FMC Launches Investigation into Demurrage Practices

On Monday, the Federal Maritime Commission launched the first phase of its investigation into port demurrage, detention, and free time practices, ordering vessel operating common carriers (OCCs) and marine terminal operators (MTOs) to provide information and documents explaining these practices, especially regarding circumstances where shippers are not able to retrieve cargo. A similar effort with respect to container terminals at major U.S. ports is also underway. 

“The ultimate resolution of the investigation will have the potential to affect every ocean common carrier calling the United States,” said the Commissioner. 

The FMC also called on shippers, dray truck companies, and other port users who can document specific allegations and supporting materials of unreasonable port detention and demurrage practices and fees to contact the FMC Commissioner. 

The investigation was triggered by a petition from the Coalition for Fair Port Practices arguing that the current practices (i.e., charges) of OCCs and MTOs are unjust and unreasonable. The petition complained of significant demurrage and detention charges resulting from events over which port users have no control, such as from federal government inspection requirements, truck shortages, chassis shortages, discrete weather events, labor disputes, lack of effective appointment systems, and general conditions in and surrounding port areas. 

The investigation will focus on five key issues:

• Whether the alignment of commercial, contractual, and cargo interests enhance or aggravate the ability of cargo to move efficiently through the United States ports
• Whether the carrier or MTO has tendered cargo to the shipper and consignee
• Billing practices for invoicing demurrage or detention
• Practices with respect to delays caused by various outside or intervening events
• Practices for resolution of demurrage and detention disputes between carriers or MTOs and shippers

The FMC will use the information obtained in the investigation to determine and issue policies regarding detention, demurrage, and free time practices of regulated entities. An interim report of findings and recommendations will be issued no later than September 2, 2018, and a final report no later than December 2, 2018.