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Senate version of Ocean Shipping Reform Act introduced

Sens. Amy Klobuchar, D-Minn., and John Thune, R-S.D., on Thursday introduced the Ocean Shipping Reform Act (S. 3580), the Senate response to the House version (H.R. 4996) passed by a wide bipartisan vote (364–60) in December.

Klobuchar

Farm groups and other industries have complained bitterly that ships coming to the West Coast from Asia are going back to China and other countries empty to pick up more consumer goods to be sold in the United States, while not picking up the U.S. products that they would normally take to Asian consumers.

A trade association executive said the Senate bill “in some instances, is stronger than the House bill; however, aspects of it remain weaker as well. If passed, it will improve the overall supply chain situation in the future and help to build greater resilience against bottlenecks.”



“The goal is to have this bill introduced quickly and marked up by the Senate Commerce Committee so they have their own bill to conference with the House bill,” the executive said.

“With the House already adding their version to the COMPETES Act, the Senate is moving quicker than they planned in order to have their companion ready to conference with the House either as a stand alone bill or as part of the larger USICA/COMPETES package,” he added.



Both Klobuchar and Thune are members of the Senate Commerce Committee.

In a news release, Klobuchar said the Senate bill “would address these supply chain challenges by making it harder for ocean carriers to arbitrarily turn away goods at ports that are ready to be shipped abroad. It would also give the Federal Maritime Commission, the federal agency responsible for the regulation of oceanborne transportation, greater authority to regulate harmful practices by carriers.”

In her summary of the bill, Klobuchar said it would:

▪ Prohibit ocean carriers from unreasonably declining opportunities for U.S. exports, as determined by the FMC in a new required rulemaking;

▪ Promote transparency by requiring ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and twenty-foot equivalent units (loaded/empty) per vessel that makes port in the United States;

▪ Authorize the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate; and

▪ Establish new authority for the FMC to register shipping exchanges to improve the negotiation of service contracts.

▪ Allow for third parties to participate in legal cases brought by the FMC against ocean carriers for anticompetitive harm; and

▪ Let successful third parties in those legal cases receive money damages, with additional financial penalties designed to deter anticompetitive conduct.

In his summary, Thune said the bill would:

▪ Require ocean carriers to certify that late fees — known in maritime parlance as “detention and demurrage” charges — comply with federal regulations or face penalties;

▪ Shift burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier;

▪ Prohibit ocean carriers from unreasonably declining shipping opportunities for U.S. exports, as determined by the FMC in new required rulemaking;

▪ Require ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and 20-foot equivalent units (loaded/empty) per vessel that makes port in the United States;

▪ Authorize the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate; and

▪ Establish new authority for the FMC to register shipping exchanges.

Also joining as original cosponsors of the bill were Sens. Tammy Baldwin, D-Wis.; John Hoeven, R-N.D.; Debbie Stabenow, D-Mich.; Roger Marshall, R-Kan.; Gary Peters, D-Mich.; Jerry Moran, R-Kan.; Richard Blumenthal, D-Conn.; Todd Young, R-Ind.; Mark Kelly, D-Ariz.; Marsha Blackburn, R-Tenn.; Cory Booker, D-N.J.; and Joni Ernst, R-Iowa.

Both Klobuchar and Thune noted that the bill has wide support from U.S. industries that ship abroad. However, the shipping industry has criticized the House bill.

The National Milk Producers Federation, the U.S. Dairy Export Council and the International Dairy Foods Association late Thursday all commended the senators for introducing the bill.

“The supply chain challenges that have beset American exporters pose significant difficulties for U.S. dairy producers, causing over $1.3 billion in export losses for our sector during the first three quarters of 2021,” said NMPF President and CEO Jim Mulhern.

“We greatly appreciate the leadership of Sens. Klobuchar and Thune to introduce legislation that will encourage many of the ocean carriers to stop unfair practices. We are committed to working with the senators and their colleagues in Congress as legislation moves forward to ensure that a final law delivers the changes our exporters most urgently need to see.”

USDEC President and CEO Krysta Harden said, “This Senate bill takes strong strides to address many of the challenges dairy exporters have faced, including securing export vessel bookings and combatting unfair detention and demurrage charges, vital issues to ensure our products reach their intended destinations.”

“When we can’t export our products, we not only jeopardize our foreign customer relationships and markets, but we also lose value-added opportunities that create jobs and investment in the United States,” Harden said.

“We look forward to continuing to work with Sens. Klobuchar and Thune, and others in Congress, to address outstanding concerns and provide for the strongest possible reforms.”

International Dairy Foods Association President and CEO Michael Dykes said, “The Ocean Shipping Reform Act will provide real, long-term solutions for the myriad issues congesting U.S. ports and slowing U.S. dairy exports.”

“The bill places disciplines on ocean carriers’ ability to decline export cargo and when demurrage can be charged, helping to get U.S. dairy exports on the water in a timelier manner. It also strengthens the oversight authority of the Federal Maritime Commission over ocean carriers, the majority of which are foreign owned,” Dykes said.

“Unlike 20 years ago when we exported very little, the U.S. dairy industry today is the third-largest dairy exporting nation in the world. Today, we need America’s transportation and export systems to function with a level of precision and efficiency that sets a global standard so U.S. dairy can achieve our goal of becoming the world’s leading dairy supplier within a decade.”

Klobuchar and Thune included statements from other groups in their news releases.


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