Federal Maritime Commission finally addresses detention & demurrage practice

Ocean cargo shippers have been telling us for some time now that marine terminal demurrage and carrier detention charges continue to be one of their major headaches. 

In an effort to bring clarity, access, and efficiency to the delivery of cargo from carrier to shipper, the Federal Maritime Commission (FMC) is finally addressing this issue. 

In its interim report for Fact Finding 28, the FMC has published the observations made by Commissioner Rebecca Dye on its ongoing investigation.

“Throughout this process, my priority has been how ocean carrier and marine terminal demurrage and detention approaches can optimize, not diminish, the performance of the overall American international freight delivery system,” said Commissioner Dye.

Over the past six months, Commissioner Dye has conducted scores of interviews with executives, managers, government officials, and policy experts with experience in, or specialized knowledge of, international ocean shipping and port operations. She also solicited submissions from shippers, consignees, and drayage providers.

As a concurrent part of the investigation, the Commissioner issued an information demand to ocean carriers and marine terminal operators (MTOs) which yielded extensive data related to demurrage and detention practices. These materials assisted Commissioner Dye in developing the preliminary observations contained in the report of her investigation.

Commissioner Dye advised the Commission that she has identified six areas to be developed:

• Transparent, standardized language for demurrage, detention, and free time practices;
• Clarity, simplification, and accessibility regarding demurrage and detention billing practices and dispute resolution processes; Explicit guidance regarding types of evidence relevant to resolving demurrage and detention disputes; Consistent notice to shippers of container availability;
• An optional billing model wherein MTOs bill shippers directly for demurrage; and VOCCs bill shippers for detention; and An FMC Shipper Advisory or Innovation Team.

“While Fact Finding 28 is an investigation, it also represents a unique opportunity for industry leaders to have their voices heard and their experiences recognized on an important policy and operational issue. I am grateful for the valuable contributions so many different parties from every sector of the industry made to this investigation. I look forward to continuing conversations with all industry leaders as we work to further develop the record and the above ideas.”

Peter Friedmann, executive director of the The Agriculture Transportation Coalition (AgTC) told LM in an interview that such a move was long overdue. 

“Our constituents have said time and time again that we are willing to pay carriers more competitive rates if they can deliver on their promises, and not add on charges this way,” he says. 

Commissioner Dye will speak publicly about the interim report at the Commission’s next meeting, scheduled to be held on September 19 at 10:00 a.m.