U.S. Congressmen Introduce Legislation Targeting Foreign Ocean Carriers’ Business Practices

Congressmen in the U.S. House of Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD) have introduced legislation requiring foreign-based ocean carriers adhere to minimum service standards and other actions meant to help American exporters.

The Ocean Shipping Reform Act of 2021 would be the first major update of federal regulations for the global ocean shipping industry in over two decades, when the Ocean Shipping Reform Act of 1998 granted the People’s Republic of China permanent normal trade relations with the United States, or so-called “most-favored nation” status, under the World Trade Organization in 2001.

The Congressmen said the legislation would support American exports by establishing reciprocal trade opportunities to help reduce the United States’ longstanding trade imbalance with China and other countries.

“Foreign businesses’ access to the American market and its consumers is a privilege, not a right. California’s agricultural exporters and other businesses are willing to pay to ensure that American-made products reach key markets in the Asia-Pacific. In turn, companies looking to offload foreign-made products at West Coast ports must provide opportunities for American exports. Even during a global pandemic, trade must be mutually beneficial, and that is exactly what our bipartisan bill ensures,” said Congressman Garamendi (D-CA).

“Foreign ocean carriers aren’t playing fair, and American producers are paying the price,” said Congressman Dusty Johnson (R-SD). “It’s time for updated rules of the road. That’s what our bill does.”

Congressmen Garamendi and Johnson serve together on the House Committee on Transportation and Infrastructure and announced their intention to pursue this legislation during a Subcommittee hearing in June. Congressman Garamendi also served as the top Democrat and Ranking Member of the Maritime Subcommittee during the 113th to the 115th Congresses. In March, the two joined over 100 others in Congress in a bipartisan letter to the Federal Maritime Commission urging action on unfair, anti-competitive, and perhaps even “illegal” business practices by some ocean carriers.

The legislation comes amid increasing pressure on ocean carriers by the Federal Maritime Commission, which has been investigating congestion and bottlenecks at ports and other challenges facing the ocean transportation supply chain brought on by the COVID-19 pandemic, with special attention given to foreign carriers’ demurrage and detention practices.

The World Shipping Council, which represents shipping interests, said the legislation, or any attempt to regulate only ocean carriers, won’t actually address issues causing supply chain congestion.

“The supply chain congestion is widespread. Every link in the supply chain—from marine terminals, to truckers, to rail cars and warehouses—is under tremendous strain. It is unrealistic, inequitable, and unproductive to try to address these supply chain-wide challenges by regulating only one class of supply chain participants—ocean carriers. It is doubtful that regulating all supply chain actors—ports, marine terminals, labor, truckers, railroads, warehouse operators—would have any discernible positive impact on the current supply chain challenges. What is crystal clear is that regulating only ocean carriers—or any other single class of supply chain provider—is doomed to fail,” the organization said in a statement.

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