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Ocean Shipping Reform Gains Congressional Support

Congress is ramping up efforts to overhaul the global shipping industry for the first time in more than 20 years as it seeks to increase maritime oversight and level the playing field in trade with China.

Multiple measures to add stricter rules to the laws governing the maritime industry are at play in Congress, with the Senate seeing the introduction of the Ocean Shipping Reform Act of 2021 (OSRA21) on Thursday. The bill was introduced by Senators John Thune (R-S.D.) and Amy Klobuchar (D-Minn.).

“Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase four-fold in just two years. Meanwhile, ocean carriers have reported record profits,” Klobuchar said in a statement.

The House version of the bill passed in December in a 364 to 60 vote and was born out of the congestion at the ports brought on by the country’s supply chain issues. It gives greater oversight and enforcement power to the Federal Maritime Commission (FMC), including penalties for carriers that send empty containers back to Asia. The practice has left many U.S. exporters waiting for containers as they’re passed up in favor of speedier loading times of imports back in Asia.

The bill requires greater transparency, with carriers expected to report quarterly to the FMC import and export tonnage, along with the total number of loaded and empty 20-foot equivalent units (TEUs, or the standard capacity of a shipping container) on ships anchored at port in the U.S.

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Late fees, called detention and demurrage, charged by the carriers would also be more closely monitored.

As the Senate now turns to crafting its own version of OSRA21, Congressmen John Garamendi (D-Calif.) and Dusty Johnson (R-S.D.) called to add OSRA21 as an amendment to the House’s America COMPETES Act of 2022, approved late Thursday 367 to 59.

America COMPETES focuses on initiatives that would make the U.S. more competitive with China. Ramping semiconductor manufacturing domestically has been one high-profile element of the legislation.

Garamendi on Thursday spoke before the House Science, Space & Technology Committee in support of the amendment, arguing it would ensure “reciprocal trade to help reduce the United States’ longstanding trade imbalance with export-driven companies.”

“We did this because American exporters have a serious and, in some cases, an existential problem. Many exporters cannot get a container to ship their goods and, for those who can get a container, they cannot get it on a ship,” Garamendi said.

Apparel and retail industry groups have been vocal in their support for greater shipping sector oversight.

The National Retail Federation (NRF) said Thursday the legislation would “modernize” ocean shipping.

“The sustained supply chain challenges, exacerbated by increased consumer demand during the coronavirus pandemic, have continued to impact the daily operations of retailers and the greater business community,” NRF senior vice president of government relations David French said.

No major updates to the global shipping industry have been passed since 1998, which French went on to say is “complicating supply chain disruption issues and adding to port congestion.”

The American Apparel & Footwear Association (AAFA) supported OSRA21 when it was in the House and on Friday called for its passage “quickly.”

AAFA president and CEO Steve Lamar blamed price increases in the apparel and footwear industries on high shipping rates, shipping delays, shipping fees and import tariffs.

The CEO voiced in a letter Thursday to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy support for the amendment to America COMPETES, saying it would “bolster” the FMC and “ensure fairness in the global shipping industry.”

“Our industry has been hit hard by the shipping crisis,” Lamar said in the letter. “Long delays, contract breaches, price gouging and excessive and unjust fees by carriers, and the lack of access to equipment to move our product have translated into empty store shelves and much higher prices at the cash register, spurring inflation to historic levels. And the situation is only getting worse.”

Elsewhere in Washington, yet another related piece of legislation was introduced Thursday, called the Ocean Shipping Competition Reform Act (OSCRA). It’s aimed at further stemming what’s deemed as anticompetitive behavior by ocean carriers by letting shippers, ports and other third parties join FMC lawsuits against carriers.

The OSCRA is sponsored by Klobuchar and Senator Cory Booker (D-N.J.).