The Federal Maritime Commission’s investigation into potentially unfair free time fees will help establish more uniform and predictable demurrage and detention practices at ports, according to Megan Montgomery, executive vice president of the NCBFAA.
The National Customs Brokers and Forwarders Association of America (NCBFAA) works closely with the U.S. Federal Maritime Commission (FMC) on a variety of issues that affect our members and the industry, but none more pressing than the industry-wide concern that demurrage and detention charges are being levied against cargo owners, often for events beyond their control.
NCBFAA members continue to report situations in which weather events, port congestion, equipment shortages, gate or terminal closures and other unforeseen circumstances delay cargo—or the return of empty containers—availability, resulting in unfair demurrage or detention charges.
First, a brief history of the current state of affairs.
On Dec. 7, 2016, the NCBFAA joined with the Coalition for Fair Port Practices to submit a petition for rulemaking (No. P4-16) to the FMC raising concerns about the assessment of demurrage and detention fees by ocean carriers and marine terminal operators. The petition asked the FMC to issue a policy statement or interpretative rule addressing situations in which a party is prevented from picking up cargo or returning equipment to a port due to port congestion or other causes beyond its control.
Essentially, the petition requested that ports and carriers be required to extend free time in those situations and that the FMC make refusal to do so should be considered an unlawful, unreasonable practice.
In response to the petition, the FMC scheduled public hearings on Jan. 16 and 17, 2018, to discuss the multiple causes of port congestion, the divergent array of demurrage, detention and per diem assessment practices by different marine terminal operators (MTO) and vessel ocean common carriers.
Rich Roche, vice president of international transportation at Mohawk Global Logistics and chairman of the NCBFAA’s subcommittee on non-vessel-operating common carriers (NVOCCs), testified at the hearing and requested the agency establish guidelines or a policy statement making it clear that the carriers and MTOs should extend free time during periods of congestion at the terminal when it is most difficult for NVOCCs and cargo owners to pick up or deliver containers.
At the beginning of March, the FMC announced it is launching a fact-finding investigation into the conditions and practices relating to detention, demurrage and free time in international ocean commerce. FMC Commissioner Rebecca Dye will be leading the investigation, examining five key issues surrounding detention, demurrage and per diem practices:
• Whether the alignment of commercial, contractual, and cargo interests enhances or inhibits the efficient movement of cargo through U.S. ports;
• When the carrier or MTO has tendered cargo to the shipper and consignee;
• Billing practices for invoicing demurrage or detention;
• Practices with respect to delays caused by various outside or intervening events;
• And practices for resolution of demurrage and detention disputes between carriers and shippers.
A final report on Commissioner Dye’s findings and recommendations will be due no later than Dec. 2.
The challenges associated with port congestion extend to every sector of the transportation and trade industry, but they affect truckers in a unique way. The lack of available drivers to move goods off the docks is a growing challenge. The inability of drivers to access the piers and move containers in a timely manner, whether or not they have managed to obtain appointments from the marine terminals, significantly undercuts their efficiency.
The NCBFAA remains committed to working toward a fair and level playing field for all legitimate trade. We support the upcoming FMC investigation, and anticipate that the results will help establish more uniform and predictable demurrage and detention practices at ports.
Free trade thrives on predictability and a level playing field, and we are grateful to the FMC for looking into this issue on behalf of the ports’ increasingly unhappy customers.
Megan Montgomery is executive vice president of the NCBFAA. She can be reached at mmontgomery@ncbfaa.org.