Understanding the American Port Access Privileges Act of 2022

The American economy was put at the forefront when the American Port Access Privileges Act was introduced in June 2022, meaning that the Act intends to prioritize American exporters by having them placed first in ports across the U.S.

But what exactly is the Act? Does it affect American shipping companies for better or for worse? Continue reading to find out!

What Is the Purpose of the Act?

Based on a statement made by Californian representative Mike Thompson, for the nation to return to being a leader in global trade by having American goods accessible by the worldwide market, fairness needs to be restored to its ports.

Thus, the American Port Access Privilege Act of 2022 was designed to ensure fair competition among U.S. and foreign exporters as foreign markets remain accessible to California's agricultural and other exporters.

One way is that the Act codifies existing preferences towards the military, Jones Act, and the many U.S. flagged American vessels at American ports into good law.

It also founds a secondary berthing preference for commercial shipping vessels with significant export cargo bookings that serve multiple ports across the country. Front-line priority would be given to ships, or carriers, that serve importers and American exporters for unloading and loading goods.

What Were the Previous Versions of the Act, and How Does the Current One Differ?

The American Port Access Privilege Act of 2018, introduced by Rep. Bill Posey (R-FL), aimed to strengthen the ability of U.S. flagged vessels to enter U.S. ports while ensuring that foreign-flagged ships do not receive preferential treatment.

The American Port Access Privilege Act of 2020 was introduced by Congressman Garamendi (D-California) on January 23, 2020. Then, the American Port Access Privilege Act of 2021 was introduced by Senator Markey (D-Massachusetts) on February 5, 2021.

The latest bill made in 2022 intends to amend title 46 of the United States Code and now requires specific port authorities to provide preferential berthing to certain vessels, among other purposes.

The American Port, Access Privilege Act, requires that foreign-flagged vessels notify their intended arrival dates and cargo information at least seven days in advance. In addition, it authorizes the U.S. Dept. of Transportation to gather data on port access practices and requirements.

Essentially, the bill prevents foreign-flagged vessels from receiving special treatment at national ports.

The American Port, Access Privilege Act, requires the Secretary of Commerce to establish rules requiring each foreign flag carrier that operates in the United States to designate one or more U.S. ports as primary berths.

The bill also provides exceptions for certain ship owners who operate multiple vessels. In addition, it imposes penalties on foreign flag operators that refuse to comply with United States laws.

What Are the Potential Impacts of the Act?

The introduction of the America Port Access Privilege Act follows the recent passage of the Ocean Shipping Reform act, which was intended to support the expansion and development of U.S. exports and promote trade in foreign commerce.

With that being said, despite the Act's focus on preferential berthing for U.S.-flagged ocean carriers, most of these carriers are non-U.S. flagged and foreign-owned; according to the Bureau of Transportation Statistics, only 0.5% of global airlines are U.S.-flagged ships.

This brings some concern that the Act would allow the U.S. Government to interfere more in business matters, such as direct or indirect influence on scheduling ocean-going carriers that operate in the U.S. market.

How Does the Act Affect Shipping Companies?

For starters, to be granted priority, documentation must be submitted by vessels or carriers as proof that the export cargo they will be transporting weighs 51 percent of their carrying capacity or their twenty-foot equivalent unit (TEU) capacity.

After calling at a foreign port, the cargo would be eligible to be loaded in more than one U.S. port. Foreign vessels can also be granted priority should they call at multiple U.S. ports before setting sail for international ports.

The berthing and cargo practices enacted by shipping companies across U.S. ports will be documented by the U.S. Department of Transportation's Bureau of Transportation Statistics, as they must evaluate the bill's impact on preferential berthing as well as ocean carriers' practices for port calls and cargo bookings.

What Is Still Lacking From the Act?

One fundamental problem with U.S. ports is their inefficiency. But unfortunately, the Act has yet to address this issue.

In an article published by Bloomberg, the Los Angeles port and Long Beach port, the largest ports in the country, were the most miniature efficient hubs for handling global trade. Consequently, they ranked bottom out of 370 members in the 2021 Container Port Performance Index.

The longer a vessel stays in its port, the worse the snowball effect will be on the supply chain. Increased transit time, port congestion, and vessel backlog are just some of the consequences, which all cost money.

One of the other major issues facing U.S. agricultural exporters is the lack of reliable intermodal transportation services. Sometimes exporters are located in rural areas where no rail lines are needed to transport containers.

Similarly, importers may unload cargo in coastal regions, leaving empty containers far from where exporters are. Exporters would, therefore, require empty shipping containers to be delivered to their location so that they could pack up their products and ship them out, which is costly and time-consuming.

These logistical issues become bottlenecks in the supply chain. It would be difficult to achieve the Act's goal of restoring the U.S.'s contribution to global trade and prioritizing its U.S. ocean carriers when fundamental operational problems still heavily burden exporters.

Conclusion

The 2022 American Port Access Privileges Act, intends to bring fair competition to the nation's ports, particularly for U.S. vessels exporting goods, so that the country's economy can strengthen and regain a foothold in global trade.

Two potential impacts the Act would bring is requiring additional documentation from exporters to be eligible for priority berthing and a seven-day advanced notification by foreign vessels on their intended arrival dates and cargo information.

However, there are still issues that have yet to be solved by the Act, particularly the inefficiencies of U.S. port operations and the lack of infrastructure needed to transport empty containers for exporters to load.

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