A new law takes aim at shipping costs and congested ports

A new law takes aim at shipping costs and congested ports thumbnail

President Biden signed the Ocean Reform Act of 2022 into law Thursday, which earned bipartisan support for its aims to address shipping challenges. In a statement celebrating the bill’s passage, the US Senate Committee on Commerce, Science, and Transportation claimed it will “crack down on foreign-owned carriers’ unfair shipping price hikes, strengthen maritime supply chain and reduce costs for consumers.” The Act also intends to cut down inefficiencies in the shipping process and ease the flow of ships at ports.

According to CNBC, the Act is the “first significant” change to maritime legislation in nearly 40 years. It comes as the country continues to struggle with capacity challenges at its ports, which have set new volume records over the past year as a ripple effect of Covid-19, causing major disruptions and backups. Prices have also skyrocketed–Freightos, a booking platform for international shipping, says shipping costs are up 41 percent globally from last year.

[Related: Record numbers of giant ships are waiting off California]

The Ocean Reform Act largely places the responsibility on the US Federal Maritime Commission, which is charged with regulating container ships entering and leaving the country. It has a new set of responsibilities and tasks to address these challenges. The new legislation will give the FMC more authority to investigate and regulate the business practices of ocean carriers and to address any violations. This legislation will allow the FMC to establish new reporting measures regarding imports, exports and empty containers. It will also make it easier to collect additional data during “emergency congestion.”

The FMC is now directed to draft new rules regarding “unreasonable” declinations of US cargo, as well, addressing companies that have been choosing to export empty containers rather than those filled with US goods, and provides increased protections for US businesses against retaliation. The act also changes the process behind “demurrage and detention” charges, which CNBC likens to “late fees” paid by importers and exporters that are then passed to shoppers, hiking up inflation. For American businesses who want to have a direct line to the federal agency, the act calls for the FMC’s creation of a new Office of Consumer Affairs and Dispute Resolution Services.

Colleen Hagerty

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