The House and Senate have begun conference committee negotiations on a bill designed to boost U.S. economic competitiveness with China.

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 included its version of the Ocean Shipping Reform Act into the America COMPETES Act as well, which would reduce shipping backlogs and address some complaints across U.S. agriculture about the practices of ocean shippers.

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 two China competitiveness bills will now need to be conferenced and the chambers will need to agree in identical versions before becoming law. Conferees would need to decide whether to include the Ocean Shipping Reform Act in its final bill.

The House and Senate have also passed the Ocean Shipping Reform Act on its own, though the versions are different and would also need to be conferenced before being sent to the president. It is likely the chambers will simply include one of the versions into the final China competitiveness bill, though, instead of having a separate conference specifically on the ocean shipping bill.

The OSRA, 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.

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.

 

 

 

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