A massive influx of federal dollars and COVID-19 changing the way consumers buy goods continue to create bottlenecks at ports across the country that have spilled over to other segments of the supply chain. With foreign shippers refusing to transport U.S. goods, new legislation hopes to make the Federal Maritime Commission a more effective federal regulator and hold shippers accountable for their actions.

In action on December 8, the Maritime Transport Reform Act passed the US home by 364-60. This bill is the first major overhaul of federal regulations for the global shipping industry in over 30 years and was sponsored by Representatives Dusty Johnson, RS.D., and John Garamendi, D-Calif.

The bill has the support of the White House and agricultural and manufacturing interests. The shipping industry, which has argued the bill would exacerbate supply chain problems, is its most vocal opponent.

HR4996 seeks to ensure a more competitive global shipping industry, protect American businesses and consumers from price increases, and establish reciprocal business opportunities to reduce the United States’ long-standing trade imbalance with countries focused on exports like mainland China.

Since fall 2020, U.S. agricultural exporters have faced extreme challenges in getting their products on ships and to overseas buyers, including record congestion and delays at ports, continued inability of shipping lines. to provide accurate notification of arrival / departure and loading of cargo. delays, excessive financial penalties and other fees, and skyrocketing freight costs. Shipping carriers are shipping empty containers across the Pacific Ocean at record rates of over 70%.

Unfortunately, this situation remains fluid with no clear end in sight; Based on current projections, a return to normal is not expected until mid-2022, while ensuring difficult months ahead for products with peak shipping seasons between September and March.

Related: Supply chain bottlenecks hit all sectors, including agriculture

The National Dairy Farmers Federation estimates that in the first six months of 2021, export supply chain challenges cost the U.S. dairy industry nearly $ 1 billion in additional expenses, losses. in sales and eroded in value. Agricultural exporters report that 22% of their export sales are lost because it is not possible to deliver to overseas customers affordably and reliably due to delays in shipping, according to a survey by the Ag Transportation Coalition. the supply chain.

In September, more than 70 farm associations called on Biden to tackle shipping practices that are hurting the country’s economic recovery. In a letter, the groups said: “The cost of shipping a container has increased 300% to 500% over the past 2 years; American producers lose 10 to 40% of their export value because of these additional costs; an informal survey suggests that the inability of U.S. agricultural exporters to perform well results in a 22% loss in sales.

Specifically, the bill establishes reciprocal trade to promote US exports as part of the FMC mission. The law would further assist agricultural exporters by improving FMC’s ability to enforce its interpretive rule on detention and predatory demurrage charges, as well as prohibiting ocean carriers from continuing to unreasonably deny bookings from export. The bill would help put safeguards on the actions of shipping companies.

With respect to shipping carriers, it requires them to adhere to minimum service standards that meet the public interest, reflecting best practices in the global shipping industry. It also requires shipping carriers or marine terminal operators to certify that any late fees – known in shipping jargon as “detention and demurrage” – comply with federal regulations or face penalties. In addition, it shifts the burden of proof regarding the reasonableness of the “hold or demurrage” charge from the portion billed to the ocean carrier.

It also prohibits ocean carriers from unreasonably reducing U.S. export opportunities, as determined by the CMF in required new federal regulations. And finally, the bill requires ocean carriers to report to the FMC each calendar quarter the total import / export tonnage and twenty-foot equivalent units (loaded / empty) per vessel that makes a port in the United States.

“Access to the US market and its consumers is a privilege, not a right,” Garamendi says. “Congress must restore balance to our ports and address our nation’s long-standing trade imbalance head-on with China and other countries. I’m glad the Ocean Shipping Reform Act was passed by the US House of Representatives with overwhelming bipartisan support, bringing us one step closer to protecting US consumers and businesses from price hikes by shipping carriers. flying a foreign flag.

“We have all been affected by the backlog in the supply chain and shipping delays,” adds Johnson. “China and the foreign-flagged shipping companies are playing unfairly, and the responsibility is long overdue. If you want to do business with US ports, you must follow our ground rules. I am proud of the Congressman Garamendi coalition and have worked to build it over the past year. The Ocean Shipping Reform Act puts U.S. consumers, farmers, retailers, truckers, manufacturers, and small businesses first. “

Future action in the Senate on maritime transport reform

Members of the industry worked with members of the House to reach consensus, while also hoping to see a companion bill in the Senate. A bill in the Senate is expected soon.

To help ensure that an effective review of the current law can be passed quickly, many organizations have also focused on working to get a strong Senate version as well.

“The Ocean Shipping Reform Act is an important step towards ensuring that the international competitiveness of our dairy producers is not unfairly limited by the abuses of shipping carriers. We look forward to working with the Senate to build on this momentum, ”said Jim Mulhern, President and CEO of the National Milk Producers Federation. “Given the complexity of the export shipping crisis, we also encourage the administration to continue to take action under its current authority to alleviate the challenges facing dairy exporters. “

Farm groups welcome the maritime transport reform project

Johnson shares that the bill has been approved by 360 national, state and local groups, including major farm groups. After the House passed, farm groups quickly praised the bill.

“The problems at our ports have been exacerbated by the unreasonable practices of foreign ocean carriers, including delays in shipping US-made goods to overseas trading partners,” said Julie Anna Potts, President and Chief Executive Officer. from the management of the North American Meat Institute. “These delays result in significant costs for meat and poultry companies as their perishable products await transport.”

The resulting inability of shippers to deliver their products to their overseas customers on time negatively impacts the reliability of U.S. exports, compromising export value and market share.

Related: Supply chain bottlenecks hamper agricultural trade

“Ongoing congestion and associated logistical hurdles threaten the ability of American farmers and ranchers to meet much-appreciated increases in foreign demand for our products,” wrote Zippy Duvall, president of the American Farm Bureau Federation, in a commentary. letter to House lawmakers urging them to support the bill.

At California’s three major ports, empty container shipments jumped 56%, from an average of 1.16 million TEUs (20-foot equivalent units) in the first quarters of 2018-2020 to 1 , 81 million TEUs in the first quarter of 2021.

Duvall continued, “Accessibility to export containers has been further limited by record shipping costs and damaging surcharges. With these factors combined, the ability of farmers and herders to fulfill supervision contracts has been significantly affected, with estimates of nearly $ 1.5 billion in lost agricultural exports. “