Congress Calls for Shipping Exchange Rules

A bipartisan group of lawmakers has urged the Federal Maritime Commission (FMC) to "work expeditiously" to initiate a rulemaking on shipping exchanges and "establish healthy and fair competition in the global shipping market."

In a letter to Chairman Dan Mafei of the FMC, Rep. Dusty Johnson (R-SD) of the House Select Committee on the Chinese Communist Party, and Rep. John Garamendi (D-CA) of the House Transportation and Infrastructure Committee, with others, called for the Commission to expedite the rulemaking called for in 2022 legislation.

“Chinese Communist Party entities currently dominate shipping exchanges,” said Rep. Johnson. “American shippers and global commerce should be concerned, as CCP economic indicators have proven to be unreliable, subject to manipulation and outright falsification. My Ocean Shipping Reform Act sought to rectify China’s influence in shipping contracts, and the FMC should take action on the OSRA provision.”

Ocean Shipping Reform Act of 2022:

In June 2022, the Ocean Shipping Reform Act of 2022, sponsored by Reps. Garamendi and Johnson, became law. Among other things, shipping exchanges became regulated entities under the new law. As a result, new regulations must be drafted to provide the rules that shipping exchanges will adhere to. Congress tasked the FMC to begin work on the rulemaking for shipping exchanges no later than three years after the enactment of OSRA 2022.

"While the deadline for the rulemaking has not yet passed, we cannot wait two more years for a rulemaking on a market that is swiftly becoming a PRC monopoly," the lawmakers said.

"The Shanghai Shipping Exchange is a major international freight shipping exchange that is state-owned, jointly by the Ministry of Transport and Shanghai Municipal People’s Government. It currently has a stranglehold on rate indexes to and from the region, presumably intending to become the industry benchmark.

"As the most widely used exchange, their contract rates have risen 35 percent over the past year. If the U.S. does not approve a competitor, the CCP could obtain a monopoly, leading to a troubling outcome for American shippers and global commerce.

Read the letter HERE.