Speaking to U.S. footwear and apparel importers, the FMC Chairman expounded on the commission’s decision to release a report on detention, demurrage and free time earlier this week.
Federal Maritime Commission Chairman Mario Cordero on Tuesday told a crowd of apparel and footwear makers that the commission would continue to take a proactive role in facilitating the resolution of congestion problems at ports nationwide.
The FMC on Monday released a report on the impacts of demurrage, detention and free time practices in the wake of severe port congestion at U.S. ports.
Cordero, speaking at the the American Apparel & Footwear Association’s Strategic Sourcing, Customs, and Logistics Integration Conference in Washington, D.C., said congestion “is not just about the West Coast. It’s nationwide.”
He said the impact of larger containerships at ports nationwide were significantly stressing terminal facilities. “Sometimes the number of containers discharged from one vessel accounts for more than half of a terminal’s capacity,” said Cordero.
The demurrage and detention report was undertaken specifically to address one of the chief complaints of shippers in the wake of extreme port congestion – most notably at West Coast ports – over the past 10 months. Shippers have argued they are being assessed demurrage fees for boxes that aren’t even available for pickup. Likewise, detention fees are being assessed when shippers are unable to return containers and chassis due to congestion at terminals.
“The concept of demurrage was put in place, ironically, to improve efficiency, so that terminals were not used as warehouses by the shipping community,” he said. “But what if you, the shippers, in good faith hold up your end of the bargain and the terminals and carriers can’t provide you the box. Now you’re paying for the a service you’re not getting. That is not a fair practice. And if this is occurring more and more, is it potentially an unreasonable practice?”
Cordero acknowledged he was preaching to the choir in a room full of shippers, but urged the audience to continue to tell the commission, carriers, and terminals about their experiences.
On the sidelines of the conference, Cordero told American Shipper he hoped the report would push the maritime community to resolve their differences on demurrage and detention outside the auspices of the FMC.
When asked if the commission was looking differently at fees assessed on cargo handled by terminal operators that are directly affiliated with the steamship line carrying that cargo, FMC staff said it had not examined that yet, but that carriers were indeed looking into the issue.
The report includes a list of eight potential actions the FMC could take to resolve the detention and demurrage debate. Cordero told the conference the commission is waiting to see how the industry wants to move forward.
“Some are more viable than others,” he said. “But part of the objective in releasing this report was to say ‘We hear you.’ We need more than just anecdotal evidence. We need more data on whether this is happening. We’re hearing that sometimes the cost of demurrage is exceeding the cost of freight, which is an absurd situation.”
FMC’s Cordero asks shippers for data on demurrage, detention
