In recent years, importers and exporters have complained that ocean transportation providers have been unfairly assessing millions in fees when the providers or port congestion prevent the timely pick up or return of cargo containers at U.S. ports. Recent proposed guidance from the Federal Maritime Commission may help importers and exports avoid being unfairly assessed these fees.
On September 13, 2019, the Federal Maritime Commission proposed an interpretive rule clarifying that demurrage and detention rules and practices are less likely to be reasonable the less they incentivize the movement of freight. Demurrage and detention refers to the practice of assessing charges when a freight container occupies space at a port or terminal beyond a certain period or has not been returned to a port or terminal within a certain period, respectively. Historically, the purpose of these charges has been to incentivize cargo movement and the productive use of freight containers and port or terminal property. The Commission seeks comments on the proposed rule, which are due by October 31, 2019.
Based on the guidance in the proposed rule, demurrage and detention charges that apply when a container is not actually available for pickup during free time, an empty container cannot be timely returned because the marine terminal refuses it or the return location is changed without sufficient notice, or a cargo interest has not been given adequate notice of cargo availability are likely unreasonable. Additionally, demurrage and detention practices would likely be unreasonable under the rule if the policies implementing them are inaccessible, do not clearly convey dispute resolution procedures, or do not use transparent terminology.
The proposed rule is the result of a nationwide investigation the Commission initiated in response to a petition by the Coalition for Fair Port Practices, a group of trade associations representing importers and exporters, draymen, freight forwarders, and customs brokers. In the petition, the Coalition identified concerns about a lack of clear demurrage and detention policies, the assessment of charges when delays in picking up and returning containers are beyond the shipper’s or drayman’s control, poor communication regarding container availability, and inadequate processes for disputing charges.