Imagine a "traffic cop" for global trade that can direct massive shipping vessels while safeguarding fair rights for importers and exporters. This "officer" is about to go on duty. The Ocean Shipping Reform Act (OSRA), having passed both houses of Congress with overwhelming bipartisan support, now awaits President Biden's signature to become law.
This landmark legislation represents the first major overhaul of U.S. maritime shipping regulations since 1998, signaling profound changes ahead for global trade patterns.
Broad Political Consensus
The bill's rapid advancement through Congress demonstrates strong political consensus on addressing current shipping challenges. Originally introduced in August 2021 by Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD), OSRA aims to empower the Federal Maritime Commission (FMC) with enhanced regulatory authority, transforming it into a "more effective federal regulator."
Key Provisions of the Ocean Shipping Reform Act
1. Export Protection: Ending Unjust Refusals
American exporters have long faced a persistent problem: ocean carriers frequently refuse cargo space for U.S. exports under various pretexts, sometimes returning empty containers to Asia instead. This practice has significantly harmed American farmers, ranchers, and the broader economy. OSRA explicitly prohibits carriers from unreasonably refusing cargo space for U.S. exports and bans discrimination against American exporters.
2. Enhanced Transparency: Shedding Light on Shipping Practices
To combat information asymmetry in shipping markets, OSRA requires ocean carriers to submit quarterly reports to the FMC detailing total import/export tonnage and the number of twenty-foot equivalent units (TEUs) per vessel calling at U.S. ports (including both loaded and empty containers). This measure will significantly improve market transparency.
3. Stronger Oversight: Empowering the FMC
The legislation grants the FMC greater authority to proactively investigate ocean carriers' business practices and take enforcement actions. This transforms the FMC from a passive recipient of complaints to an active market regulator.
4. Fair Negotiations: Leveling the Playing Field
OSRA authorizes the FMC to establish shipping exchanges, giving shippers more options and bargaining power to counter carriers' dominant position in contract negotiations.
White House Support and Industry Reactions
The White House publicly endorsed the bill last November, stating that Congress needed to provide the FMC with "an updated toolbox" to protect exporters, importers, and consumers from unfair practices. The administration called the legislation "an important step toward long-term reform of shipping laws that will strengthen America's global competitiveness."
FMC Chairman Daniel Maffei welcomed the legislation as "a necessary and long-overdue update" to maritime regulations. "These changes will beneficially impact how American shippers are served," Maffei stated, pledging swift implementation.
President Biden highlighted shipping costs as a major contributor to inflation during his State of the Union address, noting that "during the pandemic, ocean carriers increased prices by as much as 1,000%." He emphasized that the bill would "help lower costs for families and ensure fair treatment for American businesses."
Industry Perspectives
Karyn Booth, general counsel for the National Industrial Transportation League who played a key role in drafting OSRA, explained the bill focuses on addressing unreasonable detention and demurrage charges when delays aren't the importer's fault.
Maritime consultant Ben Hackett cautioned that while OSRA provides clearer guidelines for the FMC, port congestion and landside logistics remain critical challenges. Meanwhile, the World Shipping Council defended carriers' performance during the pandemic, noting record investments in new capacity while calling for parallel investments in U.S. landside infrastructure.
The imminent implementation of the Ocean Shipping Reform Act marks a significant development for global trade. While its full impact remains to be seen, the legislation represents a concerted effort to stabilize supply chains and promote fair competition in maritime shipping.