The Maritime Transport Reform Act will exacerbate supply chain problems

Last summer, amid congested ports and soaring international delivery prices, angry U.S. exporters called on Congress to act. The result was Maritime Reform Reform Act 2022 (OSRA), adopted with the support of both parties in Congress and signed by President Joe Biden on June 16. The law is said to aim to reform US shipping legislation to ensure fair treatment of US exporters. Unfortunately, the bill creates a mess in a law that does little to address current domestic regulations that have exacerbated problems in the supply chain caused by the pandemic, which have not yet completely subsided.

Pandemic-related restrictions have forced Americans largely to stay at home in 2021, increasing online shopping activity. But as restrictions began to ease later in the year, Americans also increased demand outside the home, leading to an overall increase in demand across the U.S. economy. The jump shocked the supply chain and the ports of Los Angeles and Long Beach – the largest funnels for US imports – saw some of the narrowest places in US history and uncovered countless systematic political issues affecting coastal shipping, including restrictive labor, immigration and trade policies.

As the supply chain fell into chaos, the market adjusted and prices rose, including supply prices. These price increases are the result of simple economyrather than pulling prices from greedy shipping companies. Ocean carriers have raised prices in response to high demand for goods with limited shipping, as ships and containers are stranded in congested ports. Ocean carriers have raised prices in an effort to curb demand for shipping. As proof that prices are rising because of supply and demand, not greed, consider shipping prices to fall recently as supply chain problems began to decline: spot tariffs on 20-foot containers from Asia to the United States fell nearly 33 percent after the peak in September 2021.

Port congestion has also increased the shortage of containers, which has contributed to an increase in holders issuing retention and demarcation charges (which are essentially delayed). taxi charged when the cargo is not unloaded or the containers are not returned within the agreed time). So, as stakeholders have complained about carriers raising prices and charging more, some politicians say there is no competition in the ocean shipping sector and it needs to be investigated. However, after doing so, the Federal Maritime Commission (FMC) issued a report strongly contradicts the prevailing narrative: in fact, the market for ocean services has been found to be highly competitive.

As well as being unfounded, concerns about limited competition and high shipping prices by OSRA champions are ridiculously hypocritical, given their support for Jones’ lawa 1920 law restricting competition in inland navigation to the extent that industry leaders are able to participate in fixing the price– Some anti-competitive practices. However, OSRA is not trying to open up the internal shipping market to increased competition.

OSRA’s worst sin is engaging in mercantilist sentiment to prioritize exports over imports. The bill prohibits a “common carrier, maritime terminal operator or ocean shipping agent” from retaliating against a shipper (the person or business that owns the transported products) by refusing or threatening to refuse otherwise available cargo space or accommodation; or resort to any other unjust or unjust discriminatory action. “Legislation requires the FMC to define” unjust or unjust discriminatory action. “But it may be difficult to prove intent to retaliate and businesses are (and should be) allowed to do so. to refuse a service so that ocean carriers do not have to be treated differently.

This provision stems from complaints from US exporters whose reservations were canceled during the pandemic. Although understandably frustrating for US shippers, these cancellations were due to a shortage of containers and carriers who chose to return containers to Asia for refilling instead of shipping them to US export loading points. Increased demand for imports and a shortage of containers meant that carriers were faced with the difficult decision of choosing between delaying imports or exports. The OSRA provision may simply force carriers to choose to postpone imports if they fear complaints of cancellation and non-acceptance of exports.

The law also increases regulatory oversight by giving the FMC the power to investigate complaints about detention and demarcation charges, and requires the commission to write rules on what carriers can and cannot do when assessing charges. Detention and demarcation fees provide important incentives to make sure that cargo and containers are picked up and returned on time – so the devil will be in the details of the FMC rules.

Fortunately, several useful provisions have been included in the new law: speeding up the process of certifying workers to transport goods within the United States, identifying suitable inland ports for storage and transferring containers during port transhipment, and requiring the State to reporting service to submit a report to Congress describing the adoption of US technology in ports compared to that in foreign ports. Such a report should illustrate the shocking reality of the lack of modernization of US ports compared to those in Europe and Asia, which are significantly more efficient and do not experience the extreme bottlenecks that US ports created during the pandemic.

Unfortunately, OSRA is a syllogism of a politician: Legislators have to do something, the bill is something and therefore they have to pass it. The frustration experienced by US exporters during the pandemic was understandable, but this law is likely to be ineffective in addressing freight forwarders’ concerns, while making things worse for importers. In addition, uncertainty remains, as the FMC will have to write rules for law enforcement.

OSRA may be a political victory, as Congress has “done something” – as the primary goal of the law – but this law should not be confused with serious efforts to improve the United States’ ability to meet its shipping needs.

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