The ultimate goal of H.R.4996, the Ocean Shipping Reform Act, is to alleviate cost increases for U.S. consumers. Photo by Andy Li on

published on June 14, 2022 - 2:43 PM
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Rep. Jim Costa (D-Fresno) hosted a virtual news conference Tuesday to promote the Ocean Shipping Reform Act — aimed at bringing relief to sticker-shocked U.S. consumers.

Approved by the Senate in March, H.R.4996 is expected to pass the House Tuesday night and head to President Biden’s desk for signature.

The bill revises provisions related to ocean shipping policies and is designed to support the growth and development of U.S. exports and promote reciprocal trade, proponents say.

The bill would expand safeguards to combat retaliation and deter unfair business practices, clarify prohibited carrier practices related to detention and demurrage charges, establish a shipping exchange through the Federal Maritime Commission (FMC) and expand penalty authority to include refund of charges.

The Zoom conference was co-hosted by Invest In America, a national advocacy group promoting foreign direct investment, as well as co-sponsor Rep. John Garamendi (D-Davis) and Dr. Rakeen Mabud, chief economist at activist group Groundwork Collaborative.

Garamendi said the issue came to his and Costa’s attention a year ago after hearing about obstacles faced by California exporters in obtaining shipping containers, getting their containers on ships and rising shipping rates.

“The FMC, which was supposed to be solving the problems of international trade and imbalances, simply didn’t have the power to do so,” Garamendi said.

Garamendi said the bill will help California importers and exporters take on the nine international shipping companies that dominate all ocean transportation.

The Pacific Ocean has five shipping companies operating through it — two of which are directly connected to the Chinese government, Garamendi said.

Even though the bill has yet to become law, Garamendi said it has already had an effect on shipping companies in moderating cost increases.

Mabud said the shipping industry is a prime example of how consolidation has left the economy ripe for profiteering.

More than 80% of the ocean shipping industry and more than 95% of the East/West trade routes are controlled by three ocean shipping alliances — 2M, Ocean Alliance and THE Alliance, Mabud.

“These policy choices have allowed corporations to keep costs low for themselves and keep record profits without any risk of being undercut by competition,” Mabud said.

Mabud said that there was a 1,000% increase in freight shipping rates in trade routes between the U.S. and Asian countries from January 2020 to January 2022.

Costa said that 44% of California’s ag products are exported, but without adequate transport of products, the state will lose market share.

Costa said he is open to proposing anti-trust legislation if the act doesn’t get the attention of shipping companies.

Related story: Biden pushing to lower ocean shipping costs, fight inflation

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