Ocean Shipping Reform Act Could Help With Contracts, Detention and Demurrage Woes, NRF Says

The Ocean Shipping Reform Act is part of the House China package, and a Senate version is going to have a markup next week. House co-sponsor Dusty Johnson, R-S.D., said the bill's advocates need senators "to be able to punch this into the end zone."

Sen. Amy Klobuchar, D-Minn., who is leading the charge in the Senate, wants to both address detention and demurrage and return bookings, as the House bill does, and wants to change the anti-trust exemption for ocean carriers. Rep. James Costa, D-Calif., said there are some differences of opinion between the two chambers. Costa and Johnson were speaking at a press conference March 17 hosted by the Problem Solvers Caucus in the House, a bipartisan group of lawmakers that tries to find common ground to get things done.

Johnson said "there are no red lines" among House advocates on the differences between their bill and the Senate bill. "We are going to fight for our preferences, but we are going to get something done," he said. He said they would not allow territorial feelings in either chamber or partisan tensions prevent them from getting a bill passed.

The press conference also hosted trade group leaders, and they talked about how port congestion continues to affect their members. Ben Siegrist, National Association of Manufacturers director of infrastructure, said the current multimodal system is untenable, and that 88% of manufacturers that answered a NAM survey said supply chain problems are their top concern. They don't expect delays and costs to return to normal until the first half of 2023.

Siegrist said that the Ocean Shipping Reform Act has a balanced regulatory approach, and that its planks that codify detention and demurrage rules are of "immense value to manufacturers."

National Retail Federation Vice President Jon Gold said retailers, too, told NRF that they expect the problems to continue into 2023. He said passage of the Ocean Shipping Reform Act would help address port congestion and costs but not the workforce shortages at warehouses that are contributing to the delays.

He said the bill promises "common sense reforms to address long-standing service problems and unfair business practices in the maritime shipping industry." He said many of the issues existed before the pandemic, but it has exacerbated them. "While the bill cannot solve all the current supply chain disruption issues, it will go a long way to address some of these core issues."

He said one of the most important parts of the bill is that it would codify the Federal Maritime Commission's interpretative rule on detention and demurrage. He said that NRF petitioned FMC to promulgate such a rule in 2016, and it took more than three years for that to happen. "They didn't believe that this really was a problem," he said. "We certainly hope codifying that rule will give the FMC the authority they need to tackle the issue."

He said that requiring ocean carriers to certify that their detention and demurrage bills follow the FMC rule is important. He said OSRA will also give FMC the discretion to adopt minimum contract service terms. He said there have been problems of importers being bumped out of contracts, and therefore forced onto the more expensive spot market.

Costa said that if the Ocean Shipping Reform Act does not survive the conference process for the Senate and House's China package, that does not foreclose its passage. "We want to try to get this in every vehicle that's moving," he said.

Another trade-related provision in the House China package and not the Senate's is a change to make Chinese exports ineligible for de minimis benefits. Gold said NRF has not taken a position on that change, but, "the last thing we want to do now is add any additional stress or burden to the supply chains. Let's study it and make sure what we're doing isn't going to create further problems, and not addressing the issues we're trying to address."

Agriculture Transportation Coalition Executive President Peter Friedmann said his members are not opposed to or for the change, but he said if it were to become law "it will have a dramatic impact on the supply chain," because it also addresses the practice of Chinese goods entering warehouses in Canada and Mexico where goods can wait for e-commerce orders in the U.S., and enter tariff-free under de minimis. "There has been a lot of infrastructure that has been built on either side of that border, to accommodate that, and now that infrastructure could be built here, which may be a good thing, but the supply chain would have to change."