UPDATE: June 13, 2022: House lawmakers passed the Senate version of the Ocean Shipping Reform Act of 2022 on Monday, voting 369-42 to send the measure to the president's desk. President Joe Biden, who has vocally backed the legislation in recent days, is expected to sign the bill into law.
UPDATE: March 31, 2022: The Ocean Shipping Reform Act of 2022 unanimously passed the U.S. Senate on Thursday. Next, Congress will evaluate how to reconcile two different versions of the bill before it reaches the president.
UPDATE: Feb. 4, 2022: Sens. Amy Klobuchar, D-Minn., and John Thune, R-S.D., on Thursday introduced the Ocean Shipping Reform Act of 2021 in the U.S. Senate.
"The Ocean Shipping Reform Act 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," Steve Lamar, president and CEO of the American Apparel & Footwear Association, said in a statement.
The bill would still need to pass the Senate and be signed into law by the president before taking effect.
- Congressmen John Garamendi, D-Calif., and Dusty Johnson, R-S.D., introduced legislation Tuesday in the House of Representatives that would reform the Shipping Act, according to a release from Garamendi. The Shipping Act governs the power of the Federal Maritime Commission and was last updated in 1998.
- Changes in the proposed legislation include broadening the scope of FMC's powers by giving the agency the responsibility of ensuring the ocean market is "reciprocal" in an effort to promote U.S. exports, moving the burden of proof for detention and demurrage from the invoiced company to the ocean carrier, and requiring carriers to report total import and export volume to the FMC.
- "Foreign ocean carriers aren’t playing fair, and American producers are paying the price," Johnson said in a statement. "It’s time for updated rules of the road. That’s what our bill does."
The ocean shipping marketplace was placed under a microscope over the last 18 months as a pandemic and high consumer demand in the U.S. resulted in high levels of congestion and delays for cargo owners. As a result, all eyes were on the FMC as the chief maritime regulator in the U.S., but the legislation that regulates the agency's power soon gained attention as well.
Shippers, and U.S. exporters specifically, called for the legislation to be reviewed and updated to help protect them from fees and help to ensure capacity.
Alexis Jacobson, the international accounts manager for Bossco Trading, called for the Shipping Act to be updated in written testimony she provided to Congress prior to a hearing on container shortages and supply chain delays in June.
Jacobson called on amendments to the act including "to allow for much better Federal Maritime Commission enforcement of the detention and demurrage rules and other 'unreasonable' acts" and "to encourage ocean carriers to maintain carriage of American exports."
Speaking at the same hearing, FMC Chairman Daniel Maffei said there were aspects of the Shipping Act that made it hard for shippers to win cases. Maffei pointed to a line in the legislation that requires proof that wrongdoing occurred on a "normal, customary and continuous basis."
"If they can prove it happen but it only happened once or even a couple of times but the carrier can say, 'Look, you know, that wasn't our actual practice that was just a mistake,'" he said. "[The shipper] might not win the case they, probably wouldn't win the case"
"So that also could be changed," he said of the legislation.
Maffei, a former lawmaker himself, has been open about his willingness to work with legislators to update the Shipping Act.
"I'm going to be a lot more involved, obviously, in whether or not we should do new legislation; what would be in new legislation if we did it; what would be the downsides or the potential side effects of doing certain kinds of things with the Shipping Act," he said in May shortly after taking over at the agency, adding that the ocean shipping market has changed dramatically since the legislation was passed in 1984.
But where shippers and regulators see potential to upgrade the Shipping Act, the carriers see an effort to place the blame for the snarled ocean market squarely on their shoulders.
"What is crystal clear is that regulating only ocean carriers — or any other single class of supply chain provider — is doomed to fail," World Shipping Council said in a statement on the legislation. "This approach will not improve supply chain performance, and it risks undermining the regulatory and market structure that has served the nation’s international trade well for many decades."
The WSC insisted that the government didn't need to step in, saying that "commercial solutions and market forces" are the sole balm needed to soothe the aches and pains of the current ocean market.
But U.S. exporters disagree with this assessment and many of them voiced support for the legislation Tuesday. A letter from the Agriculture Transportation Coalition noted dozes of associations voicing support for the proposed updates to the Shipping Act.
"Dairy producers and manufacturers have faced unreasonable costs and unfair practices from ocean carriers that negatively affect U.S. exports, increasing costs and putting at risk established trading relationships," Krysta Harden, president and CEO of the U.S. Dairy Export Council, said in an emailed statement. "This legislation will hopefully curtail those abuses and encourage better export-oriented behavior moving forward."