Thursday, September 16, 2021

Demurrage and Detention of Shipping Containers Back in the Headlines Again

US Federal Maritime Commissioner Issues Statement
Shipping News Feature

US – WORLDWIDE – Last year the shipping and forwarding world delivered a verbal broadside against the container lines which have been introducing seemingly random charges for detention and demurrage charges on boxes in ports all over the world.

The complainants, principally freight forwarding industry associations such as BIFA and FIATA joined a chorus of objections from shippers as container rates themselves rocketed, excepting for those of course who had the carriers enmeshed in pre-agreed rate contracts.

At the time a vociferous objector was the US Federal Maritime Commission (FMC) which had concluded, after a six year investigation, to lay out details of its Final Rule covering Demurrage and Detention charges. Now FMC Commissioner Carl W. Bentzel has issued a statement on the matter in which he refers to Commissioner Rebecca Dye and her Fact Finding 29 Interim Recommendations relevant to the Covid crisis..

In reference to these Commissioner Dye made several comments which will gladden the hearts of forwarders and shippers alike with her recommendations including amending section 41305(c) of title 46 to authorise the Commission to order double reparations for violations of section 41102(c), with Commission guidance focusing this provision on demurrage and detention violations and other types of cases or behaviour, and issuing a rulemaking concerning information on demurrage and detention billings.

In his own remarks Commissioner Bentzel reiterates that the purpose of these charges is to facilitate a faster flow of equipment through the ports concerned, not to polish the charging company’s bottom line. He said:

“Last week, the Commission voted to potentially consider further industry guidance on reasonable practices governing the issuance of demurrage and detention charges. Specifically, FMC staff was charged with the development of an Advanced Notice of Proposed Rulemaking (ANPRM) that would seek industry views on whether the Commission should require common carriers and marine terminal operators to include certain minimum information on or with demurrage and detention billings and adhere to certain practices regarding the timing of demurrage and detention billings. The Commission effort in this area is significant given the recent controversies over the scale of imposition of penalties for both demurrage and detention, and congestion related transportation failures.

”I am pleased to have voted for staff proceeding with this ANPR to move forward, and to support the recommendation of Commissioner Dye in Fact Finding-29 and believe that it is of utmost importance to expeditiously submit this proposal for public review. I believe that the Commission needs to provide clear and firm guidance on the assessment of demurrage and detention penalties in light of current levels of congestion, and growing shipping frustration. Additional clarity will also assist FMC enforcement of potential violations of the Shipping Act.

”I look forward to working with FMC staff, my fellow Commissioners, and considering comments submitted through the public review process. Demurrage and detention charges when properly utilised are intended to work to incentivise the movement of cargo by limiting the amount of time available for the pick-up of cargo, and the retrieval of cargo equipment in order to maintain traffic fluidity. Carriers and marine terminal operators should not be charging demurrage or detention caused as a result of their own operational challenges, but on the other hand, shippers also need to pick up cargo left on-dock on a timely basis. While this is clearly a delicate balance, I believe that we should move forward to consider new standards for the imposition of demurrage and detention.”

Photo: Image courtesy of Cleveland Containers UK.