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WSC Responds to Reform Act, Claiming “Appalling Mischaracterization"

container industry mischaracterizations and reform act
WSC called for port infrastructure investment to solve congestion problems (Los Angeles file photo)

Published Jun 14, 2022 3:29 PM by The Maritime Executive

Passage of the Ocean Shipping Reform Act continues to receive wide praise from a broad coalition of trade organizations, manufacturers, and exporters as the bill heads to President Biden who will sign it into law. While businesses are saying that they believe the bill is a critical step to easing export congestion, the World Shipping Council responded with its continued argument that the root of the problems is a lack of port investment. They also used the opportunity to defend the industry from what it called “mischaracterizations” by U.S. government representatives.

Late yesterday, the U.S. House of Representatives voted overwhelmingly to approve the Senate version of the legislation which is designed to enhance the regulatory and oversight authority of the Federal Maritime Commission. The legislation addresses the carriers’ policies on fees as well as business practices that exporters claim are making it difficult to ship U.S. goods overseas.

"We are appalled by the continued mischaracterization of the industry by U.S. government representatives, and concerned about the disconnect between hard data and inflammatory rhetoric,” said the WSC. “The 22 (not nine) international carriers that serve the American people, industry, and government on the Asia - United States trade are part of the global supply chain…”

Members of Congress and President Biden during the legislative process frequently cited their belief that nine multinational ocean shipping companies make up the three consortiums and raised prices by over 1,000 percent on goods coming from Asia during the pandemic. Last week, President Biden added to the rhetoric in a new statement saying it was “outrageous,” when discussing the price increases and business practices of the carriers.

“I introduced the ‘Ocean Shipping Reform Act’ to provide the Federal Maritime Commission with the necessary tools to protect American businesses and consumers and address America’s longstanding trade imbalance with China and other countries. This bill will help crush inflation and protect American jobs,” said Congressman John Garamendi from California. His colleagues are recognizing Garamendi as one of the driving forces that guided the legislation through Congress.

Similarly, in its statement, the National Retail Federation said the bill addresses issues that are longstanding systemic supply chain and port disruption issues that existed well before the pandemic.

“Making OSRA federal law helps address longstanding systemic supply chain and port disruption issues," said David French, Senior Vice President for Government Relations at the National Retail Federation. “Retailers and thousands of other businesses depend on the global maritime transportation system to move goods through the supply chain every day and continue to face significant challenges, including unfair business practices by ocean carriers.” 

While saying that it looks forward to engaging in productive conversations with the FMC to “implement OSRA in a way that will minimize disruption in the supply chain,” the World Shipping Council, defended the container shipping industry. 

“The increased rate levels we have seen over the past years are a function of demand outstripping supply and landside congestion, exacerbated by pandemic-related disruption,” repeated the WSC. They cited the report from the FMC’s fact finding that included similar conclusions while also saying the industry has “gone all-out to keep goods moving.”

Among the other elements the WSC used to defend the industry, they cited the record-breaking 555 vessels ordered in 2021 and 208 vessels ordered so far this year. They also argue that the industry has every vessel and every container available in service while also increasing sailings.

President Biden is expected to hold a bill signing ceremony in the coming days to complete the nearly year-long legislative push to reform the oversight of the container shipping industry. Daniel Maffei, who serves as Chairman of the FMC, promised to move quickly to implement the steps necessary to bring shippers the benefits of the bill once it is signed into law.