Legislation to reform ocean shipping passes House

Written by Nick Blenkey
U.S. Capitol Dome

Image: Architect of the Capitol

As frustration with port delays and supply chain disruption grows, so does dissatisfaction with the nine carriers and three alliances that dominate the global container shipping market.

Yesterday, the House of Representatives voted to pass the Ocean Shipping Reform Act (H.R.4996) by a bipartisan vote of 364-60. It now heads to the Senate for consideration.

Introduced by Congressman John Garamendi (D-Calif.) and Congressman Dusty Johnson (R-S.D.) the bill aims to make the Federal Maritime Commission (FMC) a more effective federal regulator.

According to Garamendi, the legislation will “ensure a more competitive global ocean shipping industry, protect American businesses and consumers from price gouging, and establish reciprocal trade opportunities to reduce the United States’ longstanding trade imbalance with export-driven countries like mainland China.”

As we reported earlier, the legislation has White House support.

The “Ocean Shipping Reform Act of 2021” (H.R.4996) would:

  • 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.

Although the bill has the support of a broad array of domestic trade associations, including the National Industrial Transportation League, the American Farm Bureau Federation, the National Retail Federation and many more, the World Shipping Council (WSC) is less than happy with it.

“The House today passed HR 4996 without proper debate or committee process. The bill is a political statement of frustration with supply chain challenges—frustrations that ocean carriers share,” said WSC president John Buler yesterday. “The problem is that the bill is not designed to fix the end-to-end supply chain congestion that the world is experiencing, and it will not and cannot fix that congestion.”

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