FMC Produces Final Report on Detention and Demurrage at US Ports

On Dec. 7, the Federal Maritime Commission (FMC) approved the recommendations and final report from Fact Finding 28, the investigation into the practices for charging detention and demurrage at U.S. ports. The FMC undertook this investigation following a December 2016 petition by TIA and the more than 20 members of the Coalition for Fair Port Practices. This petition requested that the FMC issue guidance as to what constituted “just and reasonable” practices for ocean carriers and marine terminal operators to levy charges for detention and demurrage.

The Commission will not pursue a formal rulemaking at this juncture. However, the Final Report included several recommendations for changes to commercial practices that can potentially work to reduce the frequency of the problem. Specifically, the Commission adopted the recommendations to convene Innovation Teams to consider:

• Developing transparent, standardized language for what constitutes detention and demurrage,
• Simplifying and increasing the transparency of detention and demurrage billing and dispute resolution processes,
• Providing explicit guidance on the types of evidence that are relevant to dispute resolution for detention and demurrage,
• How to provide consistent notice of container availability to cargo owners, intermediaries, and carriers.

The Innovation Teams will be convened in 2019, along with a Shipper Advisory Board that will provide feedback to the Commission on issues impacting companies that move goods through U.S. ports. The Final Report for Fact Finding 28 is viewable here. In addition to approving the report, on Dec. 13, the FMC released a final interpretive rule relating to detention and demurrage disputes. The new rule will require port users who challenge detention and demurrage charges to demonstrate that the unjust or unreasonable practices occur on a normal, customary, and continuous basis. The Commission moved forward with this rule to restore a historical interpretation of the Shipping Act and provide clarity to entities attempting to resolve disputes through the FMC’s dispute resolution services. The text of the new interpretive rule, which took effect on Dec. 17, is available here.

TIA was glad to work with its coalition partners to shed light on the important issue of unfair charges at U.S. ports, and will continue to work with the FMC and other industry stakeholders to improve regulation and commercial solutions at U.S. ports. For more information on the petition, fact-finding, or related issues, please contact Will Sehestedt at sehestedt@tianet.org or 703-299-5700.