MSGA: Bipartisan Ocean Shipping Reform key step toward improving supply chain

The Minnesota Soybean Growers Association (MSGA) applauds U.S. Senator Amy Klobuchar, a senior member of the Senate Commerce Committee and Chairwoman of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, for introducing bipartisan legislation to update federal regulations for the global shipping industry in order to help American producers export their products to the international market. Sen. Klobuchar also introduced legislation to hold ocean carriers more accountable for anticompetitive behavior.

The past two years have highlighted significant supply chain disruptions and vulnerabilities, with reports of agricultural exports sitting at ports while ocean carriers return to Asia with empty containers. In the first nine months of 2021 alone, the U.S. dairy industry lost approximately $1.3 billion as a result of higher shipping and storage costs.

“The Minnesota Soybean Growers Association deeply appreciates the bipartisan work on the difficulties Minnesota’s soybean growers have had with container exports,” MSGA President Mike Skaug said. “Container access in Minnesota historically has been difficult and that difficulty has increased in the past years to a near impossibility. Export markets are vital to Minnesota’s specialty soybean growers. Balancing the power of shippers and guaranteeing fair access to ships is vital to the agriculture sector of Minnesota’s economy. MSGA thanks Senator Klobuchar for her work on these difficult issues.”

The Ocean Shipping Reform Act, co-led by Senator John Thune (R-SD) and cosponsored by Senators Tammy Baldwin (D-WI), John Hoeven (R-ND), Debbie Stabenow (D-MI), Roger Marshall (R-KS), Gary Peters (D-MI), Jerry Moran (R-KS), Richard Blumenthal (D-CT), Todd Young (R-IN), Mark Kelly (D-AZ), Marsha Blackburn (R-TN), Cory Booker (D-NJ) and Joni Ernst (R-IA), 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 (FMC), the federal agency responsible for the regulation of oceanborne transportation, greater authority to regulate harmful practices by carriers. Similar legislation was led in the House by Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD) and passed the House with overwhelming bipartisan support by a vote of 364-60.

“Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase four-fold in just two years. Meanwhile, ocean carriers have reported record profits,” Klobuchar said. “This legislation will help level the playing field for American exporters so they can get their goods to market in a timely manner for a fair price. As we work to improve our supply chains, I’ll keep fighting to establish trade opportunities for the U.S.”

The Ocean Shipping Reform Act 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.

Separately, Klobuchar introduced the Ocean Shipping Competition Reform Act, cosponsored by Senator Cory Booker (D-NJ), which would allow for third parties, including shippers and ports, to get involved in legal matters brought by the FMC against ocean carriers in vessel sharing agreements (VSAs, also known as “alliances”). While alliances are intended to benefit the global shipping industry, only three alliances dominate the global shipping industry, creating an imbalance of market power.

The Ocean Shipping Competition Reform Act would:

  • 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. 

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