WASHINGTON, D.C. – The Ocean Shipping Reform Act is on its way to President Biden’s desk for signing. The legislation will crack down on skyrocketing ocean shipping costs and ease supply chain backlogs that are raising prices for consumers and making it harder for U.S. farmers and exporters to get their goods to the global market.
The US House voted 369-42 to approve the Senate version of the bill, which gives the Federal Maritime Commission more oversight of ocean shipping companies. It also requires ocean carriers to certify that late fees, known as “detention and demurrage” charges comply with federal regulations or will face penalties.
The Federal Maritime Commission (FMC) is charged with protecting the interests of U.S. businesses that rely on ocean transportation under the Shipping Act, which was last amended in 1998. The bipartisan Ocean Shipping Reform Act of 2022 will level the playing field for American exporters and importers by providing the FMC the tools it needs for effective oversight of international ocean carriers. These oversight and enforcement tools will help the FMC eliminate unfair charges, prevent unreasonable denial of American exports, and crack down on other unfair practices harming American businesses and consumers.
The Ocean Shipping Reform Act will:
- Stop international ocean carriers from unreasonably declining American cargo, as determined by the FMC in new required rulemaking.
- Direct the FMC to self-initiate investigations of ocean carrier business practices and apply enforcement measures.
- Shift the burden of proof regarding overcharging certain fees, called “demurrage and detention” charges, from the complainant to the international ocean carriers to help level the playing field and improve the FMC’s enforcement capacity.
- Improve transparency of movement of U.S. agricultural and other exports by requiring international ocean carriers to report to the FMC regarding how many empty containers are being transported.
- Stop retaliation by international shipping companies against exporters and importers.
- Formally establish the FMC Office of Consumer Affairs and Dispute Resolution Services to improve the complaint and investigation process for American businesses seeking assistance from the FMC.
- Improve management of chassis, the specialized trailer used to transport ocean containers over the road, by authorizing the Bureau of Transportation Statistics to collect data on dwell times for chassis; and initiate a National Academy of Sciences study on best practices of chassis management.
- Provide the FMC with temporary emergency authority to collect data during times of emergency congestion, among other improvements.
Port congestion that began during the COVID-19 pandemic left exporters, including American farmers, struggling to get their products to global markets because of unpredictable sailings, ocean carriers denying American cargo, and skyrocketing freight costs. For example, shipping rates for a 40-foot container rose from $1,300 before the pandemic up to $11,000 by September 2021. Shipping costs continue to increase. This week, shipping costs remain 41% higher globally compared to this time last year.
Agriculture organizations applauded the passage after months of supply chain issues fueled by disruptions and empty shipping containers leaving U.S. ports. American Farm Bureau Federation president Zippy Duvall says an estimated $25 billion in ag exports were lost in the past six months because of ocean shipping constraints and says once the bill is signed into law it will allow farmers and ranchers to continue to meet the needs of families in America and oversees.
A one-page summary of the Ocean Shipping Reform Act and a list of bill supporters is available HERE. A section-by-section summary of the bill is available HERE. The bill text is available HERE.
