News / FMC's 'shot across the bows' warning over unfair D&D fees during strike

The US Federal Maritime Commission (FMC) has warned carriers and terminal operators against profiteering from unfair detention and demurrage (D&D) charges amid the disruption from an east and Gulf coast port strike.

Yesterday, the FMC published a reminder that “all statutes and regulations administered by the FMC would remain in effect” during any International Longshoremen’s Association (ILA) strike-related terminal closures, threatened for 1 October.

Vespucci Maritime CEO Lars Jensen said: “Basically, this should be seen as a metaphorical ‘shot across the bows’; that the FMC will not look kindly on anyone trying to profit from D&D charges resulting from a physical inability to use the ports during a strike.”

The FMC said D&D fees “must be reasonable, clearly defined and serve a specific measurable purpose”, and that they should serve as incentives to encourage cargo movement.

Maersk suggested customers move equipment from affected ports before 1 October to avoid D&D fees, and advised customers and hauliers to “hold their empties” if a work stoppage happens.

The Danish carrier noted there were limited non-ILA location options that could accept empty-container returns and that it “will not cover or reimburse any chassis or other third-party charges connected to the work stoppage”.

Japanese carrier ONE noted that for demurrage fees at coastal locations it will follow terminal policy, and for detention it will “stop the clock should a port disruption occur”. For inland locations, ONE will charge detention “as per standard process as long as the rail carrier accepts the export loads” but will not charge detention for containers where the rail carriers have stopped accepting export loads.

Sara Dandan, founder of D&D and maritime dispute company FourOneOne, told The Loadstar: “I think we’ve all been given so much warning that most shippers and forwarders have alternative plans and routes in place… therefore, as far as D&D goes, the impact shouldn’t be too bad.

“But of course only time will tell, since it also depends on how these alternative ports handle the congestion,” she added.

The FMC added that it would “scrutinise any D&D charges assessed during terminal closures”, and that its “Bureau of Enforcement, Investigations and Compliance would investigate any reports of unlawful conduct and “prosecute violators to the fullest extent of the law”.

During the pandemic, extended lead times and port closures meant shippers and their trucking firms were physically unable to return or pick up containers, and many faced “unfair” D&D fees from carriers and forwarders – some of which were successfully challenged in front of the FMC.

This led, in May this year, to the FMC revising the Ocean Shipping Reform Act (OSRA) rules for charging D&D, allowing shippers to dispute fees they deem unjust.