FMC categorizes detention and demurrage complaints

Date: Monday, April 22, 2019
Source: American Shipper

FMC Commissioner Rebecca Dye provided an update on her agency’s ongoing detention and demurrage investigation.

Speaking during the National Customs Brokers and Forwarders Association of America (NCBFAA) Annual Conference, Dye said customer service complaints around detention and demurrage generally relate to reportedly poor communication regarding container holds.

She said further examination is required regarding the customs-related complaints the FMC has received.

Respondents have complained about demurrage and detention fees occurring sometimes when Customs and Border Protection pulls containers for inspection, an FMC spokesperson said.

During a panel Wednesday at the NCBFAA conference, Butch Connor, vice president of transportation and logistics company John S. Connor Inc., raised the question of whether ocean carriers and marine terminals should continue the free time clock when a container is in customs hold.

“If it’s still on terminal, there are certainly some issues over the terminal space and the use of that,” Connor said. “But more importantly, if we’re all … contributing to this effort to protect the country, should there be some removal of charges, or at least a deduction, [during a] customs hold?”

During the same panel, Mohawk Global Logistics Vice President of International Transportation Rich Roche noted variations across ports in terms of how free time during customs holds is treated.

For example, “in Long Beach, if it’s on customs hold, the free time clock isn’t ticking, but in [Los Angeles], it is,” he said. “It just doesn’t seem to be fair. We need to really come to some sort of a more standard way of operating.”

Since customs holds complicate the ability for beneficial cargo owners to move containers out of terminals in a timely fashion, it could be logical to implement an alternative type of demurrage fee for customs holds, “if any at all,” to compensate terminals for space, but not be punitive in nature, Roche said.

Perhaps it would make sense to include a rate of 10 percent of total demurrage or another rate that could be more consistent with true costs, he said.

Demurrage pertains to the time an import container sits in a container terminal, with carriers generally responsible for collecting penalties on behalf of container terminals. Detention relates to shippers keeping hold of containers for too long outside of a container terminal.

Regarding container availability, Roche said one situation he recently came across had to do with chassis moving inland via rail while containers are stacked at the seaport.

“It may be up to three weeks or more for that chassis to be available, and then lo and behold, the steamship line sends you a bill for detention,” he said. The container is “still on the steamship bill of lading; it hasn’t been truly made available for us to pick up the cargo, and yet because their container was detained, we were charged detention.”

The situation ended up being resolved, but Roche took issue with the fact that the carrier could do this in the first place.

A final report on the FMC’s investigation is scheduled for completion by Sept. 3.

Upon conclusion of the FMC’s detention and demurrage investigation, which Dye is leading, Dye said she will not recommend a legislative rule, a form of FMC regulation that carries the weight of penalties associated with determinations of Shipping Act violations. 

Such a rule won’t be recommended, in part, because it would be too difficult to find agreement on legal charges, “but there are quite a few options for us to determine what reasonable practices are,” she said.

Dye hasn’t settled on a recommendation, but it will probably be public, she said.

The final recommendation also “may not be where the commission ends up,” Dye said. “There’s more process even after my recommendation, but I’m also confident that we can reach agreement on that.”


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