Pros and cons of the Ocean Shipping Reform Act of 2021 from shippers' and ocean carriers' perspective
 Of the conflicting assessments of the bi-partisan Ocean Shipping Reform Act of 2021 from the US National Retail Federation and the World Shipping Council, one is inclined to take carriers' WSC side rather than the NRF shippers' view.
Like so many attempts at reform, the object appeared to be not so much to fix a problem, but to find fault and expect those at fault to fix it, while harried by an intrusive regulatory bureaucracy, sticking carriers with new unfunded mandates.
Which makes one sceptical of views expressed by NRF vice president David French, who fairly represents the shippers, who tend to fault ocean carriers for whatever that ails them.
As a rule, sympathies tend to lie with the customer that is the shipper, against the vendor, that is the carrier. But while this bill promises to stir things up it does not look likely to offer any improvement as Mr French of the NRF blithely assumes it will.
Says he: "This legislation provides much-needed updates and reform to an archaic system that retailers and thousands of other businesses depend on each day to transport goods."
First, this Shipping Act was last updated in 1998, which hardly merits the word "archaic".
"These improvements could not come at a more critical time, as the amplification from the pandemic has been severe," Mr French goes on to say.
But of what improvement does he speak? Mr French mentions none. Perhaps it is best to look into the provisions of the bill itself to see what can be found,.
This reform bill sets forth requirements for operating a shipping exchange involving ocean transportation in the foreign commerce of the United States.
While that may one day represent an improvement, "setting forth requirements for a shipping exchange", seems more like a burden imposed on carriers and will cost more than it will benefit at least in the short- and mid-term.
One provision prohibits ocean common carriers and marine terminal operators from retaliating or discriminating against shippers because such shippers have patronised another carrier, or filed a complaint.
This seems to oblige carriers to deal with trouble-making customers, undermining freemarket forces and making more work for lawyers, who in all likelihood will be the sole beneficiaries of this clause.
The bill would also require the Federal Maritime Commission (FMC) to publish and annually update all its findings of false certifications by carriers or marine terminal operators and all penalties assessed against such carriers or operators. This is another unfunded mandate to pay book keepers to dredge up data only the bureaucrats want and don't have to pay for.
Another clause requires carriers to adhere to minimum service standards that meet the public interest and directs the FMC to establish rules prohibiting carriers and marine terminal operators from adopting and applying unjust and unreasonable demurrage and detention fees.
While this is the nub of at least one serious problem the provision does little to solve it. There are many legitimate shipper grievances, but few accessible remedies. Some say that it cannot be resolved without a wholesale reform of waterfront practices. Reform that must contemplate an end to union control of labour. But the question is whether this set of rules will make things better or worse. Without doubt they will make things more expensive without making them better.
The legislation also requires carriers to report to the FMC each calendar quarter on total import and export tonnage and the total loaded and empty container per vessel that makes port in the United States.
And it would authorise the FMC to initiate investigations of an ocean common carrier's fees or charges and apply enforcement measures, as appropriate and revise annual reporting requirements for the FMC on foreign laws and practices to include practices by carriers.
Said bill co-sponsor South Dakota Republican Congressman Dusty Johnson: "If you want to do business with American ports, you need to play by our rules."
Bill co-sponsor California Democratic Congressman John Garamendi observed that Congress needs to restore balance at US ports and address the longstanding trade imbalance the US has with China and other nations directly, bringing US consumers and businesses another step closer to protecting US businesses and consumers from price-gouging by foreign flagged carriers.
One can understand why a South Dakota congressman would want to get behind a Democratic initiative and stick it to the carriers, and make common cause with California agr-biz in wanting to stick to carriers as they have spurned low paying farm exports, to more get clean empty boxes back to China for re-export. But the bill makes little mention of this problem per se, and instead focuses on the more headline-grabbing import issues,
Against this, which sounds like anger from South Dakota and bafflegab from California, the World Shipping Council's John Butler's CEO says the bill "does not move the needle towards making meaningful improvements".
Said Mr Butler: “The House passed HR 4996 without proper debate or committee process. The bill is a political statement of frustration with supply chain challenges - frustrations that ocean carriers share. The problem is that the bill is not designed to fix the end-to-end supply chain congestion that the world is experiencing, and it will not and cannot fix that congestion."
He concluded: "The World Shipping Council will continue to work with the Congress to seek real solutions that further strengthen the ocean transportation system that has supported the US economy throughout the pandemic.”
One can agree this bill does little to improve waterfront life despite all its supposed good intentions. But it goes some way to make work for lawyers and increase the power of bureaucrats, compelling carriers and terminal operators to hire people they do not need except insofar as they need to fulfil the needs of the bureaucracy to grow and prosper. |
