FMC urges carriers to adopt detention and demurrage best practices

FMC urges carriers to adopt detention and demurrage best practices
FMC Commissioner Rebecca Dye

Ocean carriers should rapidly adopt three common best practices related to detention and demurrage according to the Federal Maritime Commission (FMC), which hopes they will promote clarity and certainty about how and when fees will be assessed as well as how to challenge disputed charges.

The call for an industry-wide adoption of best practices came in a letter FMC managing director Lucille Marvin sent to 25 container lines and the World Shipping Council, the trade association that represents liner shipping companies.

The correspondence sent out urges ocean carriers to display detention and demurrage charges clearly and prominently on their webpage or customer portal.

It also urges them to develop and document clear internal processes on all matters related to detention and demurrage where they have not already done so.

Finally, carriers are called to clearly delineate dispute resolution procedures, contacts, and required documentation on their website and invoices.

Marvin is leading the vessel-operating common carrier (VOCC) audit programme and VOCC audit team, both of which were established in July at the direction of FMC chairman Daniel Maffei.

The VOCC audit team has engaged the top nine ocean carriers, by market share, calling on ports in the US to assess their compliance with the FMC rule on detention and demurrage instituted last year.

As part of their work, the team sought examples of model behaviour by individual carriers that should become industry standards.

In May 2020, the FMC published a final interpretive rule on the reasonableness of ocean carrier and marine terminal operator detention and demurrage practices.

The underlying principle of the rule is that demurrage and detention serve the purpose of incentivising cargo movement and equipment return. The practices in the letter were identified by the audit team as initial measures that can align carrier documents and policies with the goals of the rule.

The Commission is also implementing five of eight interim recommendations Commissioner Rebecca Dye made to address detention and demurrage from her work on Fact Finding 29. The remaining three Interim Recommendations require action by Congress to change existing law.