Monday, November 28, 2022
HomeDemurrage and DetentionThe Federal Maritime Commission needs your inputs on demurrage and detention

The Federal Maritime Commission needs your inputs on demurrage and detention

Demurrage and Detention charges, the pain in the posterior, the bane of existence for BCOs, the mega bone of contention between carriers and customers, just got some more attention from the authorities..

The Federal Maritime Commission (FMC) issued an Advance Notice of Proposed Rulemaking (ANPRM), seeking comments from the trade (public) whether they should require common carriers and marine terminal operators to include certain minimum information with regards to demurrage and detention billings.

The Commission is also interested in receiving comments on whether it should require common carriers and marine terminal operators to adhere to certain practices regarding the timing of demurrage and detention billings.

These changes were recommended by Commissioner Rebecca Dye as part of her Fact-Finding 29: International Ocean Transportation Supply Chain Engagement.

The full details on the submission are available here on the FMC Website. The FMC has given the public, time till the 17th of March 2022 to submit comments.

The Commission had previously received several concerns from stakeholders regarding a lack of clearly defined timeframes for the issuance of bills.

In response to the proposed rule on Interpretive Rule on Demurrage and Detention, the Commission received many comments asserting that ocean carriers and marine terminal operators should issue demurrage or detention invoices within specific timeframes.

In the Final Rule, the Commission determined not to take action, reserving the right to reconsider the issue on potential billing and invoice timeframes.

Below are the questions posed by the FMC for comments.

  1. Should the Commission include both VOCCs and NVOCCs in a proposed regulation on demurrage and detention billing?
  2. Should the Commission include MTOs in a proposed demurrage billing regulation?
  3. Should a proposed demurrage billing regulation distinguish between the demurrage MTOs charge to shippers and the demurrage MTOs charge to VOCCs? That is, should the Commission regulate the format in which MTOs bill VOCCs?
  4. What percentage of demurrage and detention bills contain inaccurate information, and which information is most often disputed?
  5. How much does the type of information included on or with demurrage and detention billings vary among common carriers, among marine terminal operators, and between VOCCs and NVOCCs?
  6. What type of information should be required on billings? Should the Commission require certain essential information included on invoices such as:
    • Bill of lading number
    • Container number
    • Billing date
    • Payment due date
    • Start/end of free time
    • Start/end of demurrage/detention/per diem clock
    • Demurrage/detention/per diem rate schedule
    • Location of the notice of the charge (i.e.., tariff, service contract number and section or MTO schedule)
    • For import shipments:
      • Vessel arrival date
      • Container availability date
    • For export shipments:
      • Earliest return date, including identifying any modifications to the earliest return date
    • Any intervening clock-stopping events, for example:
      • Unavailability of container
      • Unavailability of pickup or return locations
      • Unavailability of appointments (where applicable)
      • Restrictions on chassis accepted
      • Force majeure-related events
    • Please note if any portion of the charge is a pass-through of charges levied by the MTO or Port.
  7. What information or timeframes should be required for VOCC and NVOCC demurrage and detention bills? Should the Commission require different types of information or timeframes?
  8. Do common carriers invoice multiple parties for demurrage and/or detention charges? If multiple parties are invoiced for charges, should the billing party be required to identify all such parties receiving an invoice for the charges at issue?
  9. Should the billing party be required to identify the basis of why the invoiced party is the proper party in interest and therefore liable for the charges? (i.e., as shipper, consignee, beneficial cargo owner, motor carrier or an agent, or as a party acting on behalf of another party pursuant to the common carrier’s merchant clause in its bill of lading.
  10. Should the Commission, for purposes of clarity and visibility of charges, require MTOs to bill demurrage directly to shippers (rather than billing VOCCs who then bill shippers for demurrage)? In that scenario, MTOs would bill shippers directly for demurrage, and carriers would continue to bill detention to shippers.
  11. How long from the point of accrual of a demurrage or detention charge does it typically take to receive a demurrage or detention invoice or billing?
  12. Should the Commission require demurrage and detention invoices to be issued within 60 days of date when the detention/demurrage/per diem stops accruing?
  13. Should the Commission require specific information be included on the invoice regarding how to dispute a charge? If so, what information should be required? For example, should the Commission require invoices to include contact information for disputing charges, identify circumstances for when a charge may be waived, or identify the billing parties’ evidentiary requirements sufficient to support a waiver of the charges?
  14. How long from the point of dismissal of a charge does it typically take to receive a refund? Should the Commission require that refunds of demurrage or detention bills be issued within a certain time period and what should that timeframe be?
  15. How would a regulation on demurrage and detention billing requirements impact, conflict with, or preempt any other applicable laws, regulations, or arrangements (such as the UIIA)?
  16. Please provide any other views or data you believe would help inform the Commission’s decision whether to pursue a proposed regulation on demurrage and detention billing information and practices

3 COMMENTS

  1. Here in South Africa , we are at the Mercy of all shipping lines. Jean Marie , I also second your comments above. Port imbalances and poor performance is our greatest hurdle, Whilst our in-efficient port lacks the resources and staff to maintain Fluidity to evacuate out Port terminals , within set time frames , Shipping lines are ready to pounce on the clearing agents to raise demurrage / detentions charges ( for Clarity Demurrage is the late turn of empty containers all shipping line use this term in reference to the charge raised, However Maersk/ Safmarine, chose to refer to this charge as detention which causes a lot of confusion down the line) whilst our SA Port Terminals lag behind in service delivery, they extend the free times allowed for collection of these full containers from the terminal. However the off-spin is that the free time for demurrage (return of the empty containers) is reduced by these very same days extended. Lines offer 3 -5 days from vessel completion (some allow 3-5 days from container landed date) in some instances we are already incurring demurrage charges while the containers are still sitting at the Terminal waiting for the terminal to release same to our transporters. Then we have Shipping lines like MSC , who pass overstay ( Storage) on containers that have not been pre-cleared 72 hours prior to Vessel arrival. They still use Covid as the excuse to evacuate the Terminal to create Fluidity. This is the only shipping line practicing these injustices to the clearing and logistics industry. In cases like this we don’t even get the 3 days Free time at the port with MSC Vessels. There is more losses we experience from the ports and shipping lines and i could possibly write a book about SA port and the abuse we take from shipping Lines , but I really dont want to take up all the space on this article. Thank you.

  2. I propose several elements of answer.
    It would be necessary that in case of carrier haulage (organization of the rerouting by the shipping lines), the carrier does not have any right of invoicing of penalties arrivals (neither storage, nor demurage, nor detention)
    It would also be necessary that the shipping company cannot pass on to the customer the penalties of immobilizations which are attributable to the disorganization of the port (storage) or to the difficulties of re-routing (road or multimodal) which are NOT the responsibility of the customer. The motivation for these penalties is to reduce the amount of time that the end customer is responsible for the immobilization of containers, so that they have an incentive to react and reduce this time. In Latin law we say “nulli propriam turpitudinem alegans”.

  3. container demmurrage and detention charges are basically the rent for holding the property/asset which in this case is container and there is no illegality in charging a rent to user of the container. where as abnormal costs , which terminal and carriers claims that due to stopage of container at one side , utilisation of the facilities are affected, has to be redefined properly with more prompt and transparency. Tariff at destination ports should be announced in the bill of lading itself and shud be variable from time to time as due to various reasons like war/pandemic etc there can be delays. In short, more transparency is required.

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