House Passes Ocean Shipping Reform Act with Overwhelming Support

Date: Thursday, December 9, 2021
Source: Sourcing Journal

Industry trade groups praised the passage of the Ocean Shipping Reform Act of 2021 (OSRA21) in the House of Representatives on Wednesday, marking a win for U.S. shippers and a step forward in addressing conditions they believe have undermined the country’s economic recovery.

Passed with a vote of 364 to 60, the bipartisan legislation spearheaded by Reps. John Garamendi (D-Calif.) and Dusty Johnson (R-S. Dakota) requires that the Federal Maritime Commission (FMC) draft and enforce new rules aimed at establishing more reciprocal trade with countries like China.

The bill seeks to ensure fair competition and protect American businesses from excessive detention and demurrage charges levied by ocean carriers and marine terminal operators, placing the burden of proof on those leveraging the fees.

Additionally, OSRA21 tasks the FMC with creating new rules to prohibit carriers from unreasonably declining shipping opportunities from U.S. companies. Spurred by heavy demand, Chinese exporters have been paying carriers to return containers to their ports empty—rather than filled with American cargo—in order to expedite the process of getting them back on the water.

The legislation requires ocean carriers to report the total tonnage of imports and exports and loaded or empty containers that arrive at the ports to the FMC annually, with an eye toward striking a greater balance between the volume of goods coming and going from U.S. shores.

“Access to the American market and its consumers is a privilege, not a right,” Rep. Garamendi said. “Congress must restore balance at our ports and tackle the longstanding trade imbalance our nation has with China and other countries head on.”

“We’ve all been impacted by the backlog in the supply chain and shipping delays,” Rep. Johnson, the bill’s co-author, added. “China and the foreign flagged ocean carriers aren’t playing fair, and accountability is long overdue.”

Industry trade organizations, which have spent months lobbying Congress to pass the bill, echoed the overwhelming support for OSRA21 on Capitol Hill.

The National Retail Federation (NRF) spearheaded a coalition of more than 152 supply chain stakeholders to endorse the legislation in September, sending a final letter to the House earlier this week urging members to vote “aye.”

“The Shipping Act has remained unchanged for nearly 20 years, as the global supply chain has continued to grow and evolve to meet increased consumer demand,” it said Wednesday. OSRA21 provides “much-needed updates and reform to an archaic system that retailers and thousands of other businesses depend on each day to transport goods,” it added, noting that “these improvements could not come at a more critical time” for its members.

Steve Lamar, president of the American Apparel and Footwear Association (AAFA), applauded the news, saying that the bill “directly addresses many of the issues that have created today’s shipping crisis, causing the biggest headwinds facing the U.S. recovery and eroding American value.”

Reports that the shipping crisis is in the rearview are premature, he added, noting that the industry continues to see “deteriorating conditions and swelling impacts across our global supply chains.”

“Once passed, OSRA21 will reduce or eliminate carrier price gouging, epic freight costs, record delays, and other unfair and excessive punitive fees that only fuel inflationary pressures,” Lamar said, adding that the AAFA encourages an “equally swift passage” of the bill in the Senate to “stem the tide of this disaster.”

Jess Dankert, vice president of supply chain at the Retail Industry Leaders Association (RILA), said that “the current global supply chain disruption has spotlighted the need for shipper protections, as carriers have frequently eschewed contracted rates and service requirements in favor of soaring rates and punitive fees.” The group wrote to the Biden administration in late November seeking these protections.

Consolidation in the shipping industry and the growth of carrier alliances has “impeded competition, tightened capacity, and helped drive prices to record highs,” she added. “This act will ensure that American businesses have fair access to ocean shipping capacity, and protection from unreasonable fees and retaliatory measures.”

The Act would also bolster the FMC’s ability to oversee ocean carriers and their alliances, “sending the message that fair and open supply chains are essential to the American economy.” Retailers are depending on policymakers to push this agenda, Dankert added, “as all interested parties work to untangle the supply chain congestion and remove barriers to the movement of goods.”

The National Association of Chemical Distributors (NACD), which represents chemical distributors and their supply-chain partners serving the textile, cosmetics and food and beverage industries, among other categories, also praised the legislation’s passage Wednesday.

President and CEO Eric R. Byer noted that unfair ocean shipping provider practices are driving up shipping rates and prices for consumer goods, “while threatening access to chemical products necessary for water treatment, food preservation, agricultural processes, pharmaceutical and vaccine production, and more.”

The passage of OSRA21 “will go far in strengthening the FMC’s current enforcement abilities, expanding its authority to ensure industry-wide compliance with federal law,” he added, calling on the Senate to “swiftly introduce and pass a companion bill.”


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