The Federal Maritime Commission is issuing information demand orders to ocean carriers and marine terminal operators at the ports of Los Angeles/Long Beach and New York/New Jersey to determine if legal obligations related to detention and demurrage practices are being met. The demand orders will also require carriers and MTOs to provide information on their policies and practices related to container returns and container availability for exporters. In November 2020 the FMC said such policies and practices “are having an unprecedented negative impact on congestion and amplifying bottlenecks at these ports and other points in the Nation’s supply chain.”
Demurrage is charged for cargo containers exceeding allotted free time at a terminal, while detention fees are assessed for use of carrier-provided containers beyond the allotted free time. In May 2020 the FMC issued a final interpretive rule setting forth a list of considerations it will use in assessing whether a detention or demurrage practice is unjust or unreasonable. These include the extent to which demurrage and/or detention fees are (1) serving their intended primary purpose of incentivizing cargo movement and promoting freight fluidity, (2) related to cargo availability for retrieval, (3) imposed when a container cannot be returned, and (4) imposed in the context of government inspections. Other considerations include the existence, accessibility, content, and clarity of policies implementing demurrage and detention practices and regulations, and the extent to which regulated entities have clearly defined the terms used in their demurrage and detention practices and regulations.
The FMC states that any failure by the entities subject to the demand orders to operate consistent with this interpretive rule might constitute a violation of laws prohibiting unjust and unreasonable practices and regulations related to, or connected with, receiving, handling, storing, or delivering property. As a result, information received in response to these orders may be used as a basis for hearings, enforcement actions, or further rulemaking.
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