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US shipping regulatory body the Federal Maritime Commission (FMC) is to introduce revised rules covering container detention and demurrage practices across the country after commissioner Rebecca Dye released the results of an eight-month investigation into how carrier and container terminal apply the charges.
The main conclusion was that demurrage and detention charges are justified to the extent that they “incentivise cargo to move expeditiously” through US ports. But they need to be standardised – in terms of when the fees are applied and by how much – across the industry.
The report also says shippers would greatly benefit from visibility into container availability.
“An equally important finding was that focusing demurrage practices on notice of when cargo is actually available would likely eliminate many of the circumstances that lead to the imposition of demurrage fees.”
It said the grounds for this would be created by launching innovation teams to develop four key themes: creating “transparent, standardised language for demurrage and detention practices”; developing “clear, simplified and accessible demurrage and detention billing practices and dispute resolution process”; issuing “explicit guidance regarding the types of evidence relevant to resolving demurrage and detention disputes”; and getting carriers and terminals to deliver “consistent notice to cargo interests of container availability”.
Ms Dye said: “The hand-off of a container from carrier to terminal to trucker to destination is not a linear process. In reality, everything is happening at once and that is why it is so daunting a task to get a handle on these issues.
“The team process is ideally suited to creating the engagement necessary between subject matter experts to allow for private sector driven process improvements.”
Her report also recommends the creation of a shipper advisory board.
“It was found that the complexity of port operations and the wide variation in port procedures and practices supported the conclusion that the commission could benefit from the establishment of a shipper advisory board for the FMC.
“The fact-finding officer also supports advisory boards for other commission stakeholders and those involved in the US international freight delivery system.”
The FMC has formally accepted the report and a recommendation that called for the establishment of innovation teams to explore the key questions identified above. The teams will inform what steps the FMC should take.
Comment on this article
Gary Ferrulli
December 10, 2018 at 3:50 pmI think you’ll find possibly common definitions, not price. Needs anti-trust authority, and it isn’t what the Commission wants to do. More complex than most think demurrage is essentially storage of cargo on terminals – just happens much of that cargo is in containers. Detention is for use of container outside of terminal areas and not part of the initial contract of carriage (bill of lading) rather a contract called an interchange agreement, usually between the ocean carrier and trucker. And Service Contracts for a large portion of the East-West volumes obviate most ” commonality” through negotiations. As FMC said, most of this is commercial,
not regulatory
Ignacio Flores
December 10, 2018 at 5:46 pmAbout time.