SUPPLY CHAIN ISSUES AND THE OCEAN SHIPPING REFORM ACT 

By: Craig Brightup, The Brightup Group LLC; WSRCA Political Correspondent

Craig Brightup is Chief Executive Officer of The Brightup Group, LLC. Previously, he was Vice President of Government Relations for the National Roofing Contractors Association (NRCA), having opened the Chicago-based NRCA’s Capitol Hill office in 1990. His program covered all federal issues for the $30 billion commercial and residential roofing industry, with an agenda including labor relations, worker safety, health care, energy, environment, transportation, insurance, procurement, regulatory reform, taxes and immigration. During his tenure with NRCA, Brightup’s advocacy and political achievements led to being named to Fortune Small Business magazine’s Power 30 list of “influential insiders” in the nation’s capital, September 2000 issue.

The supply chain crisis causing disruptions in the roofing industry and adding to inflation is the result of a “perfect storm” that started with the jump in demand for consumer goods as the  country recovers from the pandemic.  This demand jolt was exacerbated by weather events like Hurricane Ida that brought more havoc to just-in-time inventory systems already being hampered by worker shortages.

Trucking is integral to the supply chain and has been hard hit by worker shortages, with the American Trucking Associations estimating the need for 80,000 more drivers.  Compounding this problem is California’s new independent contractor law (AB 5) that finds nearly all workers to be “employees” instead of independent contractors, making it difficult for the trucking industry to maintain enough drivers to service the ports of Los Angeles (LA) and Long Beach (LB) where 40% of the country’s overseas imports arrive.     

The LA/LB ports now have 50-100 ships waiting to unload their shipping containers every day.  Measurable relief could be realized by installing automation that’s used globally, but the Longshoremen’s union opposes this idea.  And remedial actions approved by the Biden-Harris Supply Chain Disruptions Task Force have thus far missed the mark.

For example, a new $100 container “dwell fee” announced by the ports of LA/LB for containers waiting for trucks but dwelling on the docks for nine days or more is focused on full containers, when empty containers are a bigger problem.  Also, these Excessive Container Dwell Fees will be levied on ocean carriers but then passed along as a de facto “shippers’ tax” that will be paid by customers in the roofing industry and others.  In fact, ocean carriers quickly notified trucking firms the dwell fees will be passed along, bringing to the fore another major factor in the supply chain crisis – the high concentration of ocean carriers and their lack of accountability.

The supply chain crisis put the link between ocean carriers and shipping containers in the spotlight, prompted by the fact that when shippers such as roof-component manufacturers can find available containers, they must contend with outrageous rates.  This dilemma has plagued agricultural exporters, too, and on June 15, 2021, the House Subcommittee on Coast Guard and Maritime Transportation held a hearing on the “Impact of  Shipping Container Shortages, Delays and Increased Demand on the North American Supply Chain,” where witnesses explained that the small number of ocean carriers and their lack of accountability were likely playing a role in the cost of a container rising from $3,000 to over $20,000 in a matter of months.

After this hearing and Federal Maritime Commission (FMC) fact-finding, Reps. John Garamendi (D-CA) and Dusty Johnson (R-SD) introduced the Ocean Shipping Reform Act of 2021 or OSRA 21 (H.R. 4996) to address container issues and others that shippers and truckers  have with ocean carriers.  Among its provisions, OSRA 21 would shift the burden of proof in any proceeding with the FMC regarding the reasonableness of late charges (detention/demurrage) from the invoiced party to the ocean carriers or marine terminal operators; authorize the FMC to order refund relief and civil penalties in enforcement proceedings; permit third-party challenges to anti-competitive agreements in complaints against carriers filed with the FMC; and strengthen anti-retaliation safeguards to protect companies filing complaints against carriers.  Simply put, this “Shippers’ Bill of Rights” will empower the FMC to reign in ocean carriers by curtailing unfair practices and excessive charges which will help the roofing industry.

On Sept. 13, a coalition of 152 companies and associations representing U.S. importers, exporters, transportation providers and other supply chain stakeholders sent a letter to Congress supporting OSRA 21.  The number of bipartisan cosponsors on the bill stood at 68 as of Nov. 5 and it has been endorsed by the House Problem Solvers Caucus, which has 58 members equally divided between Democrats and Republicans. 

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