Background

There has been progress in addressing high shipping fees imposed by ocean carriers, Federal Maritime Commission Chairman Dan Maffei said recently, but “we have a long way to go and must not let up one bit” in ongoing enforcement and regulatory efforts.

According to an agency press release, FMC Managing Director Lucille Marvin told a recent meeting of the commission that detention and demurrage issues remain persistent but direct engagement with ocean carriers is yielding progress in changing behavior and practices. After an FMC audit team urged carriers industry-wide to adopt detention and demurrage best practices, several carriers have restructured the information available on their websites, created streamlined dispute resolution processes, and developed more structured documentation regarding their detention and demurrage policies.

While commissioners expressed concern that carrier revenues from these charges have increased sharply, FMC staff said this is not an unexpected development given record volumes of trade and congestion throughout the U.S. supply chain caused by chassis shortages, insufficient warehouse space, abandoned cargo, and other issues. Maffei said carriers are also waiving a much higher percentage of the fees, “one indication that the [FMC’s] 2020 interpretive rule and enhanced enforcement is changing some practices and reducing collections of unreasonable detention and demurrage charges.”

However, Maffei added, “the audit findings also tell me that we have a long way to go and must not let up one bit either on our enforcement efforts or the additional rulemaking on detention and
demurrage recommended by Commissioner Rebecca Dye.” That rule, a draft of which the FMC is slated to consider soon, would seek comment on whether common carriers and marine terminal operators should be required to include certain minimum information on, or with, demurrage and detention billings.

Legislation approved by the House of Representatives in December would further address this issue by, among other things, requiring carriers or MTOs to certify that detention and demurrage charges comply with federal regulations or face penalties. That bill could be incorporated into a broader competitiveness measure the House is expected to vote on soon.

Sandler, Travis & Rosenberg is offering clients the opportunity to participate in a grassroots advocacy campaign that will (1) advocate with the FMC to devise policies that will provide real benefits to traders, (2) lobby Congress to encourage legislation or regulation against exorbitant detention and demurrage fees, and (3) identify other solutions that ensure availability and access to instruments of international commerce, including shipping containers. For more information, please contact Ned Steiner at (202) 730-4970 or via email.

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