Detention and demurrage disruptions are causing devastating damage to U.S. intermodal carriers and are placing large burdens on the shipping and transportation industry, the Harbor Trucking Association said in a new report. The association, which represents U.S. drayage carriers serving West Coast ports, and TradeLanes, a technology company focused on streamlining global commodity trade, surveyed HTA members and found that more than half reported critical negative effects on their business from the detention and demurrage costs. Detention and demurrage is common in the industry as well, with 64% of respondents saying that they incur them on more than 15% of their containers with the average price around $200 per container. Once the charges are levied, governmental relief is rarely given, with 80% of respondents saying they got charges reduced 0-25% of the time. The charges cost more than money, evidenced by the majority of respondents saying the invoices take at least 45 minutes to complete.

CMA CGM, American President Lines, APL, and ANL Singapore are asking the Federal Maritime Commission for permission to retroactively apply service contract rates and terms to shipments received on or after Sept. 27 for a period of 60 days (see 2010090022). Their petition also is asking for the ability to retroactively apply tariff rates communicated to its customers but that have not been published because of “major system impacts due to the recent cyber-attack.” The FMC is asking for public comments on this request through Oct. 15.

The Federal Aviation Administration on April 15 issued recommendations for air carriers transporting cargo in passenger aircraft. While current regulations allow transportation of cargo in passenger cabins, it is “an extraordinary situation, however” for the “entire passenger cabin to be loaded with cargo,” the FAA said. The safety alert includes recommendations for both putting cargo in passenger seats, and for on the floor of the passenger cabin with the passenger seats removed.

The Federal Maritime Commission is using newly formed Supply Chain Innovation Teams to look into potential agency actions to reduce supply chain slowdowns related to the COVID-19 pandemic, the FMC said in an April 6 news release. Commissioner Rebecca Dye, who is overseeing the effort, and the teams will “begin work this week to identify what actions can provide immediate relief to the most pressing challenges the American freight delivery system faces from COVID-19 related disruptions,” it said. The information provided by team members about possible FMC actions “will dictate the scope and priorities of the Teams’ work,” it said. Dye said the teams “are committed to minimizing disruptions to the Nation’s cargo delivery system and will be prepared to offer practical solutions about what must be done to promote the competitive advantage of our supply chain networks,” The teams are an offshoot of the FMC's investigation into detention and demurrage fees that resulted in a proposed interpretive rule (see 2003170058).

The Federal Maritime Commission should quickly adopt its proposed interpretive rule for addressing detention and demurrage charges (see 1909130026), trade associations said in a March 16 letter to the FMC. “With ongoing challenges posed by the coronavirus, there is real concern about these fees being assessed when there are equipment issues beyond the control of the shipper or motor carrier,” the groups said. “Thus, these fees appear to be punitive measures by the ocean carriers, not an incentive to expedite container flow.”

Hapag-Lloyd will require a minimum of four digits on Harmonized System codes to accompany U.S. and Canadian exports as of April 1, the carrier said in a notice. “To ensure high quality, faster Bill of Lading release and due to the increasing customs requirements of different countries throughout the world,” the company will require at least four digits “on your submission of Shipping Instructions for exports from Canada or the United States,” it said. When that information isn't available, “our documentation team will input an HS code that is determined to be suitably close to your commodity description,” it said. “It is your responsibility to review the inputted HS Code and advise if a correction is needed. Any costs, penalties or fines related to incorrect HS Code submission will be on customers account.”

A recent Federal Maritime Commission proposed rule would lead to a much fairer enforcement process for alleged violations of the Shipping Act, the National Customs Brokers & Forwarders Association of America said in comments submitted to the agency. The proposal would create a process for notifying a target of an investigation and allowing it to respond, and ensure that FMC commissioners see the target’s statement before deciding how to proceed. “As the members of the Commission would necessarily be involved at the outset, it seems more likely that potential enforcement cases would focus on issues that have a material adverse effect on trade or competition and minimize the initiation of cases that are based on relatively minor or technical infringements of regulations,” the NCBFAA said. The proposal would also make it “less likely that there would be an anecdotal approach to enforcement where only [the Bureau of Enforcement] and a respondent know what the issues in any prosecution actually involved.” But FMC should go beyond its proposal and create penalty and mitigation guidelines for Shipping Act violations, the trade group said.

S&P Global Ratings is “fairly confident” that tech manufacturers Flex and Jabil “could manage their metrics to preserve” their current “BBB-“ ratings if the List 4 Section 301 tariffs stay at 15 percent, the financial analytics firm said Sept. 13. But in a 30 percent tariff “scenario,” as the first three tariff rounds are scheduled to rise to Oct. 15, the potential EBITDA declines “could prove to be too severe” for either company to avoid a ratings downgrade, S&P said. "Flex and Jabil could be the canaries in the coal mine when it comes to the effects of another round of tariffs on the technology hardware sector," S&P said in a news release. Before any downgrade, “we would consider each company's tariff mitigation and balance sheet management strategies,” it said. “If we believed credit metrics were likely to exceed our downgrade thresholds over a 24 month period, we could lower the ratings.” It estimates that goods representing 6 percent to 9 percent of Flex's revenues and 12 percent to 17 percent of Jabil's sales will have exposure to the four rounds of tariffs, it said. “Neither company discloses these figures so we estimated them based on a review of revenue by geography for each of the customers they name in their annual reports,” it said. Jabil’s largest customer, Apple, draws 37 percent of its revenue from U.S. sales, it said. For Flex, the largest customer is Ford, which draws 61 percent of revenue from the U.S., it said. In fiscal 2019 ended March 31, 25 percent of Flex revenue came from manufacturing operations in China, it said. It estimates that Jabil derives 40 percent to 50 percent of its revenue from Chinese production, it said. Flex and Jabil didn’t comment.

The Federal Maritime Commission will likely publish next week a notice in the Federal Register seeking comment on an interpretive rule that is meant to help address issues with detention and demurrage charges, an FMC spokesman said. The agency announced on Sept. 6 that the FMC adopted recommendations from Commissioner Rebecca Dye, one of which includes publishing "an interpretive rule that clarifies how the Commission will assess the reasonableness of detention and demurrage practices." Interpretive rules differ from other regulations in that they don't require a notice and comment period, though the FMC has chosen to go through one, and aren't considered to have the force of law.

The Federal Maritime Commission will seek comments on a proposal to "prevent ocean carriers and marine terminals from imposing free-time (detention, demurrage, per diem) charges when the container cannot be picked up from, or returned to, the terminal through no fault of the shipper/trucker," the Agriculture Transportation Coalition said in a Sept. 6 email. The FMC didn't comment. The trade group said carriers have made such penalties "a major cost for importers and exporters and their truckers, often threatening to lock out truckers who don't immediately pay, and making shippers' protest/challenges extremely difficult."