A key question that came out of Covid related to US marine terminals is this: Under what circumstances can they charge for demurrage? Terminals argue that in the interests of preserving port fluidity especially during period of heavy volumes, they need wide latitude to charge demurrage for long-dwelling containers.
But the Federal Maritime Commission, which under its current makeup is much more sympathetic to shippers’ concerns than it used to be, is responding to shippers’ complaints of what they believe to be unfair demurrage billing. In a case between Evergreen and the drayage provider TCW, FMC commissioners ruled that terminals could not charge demurrage on days when terminal gates are closed, even when parties were notified of closure dates well in advance; Evergreen is appealing.
Shippers have long experience of opaque, late and inaccurate billing, and struggles to get the disputes resolved. They have been agitating for years for reform to detention and demurrage and indeed it was that issue that united importers and exporters behind passage of the Ocean Shipping Reform Act of 2022.
But it is important to note that also included in OSRA22 was legislative embrace of the FMC’s incentive principle, under which D&D billing practices need to be supportive of an overall goal of keeping cargo flowing.
That led two members of Congress to demand that the FMC back off from imposing D&D restrictions on marine terminals, saying “we cannot allow counterproductive government regulation to threaten the stability we have restored at American ports.”
At TPM24 we will explore how shippers can practically navigate a changing D&D landscape.