The House on Wednesday passed the Ocean Shipping Reform Act of 2021 (OSRA21), which addresses unreasonable ocean carrier practices that have resulted in delays and fees to agricultural exporters.
The OSRA21, introduced by Reps. John Garamendi (D-CA) and Dusty Johnson (R-SD), would update the Shipping Act – which governs the practices and authorities of the Federal Maritime Commission (FMC) – to address a growing shipping crisis.
Vessel-operating common carriers (VOCCs) have been delivering massive volumes of imported shipments to U.S. ports and then elected to leave without refilling empty containers with American goods and products. Whereas shipping containers filled and imported goods are normally unloaded, sent to rural areas, filled with agricultural commodities and then shipped abroad, the lucrative freight rates paid by the import cargo, combined with congestion at ports on the West and East Coasts are leading VOCCs to immediately return empty containers to their overseas ports of origin.
Port congestion is exacerbated by a lack of sufficient labor and automation, a lack of appointments for truckers to enter terminal gates to retrieve import containers, or bring in containers with export cargo, or empty containers, carrier + chassis company agreements causing shortages of chassis to carry the containers in and out of the terminals, lack of capacity of near-port distribution centers to accept/process massive volumes of import cargo. Additionally, this situation is exacerbated by carriers’ failure to provide accurate notice to U.S. exporters of arrival/departure and cargo loading times, then imposing financial penalties known as detention or demurrage fees on exporters for “missing” those windows. The FMC has found this practice to be unreasonable.
NCC in August joined over 100 companies and associations in a letter from the Agricultural Transportation Coalition expressing support for the bill. The full text of the letter can be found here.
“Over 150 Members of Congress have written urging prompt Federal initiative,” the August coalition letter read. “The House Committee on Transportation and Infrastructure hearing, President Biden’s Executive Order 14036, and Secretary of US Department of Transportation Buttigieg’s recent port Roundtable all confirm that current law and regulation are insufficient to protect the ocean shipping interests of US exporters and importers.”
“We strongly support provisions in your bill to gain reasonable and fair ocean carrier practices consistent with the Federal Maritime Commission’s excellent Interpretive Rule on Demurrage and Detention – which unfortunately has gone unheeded,” the letter continued. “It imposes upon carriers the obligation to self-police compliance with that Rule. In addition, the bill obligates ocean carriers to carry export cargo, to the extent they can do so safely. It addresses carrier practices limiting efficient use of containers, chassis and other equipment.”
“The Agriculture Transportation Coalition is gratified that the overwhelming majority – 364 – Members of the House of Representatives have now acted decisively, by passing the Ocean Shipping Reform Act of 2021 (OSRA21), to reign in ocean carrier practices threatening our nation’s agriculture and forest products’ global competitiveness,” the coalition said after the bill’s passage in the House on Wednesday. “We look forward to similar support in the Senate, energetic response to unreasonable carrier practices by the Federal Maritime Commission, and most importantly, constructive engagement with individual ocean carriers to alter certain practices and to implement needed supply chain efficiencies, ultimately benefiting US exporters and importers, and also the carriers themselves.”
“Agriculture exporters in every part of the country weighed in to educate their Congressional representatives, as to the hundreds of millions of dollars of punitive detention and demurrage charges being imposed on exporters and importers, despite being declared unreasonable by the FMC. The lack of carrier compliance with the FMC Rule (lack of FMC enforcement), combined with ocean carriers declining to accept US export cargo, led directly to OSRA21.”
The bill must now pass the Senate and be signed by President Biden in order to become law.
A summary of the bill can be found here and the full text of the bill can be found here.
