipping Law Reform That Would Strengthen America’s Global Competitiveness.
FMC Chairman Daniel Maffei said OSRA provides necessary and overdue updates to the laws enforced by the FMC. “These changes will have a beneficial effect on how U.S. carriers are served and will create greater accountability for how ocean freight services are provided,” Maffei said. “We will act quickly to implement the necessary steps to provide shippers with the benefits of the legislation, beginning with regulations addressing export shipments. OSRA will give the FMC greater authority to ensure that industry players have the right incentives and that all stakeholders in the freight shipping system can have a voice.”
President Biden explained that in his State of the Union address, he called on Congress to address the high prices and unfair practices of ocean carriers because rising shipping costs are a major factor contributing to rising costs. costs to American families.
“During the pandemic, ocean carriers increased their prices by as much as 1,000%,” he said. “And too often, these ocean carriers refuse to take US exports back to Asia and instead leave with empty containers. That is costing farmers and ranchers, and our economy, a lot of money. This bill will further reduce costs for families and ensure fair treatment for American businesses, including farmers and ranchers. I hope it becomes law.”
National Industrial Transportation League (NITL) General Counsel Karyn Booth, who played a key role in writing and editing the text for the House and Senate versions of OSRA, told LM that OSRA represents an attempt to address current problems, as US importers and exporters have faced some unprecedented challenges in the past two years.
“The service has been terrible, and they can’t get adequate or timely space for ships,” Booth said. “They have been unable to negotiate fair contract terms with their carriers to address these issues, which led to the need to [assess] what the current state of the law is and how we update the law to ensure the right tools are in place. . there for the FMC to handle unfair business practices. OSRA is quite focused on the conduct and practices of international shipping carriers, and is designed to address potential unfair trade practices, which are called “prohibited acts” in the law. And Congress has now updated those provisions to specifically address today’s challenges … clarifying that unreasonable reductions in service and basically unreasonable denials of boat space will now be able to be specifically addressed through FMC claims.”
Additionally, Booth explained how the bill has a strong focus on detention and demurrage, with a significant portion of the bill’s goals centered around increased costs. While the FMC does not have jurisdiction over rates in the same way that the Board of Surface Transportation has to deal with setting freight train rates, Booth focuses on the detention and delay issues assessed against freight being shipped. left in a port beyond a period of free time, when the delays are not the cause or fault of the importer—will give the FMC more tools to address these problems through prohibitive acts, detention and changes of stay, among other actions.
“There will be some regulations to flesh out what these new provisions mean, and I think that’s going to be the next big thing here,” he said. “The FMC will have to make some rules about detention and demurrage rules, unreasonable refusals to deal or negotiate on these vessel space issues, as well as any potential type of unfair or unfairly discriminatory conduct.”
Ben Hackett, founder of maritime consultancy Hackett Associates, told LM that OSRA provides the FMC with clearer guidance on its ability to consider the entirety of the supply chain that affects shipping.
“What is surprising is that President Biden seems to take it for granted that it is the container shipping sector that has been the main driver of inflation through freight rate increases and capacity manipulation,” he said. . “This despite the fact that the FMC found that the problem lies on the land side and the difficulties that arise with staffing due to Covid and the actions taken to furlough staff and slowly bring them back. Not much mention is made of the fact that consumer demand for retail products and online shopping have put significant pressure on the supply chain and available warehousing. Ships waiting two or more weeks to dock at US ports and some major Chinese ports due to zero Covid lockdowns are the main culprits for capacity constraints.”
Comments on OSRA from the World Shipping Council (WSC) had a different take on the factors that are causing the ongoing entanglements in the supply chain that OSRA is taking steps to address.
WSC officials said that during the pandemic, ocean carriers have gone to great lengths to keep goods moving, deploying all available vessels and containers, as well as increasing voyages and investing in the future. It highlighted that in 2021 carriers ordered 555 vessels worth $42.5 billion, with 208 vessels worth $18.4 billion ordered to date in 2022.
According to Jeff Berman, Group News Editor de logisticsmgmt.com “But as long as America’s ports, rail yards and warehouses remain overloaded and unable to cope with increased levels of trade, ships will remain stuck outside ports to the detriment of shippers and exporters,” officials said. the WSC. “We are dismayed by the continued mischaracterization of the industry by US government representatives, and concerned about the disconnect between hard data and inflammatory rhetoric. The 22 (not nine) international airlines serving the American people, industry and government in Asia America’s trade is part of the global supply chain this country has built, importing and exporting food, medicine, electronics , chemicals and everything else we depend on. The increase in fee levels that we have seen in recent years is a function of demand. outpacing supply and congestion on land, exacerbated by pandemic-related disruption. Until the import bottleneck is resolved, the export bottleneck will persist. Ocean carriers continue to move record volumes of cargo and have invested heavily in new capacity – the United States must make the same commitment and invest in its land-based logistics infrastructure.”