Baldwin, Thune, Klobuchar, Hoeven Urge Federal Maritime Commission to Carefully Implement Key Ocean Shipping Reform Act Rule

WASHINGTON, D.C. — U.S. Senators Tammy Baldwin (D-WI), John Thune (R-SD), Amy Klobuchar (D-MN), and John Hoeven (R-ND) today urged Federal Maritime Commission (FMC) Chairman Daniel Maffei to provide additional clarity on the definition of “unreasonable” as it relates to refusal by ocean carriers to provide vessel space accommodations.  

“In order to ensure the law is faithfully implemented in a manner consistent with congressional intent, the definition of ‘unreasonable’ must adequately take into account both transportation and commercial-related factors when evaluating the behavior of an ocean carrier,” the senators wrote. “We agree with the Commission’s view that ‘commercial convenience alone is not a reasonable basis’ for refusal by an ocean carrier to deal or negotiate. However, we have questions about the breadth of the ‘transportation factors’ under the proposed rule. In particular, an ocean carrier might point to the ‘existence’ of ‘scheduling considerations’ as a basis for refusing to negotiate with a would-be exporter. We urge you to consider whether additional clarifying language about the magnitude of the ‘transportation factors’ might provide useful guidance to industry and align with the goal of promoting an efficient, competitive, accessible, and affordable global shipping market, consistent with congressional intent.”

In June, the Ocean Shipping Reform Act, which Senator Baldwin co-sponsored, was signed into law. The bill strengthens the authority of the FMC by providing it with new tools to help level the playing field for American exporters and counteract anticompetitive behavior. The bill would also help FMC more efficiently resolve disputes between ocean carriers and shippers, while also taking actions at the U.S. Department of Transportation to alleviate strain across the supply chain.

The full letter is here and below.

The Honorable Daniel B. Maffei

Chairman

Federal Maritime Commission

800 North Capitol Street, NW

Washington, DC 20573

Dear Chairman Maffei:

We write regarding the Federal Maritime Commission’s recent notice of proposed rulemaking (NPRM) establishing a definition of unreasonable refusal by an ocean common carrier to deal or negotiate with respect to vessel space accommodations, consistent with the requirement established in section 7 of the Ocean Shipping Reform Act of 2022. The Commission’s implementation of this requirement is crucial to ensuring American exporters and importers alike have fair and competitive access to the global shipping market. 

Congress passed this landmark legislation, signed into law in June, to make it easier for American farmers and manufacturers to ship ready-to-export goods left waiting at our ports and to limit foreign ocean carriers’ ability to impose added fees on container handling. Section 7 of the Act sought to clarify that an “unreasonable” refusal by an ocean carrier to provide vessel space accommodations should constitute a prohibited practice under the Shipping Act of 1984. The need to require such a clarification arose specifically from reports of ocean carriers refusing certain export cargo – particularly agricultural cargo – even when vessel space was readily available, often opting to carry empty containers instead. 

In order to ensure the law is faithfully implemented in a manner consistent with congressional intent, the definition of “unreasonable” must adequately take into account both transportation and commercial-related factors when evaluating the behavior of an ocean carrier.  We agree with the Commission’s view that “commercial convenience alone is not a reasonable basis” for refusal by an ocean carrier to deal or negotiate. However, we have questions about the breadth of the “transportation factors” under the proposed rule. In particular, an ocean carrier might point to the “existence” of “scheduling considerations” as a basis for refusing to negotiate with a would-be exporter. We urge you to consider whether additional clarifying language about the magnitude of the “transportation factors” might provide useful guidance to industry and align with the goal of promoting an efficient, competitive, accessible, and affordable global shipping market, consistent with congressional intent.

Thoroughly defining what constitutes the ‘unreasonable’ refusal to deal with or negotiate as it relates to vessel space accommodations is a crucial component of our landmark shipping reform law. We greatly appreciate your attention to this issue and applaud your continued work to speedily implement the provisions of the Ocean Shipping Reform Act of 2022. Should you have any questions, please do not hesitate to contact our staff.

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