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FMC Demurrage, Detention Rules Favor Fleets

[ March 1, 2024   //   ]

The U.S. Federal Maritime Commission on Feb. 23 established new requirements for how common carriers and marine terminal operators (MTOs) must bill for demurrage and detention charges, providing clarity on who can be billed, within what timeframe, and the process for disputing bills.
The Ocean Shipping Reform Act, passed in 2022, requires the FMC to specify who can be billed for detention and demurrage charges,
A key provision of the Feb. 23 rule determines that demurrage or detention invoices can only be issued to either:

  • The person for whose account the billing party provide ocean transportation or storage of cargo and who contracted with the billing party for the ocean transportation or storage of cargo.
  • The “consignee,” defined as “the ultimate recipient of the cargo; the person to whom final delivery of the cargo is to be made.” Demurrage and detention bills cannot be issued to multiple parties simultaneously.
    The rule also requires vessel-operating-common carriers (VOCCs) and MTOs to issue detention and demurrage invoices within 30 calendar days from when charges were last incurred. Non-vessel-operating common carriers must issue demurrage and detention invoices within 30 calendar days from the issuance date of the invoice they received.
    Billed parties have at least 30 calendar days to make fee mitigation, refund, or waiver requests. If a timely filed request is made, the billing party must attempt to resolve the matter within 30 calendar days, unless both parties agree to a longer timeframe.
    The FMC said the new rule will advance the commission’s goal of promoting supply chain fluidity by ensuring a clear connection between the failure to pick-up cargo or return equipment in a timely manner and the appropriate fee. The rule ensures that billed parties understand the demurrage or detention invoices they receive by requiring certain identifiable information be included by the billing party on the invoice. Failing to include any of the required information in a detention or demurrage invoice eliminates any obligation of the billed party to pay the applicable charge. Of course, if an invoice does comply, a charged party does have an obligation to pay charges billed. The new rule will provide relief to parties who should never have received a bill for detention or demurrage.
    The American Trucking Associations’ Intermodal Motor Carriers Conference voiced support for the new rules.
    Most of the rule takes effect on May 28.

FMC Sides with ATA, IMMC on Chassis Choice

The American Trucking Associations’ Intermodal Motor Carriers Conference hailed a Federal Maritime Commission decision upholding a previous ruling that ocean carriers violated federal law by requiring trucking companies to use specific intermodal chassis providers when moving containers.
IMCC filed its complaint against the Ocean Carrier Equipment Management Association, Consolidated Chassis Management and the world’s largest ocean carriers with the FMC in 2020, alleging, among other things, that they have denied motor carriers the ability to choose their provider when obtaining this essential equipment, leading to unjust and unreasonable prices for trucking companies.
The Feb. 13 action by the full FMC upholds a 2023 FMC administrative law judge decision that this conduct violated the Shipping Act. “IMCC and ATA have been fighting this conduct by foreign-owned ocean carriers for more than a decade, so this ruling has been a long time coming,” said IMCC Executive Director Jonathan Eisen.

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