FMC Releases Demurrage and Detention Proposal

Have you or your customers been impacted by container demurrage?  If so, please send to your comments to IWLA’s Washington Representative Pat O’Connor at poconnor@iwla.com.

On September 13, 2019, the Federal Maritime Commission (FMC) proposed an interpretive rule that provides important guidance on when marine terminal and ocean carrier demurrage and detention rules and practices for containerized cargo may be found to be unlawful.

The proposed rule is the result of a nationwide fact-finding investigation initiated by the FMC in response to an industry petition filed by the Coalition for Fair Port Practices, a group of trade associations representing importers and exporters, draymen, freight forwarders, and customs brokers. In the petition, the Coalition identified concerns about a lack of clear demurrage and detention policies, the assessment of charges when delays are beyond the shipper’s or drayman’s control, poor communication regarding container availability, and inadequate processes for disputing demurrage and detention charges.

Under the proposed rule, the Commission will assess the reasonableness of demurrage and detention rules and practices based on how well they promote the movement of freight.

The proposed rule also contains a non-exhaustive list of factors the Commission will consider when evaluating whether demurrage and detention practices adequately incentivize cargo movement in the context of specific fact involved in a case filed with the agency:

  • Cargo availability. The rule indicates that demurrage is likely unreasonable if it applies when cargo is not actually available for pickup during free time, such as when cargo is held in a closed area of the terminal or when pickup appointments are unavailable within a reasonable time.
  • Empty container return. The rule indicates that detention is likely unreasonable if it applies when empty containers cannot be returned, such as when a marine terminal refuses to accept them or when there is a failure to communicate a change in the container return location.
  • Notice of cargo availability. The rule indicates that demurrage is likely to be unreasonable to the extent cargo interests are not provided adequate notice that the cargo is available for pickup. When evaluating whom the notice is provided, the notice’s format and method of distribution, the notice’s timing, and the notice’s effect. For example, reasonableness would be favored where free time does not start until notice of availability is provided, terminals provide push notifications related to cargo availability and yard closures, and pickup appointments are guaranteed to be available within a certain period after providing notice of container availability.

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