Trade Groups Ask FMC to Suspend Unfair Detention, Demurrage Fees
More than 40 trade groups urged the Federal Maritime Commission to suspend certain detention and demurrage charges they say are being unfairly imposed by ocean carriers and marine terminals, saying the charges violate guidelines issued by the FMC in May (see 2004290037). The groups said their members have paid more than $150 million in “unreasonable” fees at the ports of Los Angeles and Long Beach and the Port of New York and New Jersey due to “massive congestion created by record setting volumes” and a shortage of labor and available chassis.
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“We all know that the COVID-19 pandemic has created disruption throughout the supply chain,” the groups said in a Nov. 16 letter to FMC Chairman Michael Khouri and the FMC commissioners. “However, as the U.S. economy and companies continue to recover, they should not have to be worried about congestion and additional costs that will further impact their businesses and recovery efforts.”
The FMC’s rule on detention and demurrage charges “would have helped” if it was being followed, the groups added. “The lack of participation by the ocean carriers is glaring,” the letter said, “and the commercial and operational benefits they were afforded through the shipping alliances have created commercial and operational hardships for the rest of the supply-chain.” An FMC spokesperson declined to say whether the commission would consider suspending the fees. "If there are any developments related to this matter, updates will be provided at an appropriate time," the spokesperson said in a Nov. 17 email. An FMC commissioner recently said the commission plans to address non-compliance with its May rule (see 2011100053).
Aside from unfair fees, the trade associations said they are seeing “the biggest chassis shortage in the history” of the San Pedro Bay port complex. Ocean carriers have “refused to provide advanced notification of empty receiving locations” to allow truckers and terminals to partner in promoting more “dual-transactions,” which would allow chassis to be recycled during the pick-up and drop-off of containers. Chassis shortages are also becoming a problem at the Port of New York and New Jersey, the letter said, “where dwell times have nearly tripled in recent weeks.”
And because of skilled labor shortages, ocean carriers have not been able to evacuate empty containers from marine terminals to create space on their docks, the groups said. “Meanwhile, they have continued to unload loaded import containers creating congestion at the terminals,” the letter said. That has resulted in restrictions by marine terminals which are “further thwarting the ability to terminate empty containers or pickup imports during the allotted free time.”
The groups asked for a “short-term” suspension of detention and demurrage fees until these issues can be resolved. They also asked the FMC to “review and disallow carriers from filing or collecting any surcharges for congestion, trucking or equipment for moving in and through these ports until they have made a constructive action to remedy the problems.”