By Arthur  Photo：druckfuchs Link：Pixabay

According to US media reports, under the pressure of agricultural exporters, congressmen from both parties have formally submitted the Maritime Reform Act of 2021 (Ocean shipping reform act) to the U.S. Congress.
The bill will establish new requirements for freight rates in ocean freight contracts and set out new procedures for handling complaints about demurrage and port charges. And in terms of supervising shipping lines, the US Federal Maritime Commission (FMC) has been given greater powers. Mainly include: update the requirements of the carriers; require the carriers or terminal operators to prove that the demurrage fees and port detention fees implemented by them to comply with the relevant regulations of FMC, otherwise they will face penalties; if the fees are based on the public port specified by the state Terminal operators should conditionally waive demurrage fees and port demurrage fees; updated FMC’s explanatory rules on demurrage fees and port detention fees, and obliged the carriers to comply with the minimum service standards that meet the public interests. These new standards will also be determined by FMC; carriers or terminal operators are required to keep all invoice records related to demurrage and port charges etc., for at least 5 years and provide them to FMC.

It is reported that the bill was jointly proposed by U.S. Democratic Rep. John Garamendi and Republican Rep. Dusty Johnson. They said that since the outbreak of the covid-19 pandemic, US exporters have generally been dissatisfied with carriers. U.S. exporters complained that carriers/shipping companies are more inclined to ship empty containers from the United States back to Asia as soon as possible because the freight rates on routes from Asia to the United States are higher, which infringes on the interests of U.S. exporters.
John Garamendi said: “California agricultural exporters and other export companies are willing to pay freight to ensure that products made in the United States enter the Asia-Pacific market. Therefore, carriers who unload at West US ports must provide opportunities for US exporters. This reform bill requires. Dusty Johnson believes that there is an “oligopoly” in the current container shipping market---referring to a state where a small number of sellers (oligarchs) dominate the market.

However, the World Shipping Council (WSC) believes that the reform of the US government will not create a level playing field, but will tilt the market to favor US shippers. If the US government wants to intervene, it must Ensure that all parties enjoy fair rights. WSC explained that the new bill has flaw. The current supply chain bottlenecks faced by the United States should not be solely the responsibility of the carrier. The organization insists that the reform ignores the fact that every link in the supply chain, from carriers, ports and terminals to railways and warehouse operators, is under tremendous pressure. If only a single supply chain participant is regulated, this bill is "doomed to fail."
It is reported that the bill will be further discussed this month. Industry analysts said that given the bipartisan nature of the bill and the widespread support of American agricultural exporters, it is unlikely that the U.S. Congress will oppose it.

In fact, it is difficult for FMC to catch clear evidence that the current shipping company has so-called "confidential-room negotiation" to increase shipping freight rates ! As long as there is no such direct evidence, FMC cannot initiate anti-monopoly lawsuits against shipping companies under current regulations. The new laws that may be passed by Congress this time can only regulate demurrage charges and port dentition charges when they occur at American ports. The level of ocean freight is determined by the result between market supply and demand. In the American society that supports absolute capitalism, the sky-high ocean freight cannot be restrained. Therefore, I feel that all maritime alliances will not start the US Congress to lobby strongly for this possible new law.

The report of each shipping lines in the first half of this year show that they made huge profit which is just as a slap in the face to the new law that may be passed by the U.S. Congress. The shipping company alliance has strong evidence that most of the high freight rates are due to the outdated infrastructure of US ports, container yards, railway terminals, warehousing, etc., as well as supply and demand imbalances caused by pandemic to shortage of personnel. This is a great opportunity for shipping lines to make big fortunate. For example, in the first half of 2020, Zim line achieved operating income of US$4.13 billion, a year-on-year increase of 155%; net profit (net income) was US$1.48 billion, while in the first half of 2020 it was US$13 million, a year-on-year increase of 11285. %, close to 113 times. Maersk line, the world’s largest container shipping company, announced a substantial increase in its revenue in the second quarter. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) announced last Friday was US$5.1 billion, an increase of 200 from the US$1.7 billion in the same period last year. %. Revenue increased by nearly 60%, reaching 14.2 billion U.S. dollars.

Shipping lines are units for profit. In an environment of free competition, as long as they do not violate the law, they jointly negotiate an increase in ocean freight. The public is suffering from inflation can only resort to moral condemnation.