New California Law to Set Significant Limits on D&D Fees, Law Firm Says
A recently signed California law will “significantly” limit the ability of marine container providers or terminals to impose detention and demurrage charges, law firm Cozen O’Connor said in an alert this month. The law, effective Jan. 1, outlines 10 situations in which container providers will not be able to begin or continue free time or impose fees on motor carriers and cargo owners “due to circumstances ostensibly beyond those parties’ control,” the firm said.
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Those circumstances include cases in which the container provider diverts equipment from the original location without 48 hours' notice to the carrier, when a loaded container can’t be picked up when a carrier arrives at the terminal, and when ​the terminal is “too congested to accept a container and turns the motor carrier away," the firm said. The bill also covers situations in which a carrier “documents unsuccessful attempts to make appointments for loaded or empty container transactions” and when a container’s delivery or return is delayed because of “date changes for the booked vessel.” A catch-all provision in the bill would also prohibit detention and demurrage charges from being imposed if “the return or retrieval of equipment ‘is within the scope of responsibility of the carrier … and beyond the control of the invoiced or contracting party,’” the firm said.
The law was passed as the Federal Maritime Commission considers its own set of changes to fee practices and how it assesses unfair shipping conduct. The commission this month proposed new detention and demurrage billing requirements (see 2210070079) and has sought public comments on the set of factors it should consider when determining whether an ocean carrier is violating shipping regulations by refusing vessel space (see 2209130040).
Because of the “continued, significant emphasis on D&D by both California and the FMC,” container providers and terminal operators should review their current practices to make sure they can comply with any regulatory changes, both in California and those mandated by the Ocean Shipping Reform Act, Cozen O’Connor said. They should also closely monitor whether FMC announcements pose “any potential conflicting” requirements with California laws.