The Senate on Thursday 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 in the Senate by Sens. John Thune (R-SD) and Amy Klobuchar (D-MN), 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 with 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.
The House passed its own, similar version of the bill in December 2021. Passage of a Senate version now means the chamber must either go to a conference with the House and iron out the differences, or the House must pass the same exact bill that the Senate has just passed.
Whereas the House version of OSRA specifically prohibits the refusal by carriers to export agricultural commodities, the Senate version instructs the FMC to promulgate rules on the issue a year after the legislation becomes law.
A summary of the House bill can be found here and the full text of the bill can be found here. The Senate bill text can be found here.
Additionally, the House recently passed the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act, a nearly 3,000 page, $350 billion bill which addresses many sectors of the U.S. economy and seeks to enhance U.S. economic competitiveness. The House took the extra step to include its version of the Ocean Shipping Reform Act in this bill as well, which now heads to a conference with the Senate.
The Senate last June passed the U.S. Innovation and Competition Act (USICA), a nearly 2,400 page, $250 billion bill similar bill to the America COMPETES Act but does not include the ocean shipping legislation. The Senate had not even had a version of the ocean shipping bill introduced at the time USICA passed in 2021.
USICA will now need to be conferenced with the COMPETES Act before becoming law. Conferees would need to decide whether to include the Ocean Shipping Reform Act in its final bill, which would be a separate effort from an OSRA-specific conference.
