Maritime Affairs Program (MAP) Handbill Spotlight

Given the importance of ocean shipping, U.S. policymakers are naturally concerned when global and U.S. shipping were threatened, most recently by the outbreak of the COVID-19 pandemic. As the pandemic disrupted the regular flow of cargo shipments and port operations in the United States, significant congestions were observed in a number of major U.S. ports. When the cost of long waits at U.S. ports added up, many ocean carriers started to ship empty containers back to Asia, creating serious issues for U.S. exporters; especially agricultural exporters. With the wide-ranging and long-lasting impacts of the ocean shipping disruptions, U.S. policymakers are giving renewed attention to ocean shipping, eyeing for reforms and better governance.

Recent Events

Given the especially high volume of trade between the U.S. and China and Washington’s growing concerns about U.S. competitiveness against China, China became a key focus in the policy discussions on ocean shipping reform. On June 16, 2022, U.S. President Joe Biden signed into law the Ocean Shipping Reform Act, a bill that will, among others, “prohibit ocean carriers from unreasonably refusing cargo space accommodations for U.S. exports” and “promote transparency” by demanding ocean common carriers to report a number of shipping-related statistics. While originally a response to the problem of port congestion and unfavorable ocean carrier practices, the Ocean Shipping Reform Act quickly turned into a bill to counter China’s “unfair practices.” In August 2021, U.S. Representatives Dusty Johnson and John Garamendi, the two original sponsors of the Ocean Shipping Reform Act, said that the bill would “help reduce the United States’ longstanding trade imbalance with China and other countries.” According to an earlier statement by Johnson in March 2021, “once again, China is participating in unfair trade practices, prioritizing empty shipping containers over U.S. agriculture products.”

Following the passage of the Ocean Shipping Reform Act, Washington’s attention on ocean shipping reform has continued, especially where China is a factor. On September 20, 2022, the U.S.-China Economic and Security Review Commission released an issue brief on China’s transportation and logistics management platform LOGINK, arguing that the Chinese government could “potentially gain access to and control massive amounts of sensitive business and foreign government data through LOGINK” as well as gaining advantages in the standard making of global logistics data management. On October 3, 2022, warning that China has become “a global maritime powerhouse” of shipping and shipbuilding, former shipping industry executive and association leader Michael Roberts proposed that the United States should enact a “U.S. Ships Act” in the likes of the CHIPS and Science Act to channel investment and “help American shipbuilders and shipping companies reclaim lost ground in international markets.” The policy discussions have since led to new legislative actions. On March 28, 2023, U.S. Representatives Dusty Johnson and John Garamendi, the same sponsors of the previous Ocean Shipping Reform Act, introduced the Ocean Shipping Reform Implementation Act. This Act, which would prohibit U.S. ports from using China’s LOGINK, authorizes investigation of foreign shipping exchanges like the Shanghai Shipping Exchange and streamline data standards for maritime freight logistics in the United States. 

Keep In Mind

As the COVID-19 pandemic heightened the grave consequences of ocean shipping disruptions, the issues of ocean shipping and ocean shipping reform will continue to attract policy attention as the United States aims to improve its supply chain resilience and enhance American competitiveness. With the passage of the Ocean Shipping Reform Act and the introduction of the Ocean Shipping Reform Implementation Act, it is foreseeable that U.S. government and agencies—in particular, the Federal Maritime Commission—will play an increasingly larger role in collecting and analyzing shipping data, investigating and identifying systematic problems as well as implementing new standards and regulations at U.S. ports and beyond. This could translate to further regulatory changes and compliance needs for the shipping industry as well as trading companies around the world. 

At the same time, as China’s central role in maritime shipping became increasingly salient amidst the rising U.S.-China competition, an increasing number of U.S. lawmakers, policymakers and commentators have made China the focal point of U.S. ocean shipping reform. As the United States has come to see China as a “near-peer competitor” that challenges U.S. leadership economically, militarily and technologically, China-related discussions have tended to take priority over other policies and concerns, even if the latter could also impact long-term U.S. competitiveness and leadership. Policymakers should beware to not let their valid China concerns overshadow equally necessary reforms of U.S. ports and shipping, especially when the COVID-19 pandemic and the consequent port congestion have already revealed systematic issues that are not necessarily related to China.