Industry associations call on Congress to bring Ocean Shipping Reform Act to conference

An April 20 letter penned to a quartet of House and Senate members of Congress, from a whole host of companies and trade associations that represent U.S. importers, exporters, freight transportation providers, and other industry stakeholders, called on Congress to get to work in conference the differences in the House and Senate versions of the Ocean Shipping Reform Act (OSRA), with OSRA passing in both chambers recently, and the letter’s authors saying that they believe the differences between the two versions can be easily resolved through a conference negotiation.

The members of the Congress the letter was written to were: Maria Cantwell (D-WA), Chairman, Senate Committee on Commerce, Science, and Transportation; Roger Wicker (R-MS), Ranking Member, Senate Committee on Commerce, Science, and Transportation; Peter DeFazio (D-OR), Chairman, House Committee on Transportation and Infrastructure; and Sam Graves (R-MO). Among the concerns sending the letter were: the Agriculture Transportation Coalition; American Association of Exporters and Importers; the National Industrial Transportation League; the American Chemistry Council; and the National Retail Federation, among others.   

The letter’s authors made it clear that while the two current versions of the bill, as passed, are very complimentary, there are provisions, which they said “need to be discussed and reconciled as part of a conference negotiation, including:

• a requirement for ocean carriers to adhere to minimum service standards that meet the “public interest”;
• a certification requirement for a demurrage and detention charge;
• an explicit prohibition of carriers from declining export booking;
• a provision 1) prohibiting carriers from failing to furnish or 2) causing a contractor to fail to furnish the facilities and instrumentalities needed to perform the transportation services; and
• a provision allowing third parties to intervene in FMC action against ocean carriers alleging anticompetitive conduct

The letter’s authors added that promptly reaching a final OSRA bill followed by swift final Congressional passage and President Biden’s signature will help to ensure U.S. competitiveness and continued economic recovery.

As previously reported by LM, United States Senate in late March unanimously voted to sign off on the bill on a voice vote.

The bill will head back to the House of Representatives, with the expectation it will head to President Biden’s desk to be signed into law, following conferencing between the House and Senate on differences that need to be hammered out between the chambers.

This represents the most recent sign of progress for the OSRA, getting bipartisan approval from United States Senate Committee on Commerce, Science, and Transportation on March 22 and OSRA being passed in December 2021 by the United States House of Representatives by a convincing 364-40 vote and its subsequent introduction into the Senate in February by Senator Amy Klochubar (D-Minn.) and Senator John Thune (R-S.D.).

Key components of the Ocean Shipping Reform Act of 2021 include:

• requiring ocean carriers to certify that late fees —known in maritime parlance as “detention and demurrage” charges—comply with federal regulations or face penalties;
• shifting burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier;
• prohibiting ocean carriers from unreasonably declining shipping opportunities for U.S. exports, as determined by the FMC in new required rulemaking;
• requiring ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and 20-foot equivalent units (loaded/empty) per vessel that makes port in the United States;
• authorizing the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate; and
• establishing new authority for the FMC to register shipping exchanges

“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, raising costs for consumers and hurting our businesses. Meanwhile, ocean carriers that are mostly foreign-owned have reported record profits. This legislation will help American exporters get their goods to market in a timely manner for a fair price,” said Klobuchar in a statement. “By passing this bill, we are one step closer to leveling the playing field for American manufacturers and consumers.” 

National Retail Federation (NRF) Vice President for Supply Chain and Customs Policy Jonathan Gold told LM that the NRF strongly supports this legislation.

“We are working very closely with the bill’s sponsors to get it done,” he said. “It addresses many of the key issues our members have been dealing with like unfair charges related to detention and demurrage…as well as challenges that were intact prior to the pandemic that further exacerbated and highlighted the need for changes.”

The World Shipping Council (WSC) recently panned the OSRA, saying that the bill addresses none of the root causes of what it called U.S. landside congestion.

“Americans continue to import goods at record levels—so much so that the U.S. ports and landside logistics workforce is unable to process all the cargo,” it said. “Ocean carriers have deployed every vessel and every container available, and are moving more goods than at any point in history, but the U.S. landside logjams are keeping vessels stuck outside U.S. ports. This import congestion is also consuming the capacity and space needed to ensure the uninterrupted flow of U.S. exports. While the Senate is taking a more deliberative approach that the House’s flawed process in passing the Ocean Reform Act of 2021, H.R.4996, neither chamber’s version of the bill does anything to fix the landside logistics breakdowns that are at the heart of America’s supply chain problems.”

WSC added that the House bill would make existing congestion worse, whereas the Senate bill— despite carrying some of the same risks of unintended negative consequences—provides regulators enough authority to get the final rules right.  

And a report in The Loadstar observed that shipping lines have railed against the OSRA, claiming the legislation will “up-end” the global system for shipping cargo and see a worsening of the services offered to US importers and exporters.

“It is disappointing that unfounded allegations are being levied against an industry moving more cargo now than at any time in history in order to meet the unprecedented demand for imported goods during the pandemic,” said WSC President and CEO John Butler in the report.