News / Backing for FMC probe into controversial demurrage and detention charges

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No party in the sea freight supply chain wants to incur additional charges on a shipment caused by factors “outside of their control”, somebody has to pay: but who should it be?

Online booking platform iContainers has entered the fray in the debate about quay rent and demurrage and detention (D&D) charges levied by container lines to shippers, questioning the justification and saying that carrier “transparency is definitely lacking”.

The US Federal Maritime Commission (FMC) has launched an investigation into port demurrage, detention and free time practices at US ports and has ordered carriers and terminals to provide documentary evidence to explain the workings of their additional charges.

The investigation led by Commissioner Rebecca Dye started at the end of last month and followed a petition filed in January by a coalition of shippers, business associations and trucking organisations demanding that the FMC restrict the ability of ocean carriers to impose what it said were “unreasonable and unfair penalties”.

According to Klaus Lysdal, vice president of sales and operations at iContainers, the investigation is “absolutely necessary” and has come at “the right time”.

Mr Lysdal alleged: “Billing and rate levels [of D&D] skyrocketed as ocean rates took a dive years ago, resulting in plenty of situations where charges and costs are accrued for something the shipper cannot control nor have influence over.”

He continued: “For example, it’s not uncommon to encounter extra charges due to customs exams, which can sometimes take days if not weeks to complete.

“Sometimes, the container is pulled off the terminal to a customs-approved warehouse, which adds into the delay. The exam is completely beyond the client’s control because the container is outside of the port and yet they can get billed demurrage charges,” said Mr Lysdal.

However, a carrier source told The Loadstar today that shipping lines had no influence on the workings of the customs authorities and that an inspection of goods was “entirely the responsibility of the cargo owner or shipper”.

“In most cases we are simply recharging quay rent on behalf of the terminal, who will only accept us as the customer,” said the source. “Shippers should know how much free time that they are entitled to on the quayside and the box D&D charges at the time of the booking,” he argued.

“We simply cannot afford to waive these charges, with rates at such a low level,” he said, but admitted that in the past “commercial decisions had been taken” on charges for some customers.

Notwithstanding the argument over who should be responsible for the charges iContainers said that it hoped that the investigation would “bring about more transparency into the types of charges and the circumstances under which they can be billed”.

It bemoaned: “Some carriers cannot even provide you with the actual amount you will be billed for until they process the invoice. This means that as a shipper, you will be stuck with knowing you have delay fees pending but not know the amount until you get hit with the invoice, which for some carriers can take six months to process.”

The FMC is asking that all stakeholders participate in the investigation and has promised an interim report on its findings and recommendations by no later than 2 September.

Ms Dye said that a final report would be issued to the FMC for consideration, discussion, and vote no later than 2 December.