House passes ocean shipping regulation bill in bid to unravel supply chain delays

Logistics industry groups today cheered the passage of an ocean shipping regulation bill through the U.S. House of Representatives and called for the Senate to follow, saying the law would provide critical updates to an international maritime transportation system which has been cramped by pandemic pressures.

The House voted by a firm, 364-60 margin on Wednesday to approve the Ocean Shipping Reform Act (OSRA) of 2021, a bipartisan bill that is co-sponsored by Congressmen John Garamendi (D-CA) and Dusty Johnson (R-SD). The bill now heads to the Senate, where Commerce Committee members are already drafting comparable legislation.

Known in the House as H.R. 4996, the act would strengthen the Federal Maritime Commission (FMC)’s oversight and enforcement authority, empowering it to help ease current supply chain challenges, according to a statement by the chair of the House Committee on Transportation and Infrastructure, Peter DeFazio (D-OR). More specifically, the legislation would allow the FMC to ensure fairness in ocean carrier contracts, require a new process for detention and demurrage charges, deter retaliation and unfair business practices, and examine options for more efficient cargo information sharing, DeFazio said.

Johnson also cheered the vote in the House, calling the bill the first major overhaul of federal regulations for the global shipping industry in over 30 years. “We’ve all been impacted by the backlog in the supply chain and shipping delays,” Johnson said in a release. “China and the foreign flagged ocean carriers aren’t playing fair, and accountability is long overdue. If you want to do business with American ports, you need to play by our basic rules. I am proud of the coalition Congressman Garamendi and I have worked to build over the last year. The Ocean Shipping Reform Act puts American consumers, farmers, retailers, truckers, manufacturers, and small businesses first. Our bill passed the U.S. House with strong bipartisan support and I look forward to seeing it pass the Senate.”

Despite its broad support, the bill was criticized by the World Shipping Council, which is the trade association for the international container shipping line industry. “The House today passed HR 4996 without proper debate or committee process,” the council’s president and CEO, John Butler, said in a release. “The bill is a political statement of frustration with supply chain challenges – frustrations that ocean carriers share. The problem is that the bill is not designed to fix the end-to-end supply chain congestion that the world is experiencing, and it will not and cannot fix that congestion.”

Shippers and retailers cheer tighter regulation of port conditions

However, a host of other supply chain groups applauded the bill. Some of its strongest proponents have been shippers, who have long argued that carriers have taken advantage of pandemic conditions to dodge previous contracts and charge inflated rates.

According to shippers who are represented by the Retail Industry Leaders Association (RILA), the bill would apply “common sense reforms” to address those issues. “The Ocean Shipping Reform Act will bolster the Federal Maritime Commission’s work providing oversight of ocean carriers and carrier alliances—sending the message that fair and open supply chains are essential to the American economy. This is exactly the message retailers need policy makers to press as all interested parties work to untangle the supply chain congestion and remove barriers to the movement of goods,” Jess Dankert, RILA’s vice president for supply chain, said in a release.

“Increased consolidation in the ocean shipping industry and the growth of carrier alliances has impeded competition, tightened capacity, and helped drive prices to record highs.  This act will ensure that American businesses have fair access to ocean shipping capacity, and protection from unreasonable fees and retaliatory measures,” Dankert said.

Likewise, one of the earliest proponents of the legislation has been the National Retail Federation (NRF), which this week issued a letter urging House members to vote for its passage and in September had spearheaded a coalition of some 152 supply chain stakeholders to endorse it. “The Shipping Act has remained unchanged for nearly 20 years, as the global supply chain has continued to grow and evolve to meet increased consumer demand. This bipartisan legislation provides much-needed updates and reform to an archaic system that retailers and thousands of other businesses depend on each day to transport goods,” NRF’s senior vice president of government relations, David French, said in a release.

Additional statements of support came from the American Trucking Associations (ATA), which said that the legislation is needed to end abusive practices imposed on American trucking companies at U.S. maritime ports by ocean carriers, most of which are foreign-owned. “Specifically, the trucking industry seeks relief from excessive detention and demurrage charges—unfair fees levied on motor carriers by ocean carriers and marine terminal operators when shipping containers are not moved on schedule, even though delays are typically due to factors entirely outside truckers’ control and often the result of inefficiencies caused by the ocean carriers themselves,” the ATA said in a release.

Another group hailing the bill’s ability to cap excess fees was the American Apparel & Footwear Association, which applauded a future where the FMC would apply minimum service requirements for shippers, respond to breaches of contracts, and address excessive detention and demurrage fees. “Any reports that the shipping crisis is in the rearview mirror have been premature,” Steve Lamar, the association’s president and CEO, said in a release. “Rather, we are seeing deteriorating conditions and swelling impacts across our global supply chains. Once passed, OSRA21 will reduce or eliminate carrier price gouging, epic freight costs, record delays – and other unfair and excessive punitive fees that only fuel inflationary pressures.”

Additional groups now urging the Senate to pass the bill for similar reasons include the Consumer Brands Association, the National Association of Chemical Distributors (NACD), and the Agriculture Transportation Coalition.