Amid the lingering effects of the COVID-19 pandemic on U.S. supply chains, 2021 has seen significant new laws and changes within the regulatory and legislative landscape affecting carriers and their customers. The following are what we consider the Top 10 stories — in no particular order — chronicling those changes and why they matter to freight markets.
Bipartisan infrastructure package
Summary: President Joe Biden signed into law the Bipartisan Infrastructure Bill — known formally as the Infrastructure Investment and Jobs Act — on Nov. 15. The law authorizes billions of dollars above annual program funding toward untangling supply chains affecting trucking, rail, maritime and airports.
Why it matters: After years of warnings by civil engineers about America’s “crumbling” roads and bridges, Congress finally figured out how to pass a transformational infrastructure package supported by both Republicans and Democrats. Competitive grants and other funding initiatives can finally begin addressing inefficiencies and congestion in the supply chain that rack up significant costs for carriers and shippers, which are ultimately passed down to consumers in the form of higher prices.
Ocean Shipping Reform Act of 2021
Summary: The U.S. House of Representatives passed on Dec. 8 the Ocean Shipping Reform Act (OSRA) of 2021, legislation that places a series of new requirements on ocean carriers, including provisions related to demurrage and detention, retaliation and discrimination by carriers and marine terminal operators against shippers, and a rulemaking on minimum service standards. The Senate is writing a companion bill that could be introduced by early next year.
Why it matters: Sparked by complaints by U.S. exporters alleging service and price discrimination by the world’s largest (and foreign-owned) container ship carriers, OSRA 21 would be the first significant changes to the Shipping Act since 1998. As written in the House bill, the legislation broadens the Federal Maritime Commission’s oversight of the container supply chain, with the power to influence on a larger scale how ocean carriers operate their import and export services.
President Biden’s Supply Chain Disruptions Task Force
Summary: A June report issued by the White House included a recommendation to establish a new Supply Chain Disruptions Task Force, to be led by the secretaries of Transportation, Commerce and Agriculture, with the goal of addressing “near-term challenges to the economic recovery.” The most significant move in standing up the task force was the appointment in August of John Porcari as the group’s port envoy.
Why it matters: Porcari immediately started planning a series of high-profile, short-term initiatives aimed at untangling container bottlenecks and inefficiencies at the nation’s ports. One of the biggest was extending port gate hours and pushing major retailers such as Amazon, Walmart, Target and Office Depot to do the same. Other initiatives include developing off-site “pop-up” container storage yards; recommending National Guard truck drivers to help clear container ports; and fees charged to ocean carriers for allowing containers to sit at docks for extended periods. The initiatives, which have had varying levels of success, will continue into 2022.
CP and CN merger plays for KCS
Summary: Beginning in March, Canadian Pacific, CN and Kansas City Southern engaged in a battle over which of the two major Canadian freight railroads would acquire KCS. After the Surface Transportation Board failed to approve CN’s voting trust application, CN and KCS parted ways, with KCS returning to original merger partner CP, which the STB in November allowed to proceed.
Why it matters: While the merger has the potential to reduce transit times for shippers and create a potential new intermodal service between Dallas and Chicago, some shippers are concerned that reducing the number of rail competitors will lead to higher rates. Also, some believe STB’s rejection of CN’s voting trust is a signal that it will be much more difficult, if not impossible, for future Class I railroad mergers to go forward because of the STB’s new high-bar test.
Air cargo export screening
Summary: The Transportation Security Administration unveiled an alternative screening regime to coincide with the June 30 deadline for member states of the International Civil Aviation Organization to implement 100% screening of export air shipments on all-cargo aircraft. The creation of a Secured Packing Facility (SPF) model gives manufacturers, e-commerce fulfillment centers, third-party logistics providers and others the ability to tender outbound shipments to airlines without screening to meet the 100% requirement.
Why it matters: The new 100% screening rules are a significant change for the air logistics sector, which will have to apply security measures for cargo carried on freighters as it has done for more than a decade in the passenger sector. Regarding the SPF model, while the program is designed to minimize screening burdens on all-cargo carriers, critics contend that tendering cargo to airlines under different security parameters for passenger and freighter aircraft could cause confusion at the receiving end about whether freight was properly secured.
