Shipping Reform Bill Passes House, Falls Flat With Experts

Shipping Reform Bill Passes House, Falls Flat With Experts

( – Once again, Congress could be making a bad problem worse. It’s an all too common issue when lawmakers try to become experts in all things. Over the fall, American consumers started noticing prices were rising on virtually everything they purchased. Groceries, cars, gasoline, electricity, staples: rising inflation left nothing untouched. Then, suddenly, it became difficult to purchase basic necessities as store shelves ran empty.

In October, the scope of the supply chain issue came into full view as hundreds of cargo ships sat off the coast of California. For weeks, supplies anchored offshore, waiting for ports to offload them. The Biden administration blamed port congestion and consumer demand for the rising prices and missing store shelf items. In response, on December 8, the House passed the Ocean Shipping Reform Act (OSRA) with broad bipartisan support. The question is, was it the proper legislation to solve the problem, or was something else at play?

Is OSRA Really Shipping Reform?

So, what is OSRA? The 21-page bill makes several changes to federal regulations regarding ocean shipping. In particular, Congress wants to give the Federal Maritime Commission (FMC) more authority, but some suggest there isn’t anything FMC can do to solve the crisis. Despite glaring weaknesses in the legislation, it has a lot of support from the National Retail Federation, the Farm Bureau, and virtually every American Association of (whatever you can find).

So, why are the retail and farm associations involved?

The bill shifts the burden of regulatory disputes away from exporters to ocean carriers. It requires an ocean carrier to export American goods if they are reasonably able. Here’s the catch:

  1. The bill existed before the current supply chain crisis.
  2. The number of empty containers at shipping ports far exceeds the number of containers awaiting entry to the ports.

Rob Quartel was a member of the FMC from 1990 to 1992. He said the commission’s primary purpose is to protect foreign oceangoing cartels. Three major ocean carriers control nearly all of the world trade, and not a single one is American. He said lawmakers don’t know what they are doing and the legislation will not solve the current supply chain problem. He also noted that the FMC has nothing to do with supply chain issues.

OSRA Could Create a Bigger Problem

Experts contend imports are clogging the ports, not exports. In addition, organized labor, trucking issues, and warehouse space all play vital roles in the problem, which the legislation doesn’t address.

Critics question the bill’s intention because it was already in process early in the summer and well before the supply chain crisis emerged. Some believe Congress initiated the legislation in response to complaints by agricultural shippers who said the ocean carriers participated in bad practices that harmed their businesses and caused them to lose money.

Is it possible that politicians saw an opening and used the supply chain crisis to gain support for the legislation?

Experts suggest OSRA could worsen the supply chain crisis by making ocean carriers prefer US exports over empty containers. In turn, that may slow the return of containers back to the United States full of products. The ports say they are drowning in empty containers, and the new law may worsen the situation. Because there is no room to offload full containers, ships may need to sit at sea longer.

So, once again, Congress didn’t think things through. They might have made a complex problem worse.

Should we be surprised?

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