'Head Scratching' Likely After D&D Rule in Effect; Changed Broker Terms Possible, NCBFAA Lawyer Says

FORT LAUDERDALE -- The effective date for the Federal Maritime Commission's new rule on detention and demurrage may not provide a long enough "runway" for industry to prepare, given that it's a "systemic alteration" of how the industry operates, said Ashley Craig of Venable. He said he suspects there will be a lot of "head scratching" after the rule becomes effective on May 28 (see 2402230049).

Craig, speaking during a panel discussion at the National Customs Brokers & Forwarders Association of America annual conference April 15, said the FMC has alluded to the potential chaos, with one commissioner saying he expects more complaints coming its way, especially given disruptions after the closure of the Port of Baltimore after a bridge collapse. "We saw that after June [2022], when the charge complaint process went into effect, and we continue to see it now."

Several gray areas remain after the final rule was issued in February. One involves how customs brokers should handle situations where they are expected to make arrangements to move containers on behalf of their importer clients. Craig, the NCBFAA's transportation counsel, said the NCBFAA may want to address these situations with a change to the broker terms and conditions.

"The 'bill to' party cannot be the broker, but "it's common for the broker to assume that responsibility" of "moving that container and allocating it. And I do think it's something that we're going to have to address as an association in terms of language that we can all get with," Craig said.

"I think we should think about tightening up the terms and conditions" to clarify that, even though the broker may be involved in arranging for transportation, and may even be adding to detention and demurrage, that's on behalf of a "disclosed customer," Craig said. "So if there are issues associated with non-payment, it's ultimately going to be the consignee or the shipper, notwithstanding that I'm taking the following actions on behalf of my importer client to move the container," he said.

Another is detention and demurrage from government holds, which went unaddressed in the final rule, despite some pressure from industry (see 2403070061). Nonetheless, such charges can be fought with carriers by citing the FMC's interpretive rule on government holds, said Rich Roche of Mohawk Global Logistics, speaking during the same panel discussion. If that doesn't work, another option may be a charge complaint, if applicable, Roche said.

Craig said Red Sea surcharges are "here to stay" despite the heat FMC received for granting them. He said he found it "fascinating" the "lightning speed" with which these special permissions were approved for all major carriers.

Craih said there have been allegations of "interesting activity," but "to my knowledge, no one has advanced specific allegations of collusion or anticompetitive behavior," Craig said. Craig noted that no carriers or related trade associations appeared at a hearing on the issue held by the administration in February (see 2402070078). Regardless, the surcharges are in place and "will not be going anywhere," Craig said.