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December1720210COMMENTS
Ocean Shipping Reform Act of 2021

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The Passage

Ocean Shipping Reform Act of 2021

Ocean Shipping Reform Act of 2021 is passed by U.S. House of Representatives.

The United States House of Representatives signed off on the bipartisan Ocean Shipping Reform Act of 2021, H.R. 4996, by a convincing 364-60 vote.

The bill was introduced by Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD) in August, with the objective of making the Federal Maritime Commission (FMC) “a more effective federal regulator.”

The bill’s next step is for it to be sent to the U.S. Senate to be considered.

Key components of the Ocean Shipping Reform Act of 2021 include:

  • Establishing reciprocal trade to promote U.S. exports as part of the Federal Maritime Commission’s (FMC) mission;
  • Requiring 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;
  • Shifting the burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier;
  • Prohibiting ocean carriers from declining opportunities for U.S. exports unreasonably, as determined by the FMC in new required federal rulemaking; and
  • Requiring 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.

Conversely, John Butler, President and CEO of the World Shipping Council said it does not do enough to materially move the needle towards making meaningful improvements.

The World Shipping Council will continue to work with Congress to seek real solutions that further strengthen the ocean transportation system that has supported the U.S. economy throughout the pandemic.

(Ref. Logistics Management 12/09/2021)

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November1920210COMMENTS
Congestion

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The Passage

Congestion

Nearly all container shipping trades are hit by congestion.

Of all the trade lanes covered, most trades showed a significant increase in delays in September this year compared to a baseline of 2016 – 2019, indicating that the congestion problems leading to delays are indeed prevalent globally and not isolated to just a few significant vital trades.

In an update on its Fiscal Year 2021 Q2 initiatives, companies continued to see bottleneck constraints as a result of land-side labor shortages and high consumer and industrial demand for products.

Hundreds of ships waiting around the world at anchor is the “effect” (and not the “cause”) of such inland logistics bottlenecks backing up into the port infrastructure. The land-side supply chain challenges appear to be somewhat universal, but North America and Europe seem to be the most significantly impacted.

The industry saw an improvement in the first half of 2021 over the same period in 2020. It could have carried more cargo had it not been forced to pause Asia sailings due to heavily delayed vessels returning from elsewhere. As things stand in Q3 and Q4 2021, we see no major improvement in the current situation so far.

Shipping backups at big U.S. ports are not likely to resolve themselves until well into 2022, according to economists. Though, the problems should lessen after the holidays and Lunar New Year as container traffic backs off.

Companies have been left to find ways to keep their products moving amid the supply chain disruptions. Some of these solutions include services like the ones we at Precision Global Logistics offer.

Shipping a container through major U.S. ports now takes triple the time it usually does. President Joe Biden tried to fix the problem by ordering ports to stay open 24 hours, but it has only helped at the margins. Ongoing labor shortages and a lack of coordination among the multiple players in the U.S. supply chain blunt the effect of the move.

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