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Regulators ask for evidence of unreasonable demurrage, detention fees

14 Apr 2015 10:10 AM | Anonymous member (Administrator)

By:Joseph Bonney, Posted from JOC

A U.S. Federal Maritime Commission report on port congestion impact on demurrage and detention fees stopped short of recommending agency action and invited the industry to provide evidence of allegedly unreasonable practices.

“I am hopeful that the report becomes a discussion paper among industry stakeholders and helps stimulate solutions to problems that have arisen as a result of severe port congestion experienced in the last year,” said FMC Chairman Mario Cordero.

The 64-page report, available at fmc.gov, described demurrage, which is charged for storage of containers on terminal space beyond allowable free time, and detention fees levied by carriers for late return of containers.

The report listed actions that affected parties can take to mitigate problems, and discussed actions the commission has the authority to take.

The commission said it “has made no determinations with respect to the application of demurrage and detention, or about the courses of action that it may take. The commission has a variety of actions that could be used to address issues provided there is a sufficient factual basis to support the action.”

The FMC report followed four regional forums the commission hosted last year, and continuing complaints by shippers and truckers who say they’ve been hit with fees for unavoidable late pickup or delivery of containers at congested ports.

Commissioners voted during a closed session to release the report. The vote was said to be 3-2, with Cordero, Richard Lidinsky and William Doyle voting in favor and Rebecca Dye and Michael Khoury opposed. The commission voted to release the transcript of the meeting related to the staff report when it becomes available.

Doyle said the report is the first in a series of planned commission reports entitled “Rules, Rates, and Practices Relating to Detention, Demurrage,and Free Time for Containerized Imports and Exports Moving Through Selected United States Ports.”

Cordero and other commissioners have identified port congestion issues as a top concern under the commission’s Shipping Act mandate to provide a fair, efficient and economic ocean transportation system.

The FMC chairman invited the industry to provide the commission with information on any allegedly unreasonable practices.

“Though the commission has received anecdotal evidence, the industry is encouraged to submit substantive documentation and information of unreasonable practices regarding the application of demurrage and detention,” Cordero said. “The documentation could include information related to those who pay the charges or those who impose the charges.

“In addition, industry stakeholders are reminded that they may file complaints for adjudication at the commission that involve alleged violations of the Shipping Act,” Cordero said.

Doyle urged industry stakeholders to read the report, and to share their comments. “All stakeholders in the supply chain should read the report and actively engage with each other in the industry,” he said in a statement.

Most of the FMC report is devoted to a factual explanation of demurrage, detention and free time. An appendix to the report compares demurrage and detention charges among ports and carriers. Fees generally were highest in the Port of New York and New Jersey, the report noted.

The report details possible ways vessel operators, terminal operators and port authorities to minimize congestion and resulting demurrage and detention fees.

It also outlines actions that cargo owners and truckers may take, such as requesting informal mediation and administrative or court action.

The report also identifies possible actions the commission can take to gather information and examine and address concerns related to free time, detention and demurrage practices. Those include fact-finding investigations, some of which could lead to adjudicatory proceedings against vessel operators or terminals.

Other possible commission actions could include demands for reports by vessel operators under Section 15 of the shipping act, action on petitions for relief from allegedly unfair practices, creation of an industry advisory committee,asking for  recommendations from the commission ombudsman, and proposed rulemaking to address practices that the commission has determined violate the shipping act.

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