Shipper groups applaud U.S. ocean reform bill

U.S.-based shipper and transportation groups are applauding the U.S. Congress for passing the Ocean Shipping Reform Act of 2022 (S.3580).  But ocean carriers are not impressed.

The Consumer Brands Association, National Retail Federation (NRF) and American trucking Association (ATA) all weighed in urging president Joe Biden to quickly sign the bill into law.

The law will add restrictions on contracts between shippers and ocean carriers, and will require the carrier to provide the proof in disputes where previously the onus was on the shipper. The legislation also makes it illegal for ocean carriers to decline export cargo providing the containers can be safely loaded in a timely manner.

Shippers united

“Consumer Brands commends the final passage of the Ocean Shipping Reform Act, which updates existing law to tackle rising shipping fees and provides the Federal Maritime Commission with additional authorities to protect U.S. exporters and importers. We urge President Biden to move quickly on signing the bill into law,” said Consumer Brands vice-president of supply chain and logistics Tom Madrecki, in a statement.

The NRF said retailers continue to face significant supply chain challenges, including “unfair business practices by ocean carriers. “Making OSRA federal law helps address longstanding systemic supply chain and port disruption issues that existed well before the pandemic by providing the Federal Maritime Commission the additional authority it needs. Additionally, it provides critical updates to the international maritime transportation system, which has been severely impacted by COVID-19,” said David French, the NRF’s senior vice-president for government relations.

The ATA said the legislation will help to end the “illegal fees” charged to truckers by the ocean carriers, “fees that have contributed to the shipping lines raking in US$150 billion in profits just last year. Those fees hurt American motor carriers and consumers – helping to drive record inflation. We thank Congress for passing this bipartisan solution and urge President Biden to quickly sign it into law,” said ATA president and CEO Chris Spear.

The truckers went on the describe the ocean carriers as a “cartel of foreign-owned companies”, and ATA intermodal motor carrier conference director Jonathan Eisen added that they “will no longer be able to charge truckers exorbitant and illegal detention and demurrage fees, increasing efficiency and reducing costs across the supply chain.”

Carriers not happy

For its part, the World Shipping Council, which represents the ocean carriers, said it is “appalled by the continued mischaracterization of the industry by U.S. government representatives, and concerned about the disconnect between hard data and inflammatory rhetoric. The 22 (not nine) international carriers that serve the American people, industry and government on the Asia – United States trade are part of the global supply chain that has built this country, importing and exporting food, medicine, electronics, chemicals, and everything else we depend on.”

The council said in a statement that increased freight rates are the result of congestion and a supply and demand imbalance that was made worse by the pandemic. It cited the U.S. Federal Maritime Commission’s recent Fact Finding 29 investigation, conducted over the past two years, that concluded: “Our markets are competitive and the high ocean freight rates have been determined by unprecedented consumer demand, primarily in the United States, that overwhelmed the supply of vessel capacity. Congestion further constrained available capacity.”

The council added that until import congestion is fixed, exports will continue to be affected. “Ocean carriers continue to move record volumes of cargo and have invested heavily in new capacity – America needs to make the same commitment and invest in its landside logistics infrastructure,” it concluded.