China in crosshairs of new ocean shipping reforms

China’s government, according to U.S. authorities, is encouraging ports, ocean carriers and freight forwarders to adopt LOGINK by providing it for free.

“China’s state-funded effort to obtain first mover advantage could enable LOGINK to shape how the market evolves, setting the rules of the road in a way that favors Chinese firms and otherwise advances China’s interests,” according to an issue brief published in September by the U.S.-China Economic and Security Review Commission.

“It could also give China’s government access to sensitive data, including commercial transport of U.S. military cargo, insight into supply chain vulnerabilities, and critical market information,” the issue brief warns. “All this could help Chinese firms compete on unequal footing in the nearly $1 trillion third-party logistics industry, in particularly the freight forwarding services market estimated at just under $200 billion.”

Johnson and Garamendi led the bipartisan Ocean Shipping Reform Act (OSRA) of 2022, a law signed in June that put in place rules and updated regulations aimed at providing rate and service relief to U.S. importers and exporters hammered by the supply chain disruptions and cargo backlogs that emanated from the pandemic.

New hurdles head for ocean carrier alliances?

“OSRA 2.0,” as Johnson and others have referred to it, will not only target China but will attempt other reforms as well. “We want to do things with ocean shipping that clean up mistakes and deficiencies in the previous bill,” Johnson said.

Peter Friedmann, executive director of the Agriculture Transportation Coalition, which lobbies on behalf of importers and exporters, said one of the reforms in the new bill will attempt to address alliances and agreements among ocean carriers.

Friedmann pointed out that under the Shipping Act of 1984, ocean carriers that decide to form an alliance or other agreement with each other must file it at the Federal Maritime Commission — where it automatically goes into effect within 30 days.

“It doesn’t matter whether it’s considered pro-competition or not, or whether it’s good or bad for the economy,” Friedmann told FreightWaves. “The FMC can’t stop it unless it gathers its resources and goes to federal court and convinces a judge, who may know nothing about ocean transportation, to enjoin the agreement.”

But a provision to be included in the new ocean reform legislation, according to Friedmann, would give the FMC the authority to block such an agreement upon it being filed. The carriers filing the agreement would have to convince the federal court to allow it to go into effect.

“That could be momentous” in terms of boosting FMC oversight authority, Friedmann said, noting that the change “is primarily being advocated by a lot of the thought leaders in the administration.”

Supply chain package to include trucking reforms

Johnson, who is a member of the House Supply Chain Caucus, revealed that along with OSRA 2.0, the chamber’s Republican leadership is looking to include in the upcoming supply chain legislative package a bill introduced in January that provides tax credits to help recruit new truck drivers and funding for boosting truck parking capacity, and work-rule relief for agriculture haulers, among other things.

In many ways [trucking] is the weak link in the supply chain at this point,” Johnson said. “I think [the bill] is tailor made to build big bipartisan consensus, not just in the House but in the Senate. We need to pay attention to this because it will have a big impact on how this country runs.”

Related articles:

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• How will Maersk-MSC split redraw container shipping landscape?
• Broker oversight, truck speed limiters among 2023 policy action items

Click for more FreightWaves articles by John Gallagher.