The Federal Maritime Commission's (FMC) Final Rule on Detention and Demurrage Billing Requirements, effective May 28, 2024, mandates significant adjustments in how ocean carriers and terminal operators handle demurrage billing.
To ensure compliance and maintain seamless operations, Atlantic Pacific Tariffs, Inc., the 5th largest tariff publisher for NVOCCs in the world, compiled a detailed guide tailored for Non-Vessel Operating Common Carriers (NVOCCs) and Vessel Operating Common Carriers (VOCCs):
Immediate Steps for Compliance:
1. Review Current Billing Processes:
- Assess your existing billing procedures to comport with the new FMC requirements.
- Identify gaps, especially in to whom invoices are issued.
2. Update Contractual Agreements:
- If you are an NVOCC, ensure that your NRAs or NSAs with shippers specify that demurrage and detention charges will be treated as pass-through charges unless you opt to publish your own charges as set forth in your governing tariff.
- If you are a VOCC, ensure your service contracts with shippers specify responsibilities for demurrage and detention charges are in sync with the new rule.
- Clarify invoicing parties to avoid conflicts.
3. Train Your Staff:
- Conduct training sessions for your billing and customer service teams on the new requirements.
- Focus on the importance of timely invoicing and the specifics that need to be included in each invoice.
- AP Tariffs offers customers free training sessions. Please click here to schedule a follow-up meeting to discuss how these changes will impact your NVOCC operations.
4. Implement a Dispute Resolution Process:
- Establish a clear process for handling disputes regarding demurrage and detention charges.
- Ensure this process allows for resolution within the 30-day timeframe mandated by the FMC.
Timeline and Specific Actions:
Before May 28, 2024:
- Complete internal reviews and training.
- Update all contracts and service agreements to reflect the new invoicing requirements.
By May 28, 2024:
- Fully integrate the new billing and dispute resolution processes into your operations.
- Communicate changes to your shippers, consignees, and truckers, emphasizing the importance of the 30-day dispute window.
For NVOCCs Specifically:
- Understand Your Position: As both a billed and billing party, NVOCCs have an extended 30-day period, on top of the initial 30 days, to dispute charges with VOCCs. This takes into account the role intermediaries as NVOCCs play.
- Coordinate with VOCCs: Establish clear communication channels with VOCCs from whom you receive invoices. This will ensure you can manage disputes effectively within the extended timeline should your client dispute an invoice for demurrage and/or detention charges.
For VOCCs Specifically:
- Clarity in Invoicing: As primary carriers, VOCCs must ensure invoices are issued directly to the party responsible for the charge, either the shipper or the consignee, based on the contractual agreement.
- Timely Communication: VOCCs are required to issue invoices within the 30-day period post-charge accrual to comply with the FMC regulations.
Ongoing Compliance:
- Monitor and Adjust: Regularly review your billing and dispute processes to ensure they comply with FMC regulations.
- Stay Informed: Keep abreast of any further regulatory changes by the FMC that may affect detention and demurrage billing practices.
Adhering to these guidelines will ensure compliance with the FMC's final rule and foster a more transparent, efficient, and equitable operational environment for NVOCCs, VOCCs, and their clients.
Remember, a proactive approach to compliance can significantly reduce the risk of disputes and strengthen your relationships within the industry.
Contact Us Now!
AP Tariffs is your best partner in the business, ensuring you stay on top of the FMC rules and regulations. Email us at info@aptariffs.com or schedule a free consultation (Spanish, Mandarin and Korean languages also available).
