FMC Releases Study on Port Congestion and Demurrage Fees

The Federal Maritime Commission released an agency report on "detention, demurrage and free time" after the agency voted to make the report public on April 13, said the FMC (here). The report (here) is the result of "four congestion forums held by each of the Commissioners at major gateway ports in the fall of 2014 and subsequent contact from stakeholders," the agency said. The FMC also voted to release the meeting transcript related to the staff report once it becomes available, it said.

The report "frames the relevant issues, including: defining terms associated with the application of demurrage and detention rules; who controls the charges (e.g., carriers, Marine Terminal Operators or Port Authorities); and, potential actions that may be taken," said FMC Chairman Mario Cordero. "The Commission staff report does not recommend any action by the Commission, nor did the Commission authorize any to be taken. Any action in the future by the Commission on its own motion, is not a matter for consideration at this time." Cordero also asked that the industry provide evidence of unreasonable detention or demurrage practices.

The agency's staff looked at tariff publications of six vessel-operating common carriers -- Maersk Line, Mediterranean Shipping Company, CMA CGM, Evergreen, COSCO and OOCL -- "selected chiefly for the size of their market share," it said. The agency also reviewed the public rules of the port authorities of Los Angeles, Long Beach, Oakland, New York/New Jersey, Tacoma, Seattle, Houston, Georgia, South Carolina and Virginia, it said. The report showed that the "average total prices for both demurrage and detention may be higher for importers than exporters, higher for demurrage than detention, and that both charges appear similar across all ports, except for New York/New Jersey, where they are much higher on average." Generally, the VOCCs, not the marine terminal operators, control the prices and policies, said the FMC.

The report is the first in a series, said Commissioner William Doyle (here). The report names several possible paths that the FMC could use to move forward in addressing the concerns. The options include an order of investigation and hearing, adding special reporting requirements for parties to certain agreements and the use of a Federal Advisory Committee to offer suggestion on the FMC's regulations on the issue. Commissioner Richard Lidinsky recently said agency action on the issue was imminent (see 1504010020).