Commissioner William P. Doyle votes to publically release FMC report on Rules, Rates, and Practices relating to Detention, Demurrage, and Free Time.
Today, I made a motion and voted in favor of publically releasing the FMC report on detention, demurrage and free time.
All stakeholders in the supply chain should read the report and actively engage with each other in the industry. I look forward to hearing from stakeholders with respect to their ideas for next steps now that this report has been made public.
The Federal Maritime Commission has identified port congestion and the resulting costs in the form of demurrage and detention fees on the American shipping public as having a negative impact on the fair, efficient and reliable movement of oceanborne commerce to and from the United States.
Specifically, the Commission has fielded a number of complaints from importers, exporters, and truckers related to the assessment of demurrage and detention charges by vessel operating common carriers (VOCCs) and marine terminal operators (MTOs). These charges are for delays out of the control of importers, exporters, and truckers and widely viewed by the affected parties as unfair.
As a result of a series of port congestion forums hosted by the FMC in 2014, and continuing complaints made by industry stakeholders, the FMC is issuing the first in a series of planned reports entitled: Rules, Rates, and Practices Relating to Detention, Demurrage, and Free Time for Containerized Imports and Exports Moving Through Selected United States Ports.
The Report highlights the assessment of fees in connection with port congestion and the resulting increased costs for shippers and truckers. It details possible actions VOCCs, MTOs, and port authorities can take to help minimize congestion and attendant demurrage and detention fees. It also notes possible actions that beneficial cargo owners and truckers may take such as requesting informal mediation and administrative or court action.
The Report also identifies possible actions the Commission itself can take to acquire additional information to examine and address concerns relating to free time, detention and demurrage practices:
- Order of Investigation – Non-Adjudicatory Fact Finding: the Commission may investigate policies and practices of regulated entities on a wide range of alleged violations, e.g., discrimination, unreasonable practices, anti-competitive practices). The Commission can direct the appointed fact-finding officer to present findings and recommendations for Commission action such as rulemaking or adjudication.
- Order of Investigation and Hearing: the Commission, after gathering evidence or credible allegations of a Shipping Act violation related to free time, demurrage, and detention practices, may initiate an adjudicatory proceeding against one or more VOCCs and/or MTOs. The investigation would include discovery including interrogatories, production of documents, depositions, and issuance of subpoenas.
- Section 15 Orders: The Shipping Act provides the Commission authority to order VOCCs and their employees and agents to file with the Commission a periodical or special report, an account, or a memorandum of facts and transactions related to the business of the carrier. The report, account, or memorandum may be made under oath.
- Special Reporting Requirements: the Commission may seek special reporting from parties to certain filed agreements, i.e., directing MTOs and VOCCs to submit additional data related to demurrage, detention, and free time issues involved in agreements filed with the FMC.
- Petition to the Commission: the public may file petitions with the Commission seeking relief or affirmative action by the Commission.
- Federal Advisory Committee: an advisory committee made up of representative stakeholders could be formed and directed to offer suggestions for the Commission’s regulation of MTO and VOCC demurrage and detention rates, rules, and practices.
- Ombudsman: the Commission can direct the CADRS Director, who also serves as the agency’s ombudsman, to facilitate targeted meetings with industry and to develop findings and recommendations for the Commission and industry.
- Rulemaking: the Commission may issue a notice of proposed rulemaking or initiate a negotiated rulemaking to address practices that the Commission has determined violate the Shipping Act.
Demurrage and detention charges are perceived by many stakeholders as no longer serving to speed the movement of cargo. This Report marks the Commission’s first step post port congestion forums. Industry stakeholders must weigh in and inform the Commission as to the kind of action desired, if any.
Pursuant to the Shipping Act, the law specifies certain purposes including but not limited to:
“[p]rovide an efficient and economic transportation system in the ocean commerce of the United States that is, insofar as possible, in harmony with, and responsive to, international shipping practices”
“[p]romote the growth and development of United States exports through competitive and efficient ocean transportation and by placing a greater reliance on the marketplace.”
A transcript of today’s FMC meeting will be made available through the FMC Office of the Secretary once transcribed.