Background

Shippers could get another tool to combat high shipping fees under regulations being considered by the Federal Maritime Commission. FMC Chairman Dan Maffei said recently that the Commission “must not let up one bit” in enforcing current rules and developing new ones to address unreasonable detention and demurrage fees being charged amid ongoing supply chain snarls.

The FMC notes that demurrage and detention charges have substantially increased for a variety of reasons as rising cargo volumes have increasingly put pressure on carrier, port, and terminal performance. These charges are primarily designed to incentivize the movement of cargo, but the FMC has continued to receive complaints that they are being assessed unreasonably.

To help ensure that shippers clearly understand these charges, including “what is being billed by whom,” the FMC is seeking comments by March 17 on whether it should require common carriers and marine terminal operators to include certain minimum information on or with demurrage and detention billings and what information that should be. Examples include (1) shipment identification (bill of lading number, container number, etc.,), (2) how the charges are calculated (e.g., clear and concise container availability dates and vessel arrival dates for imports, or earliest return dates for exports), (3) events that would justify stopping the clock on charges (container unavailability, lack of return locations, etc.), (4) the source and reason for the charges (e.g., by tariff, service contract, or MTO schedule) and (5) all parties receiving the bill and why the receiving party is liable for the charges.

(For purposes of this rulemaking the FMC is defining “demurrage and detention” broadly to include any charges assessed by carriers and MTOs related to the use of marine terminal space or shipping containers, regardless of what they may be called in practice.)

The FMC is also considering requiring carriers and MTOs to issue demurrage or detention bills within 60 days of the occurrence of the charge and is inviting comments on whether a longer or shorter timeline would be appropriate. Similar timing requirements may be considered on the issuance of refunds.

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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