FMC to Seek Feedback on Detention, Demurrage Billing Regulations
The Federal Maritime Commission plans to request comments on the possibility of new demurrage and detention billing requirements, which would seek to address unfair charges and billing practices faced by shippers. In a pre-rule set to be published "soon," the FMC will request feedback on whether it should require carriers and terminal operators to include “certain minimum information” with their billings and whether they should be issued to shippers within a certain time frame.
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The proposed changes stem from Commissioner Rebecca Dye’s fact-finding mission that began in March 2020, sparked by a range of complaints from lawmakers and shippers that said ocean carriers have been unfairly imposing detention and demurrage fees (see 2011200024). Dye issued a set of recommendations in July 2021 to address fees and other problems in the international ocean freight delivery system that have been exacerbated by the COVID-19 pandemic (see 2107290021).
The pre-rule, which was released by the FMC this month but not yet published in the Federal Register, asks for public comments on a new set of rules to regulate the billing practices for fees imposed by common carriers and marine terminal operators. The FMC said the rules would broadly apply to “any charges'' assessed by carriers or terminal operators “related to the use of marine terminal space or shipping containers,” regardless of whether the charges are called “detention,” “demurrage” or “per diem.” The commission will request comments on whether the rules should apply to both vessel-operating common carriers and non-vessel-operating common carriers or should “differ based on the type of entity involved.”
One potential regulation could require demurrage and detention bills to contain certain minimum information. Although the FMC said the bills already include some required information, more may be needed to ensure the charges are accurate and clear. This could help all parties better understand whether the bill is “being issued to the correct party” or “identifying the appropriate time period for which demurrage and detention charges are being assessed,” the FMC said. It may also help provide more “concise” information in the event of a disputed bill, the commission said, and include information on how to access the dispute resolution process. “Requiring such information may ultimately lead to fewer disputed bills and therefore streamline the demurrage and detention billing process,” the FMC said.
The commission will request comments on the type of additional information that should be included in the bills, including how the charges are calculated. The FMC, for example, could require the bills to include “clear and concise container availability dates” for imports and earliest return dates and the availability of return locations and appointments for exports. It may also require the bills to include information on any “events” that would “justify stopping the clock on charges” -- such as lack of containers or return locations or other force majeure circumstances -- and information identifying all the parties receiving the bill, why the party receiving the bill is the “proper party-in-interest” and the source of the charge.
Another potential requirement could regulate the timing of detention and demurrage billings. The FMC said it received some complaints about a lack of “clearly defined timeframes” for the bills -- especially after it issued its May 2020 guidance on detention and demurrage practices -- and has “continued to receive anecdotal examples” of delays in receiving the bills, which can make it difficult for a shipper to “validate the accuracy of the charges.”
Under a new regulation, the FMC could require that all demurrage or detention bills be issued within 60 days of the charge, similar to the Uniform Intermodal Interchange Agreement, a standard industry contract between trucking companies and equipment providers. The FMC will seek feedback about whether that agreement is effective and whether it should impose a longer or shorter time frame.
The FMC will also seek comments on whether it should impose similar timing requirements on detention and demurrage fee refunds. The commission said it has heard refunds sometimes take “several months” to be issued.
The pre-rule, once published, will include a 30-day comment period. A spokesperson for the World Shipping Council, which represents many of the world's top ocean carriers, didn’t respond to a request for comment.