Portal - March/April 2021

EXECUTIVE SUITE

U.S. Federal Maritime Commission (FMC) Advances Inquiry into Detention and Demurrage Fees

 

IAM and Members Continue to Highlight Concern with Application of Charges

 

By Jim Wise and Bryan Vickers, PACE, LLP

As IAM has previously reported, member companies and the broader shipping community continue to contend with congestion issues at U.S. ports of entry. Adding to these delays and congestion are connected charges of detention and demurrage. These charges have escalated in frequency and amount, and have become increasingly unpredictable to plan for.

To better understand the nature and basis for these charges, FMC Commissioner Rebecca Dye released a notice on February 17 that the Commission will issue “information demand orders” to ocean carriers and marine terminal operators (MTOs) to determine whether legal obligations related to detention and demurrage practices are being met.

Commissioner Dye has largely led the investigation into port congestion issues, as well as the Final Interpretive Rule on Detention and Demurrage (which at IAM’s urging, included government inspections), in addition to delays and congestion as areas largely out of the shipper’s control, and where the Commission had discretion for further rulemaking and prescriptive action.

The information demand orders will be sent from the FMC to ocean carriers operating in alliance and using the ports of Los Angeles and Long Beach, California, as well as the Port of New York & New Jersey. The demand orders will also be sent to MTOs at these ports. These ports have earlier been identified by the Commission as experiencing substantial challenges with congestion and delays.

The information demand orders will require carriers and MTOs to provide information on their policies and practices related to container returns and container availability for exporters. Should the Commission find that the practices are inconsistent with their Interpretive Rule on Detention and Demurrage, further action may be taken including hearings, rulemakings, and specific enforcement action.

While IAM recognizes the forthcoming information demand order as an important step taken by the FMC, the association will continue to connect with relevant congressional committees and staff to highlight the continuing challenges the industry is confronted with, along with the increasing costs. These are on top of delays already being experienced in terms of off-site inspection and longer HHG delivery times to their final destination.

If you have any questions about the Commission’s actions regarding detention and demurrage charges or the overall process, please contact Bryan Vickers with IAM's Regulatory Affairs team at bvickers@pacellp.com or 703-403-2882. IAM will keep members apprised of developments as they occur on the Legislative and Regulatory section of the IAM website.