Commission Approves Recommendations in Detention & Demurrage Report
December 7, 2018
Contact: John K. DeCrosta, (202) 523-5911
Innovation Teams of private sector experts will be assembled early in 2019 to determine the commercial viability of four key ideas that have the potential to bring clarity and uniformity to when and how shippers pay detention and demurrage fees.
The Federal Maritime Commission voted at its meeting today to take this action when it approved the recommendations of Commissioner Rebecca Dye as set forth in her final report of the Fact Finding 28 investigation. Her recommendations also included the establishment of a Shipper Advisory Board.
“The work done since March of this year has yielded four main ideas that I am confident will make a difference and are the concepts to pursue to finality. We do not want to miss a rare opportunity to make things better and toward that goal, we will promptly convene innovation teams to ensure implementation is commercially viable,” said Commissioner Dye.
The investigation found that demurrage and detention charges can incentivize cargo to move expeditiously and that standardizing practices for when these fees are levied would improve velocity at ports.
An equally important finding was that focusing demurrage practices on notice of when cargo is actually available would likely eliminate many of the circumstances that lead to the imposition of demurrage fees. Toward that goal, the Commission will convene Innovation Teams that will address how to provide:
- Transparent, standardized language for demurrage and detention practices
- Clear, simplified, and accessible demurrage and detention billing practices and dispute resolution process
- Explicit guidance regarding the types of evidence relevant to resolving demurrage and detention disputes
- Consistent notice to cargo interests of container availability
“The handoff of a container from carrier to terminal to trucker to destination is not a linear process. In reality, everything is happening at once and that is why it is so daunting a task to get a handle on these issues. The teams process is ideally suited to creating the engagement necessary between subject matter experts to allow for private sector driven process improvements,” said Commissioner Dye.
The report, formally submitted to the Commission in a closed meeting held on Monday, is the culmination of an eight-month examination of the practices of vessel operating common carriers and marine terminal operators in levying charges on shippers related to equipment and land usage and freetime granted between when a container is offloaded and when it must be picked-up by a trucker.
“Fact Finding 28 has been a very careful and thorough investigation of the business and operational practices of carriers and terminals. No effort has been spared in examining the issues that were raised to the Commission. I am grateful for efforts of the many industry leaders who have worked with us on this project. We will continue to engage with these leaders as we move forward with the teams. Those interested in being involved in this next phase should contact Robert Blair at 202-523-5715. ”