News / Red tape sees smaller US shippers lose out on D&D disputes

©David Burke

Thousands of ‘little guy’ shippers lost out to “unfair” D&D charges in the US during Covid, as the FMC cannot help if they were levied before OSRA implementation in June 2022. 

Forwarder and founder of agency FourOneOne Sara Dandan expressed her frustrations in an interview with The Loadstar, saying: “I’ve lost count of how many people come to me for help in fighting misapplied demurrage and detention charges that barely missed the ‘deadline’.” 

She and many other shippers’ say that pre-OSRA implementation, the process of filing a complaint would be costly and could take upwards of a year to produce results. This means that most ‘small’ shippers on the end of ‘misapplied’ charges before June 2022 have no viable means of seeking compensation. 

One unnamed shipper claiming a misapplied charge of only $400, who was ignored by the shipping line, had three available options: go to the FMC’s Consumer Affairs & Dispute Resolution Services for mediation, which has no real authority and often turns these cases down; make an informal complaint, which can take up to a year and where often the $176 filing fee negates the benefit; or make a formal complaint, which requires lawyers, making it even longer and more costly.  

Time and money are, of course, two of the most valuable resources of small businesses, which make up around 44% of the US economy.  

Data collected from CMA, CGM, Cosco, Evergreen, Hapag-Lloyd, HMM, Maersk, MSC, ONE and Yang Ming found the carriers had collected around $12.9bn in D&D charges between April 2020 and March 2023, the bulk of the economic impact for shippers being during peak Covid-19. 

International logistics consultant Abe Orgel also expressed disappointment, telling The Loadstar: “It’s mainly difficult for the companies that have smaller claims, where it’s not worth their time to be back and forth.” 

Ms Dandan pointed out that while the amounts may be small, sometimes just a few hundred dollars, shippers could have unfair charges from multiple shipping lines, multiple times – starting to add up to large numbers. 

The chairman of the FMC, Daniel Maffei, has recognised shipping company ‘abuse’ of D&D fees as a ‘money-maker’, rather than a legitimate bid to speed up the flow of cargo. He told The Loadstar Podcast: “Detention and demurrage, until we adjudicate it, we don’t know whether it was fair or unfair. Certainly, during the pandemic, I’m comfortable saying, a lot of those charges were unreasonable, maybe more than normal because there were several reasons why the ocean shippers simply couldn’t get [their cargo].” 

A catalytic investigation into D&D fees by FMC commissioner Rebecca Dye changed this dynamic for the better, with the new ‘charge complaints’ procedure creating a cost and time-effective dispute resolution system, but only after the enactment of OSRA 2022. 

Peter Friedmann, executive director of shipper association the Agriculture Transportation Coalition, told The Loadstar: “The FMC has been doing aggressive positive work. . . hiring many competent lawyers to handle numerous charge complaints.” 

However, the decision by the FMC to not allow retroactive filing of charge complaints prior to OSRA 2022, has left Ms Dandan and the shippers she represents irritated that they cannot do so simply because the carriers were ‘lucky enough’ to have violated the Shipping Act before this date.  

But Mr Friedmann said: “Nobody would expect a federal agency to implement a law for cases before the law was passed.” 

The FMC was approached for comment, but failed to respond before publication.