US House to Clear Path for Ocean Shipping Reform Act to Become Law

Ocean Shipping Reform Act
House will vote on the Senate version of the Ocean Shipping Reform Act possibly next week

Published Jun 7, 2022 4:30 PM by The Maritime Executive

The U.S. congressional legislation to reformat the Ocean Shipping Act and give the Federal Maritime Commission added authority focusing on export containers is expected to reach President Biden for his signature by mid-June. Stalled for months due to differences between the versions of the bill passed by the U.S. House and Senate, Bloomberg is reporting that the House leadership has decided to proceed with a vote on the Senate version of the bill as the most expeditious route to adoption.

Speaking to Bloomberg, members of the House that sponsored the bill said they consider the Senate version weaker than their own, but believe it is the best path available due to the complexities of the Senate’s voting rules. The House has repeatedly passed its version of the bill with bipartisan support and as early as next week will vote on the Senate version of the bill. The alternative to the House adopting the Senate bill would have been to seek reconciliation, but that requires new votes in both chambers of the legislature after the bill was completed.

Dusty Johnson, a representative from South Dakota and one of the co-sponsors of the House bill, told Bloomberg passage of reforms will be “the most substantial change in America’s maritime laws in a generation.” The Ocean Shipping Act was last overhauled in the 1980s.

The reform effort grew out of the problems of port congestion and repeated complaints from shippers and primarily exporters. A broad coalition of trade groups representing shippers, truckers, and the agricultural sectors all supported the bill. All of the groups have been vocal critics of the shipping companies and blamed their policies for the declines in U.S. exports. They argued that in the rush to get empty containers back to Asia, the carriers were making it difficult for U.S. companies to export their goods.

The Senate version of the bill addresses the fees charged by the carriers as well as business practices most often cited by U.S. manufacturers and the agricultural sector. The bill prohibits ocean carriers from unreasonably declining shipping opportunities for U.S. exports, with the FMC determining the policies in a new rule making authority. Further, it requires ocean common carriers to report to the FMC each calendar quarter on total import and export tonnage and TEUs (loaded/empty) per vessel that call at U.S. ports. The FMC’s authority is also expanded with new authorization to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures as well as new registration requirements for shipping exchanges. Ocean carriers also have additional requirements to justify fees charged to shippers, including D&D, and the FMC gets new authorities to impose penalties against the carriers for unreasonable fee policies.

The decision to proceed with the Senate version of the bill is a partial victory also for the industry. The World Shipping Council said the bill was not addressing the root causes of the problems which lay in a lack of port investments and infrastructure. The WSC strongly opposed the stricter provisions in the House version of the bill.

John Garamendi, a representative from California that also sponsored the House bill, said he will be watching for progress from the carriers. Garamendi told Bloomberg that he was prepared to introduce additional legislation for carriers bringing loaded containers into the U.S. requiring them to also carry loaded exports. 

The FMC has also proposed its actions to further increase oversight and enforcement on the carriers. Chairman Daniel Maffei recently called for an increase in the size of the FMC staff and raising its annual budget to handle the increased workload contained in the Ocean Reform Act.