Federal regulators have relieved drayage truckers from late-fee bills associated with picking up and returning cargo containers, while inadvertently — and unfairly — shifting the burden onto shippers, a major shipper group contends.
The Federal Maritime Commission’s rule on demurrage and detention, issued last week, imposed new billing standards on ocean carriers and terminal operators in an effort to crack down on abusive container late fees, often to truckers as well as shippers.
But a simplified billing provision in the rule means drayage truck drivers can no longer be billed for demurrage and detention on cargo contracted between ocean carriers and their shippers, even if the trucker might have been responsible for the delay in picking up or returning the container to the port.
That burden — unless explicitly spelled out otherwise in an agreement — now seems to fall squarely on shippers, according to the National Industrial Transportation League, whose members could wind up having to pay more in administrative costs to manage the process.
Because truckers are not usually part of the ocean transportation contract, “it really seemed like [the FMC] wanted to carve the truckers out of the billing process, and the best way to do that was with this billing provision within the rule,” NITL general counsel and Thompson Hine LLP partner, Karyn Booth, told FreightWaves.
“But if the trucker knows they’re not going to pay demurrage and detention invoices — unless contractually obligated to do so with the shipper — the rule could reduce their incentive to do everything in their power to get the container out of the port, or return it, in a timely way?
“That’s where our members have concerns. They’re going to have to pay even when they’re not at fault for delays in picking up or returning containers, and will have to have contractual relationships that will allow them to get reimbursed. That’s the practical implication of this rule — shippers are going to have to look at their contracts carefully with their ocean carriers and truckers.”
NITL Executive Director Nancy O’Liddy pointed out that larger shippers have departments in place to deal with these types of contract changes. For smaller shippers, however, “I think they’re very distressed about this,” she said. “And their costs are going to go up, because they’re going to have to pay the invoice and then try and get reimbursed from the trucker if they’re not at fault.”
The American Trucking Associations’ Intermodal Motor Carriers Conference, which represents drayage carriers, praised the change as more accurately assessing invoicing responsibilities.
“The new rule will require ocean carriers to work directly with their customers, increasing incentives for faster dispute resolutions and bringing greater efficiency to the supply chain,” commented IMCC Executive Director Jonathan Eisen when the rule was announced.
Testifying on Wednesday at a hearing to be reconfirmed as FMC chairman, Daniel Maffei told the Senate Commerce Committee that the new rule will help eliminate container late-fee billing abuses by ocean carriers.
“These fees are for the promotion of the movement of cargo. They’re not to pad the bottom line of an ocean shipping company,” Maffei said. “If they’re not used for [promoting cargo movement], they’re unreasonable, and we will do whatever it takes” to enforce the rule, he said.
However, Booth questioned whether the FMC’s “contract-based” billing provision, which places sole responsibility on the contracting shipper regardless of fault, will put the incentives for freight fluidity in the right place.
NITL, in contrast, favored a “conduct-based” rule that would have placed responsibility for demurrage and detention charges on the party affecting the timely pick up or return of containers.
“We’re going to have to wait and see whether or not this improves fluidity — we don’t know yet,” Booth said. “Because if you’re going to get the bill when you’re at fault, you’re going to check your conduct to avoid getting that bill. But this rule requires the bill to be the responsibility of the shipper no matter who’s at fault.”
N
So they will no longer be able
To extort money from the owner operators and make them pay for things out of their control…..funny how they’re fine with the drivers and companies being charged and forced to pay but when they’re held to the same standards they are crying foul and how unfair it is! Yet the drivers etc have been saying this for years and they could have cared less! Now let’s make it so they can’t charge the drivers for new virgin chassis tires when the recap they’ve recapped repeatedly on a 15-20 year old casing blows on their chassis but they back charge it to the company/driver!
Stephen webster
It should have a trucking company issue it should the shipper of the receiver. This is why in Canada there have many shutdown by the trucking company or the drivers along with not getting paid for all hours at $30 or more candain
Jack Carbone
I do believe that the FMC did right to avoid having the trucker be the default bill to party. But I also believe that they may have over simplified the situation in attempting to clarify things. You need to separate the processes into import and export scenarios and then into merchant haulage (where BCO arranges for drayage) and carrier haulage (where the line or nvocc arranges drayage). Usually there are four parties involved, the line, BCO, the trucker and MTO. Sometimes the contract of carriage is between the Line and the BCO and sometimes between the BCO and Trucker. The MTO has contracts with the Carrier which may include free time rules, but it also has terminal agreements with truckers which apply in the case of merchant haulage.
Jorge Boose
It’s always been unreasonable that MBL parties (shipper/c’nee), with service contracts and contracts of carriage using those SVCs, are not the ones invoiced for extended use of containers that THEY BOOKED, while motor carriers who are not under contract with SSLs are billed extended use of those containers.
This because SSLs have no issues shutting down truckers as that won’t reduce freight so it’s easier for SSLs to hold truckers liable for invoices, but holding their clients accountable will threaten freight and that, SSLs don’t want to jeopardize.
This rule change should disrupt this illogical and unfair practice.
William hardin
So now they will have to do the same thing truckers used to have to do, fight the charges. I really don’t understand how this wasn’t in place from the beginning, let the shippers figure out which trucker can handle thier properly like any other industry.
We are currently dealing with $16,780 in per diem on 6 containers because the shipper chose a contract where the detention clock started as soon as the containers came off the boat in Savanna then they sat for over month in the rail at various locations before reaching us. We delivered and terminated empties within free time then 6 weeks after delivery bam those bills charged to us that have nothing to do with us and the shipper wouldn’t approve the bills for charge back…wanted us to dispute which we did twice and denied…16 months later they still haven’t paid us back.
We had to pay if not the steamship threatens to shutout our scac code that effects the whole company at 30+ terminals. The steamship lines will fight this hard because they had guaranteed payment putting the burden on the trucker. I mean it’s not really hard for them to blacklist a shipper for non payments and not haul for them anymore.
Jessica Linn
As a trucker we already do everything in our power to return these containers to the terminals. The appointment system in place for the West Coast makes it impossible to return anything in a timely manner. We have no incentive to keep these empties out longer that necesary. They take up space in our yards, hold our chassis hostage, and honesly are just a real pain to deal with. We also do everything in our power to make pick up appointments as soon as the terminals release the loads. Again, the issue is the Emodal appointment system. For example I have a load at WUT terminal right now. It came off the vessel this morning at 7:04 am. The last free day is on March 5th. The first appointment available to pick it up is on March 7th at 3:30 in the morning. This means that by the time the container came off the vessel it already will have demurrage charges. The SSL will not push back LFD due to no appts so they are actually acting maliciously against the shipper and the trucker. I have the recorded converstation with 2 SSL where they say the demurrage will just need to be paid. Do not put all this on the trucker. The shippers need to stop using the cheapest SSL trying to save a dime on the shipping just to pay more money at the terminal.
Craig Fuller
Gawd, I thought y’all were on the side of the trucker, now you shill for shippers. FW has gone to hell.
Michael Alexander
This is the news ever as a small carrier we tend to have to bare the brunt of all the mistakes and short comings of the shippers broker’s it’s not fair for us to be the default for the mistakes of the rail or faulty chassi etc.