Background

Efforts to address surging freight transportation costs and export shipping challenges got a boost this week with the introduction of the first major update to U.S. shipping laws in nearly a quarter-century. The bill reflects increasing concerns among the trade community that have also spurred actions by the Federal Maritime Commission and the White House.

“Foreign businesses’ access to the American market and its consumers is a privilege, not a right,” said Rep. John Garamendi, D-Calif., a primary sponsor of the bipartisan bill along with Rep. Dusty Johnson, R-S.D. “California’s agricultural exporters and other businesses are willing to pay to ensure that American-made products reach key markets in the Asia-Pacific. In turn, companies looking to offload foreign-made products at West Coast ports must provide opportunities for American exports. Even during a global pandemic, trade must be mutually beneficial.”

According to a press release from Garamendi’s office, the Ocean Shipping Reform Act of 2021 includes the following provisions.

- establishes reciprocal trade to promote U.S. exports as part of the FMC’s mission

- requires ocean carriers to adhere to minimum service standards that meet the public interest

- requires carriers or marine terminal operators to certify that detention and demurrage charges comply with federal regulations or face penalties

- shifts the burden of proof regarding the reasonableness of detention and demurrage charges from the invoiced party to the carrier or MTO

- prohibits carriers from declining opportunities for U.S. exports unreasonably, as determined by the FMC in new required rulemaking

- requires carriers to report to the FMC each calendar quarter on total import/export tonnage and twenty-foot equivalent units (loaded/empty) per vessel that makes port in the U.S.

- authorizes the FMC to self-initiate investigations of carrier business practices and apply enforcement measures as appropriate

However, the World Shipping Council, which represents ocean carriers, said the bill is flawed for a number of reasons. One is that it suggests that carriers are solely responsible for the ongoing congestion in global supply chains when in fact the primary culprit is “the confluence of record U.S. consumer and business import demand, coupled with disruptions resulting from the COVID-19 pandemic.” The bill would also impose unfair burdens on carriers, such as requiring them “to ensure chassis, trucks, and rail cars are available from third-party providers” and “to make certifications of fact on why customers do not return equipment in time in situations in which the facts are not, and in most cases cannot be, known to the carriers.” The WSC warned against reacting to the current temporary stress on supply chains by “legislatively creating a commercial playing field that is unlevel and which will persist for many years if enacted.”

Sandler, Travis & Rosenberg is offering clients the opportunity to participate in a grassroots advocacy campaign that will (1) advocate with the FMC to devise policies that will provide real benefits to traders, (2) lobby Congress to encourage legislation or regulation against exorbitant detention and demurrage fees, and (3) identify other solutions that ensure availability and access to instruments of international commerce, including shipping containers. For more information, please contact Ned Steiner at (202) 730-4970 or via email.

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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