Congress Passes Ocean Shipping Reform Act to Help Lower Ocean Shipping Costs & Fight Inflation
Sen. Reed votes to modernize ocean shipping laws to address supply chain and inflation issues
WASHINGTON, DC -- In an effort to help lower prices for American consumers, retailers, and farmers, Congress passed the Ocean Shipping Reform Act (S. 3580). U.S. Senator Jack Reed, who voted to pass the Ocean Shipping Reform Act, says it will help tackle rising shipping fees and provide the Federal Maritime Commission (FMC) with additional tools to protect U.S. consumers, exporters, importers from unfair and unjust practices.
The new measure empowers the FMC to investigate fees charged by carriers and prohibit ocean carriers and marine terminals from refusing to fill available cargo space. It would institute new penalties against ocean carriers and marine terminal operators for violations of the Shipping Act, require expanded public disclosure from the FMC and carriers, and establish a series of new regulations against unfair carrier practices.
According to the Biden Administration, over the past decade, the nine largest ocean carriers have increased their control of the market and now account for 80 percent of global container shipping by volume and control about 95 percent of the critical East-West trade lines. And shipping analytics watchdog Drewry reported that ocean carriers generated about $190 billion of annual profits in 2021, with about $130 billion of this earned primarily by charging higher prices. And according to a report last month by Maritime Magazine, Drewry is forecasting a half trillion dollar profit for global container carriers in 2022.
“No one wants to hear it, but the pandemic stalled our economy and our supply chains. So while employment is strong, we still need an all hands on deck approach to fighting inflation and reducing costs for American consumers and businesses. Passing this new law will help combat inflation by alleviating some key shipping challenges. It will give federal authorities new tools to ensure consumers, retailers, farmers, and other businesses aren’t getting unfairly gouged by foreign ocean carriers. And it will also prevent empty shipping containers from leaving U.S. ports when American goods are ready, waiting, and sitting dockside ready to go while there is empty vessel space,” said Senator Reed.
The bipartisan measure was authored by U.S. Senators Amy Klobuchar (D-MN) and John Thune (R-SD). It was approved by the U.S. Senate on March 31 and sailed through the U.S. House of Representatives last night on a vote of 369-42.
Passage of the Ocean Shipping Reform Act marks the first time Congress significantly updated the Federal Maritime Commission’s authority to regulate the global ocean shipping industry since 1998.
President Biden endorsed the bill and indicated he will sign it into law.