FMC VOCC Audit Team Urges Carriers to Adopt Detention & Demurrage Best Practices
Ocean carriers should rapidly adopt three common best practices related to detention and demurrage that promote clarity and certainty about how and when fees will be assessed as well as how to challenge disputed charges.
The call for an industrywide adoption of best practices came in a letter Federal Maritime Commission Managing Director Lucille Marvin sent to 25 container lines and the World Shipping Council, the trade association that represents liner shipping companies. Ms. Marvin is leading the Vessel-Operating Common Carrier (VOCC) Audit Program and VOCC Audit Team, both of which were established in July at the direction of Commission Chairman Daniel B. Maffei.
The VOCC Audit Team has engaged the top nine ocean carriers, by market share, calling on ports in the United States 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 behavior by individual carriers that should become industry standards.
The correspondence sent to industry urges ocean carriers to:
- Display detention and demurrage charges clearly and prominently on their webpage or customer portal;
- Develop and document clear internal processes on all matters related to detention and demurrage where they have not already done so; and
- Clearly delineate dispute resolution procedures, contacts, and required documentation on their website and invoices.
In May 2020, the Commission 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 incentivizing 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.
In addition to the work of the VOCC Audit Team, the Commission is pursuing other actions to achieve compliance with its rule on detention and demurrage. In September, the Commission voted to begin work on an Advance Notice of Proposed Rulemaking on detention and demurrage billing practices that will be published in the coming months. The Commission is also moving forward 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. The work of the VOCC Audit Team and Fact Finding 29 continues.