Committee Members Place Large Focus on Detention and Demurrage Charges to Shippers

On June 15, the U.S. House Transportation and Infrastructure (T&I) Subcommittee on Coast Guard and Maritime Transportation held a hearing on port delays, congestion and other supply chain challenges within the maritime connected system. Subcommittee Chair Salud Carbajal (CA) opened the hearing by highlighting some of the primary challenges, listed below:

• Empty ships headed back to Asia, instead of being loaded with U.S. exports;

• Detention and demurrage charges assessed to shippers on multiple fronts;

• Truck and related delays, getting cargo both in and out of port;

• Container turnaround times increased from 60 to 100 days; and

• Vessels waiting to come into port/import surge.

Over the past year, IAM has met with U.S. Federal Maritime Commission (FMC) staff, along with staff from several of the T&I Members who participated at the hearing, expressing our desire to see more definitive action on the Commission’s Final Interpretive Rule on Detention and Demurrage (FIR), which was issued in May of 2020. As IAM members may recall, the association testified before the Commission during the FIR’s drafting and development process, outlining our support for inclusion of government inspections (which was successful) in addition to congestion, weather and other circumstances beyond the shipper’s control.

FMC Chairman Dan Maffei and Commissioner Rebecca Dye testified on behalf of the FMC, highlighting the FIR, and indicating the Commission can act on the recommendations within it. Chair Maffei and Commissioner Dye also explained to the Committee that they are reviewing how the FIR may be applied to dissuade D&D charges as appropriate, and that they were also reviewing carrier-submitted data on D&D billing practices. Commissioner Dye stated that while some of the carriers are acting properly in their assessments, the Commission is considering enforcement actions for those carriers who are not.

The Commission is also considering a formal audit of the nine largest carriers (pending staff resources), and referenced the National Shipping Advisory Committee, which the Commission is accepting applications for now, as further efforts to address a range of issues at the port. Commissioner Dye reminded the Committee that retaliation against shippers due to complaints filed against carriers at the Commission would not be tolerated, and would be in clear violation of the U.S. Shipping Act.

Participating at the hearing were Reps. Gibbs (OH), Brownley (CA), Garamendi (CA), Larsen (WA), LaMalfa (CA), Johnson (TN), and Full Committee Chair DeFazio (OR). In addition to near unanimous concern expressed over the carrier’s continued application of D&D charges, Reps. Johnson and Garamendi told all witnesses that they are drafting legislation that would, among other items, prevent carriers from refusing American exports out of the ports.

IAM will continue to engage and follow this and other port-related issues. If you have questions on the hearing or potential next steps, please contact Bryan Vickers with IAM’s Government and Regulatory Affairs team at bvickers@pacellp.com or 703-403-2882.