Shipping Penalty Practices Reformed Under FMC Rule

The Federal Maritime Commission has issued a final rule that, effective May 28, will establish new requirements for how shipping lines and port facilities bill for demurrage (fees charged for cargo containers exceeding allotted free time at a terminal) and detention (fees charges for use of carrier-provided containers beyond the allotted free time). This rule implements parts of the Ocean Shipping Reform Act of 2022 and includes the following provisions.

– Vessel-operating common carriers, NVOCCs, and marine terminal operators must include specific minimum information in demurrage or detention invoices; failure to do so will eliminate any obligation of the billed party to pay the charge.

– VOCCs, NVOCCs, and MTOs can issue demurrage or detention invoices to the consignee (the person to whom final delivery of the cargo is to be made) as well as the person for whose account the ocean transportation or cargo storage is provided and who contracted for those services. Invoices cannot be issued to multiple parties simultaneously.

– VOCCs and MTOs must issue detention and demurrage invoices within 30 calendar days after the charges were last incurred, while NVOCCs have 30 calendar days from the issuance date of the invoice they received.

– Billed parties have at least 30 calendar days to make fee mitigation, refund, or waiver requests and the billing party must generally attempt to resolve the matter within another 30 days.

ST&R’s team of former FMC and DOJ litigation personnel, freight forwarders, and former administration and congressional staffers can help shippers understand, comply with, and take advantage of OSRA 22 and related rules, including this one. For more information, please contact Jason Kenner (at (212) 549-0137 or via email), Andy Margolis (at (305) 894-1021 or via email), or Ned Steiner (at (202) 730-4970 or via email.)