The Federal Maritime Commission is urging ocean carriers to rapidly adopt three common best practices as they work to comply with FMC rules on cargo container storage and use fees.
In May 2020 the FMC issued a rule setting forth a list of considerations it will use in assessing whether a detention or demurrage practice is unjust or unreasonable. 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. The FMC states that the underlying principle of this rule is that demurrage and detention incentivize cargo movement and equipment return.
In July the FMC established an audit program to analyze nine top carriers for compliance with this rule. The director of that program has now sent a letter to 25 container lines and the World Shipping Council urging them to take the following actions as initial measures to align their documents and policies with the goals of the rule.
- display detention and demurrage charges clearly and prominently on their website or customer portal
- develop and document clear internal processes on all matters related to detention and demurrage where they have not already done so
- clearly delineate dispute resolution procedures, contacts, and required documentation on their website and invoices
The FMC also notes that it recently voted to begin work on an advance notice of proposed rulemaking on detention and demurrage billing practices, which is expected to be published in the coming months. In addition, the FMC is moving to implement five of eight interim recommendations Commissioner Rebecca Dye made as a result of her work in a related agency investigation. The remaining three recommendations require action by Congress to change existing law.
Sandler, Travis & Rosenberg is offering clients the opportunity to participate in a grassroots advocacy campaign on this issue 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 on participating in this campaign, please contact Ned Steiner at (202) 730-4970 or via email.
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