New FMC Investigation on Demurrage and Detention Practices
Courtesy of NCBFAA, Western Overseas is an active participant, fighting on behalf of all importers and exporters.
It is evident that there is currently almost debilitating extreme congestion occurring at the ports of NY/NJ and LA/LB. Regardless, there is a continued propensity of the carriers and marine terminal operators to continue to assess demurrage and detention even though the slow down on the movement of containers in and out of the ports is beyond the control of NVOCCs and shippers. It appears, however, that the FMC may be letting the carriers and ports that the status quo is no longer acceptable.
As you may recall, the FMC opened Fact Finding Investigation No. 29 (FF 29) earlier this year in response to the disruptive effects COVID-19 has had on trade and for the purpose of identifying solutions for some of the issues. That investigation was quickly followed by the FMC’s release of the long-awaited decision in Fact Finding No 28, Interpretative Rule on Demurrage and Detention Practices under the Shipping Act, FMC Docket No 19-05 (April 28,2020). In that decision, the FMC provided guidance as to when the assessment of demurrage and detention would not be reasonable, acceptable or even lawful.
In FF 29, Commissioner Rebecca Dye was once again appointed as the Fact-Finding Officer authority to establish one or more supply chain innovation teams (Innovation Teams) in an attempt to see if the various players in the transportation chain could voluntarily establish processes to expedite the flow of cargo and minimize the need for demurrage and detention. It appears that this voluntary effort has not worked very well and the congestion at these major ports has become far worse. Yet the assessment of demurrage and detention has continued unabated.
In response to the continued deluge of complaints reaching the FMC, the Commission, on November 19, 2020, the FMC issued a supplemental order expanding the scope of FF 29. The new order states that VOCCs calling on the ports of Los Angeles/Long Beach (LA/LB) or New York/New Jersey (NY/NJ) may be engaging in unreasonable practices in violation of former section 10(d)(1) of the Shipping Act, now 46 USC 41102(c). This order results from the fact that numerous NVOCCs, truckers and shippers alleged that the carriers and marine terminal operators (MTOs) had not reformed their practices, and that demurrage and detention procedures were still being abused, notwithstanding an extensive record and the FMC’s clear signal that significant change was necessary.
In a show of how importantly the FMC is taking this, the new supplemental order in FF 29 was approved by unanimous vote. And, Chairman Michael Khouri as well as Commissioners Daniel Maffei, Louis Sola, and Carl Bentzel all issued statements in support. Moreover, Chairman Khouri’s statement of support also indicated that certain carrier billing practices-as previously mentioned in the FMC’s Notice of Inquiry -will also be investigated in this expanded FF No. 29.
The FMC’s supplemental order comes just days after the NCBFAA submitted a letter to the FMC -in conjunction with 48 other national trade associations-requesting that the agency use its authority to order the carriers and MTOs to cease imposing demurrage and detention during times of extreme congestion. This, of course, is one of those times.
Once again, the FMC is seeking comments from the trade concerning these very significant issues. To the extent that your companies, or your customers or truckers, are experiencing unfair or unreasonable treatment, this is the time to let the Commission know. We understand that the carriers may finally have begun to take the issue of the gross unfairness of their demurrage/detention billing practices a bit more seriously and that a number of such invoices are being cancelled. To the extent you have information that is relevant to these practices, the NCBFAA urges you to provide that information to the agency. Whether the issue is the lack of containers or chassis, the inability to return empties, or the inability to access and remove loaded containers, it is important that the FMC know about it. Similarly, if your company is being billed for various issues even though it is not a party to the carrier’s bill of lading, that would be relevant.
There may never be a better time to try to correct the unjustified demurrage/detention practices of the carriers and MTOs. But this cannot be done without your input.
The NCBFAA recognizes that there is often a sensitivity and reluctance to go public with complaints against the carrier and MTO’s practices, however, comments can be submitted confidentially in a way that only the Commission would have access to details that could serve to identify parties. If you would like to have more information about that process, you can contact the NCBFAA or the FMC. But, any comments or complaints should be sent, with detailed information, to the FMC through the special mailbox that Commissioner Dye established at email@example.com.