Johnson & Garamendi’s “Ocean Shipping Reform Act” Passes the U.S. House

Washington, D.C. – Today, the Ocean Shipping Reform Act passed the U.S. House by 364-60. This bill is the first major overhaul of federal regulations for the global shipping industry in over 30 years and was sponsored by U.S. Representatives Dusty Johnson (R-S.D.) and John Garamendi (D-CA). Click here for Johnson's full remarks during floor debate.

The Ocean Shipping Reform Act addresses the ongoing supply chain crisis and safeguards South Dakota agriculture exporters from unfair trade practices. It will ensure a more competitive global ocean shipping industry, protect American businesses and consumers from price gouging, and establish reciprocal trade opportunities to reduce the United States' longstanding trade imbalance with export-driven countries like China. The bipartisan legislation passed by the U.S. House of Representatives now heads to the U.S. Senate for consideration.

South Dakota businesses from Strider Bikes in Rapid City, S.D. to Valley Queen Cheese in Milbank, S.D. are experiencing port delays, equipment access issues; and declined bookings that have a negative impact on our local economy. More than 2 million pounds of lactose that's been sold, paid for; and is ready to ship is sitting in Valley Queen's warehouse waiting for an empty container to become available. The National Milk Producers Federation estimates that in the first six months of 2021, export supply chain challenges have cost the U.S. dairy sector nearly $1 billion in additional expenses, lost sales, and eroded value. According to a survey by the Ag Transportation Coalition, agriculture exporters report that 22% of their export sales are lost because it is not possible to deliver to foreign customers affordably and dependably due to supply chain delays.

The Ocean Shipping Reform Act is supported by more than 360 national, state and local groups and businesses. Johnson and Garamendi introduced the bill in August following months of severe supply chain delays and anti-competitive and unfair practices on behalf of foreign flagged ocean carriers.

"We've all been impacted by the backlog in the supply chain and shipping delays," said Johnson. "China and the foreign flagged ocean carriers aren't playing fair, and accountability is long overdue. If you want to do business with American ports, you need to play by our basic rules. I am proud of the coalition Congressman Garamendi and I have worked to build over the last year. The Ocean Shipping Reform Act puts American consumers, farmers, ranchers, retailers, truckers, manufacturers, and small businesses first. Our bill passed the House with strong bipartisan support and I look forward to seeing it pass the Senate."

"Access to the American market and its consumers is a privilege, not a right," Garamendi said. "Congress must restore balance at our ports and tackle the longstanding trade imbalance our nation has with China and other countries head on. I am pleased that the ‘Ocean Shipping Reform Act' has passed the U.S. House of Representatives with overwhelming bipartisan support, bringing us one step closer to protecting American consumers and businesses from price gouging by foreign-flagged ocean carriers. I continue working with my Republican colleague, Congressman Dusty Johnson of South Dakota, to enact our bipartisan bill into law."

The Ocean Shipping Reform Act of 2021 (H.R.4996) would:

• Establish reciprocal trade to promote U.S. exports as part of the Federal Maritime Commission's (FMC) mission.
• Require ocean carriers to adhere to minimum service standards that meet the public interest, reflecting best practices in the global shipping industry.
• Require ocean carriers or marine terminal operators to certify that any 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 declining opportunities for U.S. exports unreasonably, as determined by the FMC in new required federal rulemaking.
• Require 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.

Congress last overhauled the Federal Maritime Commission's authority to regulate the global ocean shipping industry under the Ocean Shipping Reform Act of 1998 (Public Law 105-258). The People's Republic of China was granted permanent normal trade relations with the United States, so-called "most-favored nation" status, in December 2001 following the country's admission to the World Trade Organization. In 2001, the United States' trade imbalance with the People's Republic of China was approximately $83 billion in nominal dollars, according to the U.S. Census Bureau. In 2020, our trade imbalance with mainland China was $310 billion, having increased year-over-year most years.

In late April 2020, the Federal Maritime Commission announced "Fact Finding No. 29" to investigate congestion, bottlenecks, and fees at our ports. In November 2020, the Commission expanded this investigation (Fact Finding No. 29) to include reports of ocean carriers declining to ship American exports.

On July 20, 2021, the FMC launched a new audit program to assess ocean carriers' compliance with federal regulations on detention and demurrage and increase the agency's monitoring of the marketplace for ocean cargo services. This action underscores the need for legislation.

The following organizations have endorsed the Ocean Shipping Reform Act (H.R.4996):

• National Endorsements: Agriculture Transportation Coalition; National Industrial Transportation League; American Farm Bureau Federation; National Retail Federation; American Trucking Associations (ATA); American Apparel & Footwear Association; Agricultural & Food Transporters Conference, ATA; American Chemistry Council; American Cotton Shippers Association; American Feed Industry Association; American Pulse Association; American Seed Trade Association; Consumer Brands Association; Corn Refiners Association; Cotton Warehouse Association of America; Dairy Farmers of America; Hardwood Federation; Intermodal Motor Carrier Conference; International Dairy Foods Association; International Housewares Association; International Paper; Institute of Scrap Recycling Industries, Inc.; Leather and Hide Council of America; Meat Import Council of America; National Association of State Departments of Agriculture; National Association of Chemical Distributors; National Chicken Council; National Cotton Council; National Council of Farmer Cooperatives; National Hay Association; National Milk Producers Federation; National Oilseed Processors Association; National Onion Association; National Pork Producers Council; North American Meat Institute; North American Renderers Association; Outdoor Industry Association; Pet Food Institute; Specialty Soya and Grains Alliance; The Fertilizer Institute; Travel Goods Association; Truckload Carriers Association; U.S. Dairy Export Council; U.S. Dry Bean Council; U.S. Forage Export Council; U.S. Meat Export Federation; U.S. Pea and Lentil Trade Association; United Fresh Produce Association; USA Dry Pea and Lentil Council; Western Agricultural Processors Association; Wine and Spirits Shippers Association
• South Dakota Endorsements: South Dakota Dairy Producers Association; South Dakota Soybean Association; South Dakota Association of Cooperatives; South Dakota Grain & Feed Association; South Dakota Pork Producers Council; South Dakota Farm Bureau Federation and South Dakota Agri-Business Association

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