OSRA Passes In House, Biden Signature To Come
Driving home the importance of the Ocean Shipping Reform Act, one of the key points of discussion at last week’s Legislative Education and Action Day (L.E.A.D.), PPAI joined with more than 90 trade associations in a letter to leaders in the Senate and House of Representatives in support of the bill. The final bill passed the House with bipartisan support—369 to 42—today and President Biden is expected to sign it later this week.
The letter is addressed to Senate Majority Leader Chuck Schumer, Senate Republican Leader Mitch McConnell, Speaker Nancy Pelosi, and House Republican Leader Kevin McCarthy.
The letter notes, “As U.S. companies continue to face ongoing supply chain disruptions and congestion in addition to rising inflation, it is critical for Congress to address these issues. Final passage of OSRA will help address the longstanding, systemic supply chain and port disruption issues that existed prior to the pandemic as the industry has changed significantly since the last time the Shipping Act was amended over 20 years ago.”
The coalition’s letter also highlights the inordinate influence of certain shipping companies on the price of freight. “Currently, shipping alliances maintain large percentages of market share and operate with the protection of antitrust immunity. Members of these alliances fail to provide timely vessel bookings and equipment and they assess extremely high rates and increasing demurrage charges when bookings are secured. They also refuse to negotiate commercial terms and solutions with their customers.
“Importers and exporters continue to face unreasonable business practices which OSRA seeks to address. Key to this is strengthening the role of the Federal Maritime Commission to address unreasonable demurrage and other charges, which have caused skyrocketed prices through the pandemic and have raised costs for everyone.”
In a press conference Friday at the Port of Los Angeles, President Biden, speaking on steps taken to address inflation and supply chain challenges, touched on reforms OSRA would implement.
One of the reasons prices have gone up is because a handful of companies who control the market have raised shipping prices by as much as 1,000%. It’s outrageous — and I’m calling on Congress to crack down on them. pic.twitter.com/eLIdQBmskJ— President Biden (@POTUS) June 9, 2022
Biden said, “There are nine major ocean line shipping companies that ship from Asia to the United States. Nine. They form three consortia. These companies have raised their prices by as much as 1,000%. So everything coming from Asia, they—they get 90-some percent of it—the stuff coming from Asia. They’ve raised it by 1,000%.
“I called on Congress to crack down on foreign-owned shipping companies that raise their prices while raking in, just last year, $190 billion in profit—a seven-fold increase in one year. The Senate passed legislation. I’m hopeful the House is going to act soon to crack down on these companies, as I’ve asked, and lower the cost.”
The Ocean Shipping Reform Act of 2022 (OSRA22) implements common-sense reforms to address long-standing issues in the maritime shipping industry that have exacerbated supply chain disruptions, particularly during the pandemic. It is now before a conference committee to reconcile differences between the House and Senate versions of the bills.
OSRA tackles significant issues facing cargo owners and other supply chain stakeholders. Among those highlighted by PPAI and its partners are:
- Port congestion has led to a significant increase in these fees for cargo owners and truckers. The Federal Maritime Commission has published its “Interpretive Rule on Detention and Demurrage” but as only guidance, it is not followed by ocean carriers or marine terminals. OSRA22 would formalize the rule and define the parameters for these charges.
- The reforms update key provisions of the Shipping Act, which hasn’t been updated in over two decades. Regulations must remain applicable to today’s market reality. With the creation of the carrier alliances, contraction of the number of carriers in the market, changes to chassis management and others, the time is right for reforms and for strengthening the role of the Federal Maritime Commission in regulating unfair business practices.
OSRA passed both houses of Congress with bipartisan support. Following its approval in the Senate, Sen. Amy Klobuchar, who cosponsored it with Sen. John Thune, said, “Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase four-fold in just two years, raising costs for consumers and hurting our businesses. Meanwhile, ocean carriers that are mostly foreign-owned have reported record profits.
“This legislation will help American exporters get their goods to market in a timely manner for a fair price. By passing this bill, we are one step closer to leveling the playing field for American manufacturers and consumers .”