Industry groups press Senate for ocean shipping reform

In the wake of the passage last year of a $1 trillion infrastructure bill, shippers and manufacturing groups are turning their focus in 2022 to support another federal initiative with the potential to iron out supply chain wrinkles, pledging to work with the U.S. Senate to pass an ocean shipping reform bill. 

Many shipper groups are backing the Ocean Shipping Reform Act (OSRA) of 2021, a bipartisan bill that easily won approval in the U.S. House in December. The bill’s passage in that body sent the legislation to the Senate for a new round of debate.

In a letter delivered yesterday to Senate leaders from both parties, a coalition of more than 100 agriculture sector associations and companies reiterated their support for the bill. “The U.S. agriculture industry is encouraged that the Senate may consider a bill to address unreasonable ocean carrier practices that are undermining U.S. export competitiveness. The bipartisan Ocean Shipping Reform Act of 2021 (H.R. 4996) recently and overwhelmingly passed the House of Representatives 364 – 60; it is essential the Senate also pass legislation to allow US agriculture to remain viable in global markets,” the Agriculture Transportation Coalition (AgTC) trade group said.

According to the AgTC, U.S. farmers and food processors are losing customers in foreign markets because they struggle to deliver their products dependably, prompting customers in other countries to find alternative sources. The group said a major reason for that problem is unfair ocean carrier practices including: exorbitant freight rates; declined booking requests; unreasonable freight and demurrage/detention charges; and failure to communicate schedules in a timely manner.

In response, the AgTC said it supports legislative initiatives to gain “reasonable and fair” ocean carrier practices consistent with the Federal Maritime Commission’s Interpretive Rule on Demurrage and Detention. “We ask that the Senate bill, like the House bill, establish an obligation for carriers to self-police compliance with that Rule. In addition, the bill should address the ocean carriers’ responsibility to carry U.S. export cargo to the extent they can do so safely. We also ask that legislation provide the FMC with additional enforcement tools to address injurious ocean carrier practices,” the AgTC letter said.

However, opposition to the bill comes from the ocean freight carriers themselves. In testimony to the U.S. Senate Committee on Commerce, Science, and Transportation, trade association the World Shipping Council blamed supply chain delays on a shortage of landside capacity to process incoming cargo. The group acknowledged that ports are seeing unprecedented import cargo demand due to pandemic-altered consumer spending patterns and Covid disruptions, but said the Federal Maritime Commission (FMC) already has the necessary authority it needs and is actively regulating the U.S. international transportation system.

The shipping reform act also attracts criticism for charging carriers with policing themselves. “Putting the onus on carriers to provide data about overcharges, which the Ocean Shipping Reform Act bill does, is like asking a fox to guard a henhouse,” Brian Glick, the CEO of Chain.io, which provides a cloud-based supply chain integration platform, said in a 2021 statement. Glick says that such an approach would likely not fix the issues plaguing shipper-carrier relationships in the near-term, and could even strain them further in the long run. Instead, in order to achieve real detention and demurrage reform, shippers need to have accurate data that they control, Glick said.

Still, other logistics and retail groups that have supported the bill’s progress include the American Apparel & Footwear Association (AAFA) and the American Chemistry Council (ACC), a trade group for U.S. chemical manufacturers.

The Senate’s version of the bill is currently being drafted by Senator Amy Klobuchar (D-MN) and Senator John Thune (R-SD), with input from the Committee on Commerce, Science and Transportation.