FMC issues report on detention, demurrage and free time
Fees are having “negative impact “on the fair, efficient and reliable movement of ocean cargo, according to a new report from the Federal Maritime Commission.
The Federal Maritime Commission has released a report on detention, demurrage and free time.
FMC Chairman Mario Cordero said the agency “has heard from many importers, exporters, and drayage trucking companies complaining about demurrage and detention charges that they must pay even though they cannot timely access their cargo or drop it off before free time expires.” Last year the FMC held forums on port congestion in Los Angeles, Baltimore, Charleston and New Orleans.
“Though the Commission has received anecdotal evidence, the industry is encouraged to submit substantive documentation and information of unreasonable practices regarding the application of demurrage or detention,” Cordero added.
Demurrage is a charge for the use of space at a terminal; detention is a charge for the use of equipment such as containers and chassis; and free time is the grace period for which neither of these charges will be incurred.
Commissioner William Doyle said FMC “has identified port congestion and the resulting costs in the form of demurrage and detention fees on the American shipping public as having a negative impact on the fair, efficient and reliable movement of oceanborne commerce to and from the United States.”Doyle suggested, “All stakeholders in the supply chain should read the report and actively engage with each other in the industry. I look forward to hearing from stakeholders with respect to their ideas for next steps now that this report has been made public.”
{Photo Source: Depositphotos.com/MrHamster}
He made a motion and voted in favor of publicly releasing the report during a closed meeting of the FMC on Monday.
Doyle said the FMC has fielded a number of complaints from importers, exporters and truckers related to the assessment of demurrage and detention charges by carriers and marine terminals.
The report reviews the published rules tariffs of six vessel-operating common carriers at 32 terminals across the United States, and reveals that average total prices for both demurrage and detention may be higher for importers than exporters, higher for demurrage than detention, and that both charges appear similar across all ports, except for New York/New Jersey, where they are much higher on average.
“It appears that VOCCs (vessel operating common carriers), rather than MTOs (marine terminal operators), generally control these prices and policies affecting importers and exporters directly. The demurrage and detention rates for the VOCCs whose tariffs were studied vary somewhat depending on port and terminal, but the terminology and application of charges with similar names are distinct across these VOCCs, making direct comparisons difficult.”
Doyle noted the charges are for “delays out of the control of importers, exporters and truckers and widely viewed by the affected parties as unfair.”
He said the report highlights the assessment of fees in connection with port congestion and the resulting increased costs for shippers and truckers, and details possible actions that carriers, terminal operators and port authorities can take to help minimize congestion and attendant demurrage and detention fees.
He said the report also “notes possible actions that beneficial cargo owners and truckers may take such as requesting informal mediation and administrative or court action.”
FMC could take a wide variety of actions, such as investigating whether there has been discrimination, unreasonable practices, or anti-competitive practices and possibly initiating an adjudicatory proceeding against a vessel carrier or terminal operator if found to be in violation of the Shipping Act.
The FMC also has the ability to order shipping lines to file reports related to their business or could require lines or terminal operators to submit additional data related to demurrage, detention, and free time issues involved in agreements filed with the FMC.
Doyle noted the public may file petitions with the FMC seeking relief or affirmative action by the Commission.
Commissioner William Doyle said FMC “has identified port congestion and the resulting costs in the form of demurrage and detention fees on the American shipping public as having a negative impact on the fair, efficient and reliable movement of oceanborne commerce to and from the United States.”