US Senate © Richardmodhamma
© Richardmodhamma

Shipping lines continue to rail against the introduction of new legislation in the US that is aimed at curbing some of the excesses that both importers and exporters have complained about over the past two years.

A Senate version of the Ocean Shipping Reform Act is now under consideration in the US upper house, introduced by senators Amy Klobuchar and John Thune, a Democrat and a Republican. The bill enjoys significant cross-party support.

However, John Butler, the president and CEO of liner shipping association the World Shipping Council (WSC), said that shipping lines have continued to work with all the members of the supply chain, including the Federal Maritime Commission (FMC), to find operational solutions that will mitigate the effects of the chronic congestion experienced in US ports.

“Ocean carriers have deployed every available ship and container to move the continuing record levels of cargo resulting from pandemic-driven US demand for imports—but when ships cannot get into port to discharge and load cargo because of landside logistics breakdowns, it is clear that further regulating ocean carriers will not solve the deeper challenges in US supply chains,” argued Mr Butler.

In his opinion the bill passed by the House of Representatives late last year is “deeply flawed,” and would “place government officials in the role of second-guessing commercially negotiated service contracts and dictating how carriers operate ship networks – an approach that would make the existing congestion worse and stifle innovation”.

The WSC said it looks forward to working with the Senate to develop legislation that will deal with the “real root causes of supply chain congestion”.

Unsurprisingly, shipper and forwarder representatives are lauding the legislation. “National Industrial Transportation League (NITL) members continue to face substantial delays, costs, and business interruption with respect to cargo transported in the ocean delivery network. We strongly support the Senate’s leadership to modernise the Shipping Act to help address present day challenges,” said the shipper body in a statement.

NITL’s executive director Nancy O’Liddy added: “The overwhelming support of the White House and the bi-partisan support shown for competitiveness in the supply chain is a crucial step toward addressing systemic issues contributing to the chaos at US seaports and unprecedented disruption to the ocean shipping network.”

She said that while shippers and forwarders successfully negotiated the holiday rush, “the ongoing ocean shipping turmoil has wreaked havoc on US exporters and importers, costing them billions in higher shipping costs, demurrage and detention charges, dwell fees and lost business and products”.

According to the NITL much of the disruption was caused by the inability of shippers to access chassis and containers, which “upended” the ocean network.

“These unprecedented challenges exposed gaps in the current law governing ocean carrier services that are addressed by OSRA22,” added NITL general counsel Karyn Booth.

According to the NITL, OSRA22 will modernise the Shipping Act, which was last updated in 1998. Lori Fellmer, chair of the NITL’s Ocean Transportation Committee explained that “the shipping industry will benefit from these reforms that are targeted to address the challenges that confront importers and exporters in 2022″.

In summary the OSRA22 bill will:

  • set forth requirements for operating a shipping exchange involving ocean transportation in the foreign commerce of the United States;
  • require ocean common carriers to report to the Federal Maritime Commission (FMC) each calendar quarter on total import and export tonnage, and the total loaded and empty 20-foot equivalent units per vessel that makes port in the United States;
  • require the FMC to publish and annually update all its findings of false certifications by ocean common carriers or marine terminal operators and all penalties assessed against such carriers or operators;
  • revise annual reporting requirements for the FMC on foreign laws and practices, to include practices by ocean common carriers;
  • prohibit ocean common carriers and marine terminal operators from retaliating or discriminating against shippers because such shippers have patronised another carrier, or filed a complaint;
  • direct the FMC to establish rules prohibiting ocean common carriers and marine terminal operators from adopting and applying unjust and unreasonable demurrage and detention fees;
  • authorise the FMC to initiate investigations of an ocean common carrier’s fees or charges and apply enforcement measures, as appropriate;
  • direct the Department of Transportation to seek to enter into an agreement with the National Academy of Sciences to study the US supply chain industry, including data constraints that impede the flow of maritime cargo and add to supply chain inefficiencies; and
  • provide authority for the FMC to issue an emergency order requiring ocean common carriers or marine terminal operators to share directly with relevant shippers, rail carriers, or motor carriers information relating to cargo throughput and availability.

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  • James Binnie

    February 07, 2022 at 10:42 pm

    Some thoughts from an ancient Master Mariner with some container terminal operations experience.

    The problem is NOT the shipping lines who really do not like having their ships queued outside ports for days (weeks) at a time. Ships are like any other form of transport, they only make money when travelling from point to point fully loaded with cargo. Waiting outside port is a cost which will be passed on to the end customer – you and I.

    US need to sort out their terminal operations and the inland road/rail transport systems which are required to support the shipping lines in moving containers efficiently.

    Terminals should immediately start handling ships, road trucks and rail on a continuous 7×24 hour basis throughout the year and inland operations including depot operators, warehouses etc must do the same. If the likes of Amazon can do it so can the terminals and inland transport operators. The additional costs will be offset by reductions in shipping freight costs when port delays are minimised into hours instead of days (or weeks as at present).

    Having said all of the above the shipping lines have also contributed to the problem by greatly increasing ship sizes to 24000teu which has caused large peaks and troughs in container volumes through ports worldwide which the landside capacities still cannot cope with.