Shippers, carriers and terminals swapped accusations in their filings with the Federal Maritime Commission that their positions on detention and demurrage charges are being mischaracterized.
A debate between shippers, carriers and terminal operators over a petition asking the Federal Maritime Commission (FMC) to regulate detention and demurrage charges has heated up with carriers and terminal operators questioning how far the agency can go in regulating them under the Shipping Act of 1984.
The petition, dubbed Petition PR-16, was filed with the FMC by the Coalition for Fair Port Practices in December, asking the U.S. maritime regulator to address fees imposed on shippers when they can’t pick-up and return cargo, containers and chassis for reasons beyond their control.
The Coalition for Fair Port Practices, an alliance of 25 groups that represent shippers, transportation intermediaries and truckers – asked the FMC to adopt a rule “to clarify what constitutes ‘just and reasonable rules and practices’ with respect to the assessment of demurrage, detention and per diem charges by ocean common carriers and marine terminals when ports are congested or inaccessible.”
The National Association of Customs Brokers & Forwarders Association of America, Inc. (NCBFAA), which has joined with the coalition, said the “petition requests that free time should be extended to parties when a party is prevented from picking up cargo or returning equipment to a port due to port congestion or disruption beyond its control. Refusal to do so should be considered an unlawful, unreasonable practice.”
The FMC invited comments on the coalition’s proposal, and over 100 responses have been posted.
At the end of March and in early April, the coalition and groups opposing the petition exchanged additional filings with the FMC.
On March 30, the Coalition for Fair Port Practices filed an additional document with the FMC, a “petition for leave to supplement the record,” saying its original petition established that the FMC “has clear authority to issue the policy statement under the current statute and prior commission precedent involving free time, demurrage and detention practices” and that it had “provided a strong factual basis establishing the need for the desired policy.”
It said organizations representing ocean carriers and marine terminal operators that responded to the coalition petition “fail to comprehend the nature of the relief requested by the coalition and have mischaracterized the policy as a request for a legislative rule.”
The coalition said its petition “does not ask the commission to issue a legislative rule that would operate with the force of law. Instead, it seeks a policy statement that explains the commission’s enforcement discretion under § 41102(c)) (of the Shipping Act of 1984) regarding unjust and unreasonable demurrage and detention practices related to events of port congestion or disruption, which policy would be applied on a case-by-case basis.”
On April 6, the World Shipping Council (WSC) asked the FMC to deny the coalition’s requests, and the National Association of Waterfront Employers, a trade group representing terminal operators and stevedoring companies, filed a letter endorsing WSC’s position.
“The commission clearly has authority to issue a policy statement,” the WSC said. “The problem here is not with the commission’s authority with respect to policy statements, but rather with the fact that the petition seeks commission action that would be a substantive rule, not a policy statement. Moreover, however characterized, the relief requested seeks commission action that is beyond the agency’s statutory authority.”
The FMC does not have authority “to issue a regulation that contains the vast majority of the substantive relief” requested by the coalition’s petition, the WSC said.
“The 1984 Act did not carry forward the 1916 Act’s authority either for the commission to regulate rates or for the commission to prescribe specific regulations and practices with respect to the receiving, handling, storing or delivery of property,” the WSC said. “The problem here is that most of what petitioners seek would in fact constitute either rate setting or the prescription of very specific rules for detention and demurrage practices.”
The petition, dubbed Petition PR-16, was filed with the FMC by the Coalition for Fair Port Practices in December, asking the U.S. maritime regulator to address fees imposed on shippers when they can’t pick-up and return cargo, containers and chassis for reasons beyond their control.
The Coalition for Fair Port Practices, an alliance of 25 groups that represent shippers, transportation intermediaries and truckers – asked the FMC to adopt a rule “to clarify what constitutes ‘just and reasonable rules and practices’ with respect to the assessment of demurrage, detention and per diem charges by ocean common carriers and marine terminals when ports are congested or inaccessible.”
The National Association of Customs Brokers & Forwarders Association of America, Inc. (NCBFAA), which has joined with the coalition, said the “petition requests that free time should be extended to parties when a party is prevented from picking up cargo or returning equipment to a port due to port congestion or disruption beyond its control. Refusal to do so should be considered an unlawful, unreasonable practice.”
The FMC invited comments on the coalition’s proposal, and over 100 responses have been posted.
At the end of March and in early April, the coalition and groups opposing the petition exchanged additional filings with the FMC.
On March 30, the Coalition for Fair Port Practices filed an additional document with the FMC, a “petition for leave to supplement the record,” saying its original petition established that the FMC “has clear authority to issue the policy statement under the current statute and prior commission precedent involving free time, demurrage and detention practices” and that it had “provided a strong factual basis establishing the need for the desired policy.”
It said organizations representing ocean carriers and marine terminal operators that responded to the coalition petition “fail to comprehend the nature of the relief requested by the coalition and have mischaracterized the policy as a request for a legislative rule.”
The coalition said its petition “does not ask the commission to issue a legislative rule that would operate with the force of law. Instead, it seeks a policy statement that explains the commission’s enforcement discretion under § 41102(c)) (of the Shipping Act of 1984) regarding unjust and unreasonable demurrage and detention practices related to events of port congestion or disruption, which policy would be applied on a case-by-case basis.”
On April 6, the World Shipping Council (WSC) asked the FMC to deny the coalition’s requests, and the National Association of Waterfront Employers, a trade group representing terminal operators and stevedoring companies, filed a letter endorsing WSC’s position.
“The commission clearly has authority to issue a policy statement,” the WSC said. “The problem here is not with the commission’s authority with respect to policy statements, but rather with the fact that the petition seeks commission action that would be a substantive rule, not a policy statement. Moreover, however characterized, the relief requested seeks commission action that is beyond the agency’s statutory authority.”
The FMC does not have authority “to issue a regulation that contains the vast majority of the substantive relief” requested by the coalition’s petition, the WSC said.
“The 1984 Act did not carry forward the 1916 Act’s authority either for the commission to regulate rates or for the commission to prescribe specific regulations and practices with respect to the receiving, handling, storing or delivery of property,” the WSC said. “The problem here is that most of what petitioners seek would in fact constitute either rate setting or the prescription of very specific rules for detention and demurrage practices.”
