The Federal Maritime Commission denied a request from a group of ocean carriers to delay its recently issued final rule on demurrage and detention billing requirements, saying the delay would impede orders from Congress and would lead to more confusion within the shipping industry.
Detention and demurrage
Demurrage is the time that filled containers spend inside a terminal when imported into the U.S. This is measured from the time they are offloaded from the vessel until the time they are picked up at the port. Detention is the time that containers spend outside the terminal. This is measured from the time between picking the containers up from the port and returning them to the port when they are empty. Demurrage and detention penalty charges will be incurred if an importer does not pick up the filled container or drop off the empty container in the time allotted by the port or carrier. The Federal Maritime Commission regulates detention and demurrage charges in the ocean environment.
The Federal Maritime Commission continues to consider a request to delay its new final rule on demurrage and detention billing requirements, said Rich Roche, who chairs the Non-Vessel Operating Common Carrier Subcommittee of the National Customs Brokers & Forwarders Association of America.
Shipping, trucking and freight forwarding associations urged the Federal Maritime Commission to reject a request from a group of major ocean carriers seeking to push back the effective date of the FMC’s new demurrage and detention billing requirements (see 2402230049), saying in public comments to the commission that the delay would cause widespread confusion within the shipping industry. But two of those groups said the FMC should at least consider giving the industry more time to adapt to the rules before punishing violators with fines.
The Federal Maritime Commission recently sent the shipping and freight forwarding industry guidance about the FMC’s February final rule that set new demurrage and detention billing requirements (see 2402230049). The six-page document, provided to us by the National Customs Brokers & Forwarders Association of America, includes 19 frequently asked questions and answers related to the rule, covering questions including timelines for disputing detention and demurrage invoices issued by ocean carriers and terminal operators, extended dwell fees assessed by U.S. ports and the definition of “billed party.”
The Federal Maritime Commission is considering whether to push back the effective date of a final rule it issued in February that set new demurrage and detention billing requirements (see 2402230049), it said in a notice released June 7. The commission said the Ocean Carrier Equipment Management Association asked it to extend the rule’s May 28 effective date “by at least 90 days or such longer period as may be deemed appropriate.” The FMC is accepting public comments by July 1 about whether it should delay the rule.
Detention and demurrage billings appear to have returned to pre-pandemic levels after spiking during the last few years, said Jason Guthrie, an official with the Federal Maritime Commission's Bureau of Trade Analysis.
The Federal Maritime Commission's recently issued final rule on detention and demurrage billing requirements was "silent" on some of the recommendations the National Shipping Advisory Committee has offered in recent months (see 2403070061), said Rich Roche, NSAC member and senior vice president at Mohawk Global.
Flexport violated U.S. shipping laws by charging unfair detention and demurrage fees and millions of dollars in other "accessorial charges" at unreasonable rates, U.S.-based Giti Tire said in a complaint filed with the Federal Maritime Commission May 16. It alleged Flexport's invoices lacked required information, were "excessive and unreasonable" and duplicated charges also invoiced to another party, leading to $12.7 million in damages.
Two provisions in a February final rule (see 2402230049) from the Federal Maritime Commission -- which set requirements for the information that will soon need to be reported in demurrage and detention invoices -- will take effect along with the rest of the final rule May 28, the commission said in a notice released this week. The FMC had been awaiting approval from the Office of Management and Budget for an information collection request "associated" with those two provisions, and the commission said it received that approval April 16. Those two provisions are: 46 CFR 541.6 and 541.99.
Flexport violated U.S. shipping laws when the logistics company failed to perform its "inland transportation obligations" and charged unfair detention and demurrage fees, Peloton said in a complaint filed with the Federal Maritime Commission May 3. Peloton said it paid "thousands" of improper detention and demurrage charges totaling "millions of dollars."