U.S. shippers that have been plagued with demurrage and detention charges since the start of the pandemic may soon have recourse as the Federal Maritime Commission (FMC) nears a final rule targeting unfair billing practices.
“As rising cargo volumes have increasingly put pressure on common carrier, port and terminal performance, demurrage and detention charges have for a variety of reasons substantially increased. Demurrage and detention charges and policies should serve the primary purpose of incentivizing the movement of cargo and promoting freight fluidity.”
The Commission is seeking industry views on whether it should regulate the demurrage and detention billing practices of common carriers and marine terminal operators (MTO).
HOW IS DEMURRAGE AND DETENTION DEFINED?
The FMC defines the terms “demurrage and detention” broadly to include any charges assessed by common carriers and marine terminal operators related to the use of marine terminal space or shipping containers.
Under this definition, for instance, charges assessed by common carriers for the use of containers outside a marine terminal would fall within this scope regardless of whether the charges are called “detention” or “per diem.” Similarly, charges assessed because a container is taking up terminal space would also fall within the definition, even if the charges are called something other than “demurrage.”
Therefore, the scope of the advance notice are any charges having the purpose or effect of demurrage or detention regardless of the labels given to those charges.
WHAT CHANGES ARE BEING PROPOSED
- Should the FMC be regulating the billings and billing practices of both common carriers and marine terminal operators?
- *For common carriers, should the regulation cover both vessel-operating common carriers (VOCCs) and non-vessel-operating common carriers (NVOCCs)?
- Where do marine terminal operators impose fees directly on shippers?
- Should (and to what extent) proposed regulation on demurrage and detention billings include MTOs?
- Common carriers and MTOs are subject to laws other than the Shipping Act, such as private contractual arrangements and the Uniform Intermodal Interchange Agreement (UIIA). Are there any other laws, regulations, or arrangements that may affect the regulation of demurrage and detention billing?
*The Commission does not seek comment on the ocean freight forwarder bills, as ocean freight forwarders, although ocean transportation intermediaries, are not common carriers.
MINIMUM BILLING INFORMATION
The FMC is also asking for industry comments on what specific information it should require on demurrage and detention bills.
- Information necessary to identify the shipment (bill of lading number, container number, etc.)
- How the charges are calculated (container availability dates, vessel arrival dates, earliest return dates, availability of return locations and appointments)
- Whether the bills should include information on any events that justify stopping the clock on charges (container unavailability, lack of return locations, appointments, or other force-majeure reasons)
- Require bills to specify all parties receiving the bill, identify why the party receiving the bill is the proper party-in-interest, and identify the source of the charge (i.e.., by tariff, service contract or MTO schedule).
BILLING TIMEFRAMES
Industry stakeholders raised additional concerns regarding a lack of clearly defined timeframes for the issuance of demurrage and detention bills, citing that the longer it takes to receive a bill the more difficult it may be for a shipper to validate the accuracy of the charges.
The FMC is now asking for comments to determine if a requirement that demurrage or detention bills be issued within 60 days of the occurrence of the charge is necessary.
Additionally, would a similar timing requirement for the issue of demurrage and detention bill refunds be beneficial?
HOW TO COMMENT
For detailed instructions on submitting comments, including requesting confidential treatment of comments, and additional information on the rulemaking process, see FMC Advance Notice of Proposed Rulemaking Demurrage and Detention Billing Requirements [Docket No. 22-04].
A formal list of all 16 questions can be found starting on Page 10 of the
FMC: Advance Notice of Proposed Rulemaking.
NOTE: All comments received will be posted without change to the Commission’s website unless the commenter has requested confidential treatment.
Commission’s Electronic Reading Room: http://www2.fmc.gov/readingroom/proceeding/22-04
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