Reps. Garamendi, Johnson Introduce Ocean Shipping Reform Act
WASHINGTON, DC—Today, Congressmen John Garamendi (D-CA) and Dusty Johnson (R-SD) introduced the “Ocean Shipping Reform Act of 2021.” This bipartisan legislation is the first major update of federal regulations for the global ocean shipping industry since 1998. The legislation would support American exports by establishing reciprocal trade opportunities to help reduce the United States’ longstanding trade imbalance with China and other countries.
“Foreign businesses’ access to the American market and its consumers is a privilege, not a right. California’s agricultural exporters and other businesses are willing to pay to ensure that American-made products reach key markets in the Asia-Pacific. In turn, companies looking to offload foreign-made products at West Coast ports must provide opportunities for American exports. Even during a global pandemic, trade must be mutually beneficial, and that is exactly what our bipartisan bill ensures,” said Congressman Garamendi (D-CA). “Congress has not updated federal regulations for the global ocean shipping industry since China was granted permanent, normalized trade relations under the World Trade Organization in 2001. Now is the time to ensure reciprocal opportunities for American exporters in trade with other countries to reduce the United States’ trade imbalance with cheap Asian imports.”
“Foreign ocean carriers aren’t playing fair, and American producers are paying the price,” said Congressman Dusty Johnson (R-SD). “It’s time for updated rules of the road. That’s what our bill does.”
On March 9, 2021, Congressmen Garamendi and Johnson joined over 100 Members of Congress in a bipartisan letter to the Federal Maritime Commission urging action on unfair, anti-competitive, and likely illegal business practices by some ocean carriers. Dozens of agricultural exporters contacted the Congressmen’s offices reporting that ocean carriers refused to accept cargo bookings for U.S. exports, instead choosing to send empty canisters back to the Asia-Pacific, as quickly as possible to refill with foreign exports during the pandemic.
The Congressmen serve together on the House Committee on Transportation and Infrastructure and announced their intention to pursue this legislation during a Subcommittee hearing on June 15, 2021. Congressman Garamendi served as the top Democrat (ranking member) of the Maritime Subcommittee during the 113th to the 115th Congresses.
On July 20, 2021, the Federal Maritime Commission established a new audit program to assess ocean carriers’ compliance with federal regulations on detention and demurrage and to step up the federal agency’s monitoring of the marketplace for ocean cargo services.
The “Ocean Shipping Reform Act of 2021” would:
- Establish reciprocal trade to promote U.S. exports as part of the Federal Maritime Commission’s (FMC) mission.
- Require ocean carriers to adhere to minimum service standards that meet the public interest, reflecting best practices in the global shipping industry.
- Require 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.
- Shift burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier or marine terminal operator.
- Prohibit ocean carriers from declining opportunities for U.S. exports unreasonably, as determined by the FMC in new required rulemaking.
- Require 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.
- Authorizes the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate.
Congress last updated the Federal Maritime Commission’s authority to regulate the global ocean shipping industry under the Ocean Shipping Reform Act of 1998 (Public Law 105-258). The People’s Republic of China was granted permanent normal trade relations with the United States, so-called “most-favored nation” status, in December 2001 following the country’s admission to the World Trade Organization.
In late April 2020, the Federal Maritime Commission announced “Fact Finding No. 29” to investigate congestion, bottlenecks, and fees at our ports. In November 2020, the Commission expanded this investigation (Fact Finding No. 29) to include reports of ocean carriers declining to ship American exports.
On July 20, 2021, the FMC launched a new audit program to assess ocean carriers’ compliance with federal regulations on detention and demurrage and increase the agency’s monitoring of the marketplace for ocean cargo services. This action underscores the need for legislation.
The following organizations have endorsed the “Ocean Shipping Reform Act of 2021”:
- National Endorsements: Agriculture Transportation Coalition; National Industrial Transportation League; American Farm Bureau Federation; National Retail Federation; American Trucking Associations (ATA); American Apparel & Footwear Association; Agricultural & Food Transporters Conference, ATA; American Chemistry Council; American Cotton Shippers Association; American Feed Industry Association; American Pulse Association; American Seed Trade Association; Consumer Brands Association; Corn Refiners Association; Cotton Warehouse Association of America; Dairy Farmers of America; Hardwood Federation; Intermodal Motor Carrier Conference, ATA; International Dairy Foods Association; International Housewares Association; International Paper; Institute of Scrap Recycling Industries, Inc.; Leather and Hide Council of America; Meat Import Council of America; National Association of State Departments of Agriculture; National Association of Chemical Distributors; National Chicken Council; National Cotton Council; National Council of Farmer Cooperatives; National Hay Association; National Milk Producers Federation; National Oilseed Processors Association; National Onion Association; National Pork Producers Council; North American Meat Institute; North American Renderers Association; Pet Food Institute; Specialty Soya and Grains Alliance; The Fertilizer Institute; Travel Goods Association; U.S. Dairy Export Council; U.S. Dry Bean Council; U.S. Forage Export Council; U.S. Meat Export Federation; U.S. Pea and Lentil Trade Association; United Fresh Produce Association; USA Dry Pea and Lentil Council; Western Agricultural Processors Association; Wine and Spirits Shippers Association
- California Endorsements: California Farm Bureau Federation; California Rice Commission; Almond Alliance of California; California Citrus Mutual; California Cotton Ginners and Growers Association; California Fresh Fruit Association; California Table Grape Commission; California Walnut Commission; Sunsweet Growers Inc.; Western Growers Association; Pacific Coast Council Customs Brokers & Freight Forwarders (Northern California, Los Angeles, and San Diego Associations)