Remember how the status of ocean shipping was last year before it all got sorted out?
However, ocean transportation is still in limbo, with record imports in the first half of the year and container backlogs continuing to plague ports around the country. Have we mentioned that West Coast ports are gearing up for another freight tsunami?
Prices grew by 8.6% annually in May (a 40-year high!). Negligible luxury items like food, shelter, and energy costs lead the way - food prices averaged 10.1% higher than in May 2021, and energy prices skyrocketed to a 34.6% increase over last year at this time (as if you need a reminder). All of this is contributing to inflation, at least to some degree.
There’s no way that shipping costs aren’t adding to this mess. We’ll leave it to economists to determine precisely how much. Still, the combination of increased demand for goods reduced supply due to backlogs, and an array of increased rates and carrier fees almost can’t pour gasoline on the inflation fire.
Against that cheerful backdrop, enter the Ocean Shipping Reform Act. The Ocean Shipping Reform Act or OSRA is designed to help out on ocean shipping oversight and solve some problems that the logistics industry currently faces.
Specifically, OSRA updates the Shipping Act of 1984 to give the Federal Maritime Commission more oversight and involvement in carrier practices. It passed in the House in December, in the Senate in March, and got the final seal of approval from the House of Representatives in mid-June, and the President signed it into law on June 16.
Instead of giving you a civics lesson, we wanted to cover some things that OSRA will do. We can expect these changes to be implemented over the coming months and years and look forward to ocean shipping settling down.
Here are a few things that the Ocean Shipping Reform Act does:
1) It increases the Federal Maritime Commission’s funding from $33 million this year to $49 million in 2025 - a $16 million jump.
2) OSRA gives the FMC authority to probe an ocean carrier’s business practices.
3) The Act allows the FMC to oversee fees that ocean carriers charge truckers, also known as detention and demurrage fees.
4) Ocean carriers must report their total import/export tonnage each quarter.
5) OSRA permits the FMC to create new rules preventing ocean carriers from unreasonably rejecting export shipments from the US - this was a major issue towards the end of 2021 when carriers started rejecting agricultural exports in order to turn containers around faster.
These are some of the main requirements of the Ocean Shipping Reform Act, but they are far from the only ones. Able Freight hopes these new guidelines will help tackle these stubborn port issues and all of the brouhaha they have engendered over the past two years.
If you have questions (about OSRA or otherwise), please don’t hesitate to reach out. We are always here for you, no matter what. And that’s a promise.
Since the start of the pandemic, product shortages have become rampant. Read our new post on how we break down the factor for such shortages.