Orchard Origins

In December 2021, the United States House of Representatives signed off on the bipartisan Ocean Shipping Reform Act of 2021, H.R. 4996. While this is a positive step in addressing the supply chain issues that have negatively affected U.S. agricultural exports, this will not have an immediate effect on the continued challenges that are expected to continue through this year.

The bill was introduced by Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD) in August, with the objective of making the Federal Maritime Commission (FMC) “a more effective federal regulator.”

With active engagement by the Agriculture Transportation Coalition (AgTC) of which the CWC is a member, it is anticipated that this legislation will strengthen Ag exports, administrate the excessive charges that the Ag industry has no control over, and establish more regulation over the companies controlling our throughput.

Some key components of the Ocean Shipping Reform Act of 2021 include:

  • Establishing reciprocal trade to promote U.S. exports as part of the FMC’s mission
  • Requiring ocean carriers to adhere to minimum service standards that meet the public interest, reflecting best practices in the global shipping industry
  • Requiring ocean carriers or marine terminal operators to certify that any late fees—known in maritime parlance as “detention and demurrage” charges—comply with federal regulations or face penalties
  • Shifting the burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier
  • Prohibiting ocean carriers from declining opportunities for U.S. exports unreasonably, as determined by the FMC in new required federal rulemaking
  • Requiring ocean common 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 United States

While the bill still needs to be sent to the U.S. Senate to be considered, there is no shortage of opinions about some of the bill’s key elements. On a longer-term basis, experts have stated that the FMC should consider how ocean carriers and terminal operators at U.S. ports combine to deliver minimum service standards. The final language of what would pass the Senate, go through reconciliation, and then be signed by the President into law is an integral factor to a lot of stakeholders involved.

If the language from the House bill survives in the final law passed, it will change how the FMC approaches their role with the added responsibility to promote exports and consider carriers’ service standards from a public interest perspective. The frustrating detention and demurrage charges having the burden of proof shifted to the ocean carriers would help shippers. 

All in all, the Ocean Shipping Reform Act of 2021 provides much-needed oversight and transparency into maritime shipping practices, which have increasingly become too unpredictable or costly for Ag exporters to remain globally competitive. As this legislation moves forward, the CWC continues to remain engaged and encourages other federal and state officials to remain engaged on this crisis and explore other immediate relief measures for the supply chain.

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