Decoding OSRA – Section 2. Purposes

Introduction

What exactly does the Ocean Shipping Reform Act of 2022 (OSRA) say and do? This blog series goes through it section by section, so you can see exactly what our lawmakers changed in the U.S. Code dealing with shipping.

We’ll give you the OSRA text; the text of the U.S. Code, usually in Title 46, before and after its amendments; and consider what those changes mean for U.S. importers and exporters.

In Universal Cargo’s last blog post, I announced this series and quickly covered Section 1, which only gives a citation for OSRA. Now we start covering the rest of the sections, where the meat of OSRA’s shipping law reform lies.

This series will be mixed in with Universal Cargo’s blog posts, so we’ll still be talking about international shipping news rather than having the next 18 posts be this decoding OSRA series. Let us know if you’d like a post with the entire text of Title 46, and we’ll post that too.

Now let’s see what Section 2 of OSRA has to say for itself…

Quick Overview

Section 2 of OSRA adjusts the goals of U.S. shipping law in Title 46. It makes three changes. Two paragraphs (which are really more like long sentence fragments) are completely removed from the code and replaced. One other paragraph is changed by adding a phrase to it.

Section 2 Text

SEC. 2. PURPOSES.

    Section 40101 of title 46, United States Code, is amended--
            (1) by striking paragraph (2) and inserting the following:
            ``(2) ensure an efficient, competitive, and economical 
        transportation system in the ocean commerce of the United 
        States;'';
            (2) in paragraph (3), by inserting ``and supporting 
        commerce'' after ``needs''; and
            (3) by striking paragraph (4) and inserting the following:
            ``(4) promote the growth and development of United States 
        exports through a competitive and efficient system for the 
        carriage of goods by water in the foreign commerce of the United 
        States, and by placing a greater reliance on the marketplace.''.

Portion of Title 46 Section 2 Amends

§40101. Purposes

The purposes of this part are to—

(1) establish a nondiscriminatory regulatory process for the common carriage of goods by water in the foreign commerce of the United States with a minimum of government intervention and regulatory costs;

(2) provide an efficient and economic transportation system in the ocean commerce of the United States that is, insofar as possible, in harmony with, and responsive to, international shipping practices;

(3) encourage the development of an economically sound and efficient liner fleet of vessels of the United States capable of meeting national security needs; and

(4) promote the growth and development of United States exports through competitive and efficient ocean transportation and by placing a greater reliance on the marketplace.

(Pub. L. 109–304, §7, Oct. 6, 2006, 120 Stat. 1523.)
Historical and Revision Notes Revised

Section
	Source (U.S. Code)	Source (Statutes at Large)
40101 	46 App.:1701. 	Pub. L. 98–237, §2, Mar. 20, 1984, 98 Stat. 67; Pub. L. 105–258, title I, §101, Oct. 14, 1998, 112 Stat. 1902.
Effects on Certain Agreements and Contracts

Pub. L. 98–237, §20(d), Mar. 20, 1984, 98 Stat. 90; Pub. L. 105–258, title I, §117(1), Oct. 14, 1998, 112 Stat. 1914, provided that: “All agreements, contracts, modifications, licenses, and exemptions previously issued, approved, or effective under the Shipping Act, 1916 [former 46 U.S.C. App. 801 et seq., see Disposition Table preceding section 101 of this title], or the Shipping Act of 1984 [former 46 U.S.C. App. 1701 et seq., see Disposition Table preceding section 101 of this title], shall continue in force and effect as if issued or effective under this Act, as amended by the Ocean Shipping Reform Act of 1998 [Pub. L. 105–258, Oct. 14, 1998, 112 Stat. 1902], and all new agreements, contracts, and modifications to existing, pending, or new contracts or agreements shall be considered under this Act, as amended by the Ocean Shipping Reform Act of 1998.”

1st Change

The code no longer states “[to] provide an efficient and economic transportation system in the ocean commerce of the United States that is, insofar as possible, in harmony with, and responsive to, international shipping practices” as one of its purposes. That purpose is replaced by the goal “[to] ensure an efficient, competitive, and economical transportation system in the ocean commerce of the United States.”

Key Difference

The new goal gets rid of the ideas of being “in harmony with” and “responsive to” international shipping practices. Instead, the focus is on the U.S. being “efficient, competitive, and economical” with its ocean shipping system.

This does seem like a clearer and wiser goal for the country’s ocean freight system. At the very least, it is more proactive and less reactive. The previous goal almost sounded passive in responding to what’s happening in global shipping and somehow being in harmony with that. Efficiency and being economical were previously part of the goal. The new purpose keeps those and adds competitive to them, making the new goal at least sound more aggressive with the U.S. ocean freight system.

2nd Change

The second change tweaks the third paragraph. Here’s how it originally reads:

“encourage the development of an economically sound and efficient liner fleet of vessels of the United States capable of meeting national security needs; and”

Here’s how it reads after OSRA change it:

“encourage the development of an economically sound and efficient liner fleet of vessels of the United States capable of meeting national security needs and supporting commerce; and”

Key Difference

This is a small but important change in the goals of the U.S. shipping code. Now, not only is it the goal of the U.S. to create liner fleet vessels for national security but also to support commerce. This adds an economic focus to U.S. ship and fleet building.

The major ocean container carriers of the world are from countries other than the U.S. Perhaps this will result in more U.S. flag container ships in the future.

3rd & Final Change

Section 2 of OSRA removes Title 46’s following purpose paragraph:

“[to] promote the growth and development of United States exports through competitive and efficient ocean transportation and by placing a greater reliance on the marketplace.”

That paragraph is replaced by:

“[to] promote the growth and development of United States exports through a competitive and efficient system for the carriage of goods by water in the foreign commerce of the United States, and by placing a greater reliance on the marketplace.”

Key Difference

Despite this being a replacement paragraph, most of it remains the same. What’s really changing is “ocean transportation” is being replaced by “the carriage of goods by water in the foreign commerce of the United States”.

The paragraph gets a little more specific. It’s making it clear that we’re talking about ocean shipping in trade with other countries. Perhaps this could have been assumed from the fact the paragraph is explicitly talking about promoting the growth and development of U.S. exports. However, the change does likely indicate that lawmakers have a specific focus on U.S. exports as they’re reforming the country’s shipping laws.

Additional Observation

Despite OSRA and other legislation targeting ocean freight shipping and other aspects of U.S. supply chains, the goal of creating regulation or a “regulatory process” for ocean shipping “with a minimum of government intervention and regulatory costs” remains untouched.

Hopefully, that is still a goal of our regulators. Usually, when the government increases regulation and involvement in a sector, such as has happened with healthcare and education, those sectors become much more expensive. Obviously, that would be a bad result in the ocean shipping sector.

Conclusion

Section 2 deals with the goals and focus of the law changes OSRA makes. While we don’t have changes here that make tangible changes at the governance or operational levels of ocean shipping, we get an idea of what OSRA is trying to accomplish. There’s a clear commerce focus in the Purpose paragraph changes. Lawmakers want U.S. ocean shipping to efficient, economical, and competitive. And they seem to have an eye specifically on U.S. exports.

We’d love to hear your thoughts on these changes in the comments section below.

Stay tuned for when Decoding OSRA continues, examining Section 3….