FMC investigation backs port demurrage and detention charges but seeks more transparency

The Federal Maritime Commission (FMC) approved the recommendations of Commissioner Rebecca Dye as set forth in her final report of the Fact Finding 28 investigation. Her recommendations also included the establishment of a Shipper Advisory Board.

The investigation found that demurrage and detention charges can incentivize cargo to move expeditiously and that standardizing practices for when these fees are levied would improve velocity at ports.

An equally important finding was that focusing demurrage practices on notice of when cargo is actually available would likely eliminate many of the circumstances that lead to the imposition of demurrage fees. Toward that goal, the Commission will convene Innovation Teams that will address how to provide:

• Transparent, standardized language for demurrage and detention practices
  
• Clear, simplified, and accessible demurrage and detention billing practices and dispute resolution process
  
• Explicit guidance regarding the types of evidence relevant to resolving demurrage and detention disputes
  
• Consistent notice to cargo interests of container availability
  

“The handoff of a container from carrier to terminal to trucker to destination is not a linear process. In reality, everything is happening at once and that is why it is so daunting a task to get a handle on these issues. The teams process is ideally suited to creating the engagement necessary between subject matter experts to allow for private sector driven process improvements,” said Commissioner Dye.

The report, formally submitted to the Commission in a closed meeting held on Monday (Dec. 10, 2018), is the culmination of an eight-month examination of the practices of vessel operating common carriers and marine terminal operators in levying charges on shippers related to equipment and land usage and free time granted between when a container is offloaded and when it must be picked-up by a trucker.

Asked by AJOT for his response, Gene Seroka, Executive Director, Port of Los Angeles said:

“We applaud Commissioner Rebecca Dye for the thoughtful, collaborative approach taken in the “Fact Finding 28” report. We believe that convening industry stakeholders as soon as possible to further refine policy details is the appropriate direction. The Port of Los Angeles looks forward to participating in any way so that we can standardize practices and improve efficiency at our nation’s ports.”