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Ocean Shipping Reform Act Awaits Biden’s Signature with House Passage

The House of Representatives approved the Ocean Shipping Reform Act, after one final push by President Biden last week calling on Congress to “crack down” on ocean carriers.

The House voted on the Ocean Shipping Reform Act of 2022 (OSRA22) Monday, passing the bill by a vote of 369-42. The legislation is the Senate version of a shipping reform bill the House passed in December and once again in February when it was packaged as part of the United States Innovation and Competition Act of 2021.

OSRA22 gives more oversight power to the Federal Maritime Commission (FMC) to ensure U.S. exporters are not unfairly bypassed for service by carriers. Carriers would be required to prove the accuracy of late fees, or detention and demurrage, with the proper citations on a shipper’s invoice of information justifying the charge. Ocean liners would also be required to report quarterly to the FMC import and export load information.

“Nine multinational ocean shipping companies formed three consortiums to raise prices on American businesses and consumers by over 1,000 percent on goods coming from Asia. This allowed these foreign companies to make $190 billion in profits last year—a sevenfold increase in one year,” Congressman John Garamendi (D-Calif.) said in a statement Monday.

Garamendi, who introduced the House version of the bill last year, went on to say OSRA22 will “help crush inflation and protect American jobs.”

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President Biden, who was in Los Angeles last week for the Summit of the Americas, visited the San Pedro Bay ports complex to promote passage of OSRA22 on Friday, the same day the Labor Department reported the May consumer price index jumped 8.6 percent, for a historically high inflation rate.

“One of the key ways to fight inflation is by lowering the cost of moving goods through the supply chain,” Biden said.

“Retailers and thousands of other businesses depend on the global maritime transportation system to move goods through the supply chain every day and continue to face significant challenges, including unfair business practices by ocean carriers,” said David French, National Retail Federation senior vice president for government relations, on Monday following the House vote. “Making OSRA federal law helps address longstanding systemic supply chain and port disruption issues that existed well before the pandemic by providing the Federal Maritime Commission the additional authority it needs. Additionally, it provides critical updates to the international maritime transportation system, which has been severely impacted by COVID-19.”

American Apparel & Footwear Association president and CEO Steve Lamar hailed OSRA22 as an “essential—and frankly long overdue—piece of legislation that will strengthen the resiliency of our supply chains.”

“The supply chain crisis that began in 2021 and continues today, showed us how price gouging and non-competitive practices can impact American companies and American families,” Lamar said in his statement released after Monday’s vote.

The World Shipping Council, an organization representing ocean liners, has said the legislation does little to address the country’s broader supply chain challenges. The group has called on lawmakers to instead focus on infrastructure spending.

Even with claims of anti-competitive behavior on the part of carriers fueling inflation, the FMC announced earlier this month the market for ocean freight is competitive and the high rates hitting shippers are the product of the surge in demand during the pandemic. The conclusion was part of a two-year investigation conducted by the FMC.