FMC Receives Mixed Comments on Proposed Demurrage, Detention Billing Requirements

The Federal Maritime Commission has so far received mixed feedback on the possibility of new demurrage and detention billing requirements (see 2202070026), with shippers saying the rules are sorely needed and at least one carrier saying the industry shouldn’t face additional regulations.

Several shippers said the proposed requirements could help reduce the amount of incorrect or disputed information on detention and demurrage bills. In comments to the FMC this month, the Association of California Recycling Industries (ACRI) said that about 10% to 20% of the bills it sees contain inaccurate information, which can lead to lengthy disputes. Meadows Group, a chemical distributor, said that about 30% of its bills contain inaccurate information.

“Shippers and [beneficial cargo owners] are burdened with excessive and incomplete detention and demurrage charges, many of which should not have been billed in the first place,” ACRI said. “The current system is out of control, and the sooner it is resolved, the more fluidity returns to the ports.”

Shippers also don’t always receive the bills within reasonable time frames, Meadows Group said. Although the company said it typically takes 120 days to receive invoices, some have taken as long as two years. “This adds to the administrative burden of companies like mine and makes the charges more challenging to verify,” the company said. The FMC should adopt a proposal to require all invoices to be submitted within 60 days, Meadows Group said, which would “provide more certainty and efficiency by ensuring that shippers will have their information readily available and more quickly be able to verify the accuracy of the charges.”

The FMC should also impose requirements to help streamline information in the invoices, the distributor said, which can be inconsistent. Important details are “often missing” from detention and demurrage bills, Meadows Group said, such as information about events “that should stop the clock, such as unavailability of containers, unavailability of pick up/return locations, unavailability of appointments, restrictions on chassis accepted, and/or force majeure-related events.”

Lanca Sales, an export distributor for food service disposables, said steamship lines are “terrible at documentation and customer service.” Because of the lines' “internal incompetence,” cargo owners often pay for charges that are the “direct result of poor performance,” the company said. It also said it doesn’t have any recourse to seek reimbursement for the bills. “If these practices are not corrected, many small importers and exporters will simply exit the international field,” Lanca Sales said. “Under current conditions it is impossible to properly price goods accurately as the amounts and frequency of these bills makes it prohibitive.”

Other parties along the logistics chain don’t see a need for more billing regulations. Crowley said there is no “compelling reason to regulate the commercial relationships” between carriers and shippers. The company is a member of the World Shipping Council, which has lobbied against legislation to hold carriers more accountable for port congestion and declined export bookings (see 2108100011 and 2203230031).

Crowley said it hasn’t seen “serious delays” at its terminals or substantial increases in detention or demurrage charges or disputes. It also said it doesn’t charge its customers for delays caused by “matters outside the control of shippers or consignees."

But Crowley also said it sometimes receives new information about a charge after it sends out an invoice, which can lead to disputes. “We are working on improvements to our systems to reduce the number of transactions we need to audit and review internally with our operations group and shippers for each shipment before the invoices are sent out,” the company said. “We believe this will result in continual improvements in efficiency and accuracy in D&D invoicing, and the many factors which go into it.”

Crowley opposed an FMC suggestion that detention and demurrage billing terms and conditions should include events that “would justify stopping the clock on charges,” such as equipment unavailability or force majeure events. “It is difficult to foresee all the potential events that could justify stopping the clock,” the company said. “If each event was not foreseen and thus not included, would that mean that D&D charges could continue to mount?”

The National Association of Waterfront Employers, which represents stevedores and marine terminal operators (MTOs), suggested the FMC consider issues beyond detention and demurrage to address supply chain problems, such as the root “causes of increasing dwell times underlying such charges.” The FMC should look to bolster warehouse investment and ask members of the National Shipper Advisory Committee (see 2111020004) what steps they are taking to reduce dwell times. “Simply put, marine terminals are not storage facilities," the association said, "and the timely removal of cargo by beneficial cargo owners is critical to reestablishing normalcy in the U.S. supply chain."

NAWE also said there are “very few” instances in which billing information provided by MTOs has been disputed as inaccurate. It also cautioned the FMC against requiring MTOs to include a range of new information on billings, such as “clock-stopping events,” which would require “significant additional staff” to monitor each container.

Although information such as the container number, billing date and payment due date “is already provided or may be achievable with limited administrative burden,” information on chassis restrictions, container availability and force majeure events could be difficult to provide. “The ability to provide the additional listed information may be impossible,” the association said, “or at a minimum extremely burdensome and costly due to system limitations.”

The FMC, which requested feedback on the proposed billing requirements in December, is accepting comments through April 16 (see 2203140025).