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FMC Monitoring Impact of New Guidance on Demurrage & Detention

The Federal Maritime Commission is closely monitoring the behavior of ocean carriers, ports, intermediaries and truckers with respect to its new guidance on how it will assess whether ocean carriers’ and marine terminal operators’ demurrage and detention practices are reasonable.

FMC Chairman Michael Khouri said they want to determine if the interpretative rule is having the intended effect to incentivize the movement of cargo and promote freight fluidity. He believes the interpretative rule is already having a positive impact on the imposition of demurrage and detention fees.

“We have some anecdotal evidence by way of CADRS (Consumer Affairs and Dispute Resolution Services) complaint resolution processes that marine terminals and vessel operators — when presented with the new rules as a defense to detention-demurrage charges — are reducing or even canceling charges in certain fact situations,” he said.

Khouri attended the National Customs Brokers and Forwarders Association of America (NCBFAA) Government Affairs Conference on Sept. 14. Representatives from the nation's leading customs brokers, freight forwarders, NVOCCs, OTIs and service attended the virtual event.

“If you have examples where the interpretive rule has made a difference, we would be happy to hear about it,” Khouri added. “If you have examples of where carriers or terminals are not in compliance with the interpretive rule, we need to hear that as well.”

Before COVID-19, forwarders and consolidators have long been concerned over the imposition of demurrage and detention fees by ocean carriers and marine terminal operators due to supply chain disruptions not of their making. The daily fees reportedly range from $150 to $350 per container.

They continue to worry about these charges now that freight volumes are increasing to the U.S. West Coast ports. They feel that imposing these demurrage and detention fees for reasons out of their control is unfair. 

Demurrage pertains to the time an import container sits in a container terminal, with carriers responsible for collecting penalties on behalf of the marine terminals. Detention relates to shippers holding containers for too long outside the marine terminals.

The FMC finalized new guidance in April. The container availability rulemaking process was initiated by the FMC last fall following approval of recommendations made by Commissioner Rebecca Dye.

(Photo: U.S. Federal Maritime Commission)

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