News / Detention and demurrage claims at FMC hit well over $67m

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Some $67m in specified claims are being pursued through the Federal Maritime Commission (FMC) over unfair D&D charges two years after a law change, but developers of a new technology have claimed it can help shippers gain a better understanding of what charges they can expect.

The Loadstar worked its way through the claims that have been levelled over D&D practices since the passage of the bipartisan Ocean and Shipping Reform Act (OSRA) in mid-2022, and found that 38 claims have been lodged against carriers and forwarders.

Of these, the biggest came from the now-bankrupt Bed, Bath and Beyond, which is after more than $31m in unfair shipping practices against carriers including Evergreen, MSC, and Yang Ming, while Giti ($12.3m) and Peloton (unspecified “millions”) have filed claims against Flexport.

CMA CGM, Cosco, Hapag-Lloyd, ONE, and OOCL are also among the major carriers facing claims. Cosco has attracted three claims of more $1m each from shippers including the South Korean electronics giant Samsung, while a further nine claims have no specified amount.

Amidst this wave of claims, Project 44 announced the launch of a new product, its Detention & Demurrage Optimisation system, which it argues will allow shippers the ability to “understand real-time risk and incurred D&D costs”.

Chief product officer at Project 44 AJ Wilhoit said: “Our customers gain better understanding of supply chain operations, enabling them to mitigate D&D based on data from their custom contracts, bringing them one step closer to achieving a high-velocity supply chain.”

However, quite how the system works to mitigate charges was not immediately apparent, with The Loadstar’s own assessment of the product being that its customers could see carriers and forwarders apply potentially unlawful D&D charges in real-time.

Founder of US air and ocean forwarder Lojistechs, Sara Dandan, also seemed flummoxed over precisely how the product could work to mitigate unfair D&D practices, which became particularly pronounced between 2020 and 2022 at the height of the pandemic.

Ms Dandan told The Loadstar: “Unless you control points of movement (and some large shippers do) or have it built into your contract that you never pay D&D (some large shippers do), D&D can and sometimes will accrue.”

She added that these charges can often be for reasons outside of the shippers’ control and that there was “no data” that could prevent this, stressing that as far as D&D practices went, “data means nothing” if the shipper lacks control over the movement points in the supply chain.

Nonetheless, Ms Dandan did see some validity in the product if it were used as a trucking partnership performance evaluator, while one source, off the record, said that after reading Project 44’s press release they did not know what was being sold.

“The most cost effective and operationally effective way to mitigate D&D is to have a reliable and communicative drayage partner who works with you and provides you with reliable information at all times before, during, and after a shipment,” added Ms Dandan.

“We’ve seen similar products from other companies, and I think that port and (drayage) partner performance evaluation is a key benefit of this kind of tech and data. However, I’ll also say that your team should be doing that on a regular basis anyway.”

All of this comes in the build-up to further changes, to be introduced on Tuesday by the FMC on D&D billing, requiring billing parties to invoice only those parties that have contracted for the ocean transport and storage as opposed to intermediaries or other services providers.

Despite the rule-change’s purpose geared towards addressing truckers’ grievances, the World Shipping Council urged in April for further amendments over concerns that the third partiers it is intended to protect could still find themselves liable.