News / Cargo owners and truckers slam carriers' call to delay new D&D rules

© Kittiwara Phunnu

Organisations representing cargo owners and drayage providers are up in arms over an attempt by ocean carriers to halt the implementation of US rules on billing demurrage and detention (D&D) charges.

The Ocean Carrier Equipment Management Association (OCEMA), which represents 10 major international box carriers, has petitioned the US Federal Maritime Commission (FMC) to postpone implementation of the new rules on D&D billing that came into effect on 28 May. It wants a 90-day deferral of the new regime.

On 23 February the FMC published the new rules to settle long-lasting disputes over billing practices. The final rule determines that ocean carriers can only bill the party that contracted ocean transport or storage, or the consignee. Truckers that move containers to or from ocean terminals cannot be charged for D&D.

In addition the new rule prohibits simultaneous invoicing of multiple parties, and sets a timeframe within which ocean carriers have to send the bills for D&D.

Although the rule has been in effect since 28 May, OCEMA wants the regulator todelay its start date by 90 days. It argues that a correction the FMC made in early May, 19 days before the official implementation, did not give vessel operators enough time to adjust their processes.

“VOCCs (vessel-operating common carriers) must now unwind arrangements they made premised on the FMC’s indication that motor carriers with which they had contractual relationships could be invoiced for detention and demurrage,” OCEMA claimed in its petition.

“The FMC now appears to be taking the position that motor carriers may not be invoiced for detention or demurrage charges relating to inland transport on through moves.”

The FMC’s rule correction was meant to clarify that truckers cannot be invoiced for D&D charges, even if they have a contractual relationship with an ocean carrier. The regulator wrote that the initial wording in the rule’s preamble was ambiguous and needed to be clarified.

Shippers and truckers are urging the FMC to dismiss OCEMA’s request. Some, including the Harbor Trucking Association (HTA), have argued that the rule was clear all along, stating that only consignees or companies that contracted ocean carriers for transport or storage can be billed for D&D.

The Shippers Coalition claimedhalting a rule already in effect would result in “a potentially chaotic cessation of the rule’s provisions”, creating confusion over transactions entered with the understanding that the rule applied.

This was echoed by the Agriculture Transportation Coalition, which warned that a 90-day suspension of the rule would “wreak havoc on the entire US supply chain”.

D&D charges have retreated from their 2022 high. According to Container xChange, average charges declined 25% in the first half of last year, sinking 14% below 2020 levels. Still, 11 major ports – including Rotterdam, Antwerp, Singapore and Hong Kong – were still billing higher D&D charges last year than in 2020.

US ports topped the list of high D&D charges, led by New York, Oakland and the Los Angeles/Long Beach port complex.

D&D charges remain a hot button issue with cargo owners and truckers. In April, Samsung complained that Cosco and its OOCL subsidiary had levied more than 26,000 D&D charges against it, alleging that the carriers had done little to address delays and had retaliated against the company when it complained about this.

Although charges have declined – both in volume and amounts levied – the American Trucking Associations (ATA), which has been in the vanguard of the push for new D&D rules, warned that they “can add up very quickly”. The HTA noted that “a couple of hundred thousand [dollars] or tens of thousands is not uncommon, because the charges start piling up”.

While truckers are clearly relieved to be off the hook for D&D charges, they intend to stay close to the matter. HTA CEO Matt Schrap posted a comment on LinkedIn urging drayage operators to monitor the charges to their shipper partners to make sure bills “are accurate and expectations are managed”.

It is a sentiment that has been echoed by the ATA’s Intermodal Motor Carriers Conference.

Clearly shippers and truckers continue to eye ocean carriers warily. A suspension of the rule through the peak season would not be likely to build more trust between the two sides.