Cargo containers pile up at a marine terminal at the Port of Los Angeles.

Cargo containers pile up at a marine terminal at the Port of Los Angeles. Photo courtesy Port of Los Angeles

FMC Proposing New Demurrage and Detention Billing Requirements

GCaptain
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October 14, 2022

The U.S. Federal Maritime Commission is proposing a new rule that seeks to bring more clarity, structure, and punctuality to the demurrage and detention billing practices of vessel operating common carriers (VOCCs), non-vessel-operating common carriers (NVOCCs), and marine terminal operators (MTOs).

This Notice of Proposed Rulemaking (NPRM) is in response to a requirement of the Ocean Shipping Reform Act of 2022 (OSRA) and follows work the FMC initiated in 2018 when it ordered an investigation (Fact Finding 28) led by Commissioner Rebecca F. Dye into conditions and practices of VOCCS and MTOs related to demurrage, detention, and per diem charges. 

That fact finding led to the Commission issuing a final rule in May 2020 addressing how the reasonableness of demurrage and detention practices of VOCCs and MTOs will be interpreted.

If this proposed rule is adopted, VOCCs, NVOCCs, and MTOs will all be required to issue bills for demurrage or detention only to parties that they have a contractual relationship with, to be clear regarding the nature of the charges, and issue invoices within 30 days after the charges stop accruing, and provide 30 days to dispute the charges with clear information about how charges should be disputed.

Specifically, the Commission is proposing four actions in this NPRM:

  • Adopting the list of minimum information that common carriers must include in demurrage or detention invoices as mandated in OSRA and codified at 46 U.S.C. 41104(d)(2).
  • Adding to the list referenced immediately above additional information that must be included in or with a demurrage or detention invoice.
  • Further defining prohibited practices by clarifying which parties may be billed for demurrage or detention charges.
  • Establishing billing practices that billing parties must follow when invoicing for demurrage or detention charges.

The Commission is proposing that a properly issued invoice is only issued to the person that has contracted with the billing party for the carriage of goods or space to store cargo and the billed party is responsible for the payment of any incurred demurrage or detention charge. The Commission is specifically interested in receiving comments on whether it would be appropriate to include the consignee named on the bill of lading as another party who may receive a demurrage or detention invoice.

Interested parties will have 60 days to submit comments to the Commission once the NPRM is published in the Federal Register.  The Commission is now using the Regulations.gov portal to receive filed comments.  A link within the Federal Register notice will take commenters to a page established for this NPRM. You may submit comments identified by docket number FMC-2022-0066 at https://www.regulations.gov.

This NPRM follows an Advance Notice of Proposed Rulemaking (ANPRM) (Docket No. 22-04) on demurrage and detention billing practices issued in February.  That ANPRM was issued in response to an interim recommendation made by Commissioner Dye resulting from her work leading Fact Finding 29, “International Ocean Transportation Supply Chain Engagement,” examining COVID-19 related effects on the ocean-linked supply chain.  The Commission received over 80 comments from VOCCs, NVOs, MTOs, shippers, and other parties involved in the transportation of ocean containers in response to the request for public comments issued in the ANPRM.  Information provided in those filings were considered in drafting this NPRM.

This NPRM is the latest initiative taken by the FMC to implement OSRA, signed into law by President Joseph R. Biden on June 16, 2022. Commission progress in meeting the requirements established by the law can be found on the dedicated “OSRA Implementation” landing page established on the Commission’s website.

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