A rather toothless commission was finally given a little bite when the Senate and House passed the Ocean Shipping Reform Act (OSRA). Quickly signed into law by President Biden, OSRA will mandate that the Federal Maritime Commission develop rules to clear bottlenecks at ports and, more importantly, crack down on ocean carriers foregoing U.S. cargo in favor of dashing for their home countries with empty containers. While dairy cannot recover the estimated $1.5 billion in higher shipping costs and lost sales incurred last year, the new law should begin to remedy some unscrupulous shipping practices.
The U.S. emerged from World War II with the world’s largest merchant marine fleet, allowing American companies to readily ship goods around the globe. During the ensuing decades, competitors focused energy on growing their national shipping prowess to better access the world’s most lucrative consumer market. This effort often came with generous subsidies to undercut American shipping companies. As a result, U.S. manufacturers become reliant on foreign shipping competitors. Peculiarities of the Jones Act further compounded the situation.
At the onset, the situation did not impact goods, but over time, challenges began to develop. Then COVID-19 struck and hit like a hurricane on the shipping world. As prices approached $20,000 a container bound for America and roughly $5,000 for those leaving our ports, more and more shippers moved full steam ahead for home with empty ships rather than waiting for a reload.
Federal action became necessary.
The newly passed law represents the largest overhaul in shipping regulations since 1998. It mandates that the Federal Maritime Commission complete a series of rulemaking, including prohibiting carriers from unreasonably refusing cargo. That, in theory, would help get goods on ships bound for international markets.
Then there’s the money.
OSRA establishes stronger rules to prevent unfair detention and demurrage charges. These are the fees that carriers charge for holding cargo or assets beyond the contracted time period. With all the port congestion, these charges have shot skyward. Lastly, OSRA helps protect American shippers and exporters from retaliation by foreign ocean carriers if a complaint is filed with the Federal Maritime Commission.
Dairy leaders deserve a heap of praise for championing this bill. Chief among them were the National Milk Producers Federation, the International Dairy Foods Association, and the U.S. Dairy Expert Council. All were invited to see the bill signed into law by President Biden. While the new law doesn’t fully address port congestion, it goes a long way to securing cargo space at a respectable price.