President Joe Biden signed into law the Ocean Shipping Reform Act yesterday marking the first major change to federal regulations for international container shipping in more than a generation.
The law will stop “shipping companies taking advantage of American families, farmers, ranchers and businesses,” the president said at a signing ceremony at the White House.
“They raked in the profits and the costs got passed on, as you might guess, directly to consumers,” he added. “Sticking it to American families and businesses because they could.”
OSRA was created on the back of exporters lobbying politicians to intervene during the supply chain crunch seen in the US during the pandemic. The law will allow the US shipping regulator, the Federal Maritime Commission, to launch probes of containerlines’ business practices and to apply enforcement measures, require ocean common carriers to report to the FMC total import/export tonnage each calendar quarter and would bar ocean carriers from unreasonably declining opportunities for US exports.
Recent weeks have seen several attempts to demonise ocean carriers by deploying us versus them rhetoric
Feeling the growing volume of ire dished their way by politicians in Washington DC, the liner lobbying group, the World Shipping Council has fired back. President Biden even said he’d like to have a “pop” at liners last week.
“Recent weeks have seen several attempts to demonise ocean carriers by deploying us versus them rhetoric,” the council said in a statement issued yesterday. “That is not only inaccurate but dangerous, as it undermines the ability to understand and work towards solving the root causes of America’s supply chain problems.”
The FMC has recently completed a two-year investigation into the international ocean supply chain, finding that ocean carrier competition is “vigorous” and that while ocean freight prices are high, they are “exacerbated by the pandemic, an unexpected and unprecedent surge in consumer spending particularly in the United States, and supply chain congestion, and are the product of the market forces of supply and demand.”
There is an unfortunate disconnect between the media coverage of high rates and how this law will help US businesses. This law has very little to do with rates, and will not restrict the market forces driving higher rates.
The biggest benefit from the bill will come from better enforcement of the FMC’s interpretive rule on demurrage and detention. This rule, in place since May 2020, has been blatantly disregarded by ocean carriers. They bill demurrage and detention in every potential case and put the burden on the customer to dispute it, an exhausting and resource draining administrative nightmare. Finally, there will be accountability to follow the rules of the land and relief for US businesses. This cannot come soon enough for those of us in the trenches dealing with the outrageous billing practices we face from the carriers today.
BS
If ports in the USA do NOT FUNCTION, partly caused by UNIONS it is absurd to blame the container carriers.
How can it be that these disruptions are mainly in US ports?
The only serieus disruption I know is China because of Covid!
Perhaps Mr Biden is happy when all lines STOP servicing US ports. That will solve his problem.
For many years container shipping was loosing a lot of money. A turnaround in the volume of shipping
and many times shortage of equipment resulted in a complete different picture . In spite of COMPETION
rates went up and now the containerlines need to be punished in a Free Market.
IT IS AN INSULT
Bob, I call your BS. To say the historical liner industry is a Free Market is absurd. State money has kept many companies afloat when they should have gone out of business long before, prolonging the painful losses for the entire industry. That was a self-inflicted wound. The industry has been unhinged from a “Free Market” for decades.
My point is not that all supply chain issues are the carriers’ fault (they’re not). My point is that the carriers need to be following the rules and regulations of the land and they’re not today. This law will help fix that. Every country has a right to set its own laws, the carriers don’t have to like them, but they do have to follow them. I assure you they will not be leaving the US market over this…
The Consortium are using their monopolistic power and making exceptional profits whilst Consumers pays more for lousier service and longer lead time and that’s Market Forces?
Whilst Carriers are not the only one with issue in this current mayhem, them charging USD15-20K for a container is nothing but opportunistic profiteering.