OSRA 2021, as it’s called, represents an effort to update Federal shipping laws and regulations which were last revised in 1998. Representative Johnson, with a background in regulation of utilities, provided statistics on carrier concentration- where the top 10 carriers now control 80% of the volume, in contrast with 12% in 1998, saying, “We are clearly in a different environment.”
The bi-partisan legislation has three major facets, as explained by co-sponsor John Garamendi, Democratic representative from California. Congressman Garamendi explained the three major focal points of the bill:
- Minimum requirements for Service Contracts “there can be no unreasonable refusal to carry freight”
- Improves the enforcement “allows the Federal Maritime Commission to self-initiate investigations…puts into place anti-retaliatory measures…and shifts burden of proof to the carriers,” and increases transparency.
- Creates new and separate process for addressing demurrage and detention complaints, more streamlined than those at present, and allows the FMC to take a more active role in investigating such complaints.
A major catalyst for this effort has been the difficulty for US exporters to secure “empties” because carriers have sent them directly back to Asia, where outbound freight per box is at record levels, after imports have been unloaded. Johnson’s district is in the grain growing heartland, with a significant meat processing industry, while Rep. Garamendi’s district in California sees significant production of rice, walnuts and other crops. He stressed that the bill comes after the urging on constituents; saying that local growers in California were “crying out more than a year ago that they were simply unable to get containers to ship their products to the western Pacific.”
After noting that investigations and discussions with cargo shippers confirmed similar problems in the upper Mississippi region, as well, he added that “Control of ocean shipping by two handfuls of carriers eliminated the competition that had existed for many years.”
In describing the push for updated regulation, Johnson said, “This is not an onerous mandate, it’s a basic expectation of common carriers…it’s a pretty standard rule of the road that if you are in this business, and you can reasonably take freight, that you do so.” He suggested that: “Unpredictability [in securing containers] is not healthy for the marketplace…if you are going to be a common carrier, if you are going to use American ports, to be able to be part of the stream of commerce, then you need to be able to accept some very basic rules of the road…including not unduly discriminating against American agricultural exports.”
Liner shipping is indeed on the radar in Washington, DC The Biden administration mentioned shipping in an early July Executive Order on promoting competition across multiple industries. In a briefing, law firm Holland & Knight had said: “The EO specifically references consolidation in the maritime shipping industry during the past couple of decades, suggesting that such consolidation may disadvantage US exporters.”
The US legislative situation can be unpredictable and chaotic, even in quiet times. Presently there is a great deal of attention on passing a $1 trillion plus bill concerning “infrastructure”, which is tied to other legislation around expanded social programs.
When asked about the potential for the proposed legislation to be enacted, Garamendi, a shipping proponent well known from his role as the Ranking Member of the Subcommittee on the Coast Guard and Maritime Transportation, hinted that facets of OSRA 2021 might be bundled with the upcoming authorization for the Coast Guard- part of the Department of Homeland Security since 2003.
The full text of the legislation is available here.
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