By Eric Huang.      Photo：Paula Nardini

The legislation would essentially give the Federal Maritime Commission more power to regulate ocean carrier practices.

Two weeks ago, the Ocean Shipping Reform Act was passed in a voice vote by the U.S. Senate Commerce Committee. The bill is now headed to the full Senate for consideration. One version of the Act has passed the U.S. House of Representatives as part of the Creation of Manufacturing Opportunity, Technological Leadership, and Economic Strength (COMPETES) Act. The legislation would essentially give the Federal Maritime Commission more powers to regulate the practices of ocean carriers. 

In a rare moment of bipartisanship in a deeply divided U.S. Congress, the Senate today passed the Maritime Transportation Reform Act by a simple voice vote. The bill, which has bipartisan support and broad industry acceptance, strengthens the authority of the Federal Maritime Commission, and will level the playing field for U.S. exporters. It is designed to make it harder for ocean carriers to unreasonably reject cargo ready for export at port and to charge shippers high fees.

The Ocean Shipping Reform Act would make key reforms to the FMC's oversight of the shipping industry, including strengthening the Commission's oversight of demurrage and demurrage, establishing a faster fee review process, and empowering the Commission to increase the number of other "necessary terms for consideration in service contracts ". Also approved by the Senate Commerce Committee as a stand-alone bill, the Freight Act addresses broader challenges facing shipping freight, such as ensuring the committee has the people and resources it needs to conduct its oversight work, collect data on container and chassis dwell times, research the best practice of chassis pools and reduce the burden of training truck drivers.

"Port congestion and increased shipping costs have created unique challenges for U.S. exporters, who have seen the price of ocean containers quadruple in just two years, increasing costs for consumers and hurting our business, said Senator Amy Klobuchar, one of the U.S. exporters and sponsor of the Act. "Majorly foreign-owned shipping companies posted record profits. This legislation will help U.S. exporters get their goods to market in a timely manner at a fair price," said Senator Maria Cantwell, chair of the Commerce Committee. "These ocean carriers Record profits are being made. They made $150 billion in profits in 2021 and seaborne imports are expected to grow by over 30% in the first quarter of this year. Our farmers don't want special treatment. They just don't want record profits being exploited.”

Senator Roger Wicker mentioned that Americans continue to feel the effects of the supply chain crisis as the pandemic emerges. The Senate today took an important step in support of the freight system, unanimously passing the Ocean Shipping Reform Act and the Freight Act, legislation that would introduce targeted reforms to federal maritime oversight. This will provide shippers with a path to freedom from unfair and unreasonable practices, while avoiding harsh regulation. I am delighted that this bill includes my freight bill, which will support the wider transportation network through the use of data, simplified regulation and increased oversight. I look forward to bringing this legislation to the President's desk as soon as possible to provide relief to American businesses.

The bill is the first major overhaul of regulations governing the movement of goods at U.S. ports and directly addresses criticism of container shipping companies over the past two years. The Senate-passed bill focused on the fees charged by operators and about those business practices cited by U.S. manufacturers and the agricultural sector as contributing to the sharp drop in U.S. exports.

For exports, the bill prohibits ocean carriers from unreasonably reducing transportation opportunities for U.S. exports, and the FMC will determine clearer policies through a new rule making. In addition, it requires Vessel-Operating Common Carriers to report to the FMC on a quarterly basis of the gross tonnage and TEU (loaded/empty) of each vessel calling at a U.S. port. The FMC's powers have also been expanded, with new authority to initiate investigations and enforcement actions on its own into the commercial practices of ocean common carriers. Additionally, to address concerns raised by the Biden administration about the dominance of the three shipping alliances, the bill creates a new authority for the FMC to register shipping exchange. 

In his State of the Union address, President Biden called on the U.S. Congress to pass reform legislation on shipping. We can expect the president to sign the bill when it reaches his desk.

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