US detention-demurrage probe's initial focus is carriers, terminals

US detention-demurrage probe's initial focus is carriers, terminals

Investigators in the inquiry, led by Commissioner Rebecca Dye, have directed carriers to provide detailed information about their detention and demurrage practices; the same is being sought from marine terminal operators. Photo credit: Shutterstock.com.

The Federal Maritime Commission (FMC) is focusing on ocean common carriers and marine terminals in the first stage of its investigation into port demurrage, detention, and free time, and has asked them to provide information and documents explaining those practices.

Investigators in the inquiry, led by Commissioner Rebecca Dye, have directed carriers to “provide detailed information about their detention and demurrage practices, especially regarding circumstances where shippers are not able to retrieve cargo.” The top maritime regulatory agency said an effort seeking the same from marine terminal operators (MTOs) is also under way.

"The ultimate resolution of this investigation will have the potential to affect every ocean common carrier calling the United States,” Dye said in a statement. “It is vital that the information we gather is representative of business and operational practices, as well as market conditions, nationally."

The information requests are the first steps in a fact-finding mission that grew out of commission hearings in January triggered by concerns expressed by the Coalition for Fair Port Practices, a group of 26 organizations. The coalition petitioned the federal agency to establish guidelines to discourage ocean carriers and MTOs from charging hundreds of thousands of dollars when the delay in picking up or dropping off the container was out of shippers’ control.

Ocean carriers and MTOs, though, told commissioners that they resolve shipper disputes on a case-by-case basis, but also absorb real costs when containers remain untouched in a container yard. They also lose potential business opportunities when boxes are stuck in the supply chain, the opposition argued.

Shippers, truckers say they pay for situations outside their control

Shippers and truckers at the hearings described situations in which, they said, they were forced to pay “exorbitant fees” when their containers were inaccessible because of weather emergencies, a lack of appointment windows within the allotted free time, or federal inspections. Some shippers also accused terminals of using detention and demurrage as revenue generators, rather than a way to spur the timely removal of cargo and return of equipment.

The commission voted unanimously on March 6 to investigate the claims, naming Dye to head the probe, which will deliver an interim report on Sept. 2 and final report Dec. 2.

"Collectively, these reports of demurrage practices and the lack of visibility surrounding those practices have raised questions over whether the current practices allow for a competition and reliable American freight delivery system,” the commission concluded in the order enacting an investigation.

The issues to be investigated by the commission include whether the alignment of commercial, contractual, and cargo interests enhances or aggravates the ability of cargo to move efficiently through US ports, and how that situation is handled in other countries.

Another issue the commission will look at is at what point the carrier or terminal tenders cargo to the shipper, and what impediments to pickup there are. Other issues include: billing practices for invoicing demurrage or detention; how cargo delays are handled and when are demurrage or detention charges waived; and how detention and demurrage disputes are resolved.

Dye said testimony from shippers, dray truck companies, and other affected parties that documents “specific allegations and provide supporting materials of unreasonable port detention and demurrage practices and fees” will be key to the investigation. The FMC said it has set up an email account — FF28@FMC.gov — where they can send “correspondence, allegations, and supporting documents.”

"We expect concerned parties to participate robustly in this investigation. Their cooperation is essential," Dye said.

Contact Hugh R. Morley at Hugh.Morley@ihsmarkit.com and follow him on Twitter: @HughRMorley_JOC.

Comments

let's not forget exporters here, the steamship lines have made export documentation a profit center. documents cut off is 2-3 days before the physical container cut off. this forces exporters to submit "fake docs" and then revise them with "correction fees". god forbid they claim they didn't get them on time, then you have demurrage and per diem ( which can add up to thousands real quick and 5-10 times the daily amount then what they collect on ocean freight ). every carrier different on these practices and a few are out of control and deserve a deep dive by the FMC. nothing in life is free and there are some legit reasons for "the way it is", when there is abuse, and there are some bad actors, the BCO need to be heard.

let's not forget exporters here, the steamship lines have made export documentation a profit center. documents cut off is 2-3 days before the physical container cut off. this forces exporters to submit "fake docs" and then revise them with "correction fees". god forbid they claim they didn't get them on time, then you have demurrage and per diem ( which can add up to thousands real quick and 5-10 times the daily amount then what they collect on ocean freight ). every carrier different on these practices and a few are out of control and deserve a deep dive by the FMC. nothing in life is free and there are some legit reasons for "the way it is", when there is abuse, and there are some bad actors, the BCO need to be heard.