Shipping reform obliterates Congress, to cheers from retail groups

Diving brief:

  • A bill giving the Federal Maritime Commission more power to investigate shipping carriers and order refunds for unreasonable charges passed in the House of Representatives after his stint in the Senate earlier this year.
  • The bill, dubbed the Ocean Shipping Reform Act of 2022, is headed to the office of President Biden, who has urged Congress to pass it. Biden issued A declaration Monday applauding the passage of the bill and signaling his intention to sign it.
  • Retail groups also hailed the passage of the bill. Steve Lamar, president and CEO of the American Apparel & Footwear Association, called it “essential – and frankly long overdue” in a statement.

Overview of the dive:

Since 2021, shipping lines have enjoyed more leverage than they have in years. In a context of capacity and equipment shortages, combined with growing grouping between carriers, rates skyrocketed and shippers complained of broken contracts.

“The supply chain crisis that began in 2021 and continues today has shown us how price gouging and uncompetitive practices can impact American businesses and American families,” said Lamar, adding that the recently passed bill “will ensure that these types of practices are not replicated in the future.

David French of the National Retail Federation, who is senior vice president of government relations with the trade group, said in a statement that retailers “continue to face significant challenges, including unfair business practices shipping companies” in a tight supply chain environment.

“Making federal OSRA law helps address long-standing systemic issues of supply chain and port disruptions that existed long before the pandemic by providing the Federal Maritime Commission with the additional authority it needs,” said declared French. “In addition, it provides critical updates on the international shipping system, which has been severely impacted by COVID-19.”

The Oceans Reform Bill seeks to strengthen the authority of the Federal Naval Commission, requiring it to investigate complaints about late fees charged by common shipping carriers and determine whether the fees are reasonable, as well as order reimbursement of fees found to be unreasonable. It also prohibits carriers from “unreasonably refusing[ing] arranging cargo space when available” and “other unfair or unjustly discriminatory methods”.

The NRF and AAFA conducted targeted campaigns urging Congress to pass the bill. Dozens of other trade groups have advocated for the bill and signed a letter urging the House to pass it, including the Retail Industry Leaders Association, the Toy Association, the National Sporting Goods Association, the Consumer Brands Association and others.

Biden, too, called his way. “The scam is over,” Biden said last week in a speech at the Port of Los Angeles. “I’ve called on Congress to crack down on foreign shipping companies that raise prices while raking in $190 billion in profits, a sevenfold increase in one year.”

Along with shipping reform, NRF, RILA, AAFA and other groups have also called for an end to Trump-era tariffs on goods from China to reduce supply chain costs for retailers.