California’s AB5 independent contractor law
Summary: Even though California’s independent contractor law, known as AB5, went into effect in January 2020, the trucking industry has so far been able to be free from the law’s enforcement due to a series of appeals and injunctions. As of Monday, the U.S. solicitor general, which represents the U.S. government at the U.S. Supreme Court, has yet to weigh in on the case of the California Trucking Association (CTA) versus the state’s attorney general.
Why it matters: CTA, and much of the long-haul trucking industry, has maintained that the owner-operator/independent contractor model is critical because it gives trucking companies the flexibility to expand and contract their business to accommodate fluctuations in supply and demand. Owner-operator contractor drivers also enjoy the ability to set schedules while benefiting from their carriers’ routes and service offerings. Drivers in the port drayage sector, on the other hand, contend that the model leaves them open to being exploited by unscrupulous companies.
Watch: Policy in the driver’s seat
Trucking hours-of-service challenge
Summary: After three truck safety groups and the International Brotherhood of Teamsters asked a federal appeals court last year to review the newly revised rules on hours of service in the trucking industry, the Federal Motor Carrier Safety Administration was successful in early 2021 in getting the court to suspend the proceeding until incoming Biden administration officials had time to get caught up on the rules. After the abeyance was lifted in the summer, the proceeding was restored, with the safety groups and Teamsters filing their formal challenge in December. Responses are due in January.
Why it matters: The petitioners are focusing their challenge on new flexibility given to trucking companies within short-haul and 30-minute rest-break provisions of the rules, contending that they allow carriers to push drivers harder with less rest, leading to more crashes. The industry maintains — and the FMCSA agreed — that there is no evidence showing that the new rules make the roads less safe and that loosening restrictions on work hours will lead to better use of drivers’ time and more efficient supply chains.
OSHA’s vaccine mandate
Summary: The Occupational Safety and Health Administration issued in November an emergency COVID-19 vaccination standard for private companies with more than 100 employees requiring vaccinations or weekly testing. The American Trucking Associations and other groups were successful in getting an appeals court to stay enforcement of the mandate days later, but last week another court, the U.S. Court of Appeals for the 6th Circuit, lifted the stay. OSHA immediately issued new enforcement dates of Jan. 10 and Feb. 9, 2022.
Why it matters: While the ATA was able to secure assurances from the Biden administration that solo long-haul drivers would be exempt from the mandate, the trucking industry continues to oppose the mandate. Carriers contend that with a significant portion of truck drivers still choosing to not be vaccinated, vaccination and testing requirements will lead to an exodus of drivers and cause low driver retention levels to plummet further.
Ocean-carrier customer lawsuits at FMC
Summary: With Biden-designated Chairman Daniel Maffei at the helm, the FMC has been paying close attention to allegations by shippers against carriers over service and rate disputes stemming from ocean carrier market power and has provided a friendly forum in which to take complaints.
Why it matters: The FMC’s market power concerns opened the door for a shipper lawsuit alleging “collusive” practices by a U.S.-based shipper, along with subsequent complaints against major ocean carriers from a port drayage company and an e-commerce company. How the FMC’s administrative law judges decide on the complaints could be a bellwether for how strict the FMC will be on cracking down on carriers, particularly if OSRA 2021 (see above) ends up becoming law.
Postal Service reorganization and reform
Summary: The U.S. Postal Service unveiled in the spring a long-awaited reorganization plan projected to generate $24 billion in new net revenue for the agency by 2030. At the same time, major Postal Service reform bills have been making their way through the House and Senate as Congress attempts to relieve the service of 15 years of struggling under a financial mandate that nearly crippled the agency and which could put it on the road to solvency.
Why it matters: Because heavy-hitters UPS, FedEx and Amazon all compete against and partner with the Postal Service, the last-mile parcel delivery playing field hinges on the health of the Postal Service and its ability to maintain operations, particularly in rural areas that are more costly to serve.
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