FMC Seeks Industry Comment for a Proposed Interpretive Rule on Demurrage and Detention

FMC Seeks Industry Comment for a Proposed Interpretive Rule on Demurrage and Detention

2019-09-15T23:23:08+00:00September 15th, 2019|Domestic, Export, Import, Industry Spotlight, Shipping News|

After years of consideration, on September 13, 2019, the Federal Maritime Commission (FMC) issued a Federal Register Notice “seeking public comment on its interpretation of the Shipping Act prohibition against failing to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property with respect to demurrage and detention. Specifically, the Commission is providing guidance as to what it will consider in assessing whether a demurrage or detention practice is unjust or unreasonable.”

Initiated by The Coalition for Fair Port Practices back in December of 2016, the petition believes the practice of charging demurrage and detention, by ports and carriers, as a “financial incentive to promote freight fluidity” has been abused, and does “not provide for a suspension of charges when circumstances are such that demurrage and detention are incapable of serving their purpose.”

The Coalition for Fair Port Practices is a group of 26 trade associations representing importers, exporters, drayage providers, freight forwarders, customs brokers, and third-party logistics providers (“3PLs”).

After a two-day hearing in January 2018, where the FMC received testimony from shippers, ocean transportation intermediaries, ocean carriers, truckers, and marine terminal operators, the Commission assigned a fact-finding investigation that sought to evaluate five key elements:

  • Whether the alignment of commercial, contractual, and cargo interests enhances or aggravates the ability of cargo to move efficiently through U.S. ports;
  • When has the carrier or MTO tendered cargo to the shipper and consignee;
  • What are the billing practices for invoicing demurrage or detention;
  • What are the practices with respect to delays caused by various outside or intervening events;
  • What are the practices for resolution of demurrage and detention disputes between carriers and shippers.

READ FINAL FMC REPORT: FACT FINDING INVESTIGATION 28

The FMC has advised it will consider the following factors when clarifying the interpretation of demurrage and detention practices:

  • starting the free time clock upon container availability as opposed to container discharge from a vessel;
  • public notice of terminal yard closures;
  • stopping a demurrage or free time clock when a container is rendered unavailable, such as upon notice of a yard or terminal closure or when a trucker cannot get an appointment within a reasonable time of it becoming available; and
  • similar consideration for detention fees, when an empty container cannot be returned.

The FMC will also take into consideration cargo availability notification and the impact government inspections should have on freight availability.  The reasonability of these practices will also be evaluated as there is no current capacity for mitigation of government examination holds on equipment or cap on charges for these exams.

DATES: Comment must be submitted on or before October 17, 2019.

You may submit comments, identified by the Docket No. 19-05 by the following methods:

EMAIL TO: Secretary@fmc.gov

SUBJECT LINE: “Docket 19-05, Demurrage & Detention Comments”

Comments should be attached to the email as a Microsoft Word or text-searchable PDF document. Only non-confidential and public versions of confidential comments should be submitted by email.

MAIL TO:

Rachel E. Dickon

Secretary

Federal Maritime Commission

800 North Capitol Street NW

Washington, DC, USA 20573–0001.

READ FULL FMC NOTICE: INTERPRETIVE RULE ON DEMURRAGE AND DETENTION UNDER THE SHIPPING ACT

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