April 27, 2022

Senate passes Ocean Shipping Reform Bill

Senate passes Ocean Shipping Reform Bill

By: Sydney Sheffield 

The United States Senate has passed the Ocean Shipping Reform Act of 2021 following approval by the Senate Committee on Commerce, Science, and Transportation. The act seeks to resolve supply chains and ease shipping backlogs. It is important to note, that differences exist between the House and Senate versions, which will require dialogue between the two chambers.

“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 Senator Amy Klobuchar, who introduced the bill to the Senate. “By passing this bill, we are one step closer to leveling the playing field for American manufacturers and consumers.” 

Many agriculture products produced in the U.S. are currently experiencing significant competition from other countries. The Ocean Shipping Reform Act will level the playing field for American exporters by making it harder for ocean carriers to unreasonably refuse goods ready to export at ports. The bill would level the playing field for American exporters by making it harder for ocean carriers to unreasonably refuse goods ready to export at ports, and it would give the Federal Maritime Commission (FMC) greater rulemaking authority to regulate harmful practices by carriers. 

The Agriculture Transportation Coalition released survey results in late 2021, indicating that on average, 22% of U.S. agriculture foreign sales could not be completed due to ocean shipping disruption, costs, and carrier practices which severely limit export shipments, and impose charges already declared unreasonable by the FMC. “Ongoing supply chain issues and record-high shipping costs threaten to limit exports at a time when our trading partners are increasingly relying on America’s farmers and ranchers,” American Farm Bureau Federation President Zippy Duvall says. “Limiting trade also negatively affects farmers’ ability to get much-needed supplies like fertilizer, which ultimately drives up the cost of growing food for America’s families.”

Some believe the bill is unlikely to help ease the shipping crisis, though. Steve Hughes, the founder of HCS International, a consulting and sales firm focused on the automotive parts industry, notes that since there are different versions in the House and Senate, the process to resolve the differences will take several months. “Consequently, we will not see any impact from this bill until probably sometime during the summer. In the meantime, retailers have said their imports will remain elevated through June. Unfortunately, the peak season of shipping starts in July to bring in goods for back to school and holidays.”