US Senate leader presses FMC on detention-demurrage

US Senate leader presses FMC on detention-demurrage

Nearly a year after a large group of shippers lobbied for detention and demurrage relief, the FMC has yet to address the matter.

WASHINGTON — John Thune, chairman of the US Senate Commerce Committee and the third-ranking Senate Republican, is urging federal maritime regulators to deliver a decision on whether demurrage and detention fees can be considered unreasonable and therefore void.

In a written response Wednesday, the Federal Maritime Commission (FMC) told the senator it is expected to be briefed on the matter at its upcoming Sept. 20 meeting, but the briefing will be in closed session and no immediate action is expected, according to FMC officials.

Acting FMC Chairman Michael Khouri has maintained since the start of the year, when a coalition of shippers first petitioned the commission for guidance, that the commission has more pressing priorities than clarifying its stance on the fees container lines and terminal operators can charge when uncontrollable forces make it impossible to pick up or return containers and chassis on time.

The FMC’s position is a priority, though, for those beneficial cargo owners who have complained they are forced to spend millions of dollars in fees due to uncontrollable and unforeseen circumstances such as labor delays and severe weather. Carriers and marine terminals, however, have stressed that switching the financial burden to their shoulders is not a viable commercial solution and doing so would make them de facto insurers.

In a letter to the FMC Tuesday, Thune abstained from choosing sides. Instead, the chairman of the Senate’s Committee on Commerce, Science, and Transportation simply pressed the FMC to make a final decision.

“It is my understanding that the commission is still formulating its plans for further action,” the Republican senator from South Dakota wrote. “Given the issues raised in the unusually high number of comments on this petition, it is important that the commission prioritize this issue and determine whether any further action is needed.”

According to the FMC’s website, there are now more than 100 comments from across the nation. “The overwhelming number of comments from companies and industry groups supported the petition moving forward,” according to Jon Gold, vice president of supply chain at the National Retail Federation, whose group has taken lead of a broad cross-section of shippers, truckers, and transportation intermediaries backing the petition.

“They assert that such charges have implications for one of the commission’s critical responsibilities — to ensure a common carrier or marine terminal operator does not fail to establish, observe, and enforce just and reasonable regulations and practices when receiving, handling, storing, or delivering property,” Thune wrote to the FMC.

According to Gold, “The agency itself identified this as a significant issue as it evaluated the ongoing port congestion issues over the past several years.”

But it has been nine months since the petition was filed and there is still no guidance or clarity as to where the FMC stands. Officials with the commission were not available for comment Wednesday.

The senator argued that on those merits the shippers’ petition warrants the commission prioritize the issue, analyze the submitted comments, engage with stakeholders, and consider taking actual action to resolve the ongoing debate.

Thune’s letter was applauded by a number of the shipper groups that have pushed the petition, including the Agriculture Transportation Coalition (AgTC), a group representing roughly 2,000 shippers.

“The AgTC hopes that the FMC will take heed of Chairman John Thune’s clear message, and initiate action,” the group said in a statement. “Such action could address the millions of dollars of unfair charges imposed on exporters, importers, and their truckers by some ocean carriers, and could prevent continuing abuse by these ocean carriers.”

There is a vocal and well-heeled contingent demanding the FMC take no action at all.

The World Shipping Council (WSC) in particular, whose carrier members control 90 percent of global container capacity, has challenged many of the assertions made in the shipper coalition’s petition. John Butler, WSC president and CEO, has said carriers and terminals should not bear all costs of port delays, as it would place them “in the role of insurance providers against adverse weather events, labor disruptions, and delayed government inspection of containers.”

The WSC’s compatriots at the National Association of Waterfront Employers have agreed, adding that “unique episodic conditions do not justify a blanket, broad-brush policy on demurrage charges.”

FMC staff is slated to brief the commission on the matter at its upcoming Sept. 20 meeting, but FMC officials could not guarantee any guidance would be delivered.

Contact Reynolds Hutchins at reynolds.hutchins@ihsmarkit.com and follow him on Twitter: @Hutchins_JOC.