Photo: Illustration. Image Courtesy: Port of Los Angeles

US: New shipping reform seeks greater control of ocean carriers

US senators John Thune (R-S.D.) and Amy Klobuchar (D-Minn.), both members of the Senate Committee on Commerce, Science, and Transportation, have introduced the Ocean Shipping Reform Act, bipartisan legislation that would update federal regulations for the global shipping industry.

Illustration. Image Courtesy: Port of Los Angeles

The bill would level the playing field for US exporters by making it harder for ocean carriers to unreasonably refuse goods ready to export at ports, and it would give the Federal Maritime Commission (FMC) greater rulemaking authority to regulate harmful practices by carriers.

Specifically, the US Ocean Shipping Reform Act 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/empty) per vessel that makes port in the United States;
  • Authorize the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate; and
  • Establish new authority for the FMC to register shipping exchanges to improve the negotiation of service contracts. 

“South Dakota producers expect that ocean carriers operate under fair and transparent rules,” said Thune.

“Unfortunately, that is not always the case, and producers across America are paying the price. The improvements made by this bill would provide the FMC with the tools necessary to address unreasonable practices by ocean carriers, holding them accountable for their bad-faith efforts that disenfranchise American producers, including those throughout South Dakota, who feed the world.”

“Especially with record inflation in prices of goods, this legislation would also benefit consumers by promoting the fluidity and efficiency of the supply chain,” Thune added.

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

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

Thune previously questioned stakeholders on the current supply chain crisis as well as the need for legislative solutions. In November 2021, he joined his colleagues in sending a letter to the FMC expressing concerns about how increased shipping costs are being passed on to American consumers.

Last March, Thune led a letter urging the FMC to investigate reports of unreasonable practices by ocean carriers, specifically their refusal to carry certain agriculture products from US ports back to Asia.

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The bill is co-sponsored by US senators Tammy Baldwin (D-Wis.), Marsha Blackburn (R-Tenn.), Richard Blumenthal (D-Conn,), Cory Booker (D-N.J.), Joni Ernst (R-Iowa), John Hoeven (R-N.D.), Mark Kelly (D-Ariz.), Roger Marshall (R-Kan.), Jerry Moran (R-Kan.), Gary Peters (D-Mich.), Debbie Stabenow (D-Mich.), and Todd Young (R-Ind.), and a companion version was passed in the House of Representatives, which was led by U.S. representatives Dusty Johnson (R-S.D.) and John Garamendi (D-Calif.).

The House version of the bill, sponsored by Representatives John Garamendi (D-CA) and Dusty Johnson (R-ND), was approved by an overwhelming majority in December. 

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The National Retail Federation (NRF) welcomed the introduction of the bill in the Senate.

“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. For nearly two decades the Shipping Act has remained untouched, complicating supply chain disruption issues and adding to port congestion,” David French, Senior Vice President of Government Relations at NRF, said.

“Now more than ever, it is essential that we prioritize and invest in changes to support a modern-day transportation system,” he pointed out.

“We appreciate the work of senators Klobuchar and Thune to expedite this critical legislation and look forward to supporting its swift consideration in the Senate and conference with the House.”

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