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U.S. Senate Introduces Version of Ocean Shipping Reform Bill

Last Thursday, the U.S. Senate introduced its version of legislation aimed at promoting U.S. exports while curbing carriers’ power over both container service and equipment fees charged to shippers.

The Ocean Shipping Reform Act (OSRA) is similar to legislation that passed overwhelmingly late last year in the U.S. House, though it lacks some of the specifics of the earlier bill. Both bills would give the Federal Maritime Commission authority to initiate rulemakings, making it more difficult for ocean carriers to refuse service to American exporters.

“Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase fourfold in just two years. Meanwhile, ocean carriers have reported record profits,” said Sen. Amy Klobuchar, D-Minn., who cosponsored the bill with Sen. John Thune, R-S.D.

“This legislation will level the playing field by giving the [FMC] greater authority to regulate harmful practices by carriers and set rules on what fees carriers can reasonably charge shippers and transporters.”

The Senate’s version of OSRA would:

  • Prohibit ocean carriers from unreasonably declining opportunities for U.S. exports, as determined by the FMC in a new required rulemaking.

  • Promote transparency by requiring ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and twenty-foot equivalent units (loaded or empty) per vessel that makes port in the United States.

  • Authorize the FMC to self-initiate investigations of ocean common carriers’ business practices and apply enforcement measures, as appropriate.

  • Establish new authority for the FMC to register shipping exchanges to improve the negotiation of service contracts.

Language in the Senate bill is not as strong as the House version on imposing import-export reciprocity on carriers. However, both bills include certification requirements for carriers when imposing demurrage and detention fees.

It is also expected that, unlike in the House, the bill will be subjected to more deliberate negotiations with an open markup for amendments.

Commenting on Friday, John Butler, President and CEO of the World Shipping Council, said that further regulating ocean carriers will not solve land-side supply chain bottlenecks that are backing up the supply chain.

“The deeply flawed bill passed by the House at the end of last year would place government officials in the role of second-guessing commercially negotiated service contracts and dictating how carriers operate ship networks – an approach that would make the existing congestion worse and stifle innovation,” said Butler, whose organization represents 90% of the world’s container ship capacity.

“We look forward to the opportunity to work with the Senate to craft a final bill that – in contrast to the House bill – takes a comprehensive, forward-looking view of the real root causes of supply chain congestion, and that does not make that congestion worse.”

The U.S. Dairy Export Council (USDEC), on the other hand, wants to work with Congress to bolster the measure “to address outstanding concerns and provide for the strongest possible reforms,” commented USDEC President and CEO Krysta Harden.


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