FMC Expands Investigation on Detention and Demurrage Charges
Photo courtesy of Port of Los Angeles.
Detention and demurrage charges are getting out of hand as the chronic congestion problem in the ports of Los Angeles and Long Beach, and New York and New Jersey has worsened.
California Trucking Association (CTA), Harbour Trucking Association (HTA) and 50 other partner coalitions called on the Federal Maritime Commission to suspend the "unreasonable detention and demurrage penalties". (Coalition Letter to FMC)
Weston LaBar, CEO of the Harbor Trucking Association, relates that collectively their members have paid out over $100 million resultant from ocean carrier inefficiencies.
In response, the FMC approved a Supplemental Order that expands the authority of Fact Finding 29, “International Ocean Transportation Supply Chain Engagement”.
The Supplemental Order authorizes Commissioner Rebecca F. Dye, as the designated Fact Finding Officer, to investigate ocean carriers operating in alliances and calling the Port of Long Beach, the Port of Los Angeles, or the Port of New York and New Jersey.
The expanded Commission investigation will seek to determine if the policies and practices of those shipping companies related to detention and demurrage, container return, and container availability for U.S. export cargoes violate 46 U.S.C. 41102(c). Commissioner Dye said the FMC is concerned that certain potentially unreasonable practices of carriers and marine terminals regarding container return, export containers, and demurrage and detention charges in the Ports of Los Angeles, Long Beach, and New York/New Jersey "may be amplifying the negative effect of bottlenecks at these ports and may be contrary to provisions in the Shipping Act of 1984." Mr. LaBar noted that the detention fees were established to encourage the efficient flow of cargo. "Despite the motor carrier’s herculean effort to pick up and drop off loads to terminals, we are still blocked due to ocean carrier efficiencies. There is no reason the American trucker and shipper should pay for problems a foreign-owned carrier is creating." Maersk, a global integrator of container logistics, issued a press release that it is actively working with HTA whose membership of 15,000+ truck drivers performs the important role of harbor trucking from ports to warehouses and distribution centers – essential to supply chain success. Narin Phol, Maersk North America’s Regional Managing Director said “We are working closely with the HTA and our customers to manage through this peak season efficiently. Every week brings new volumes, new challenges and opportunities so it is essential we collaborate effectively with our HTA partners. We are exploring short-term and long-term solutions with all our key stakeholders to address the situation.” Port of Los Angeles Executive Director Gene Seroka, in a report by FreightWaves, acknowledged the severity of the container and chassis congestion and that is why he has been advocating for a comprehensive digitization strategy throughout the complex for many years. "We need to use real-time data to make smart decisions." “Demurrage and detention are not meant...to be weaponized,” Seroka told FreightWaves. He pointed out that the port is not a storage facility, but a transit center. “Exceptions have to be made and that’s up to the marine terminal operator, the liner shipping company. If the container is not accessible to the trucker for whatever reason, and especially in times of surge cargo like this, exceptions should be made."