Shipping reform bill sails towards passage

A massive influx of federal dollars and COVID-19 changing the way consumers purchase goods continue to create bottlenecks at ports across the country that have rippled through other segments of the supply chain. With foreign shippers refusing to carry US goods, the new legislation hopes to make the Federal Maritime Commission a more effective federal regulator and hold shippers accountable for their actions.

In action on December 8, the Shipping Reform Act passed the US House by 364-60. This bill is the first major overhaul of federal regulations for the global shipping industry in more than 30 years and was sponsored by Representatives Dusty Johnson, RS.D., and John Garamendi, D-Calif.

The bill has the support of the White House and agricultural and manufacturing interests. The shipping industry, which has argued that the bill would make supply chain problems worse, is its most vocal opponent.

HR4996 aims to ensure a more competitive global shipping industry, protect U.S. businesses and consumers from price gouging, and establish reciprocal business opportunities to reduce the long-standing U.S. trade imbalance with shipping-focused nations. export as mainland China.

Since the fall of 2020, U.S. agricultural exporters have faced extreme challenges getting their produce to overseas ships and buyers, including record congestion and delays at ports, the continued inability of shipping lines to provide a accurate notice of arrival/departure and loading of goods. times, excessive financial penalties and other charges, and skyrocketing freight costs. Ocean carriers are shipping empty containers across the Pacific Ocean at record rates of over 70%.

Unfortunately, this situation remains fluid with no clear end in sight; based on current projections, a return to normal is not expected before mid-2022, guaranteeing difficult months ahead for products with peak shipping seasons between September and March.

Related: Supply Chain Bottlenecks Hit Every Sector, Including Agriculture

The National Dairy Farmers Federation estimates that in the first six months of 2021, export supply chain challenges cost the U.S. dairy sector nearly $1 billion in additional expenses, losses sales and eroding value. According to a survey by the Ag Transportation Coalition, agricultural exporters report that 22% of their export sales are lost because it is not possible to deliver to overseas customers in an affordable and reliable manner due to shipping delays. the supply chain.

In September, more than 70 farm associations called on Biden to tackle shipping carrier practices that are hurting the country’s economic recovery. In a letter, the groups said: “The cost of shipping a container has increased by 300% to 500% over the past 2 years; US producers lose 10-40% of their export value because of these additional costs; an informal survey suggests that the failure of US agricultural exporters to perform leads to a 22% loss in sales.

Specifically, the bill establishes reciprocal trade to promote US exports as part of the FMC mission. The law would further help agricultural exporters by improving the FMC’s ability to enforce its interpretative rule on predatory detention and demurrage charges, as well as prohibiting ocean carriers from continuing to unreasonably deny export bookings. The bill would help put safeguards on the actions of ocean carriers.

For shipping carriers, it requires them to meet minimum service standards that meet the public interest, reflecting the best practices of the global shipping industry. It also requires ocean carriers or marine terminal operators to certify that all late charges – known in maritime parlance as “detention and demurrage” charges – comply with federal regulations or are subject to Sanctions. In addition, it shifts the burden of proof regarding the reasonableness of the “detention or demurrage” charges from the billed portion to the ocean carrier.

It also prohibits shipping carriers from unreasonably reducing U.S. export opportunities, as determined by the FMC in the required new federal regulations. And finally, the bill requires common carriers to report to the FMC each calendar quarter the total import/export tonnage and twenty-foot equivalent units (loaded/empty) per vessel calling in the United States.

“Access to the US market and its consumers is a privilege, not a right,” says Garamendi. “Congress must restore balance to our ports and tackle head-on the long-standing trade imbalance our country has had with China and other countries. I am pleased that the Ocean Shipping Reform Act has been passed by the United States House of Representatives with overwhelming bipartisan support, bringing us one step closer to protecting American consumers and businesses from price gouging by foreign-flagged shipping carriers.

“We’ve all been impacted by the supply chain backlog and shipping delays,” adds Johnson. “China and foreign-flagged shipping carriers are not playing a fair game, and accountability is long overdue. If you want to do business with US ports, you must follow our basic rules. I am proud of the coalition that MP Garamendi and I have built over the past year. The Ocean Shipping Reform Act prioritizes US consumers, farmers, retailers, truckers, manufacturers and small businesses.

Future action in the Senate on shipping reform

Industry players worked collaboratively with House members to reach a consensus, while hoping to see a companion bill in the Senate as well. A bill in the Senate is expected soon.

To help ensure that an effective revision to the current law can be enacted quickly, many organizations are also planning to work to get a strong Senate version as well.

“The Ocean Shipping Reform Act is an important step in ensuring that the international competitiveness of our dairy farmers is not unfairly limited by the abuses of ocean carriers. We look forward to working with the Senate to build on this momentum,” said Jim Mulhern, President and CEO of the National Dairy Farmers Federation. “Given the complexity of the export shipping crisis, we also encourage the administration to continue to take action within its current authority to mitigate the challenges faced by dairy exporters.”

Farm groups praise shipping reform bill

Johnson shares the bill has been endorsed by 360 national, state and local groups, including major farm groups. After the House passed, farm groups were quick to praise the bill.

“Problems at our ports have been exacerbated by unreasonable practices by foreign shipping carriers, including delays in shipping U.S.-made products to foreign trading partners,” said Julie Anna Potts, President and Chief director of the North American Meat Institute. “These delays result in significant costs for meat and poultry companies as their perishable products wait to be transported.”

The resulting inability of shippers to deliver their products to overseas customers on time negatively impacts the reliability of US exports, compromising export value and market share.

Related: Supply Chain Bottlenecks Hampering Agricultural Trade

“Continued congestion and related logistical hurdles threaten the ability of American farmers and ranchers to meet much-appreciated increases in foreign demand for our products,” American Farm Bureau Federation President Zippy Duvall wrote in a statement. letter to House lawmakers, urging them to support the bill.

At California’s three major ports, empty container shipments jumped 56%, from an average of 1.16 million TEUs (20-foot equivalent units) in the first quarters of 2018-2020 to 1.81 million of TEUs in the first quarter of 2021.

Duvall continued: “Accessibility to export containers has been further limited by record shipping costs and harmful surcharges. With these factors combined, the ability of farmers and ranchers to fulfill supervision contracts has been significantly affected, with some estimates approaching $1.5 billion in lost agricultural exports.