FMC Orders Carriers and Terminals to Submit Information on D&D Fees

The Federal Maritime Commission announced that it is beginning a new investigation and potential enforcement effort looking at the practices of the ocean carriers and marine terminal operators.  The FMC issued information demand orders on the detention and demurrage practices and how it relates to returns and container availability for exporters.

The effort comes as part of Commission Rebecca Dye’s Fact Finding 29 which began last spring exploring how the pandemic was impacting the global supply chain. In November 2020, the Fact Finding was expanded. At the time, Commissioner Dye said, “The time has come to resolve the most serious impediments to port performance.” Focusing on the “extreme conditions in the Ports of Los Angeles, Long Beach, and New York/New Jersey,” Dye noted that as Fact Finding Officer, she had all enforcement options to address the crisis that exists in the major port gateways. 

“The Commission is concerned that certain practices of ocean carriers and their marine terminals may be amplifying the negative effect of bottlenecks at these ports and may be contrary to provisions in the Shipping Act of 1984,” said Dye in November 2020. “The 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 present a serious risk to the ability of the United States to handle trade growth.”

The primary purpose of the Fact Finding was to identify operational solutions to cargo delivery system challenges related to recent global events. The FMC issued guidelines for detention and demurrage last year that said fees should not be charged when the shipper or trucker when they do not have control over the movement of return of the container.

Since then, the backlog has continued to grow at the major U.S. ports, and as the carriers rush to return containers to Asia to meet the surge in demand, many U.S. exports have begun to complain over the lack of containers and charges.

The new order again targets ocean carriers operating in an alliance and calling the Port of Los Angeles, the Port of Long Beach, or the Port of New York & New Jersey.  Marine terminal operators at those ports will also be subject to information demands. The demand orders will also require carriers and terminals to provide information on their detention and demurrage policies and practices related to container returns and container availability for exporters.

Commissioner Dye reportedly will be using the responses from the ocean carriers and marine terminal operators to determine if they are meeting their legal obligations.

“Failure of carriers and MTOs to operate in a way consistent with the Interpretive Rule on Detention and Demurrage that became effective on May 18, 2020, might constitute a violation to the rules which prohibits unjust and unreasonable practices and regulations related to, or connected with, receiving, handling, storing, or delivering property.

Information received in response to the new order the FMC said may be used as a basis for hearings, enforcement action, or further rulemaking.