FMC Investigation into Demurrage and Detention Charges

An increase in frequency of detention and demurrage charges assessed against port users across the country recently resulted in a Federal Maritime Commission (“FMC”) investigation into the detention and demurrage practices at U.S. ports.  The spike in detention and demurrage charges appears to be the result of factors outside of the control of port users, including increased port congestion and internal port inefficiencies. The increased congestion at ports has led to increased commercial driver turn times, decreased productivity and efficiency, an inability to retrieve an adequate number of containers, and has compounded the already pervasive issue of the commercial driver shortage for drayage motor carriers due to mounting driver frustration.

In September 2018, the FMC commissioner issued an interim report and Notice of Proposed Rule Making for “just and reasonable regulations and practices relating to or connected with receiving, handling, storing, and delivery of property.” The focus of the FMC investigation was to closely examine port practices that are leading to substantial detention and demurrage charges to port users and to provide solutions to move cargo more efficiently through the ports. The interim report revealed that there are differing, often conflicting, standards from port to port with respect to many demurrage and detention practices and recognized the need for uniform standards and transparency.

In December 2018, the FMC commissioner issued a final report on the investigation. The final report concluded that there was a need for greater transparency and consistency in notice, billing practices, dispute resolution and terminology in the ports’ detention and demurrage practices. The final report therefore recommended that the FMC create “Innovation Teams” to establish ways to standardize port practices. The FMC is in the process of reviewing the recommendations of the final report and will either accept or reject the recommendations.

While the standardization of demurrage and detention practices would be a step in the right direction, the underlying port inefficiencies must be addressed in order to combat the growing concerns in the intermodal industry.

For more information about this article, please contact Renee Bowen at 410.230.3943 or rbowen@fandpnet.com.