FMC Official Says There Will Be Further Guidance on Proper Detention and Demurrage Charges

Federal Maritime Commissioner Carl Bentzel says that audits have already led to investigations at the FMC, but that the agency is underpowered, with about 115 employees and just six investigators. He said there have been billions of dollars worth of detention and demurrage charges, and that the FMC will be issuing a notice of proposed rulemaking to create further guidance about proper detention and demurrage charges.

Bentzel, who was speaking to the National Association of Foreign-Trade Zones legislative conference Feb. 15, said the FMC is working on a marine data transmission information project, and they intend to have a package of recommendations in June.

He said there's a lot of focus on automation at ports as the solution to congestion, but, he said, "We don't really need better automation, we need a better intermodal system." He said there is not enough data-sharing among vessel operators, CBP, multimodal transport operators, logistics management companies, railroads, beneficial cargo owners, distribution centers and so on. He said the American system of getting goods from ports to stores is more complex than it is in other countries. "It’s an intricate ballet and the ballerina’s being dropped right now," he said.

He also said that 24/7 operation has been oversold as a solution to the ship backups on the West Coast."Until we know there’s a place to deliver that cargo, it really doesn’t matter if you’re going to have your [terminal] gates open."

Consulting firm ICSM President Sean Lydon said that truckers would not agree that lack of availability is the biggest problem, but rather, the problem of getting appointments to either pick up goods or return empty containers. He said a trucker might be told "today they only want 20-foot reefers," using the slang for a refrigerated container. If the trucker doesn't have that empty, then he can't drop off.

Bentzel agreed that while there are challenges on the vessel side and the terminal side, the biggest problems are in trucking. He said each of the 11 terminals in the LA/Long Beach port complexes has its own appointment system, and only 20% to 30% of the appointments are adhered to.

He also said that all containers are made in China and the vast majority are made by state-owned Chinese companies. He suggested that is an economic vulnerability for the U.S., and said this simple piece of corrugated metal is more critical to keeping trade and commerce going than even semiconductors. He suggested that countries like Vietnam and Thailand are not going to get enough containers from China, and their ability to export on time will suffer.