OPINION Panama, on the way to deglobalization?

Biden signs the “Ocean Shipping Reform Act” PANAMA, ON THE WAY TO DEGLOBALIZATION?

EDDIE TAPIERO/ LOGISTICS INVESTIGATIONS COMMISSION

On June 16, 2022, President Biden signed the Ocean Shipping Reform Act, an Act introduced by Senator Amy Klobuchar (Democrat of Minnesota) S.3580, and the 117th Congress that seeks to improve competitiveness in the maritime industry in USA

The Act strengthens the authority of the Federal Maritime Commission, which is the industry’s regulatory agency, to regulate shipping in a way that encourages the growth and development of US exports. It does this by ensuring that the maritime system is competitive, efficient and economical.

Among other things, the Act allows the Commission to investigate complaints about detention and delay charges imposed by shipping companies 2) determine if the charges are reasonable 4) order refunds for charges that it considers to be unreasonable.

The Law also prohibits shipping companies, maritime operators and intermediary carriers from canceling or not allowing cargo space when it is available or canceling space using other discriminatory methods. In addition, it includes a clause that indicates that the Commission can work on any other problem that it considers needs to be evaluated or adjusted through legislation.

THE LAW:

• Strengthens the registry of US maritime cargo markets and immunizes cargo owners from retaliation by shipping companies. • Increases transparency by requiring the commission to submit a quarterly report of import and export tons and empty and full containers by operated vessel and carrier. In addition, each port, terminal operator, and chassis owner or chassis supplier with fleets greater than 50 will also report the data to the Commission.

No later than April 1, 2023, the Federal Maritime Commission shall enter into an agreement with the Transportation Research Board of the National Academies of Sciences, Engineering, and Medicine under which the Transportation Research Board will conduct a study and develop best practices for chassis or near-terminal terminal groups serving marine terminal operators, motor carriers, railroads, and other stakeholders using chassis groups, with the aim of optimizing the efficiency and effectiveness of the supply chain

An interesting article is article 24: USE OF INTERIOR PORTS OF THE UNITED STATES FOR STORAGE AND TRANSFER OF CARGO CONTAINERS.

The article indicates that: (a) Meeting.—Not later than 90 days after the date of enactment of this Act, the Undersecretary for Transportation Policy, in consultation with the Administrator of the Maritime Administration and the President of the Federal Maritime Commission, shall convene a meeting of representatives of the entities described in subsection (b) to discuss the feasibility and strategies for identifying federal and non-federal land, including inland ports, for the purpose of storing and transferring cargo containers due to port congestion.

Supporters of the law see it as a way to reduce one of the biggest sources of inflation and to try to reduce pressures on value chains. Those who oppose it, indicate that the current situation is a result of the market and that the government continues with its tendency to intervene in the market.

However, a deeper view is that the Law is yet another step towards deglobalization. Maritime transport has evolved towards greater complexity with many actors that include not only shipping lines, ports and terminal operators, but also many intermediaries and agents that are in charge of consolidating, distributing, financing, storing and even packaging certain loads.

In the last two years, the value chains have been congested by special episodes such as COVID-19 and more recently the war between Russia and Ukraine. Expanding the power to regulate the industry based on terms like “efficient”, “economic” and “reasonable” is very difficult given the relativity of those terms.

In addition, since the ships are actually mobile plants with flags, crews, owners and bankers that can be found in different parts of the world, the impact can be negative in that monitoring, compliance and even insurance costs can increase. and it is not known whether complaints about charges for special routes abroad can also be included or not. This situation is similar (not similar) to when the railways began to be regulated, which resulted in a significant drop in margins and a deterioration in the efficiency of the railway system that had to be supported by subsidies.

A darker aspect is that the Law also focuses on the promotion of imports and exports and this can create spaces for geopolitics to limit the transport of certain parts of the world and with it, maritime trade in general.

For Panama, the law is an alert. The globalized world is changing towards deglobalization. This has the potential to reduce maritime trade, investment and long-term economic growth. For this reason, the 2030 Logistics Strategy must be improved and updated to incorporate, mainly, the geopolitical changes in the environment.