Pioneer Press
By Dave Orrick
In an effort to ease snarls plaguing the international supply chain, the U.S. Senate has unanimously approved a plan led by Sen. Amy Klobuchar to expand federal regulation of the American shores of the overseas shipping industry.
The Ocean Shipping Reform Act seeks to empower the Federal Maritime Commission on two fronts:
- Ensure that shipping costs known as “demurrage and detention” fees are “reasonable.” Currently, shipping companies can charge whatever they want for such fees, which have exploded during the pandemic as delays have left containers languishing at ports. The result has been steep increases in costs of goods, which ultimately get passed on to consumers.
- Compel shipping companies to take on cargo — not empty containers — when leaving U.S. ports for points overseas. For a number of complex reasons, including a worldwide, need-it-yesterday demand for containers, some shipping containers are departing America empty, leaving U.S. goods on the docks. Such goods can then be subject to demurrage and detention fees.
Another set of provisions would shield companies that report alleged violations to the FMC from retaliation by shipping companies.
A similar version of the proposal already has passed the House with overwhelming bipartisan support, suggesting its ultimate signing into law by President Joe Biden is likely. The measure is supported by a host of groups, from truckers to ports and agricultural interests.
Klobuchar, a Minnesota Democrat, characterized the proposed changes as not only targeting immediate supply chain problems, but also cracking down on international shippers that have profited from the global logjams that started soon after the pandemic emerged in China, leading to shutdowns in some of the world’s largest manufacturing cities and a planetary shift in demand as legions of people worked and lived exclusively from home.
“It’s really taking on the international shipping conglomerates — permanently,” Klobuchar said in an interview Monday. “They’ve been completely overcharging Minnesota manufacturers and farmers.” Of the shipping companies, she added: “They’re almost all foreign-owned.”
Practically speaking, none of the reforms would take effect any time soon; federal bureaucrats will have to write rules to govern the process, which typically takes months or longer.
But Klobuchar said she expects a swift impact as word spreads that both chambers of Congress have acted decisively. If not, she threatened to push to remove protections enjoyed by the shipping industry from anti-monopoly laws “if they keep this up while we’re working through this. Don’t even think about it.
The lead co-sponsor of the bill, Sen. John Thune (R-S.D.), said in a statement that it would “level the playing field for American farmers, exporters and consumers by making it harder for ocean carriers to unreasonably refuse goods that are ready to export at U.S. ports. Especially with record inflation in prices of goods, this legislation would also benefit consumers by promoting the fluidity and efficiency of the supply chain.”
