The United States Senate, in a show of bipartisanism, on April 1, 2022, unanimously passed a bill designed to improve oversight of ocean shipping at U.S. ports. 

The Ocean Shipping Reform Act of 2022 was co-sponsored by a group of 29 senators and endorsed by more than 100 organizations. 

“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,” said Minnesota Democrat Amy Klobuchar, who introduced the bill with South Dakota Republican John Thune.

“By passing this bill, we are one step closer to leveling the playing field for American manufacturers and consumers.”  

The act, Klobuchar’s office said, will level the playing field for exporters by making it more difficult for ocean carriers to “unreasonably refuse” goods ready to export at ports.  

“South Dakota producers expect that ocean carriers operate under fair and transparent rules,” said Thune. “I’m glad the Senate unanimously passed this important legislation that would level the playing field for American farmers, exporters, and consumers. Especially with record inflation in prices of goods, this legislation would also benefit consumers by promoting the fluidity and efficiency of the supply chain.” 

The annual inflation in the United States increased to 7.9% in February 2022, the highest since January 1982.  

The legislation was driven by an industry that has seen it become increasingly difficult to find export room amidst the supply chain challenges of the past two years, driven in part by carriers preferring to return empty containers to Asia where they can be refilled with high-value products and sent back to North American and Europe, rather than waiting for a U.S. exporter to ship their own, often lower-value, goods. Thune and Klobuchar each represent states in the midwestern United States whose farmers rely heavily on agriculture exports. 

“American exporters and their products are being left on the docks, and that’s why we wanted to act quickly,” said Maria Cantwell, a Democrat from Washington state, which is known for its exports of apples and cherries, but which actually exports more soybeans, wheat, and corn. “The American farmer, with the growing season upon us, can’t afford to wait for another for the Federal Maritime Commission to do its job and help police this market.” 

An April 20, 2022, story in The New York Times reported the woes of an almond farmer in California’s Central Valley. Scott Phippen, who runs Travaille & Phippen, a family business, told the newspaper that, week after week, he finds the same story: no shipping containers available, no vessel arriving, no space on board. 

“My warehouses are already bulging at the seams,” Phippen said. “It scares the crap out of me because in five months I’m going to get a new crop in the door. There’s no timeout in farming.”  

Most of the almonds stuck in Phippen’s warehouses have already been purchased by overseas buyers, he told the Times, but he cannot collect payment until they make it onto a ship. “Those almonds aren’t worth squat in the warehouse,” he says. “They are worth a lot of money in Dubai.”  

In pre-pandemic times, the newspaper reported, ocean carriers unloaded containers in Los Angeles and Long Beach and shipped empties north to Oakland, where they were loaded with almonds and other crops.  

With containers now being returned directly to Asia, the California almond industry has stockpiled more than 1.1 billion pounds of almonds from last year’s harvest, a volume roughly one-third larger than this time last year, according to the Almond Alliance of California, an industry trade group.  

“Foreign carriers are being allowed to disrespect us, and we can’t do anything about it,” Aubrey Bettencourt, the association’s president, told the Times. “We have no recourse.”  

In the past two years, the Agriculture Transportation Coalition says, the cost to American farmers to ship a container has increased between 300% and 500% and that U.S. producers are losing from 10-40% of their export value to these added costs.  

“Carriers are increasingly declining or cancelling export cargo bookings, while frequent ship delays and cancellations with little or no notice to our exporters are delaying shipments by weeks or even months,” says the Washington-based industry group.

“The resulting inability of shippers to deliver their products on schedule affects the reliability of American exports and subsequently decreases export values and market share. An informal survey suggests that U.S. agriculture exporters’ inability to perform leads to a loss of 22% of their sales.” 

The Ocean Shipping Reform Act would make key reforms to the Federal Maritime Commission’s oversight of the ocean shipping industry, including enhancing the commission’s oversight of detention and demurrage charges, establishing a faster process for review of the charges, and authorizing the commission to add other “essential terms” necessary for consideration in service contracts.  

The Facilitating Relief for Efficient Intermodal Gateways to Handle Transportation (FREIGHT) Act, which was incorporated into the larger bill, addresses broader challenges to moving freight, such as ensuring the commission has the staff and resources it needs to conduct its oversight work, collecting data on container and chassis dwell time, studying best practices for chassis pools and reducing burdens to training truck drivers. 

Klobuchar took the Senate floor in March to call on her colleagues to pass the legislation following its approval by the Senate Committee on Commerce, Science, and Transportation, highlighting the significant supply chain disruptions and vulnerabilities U.S. exporters face, caused by what she called “international ocean carriers who unreasonably decline shipping opportunities while reaping record profits.” Thune also spoke on the Senate floor, where he called for the bill’s swift passage and noted the long-term positive changes that would benefit exporters, importers, and consumers.  

Similar legislation passed the U.S. House of Representatives 363-57 in December of last year; the two chambers will work to reconcile differences between the bills before sending it to the White House, where President Joe Biden is expected to sign it into law, according to the Agriculture Transportation Coalition. 

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By Gregory Glass
Asia Cargo News | Washington