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FMC to Set New Rules on Demurrage and Detention Charges

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Published Sep 16, 2021 1:28 AM by The Maritime Executive

The Federal Maritime Commission has started a rulemaking process to set minimum standards for container demurrage and detention billing, a key area of friction for shippers and truckers. For more than a year, FMC has been investigating complaints of excessive and inappropriate charges related to the amount of time a shipper keeps a leased container, and it has promised to take action. 

FMC's staff will soon begin soliciting industry views on whether the commission should require ocean carriers and terminal operators to "include certain minimum information . . . and adhere to certain practices regarding the timing of demurrage and detention billing," the agency said in a statement Wednesday. 

"I believe that the Commission needs to provide clear and firm guidance on the assessment of demurrage and detention penalties in light of current levels of congestion, and growing shipping frustration. Additional clarity will also assist FMC enforcement of potential violations of the Shipping Act," said Commissioner Carl Bentzel in a statement. 

In a second initiative, the FMC said that it will issue a policy statement on the challenges that shippers and truckers face when they seek reparations for conduct that violates the U.S. Shipping Act, including carriers' actions related to demurrage and detention. The statement will cover the scope of the prohibition against carrier retaliation; when attorney fees may be imposed on the losing party in a case; and who may file a complaint with FMC over unreasonable charges. 

Both measures were proposed by Commissioner Rebecca Dye, who has been meeting with U.S. shippers and truckers for months to learn about their challenges. In a commission hearing in August, she also proposed asking Congress to amend the Shipping Act in order to make it easier for truckers, forwarders and shippers to file their own complaints against carriers and terminals. 

Dye noted that despite the frequent criticism of demurrage and detention practices, only a few companies have actually filed FMC complaints against carriers and terminals to seek reparations. For these stakeholders, she reports, the cost of litigation and the potential for commercial retaliation from the carrier often outweigh the benefits of winning a complaint proceeding. Importantly, current law forbids carrier retaliation against shippers, but it does not protect the truckers and agents who work on their behalf.