NMPF President and CEO Jim Mulhern joined political leaders and agricultural groups at the White House this afternoon as President Biden signed the Ocean Shipping Reform Act into law. The bill sets into motion a series of new rules and the development of regulations that enable the Federal Maritime Commission (FMC) to better protect American dairy farmers and exporters from anticompetitive actions by foreign-owned ocean carriers.
The shipping challenges facing the dairy sector relate in large part to the unfair and unreasonable practices of ocean carriers. Freight rates have soared since the start of the COVID-19 pandemic while the availability and predictability of equipment needed to move U.S. dairy products to overseas buyers has plummeted. Meanwhile, ocean carriers continue to ship empty containers across the Pacific Ocean at record rates. Competitors in the EU and New Zealand are not experiencing the same level of volatility, putting U.S. dairy exports at high risk of being displaced by more reliable suppliers.
Since the first quarter of 2021, NMPF and the U.S. Dairy Export Council (USDEC) have worked side-by-side to advocate for policy measures to help tackle the shipping crisis, and the Ocean Shipping Reform Act is a key part of that effort. NMPF was among the first contributors to drafting the bill and worked closely with its sponsors to secure provisions designed to address the concerns of dairy exporters. In addition to its close, sustained work with the lead offices, NMPF worked alongside other agricultural organizations to drum up strong bipartisan support in Congress for the bill.
The largest overhaul of shipping regulations since 1998, the legislation makes important gains toward alleviating supply chain congestion that contributed to well over $1.5 billion in added costs, reduced value and lost sales for U.S. dairy farmers and exporters in 2021, including by:
- Prohibiting carriers from unreasonably refusing cargo space accommodations (details to be developed by FMC in rule-making);
- Establishing stronger rules to prevent unfair detention and demurrage charges;
- Providing FMC the authority to issue new rules related to service contracts, enabling them to better protect American dairy exporters from unreasonable anticompetitive ocean carrier practices; and
- Protecting American shippers from retaliation by foreign ocean carriers if they file a complaint with the FMC.
Today’s passage brings to a close one step in the process of tackling export supply chain challenges. However, work remains to ensure FMC makes full use of its new powers and prioritizes the needs of dairy exporters in that process. Additional steps from the Biden Administration are needed to complement these new rules and regulations.
Together with USDEC, NMPF will continue to pursue effective solutions to resolve the shipping crisis and ensure U.S. dairy farmers are not unduly restricted from supplying the products that their international customers demand. Please reach out to Tony Rice at trice@nmpf.org with any questions.
