Federal Maritime Commission launches investigation into port detention, demurrage fees charged to shippers, carriers

 Shippers and trucking companies can be charged high fees and detention costs by cargo lines and marine terminal operators for not picking up loads on time, even when unforeseen circumstances make a timely pickup impossible. ( Photo: Port of Los Angeles )

Shippers and trucking companies can be charged high fees and detention costs by cargo lines and marine terminal operators for not picking up loads on time, even when unforeseen circumstances make a timely pickup impossible. (Photo: Port of Los Angeles)

The Federal Maritime Commission (FMC) has launched a fact-finding mission on detention, port demurrage and free time practices by ocean common carriers at U.S. ports. Responding to an initial compliant filed by the Coalition for Fair Port Practices on Dec. 17, 2016, FMC announced that it has begun an investigation, Fact Finding 28, under a Commission Order issued on March 5, 2018.

The agency is also investigating similar practices at major U.S. ports, Commissioner Rebecca Dye said in a release.

Just last week, over 100 port truck drivers in Virginia protested long wait times at the Port of Virginia, hoping to engage officials in a discussion about the issue.

“We should not be held against our will for the excessive wait times,” George Berry, director of For Truckers by Truckers, told Supply Chain Dive. He added that the protest worked as leaders of the group have secured a meeting with the port’s Chairman of the Board on April 30.

The Coalition for Fair Port Practices alleges that “the current practices of demurrage, detention, and per diem, i.e., charges by ocean common carriers and marine terminal operators (MTOs) for the use of space and equipment, is unjust and unreasonable.”

The group argues that “shippers, consignees, drayage providers, and others described the alleged practices of MTOs and ocean common carriers (OCCs) that came about as a result of federal government inspection requirements, truck shortages, chassis shortages, discrete weather events, labor disputes, lack of effective appointment systems, and general conditions in and surrounding port areas.”

The stakeholders in the group argue that cargo owners and trucking companies are provided “free days” to pick up containers of imported goods, but when events outside their control prevent that from happening, the fees and charges can be prohibitive.

In a press release issued in December 2016 asking for relief, The Coalition for Fair Port Practices cited several examples of the outrageous charges assessed:

  • A retailer was charged $80,000 when it took 9 days to retrieve containers when only 4 free days were allowed
  • A trucking company was charged $1.2 million after failing to pick up containers on time due to long lines at the Ports of New York and New Jersey  
  • A transportation company was charged $1.25 million after containers it tried to return were turned away at West Coast ports

“Shippers, consignees and drayage providers do not create and cannot avoid these events,” the group said. “They cannot control the weather. They do not choose the terminals that carriers use. They are not parties to port labor collective bargaining agreements.”

The group’s petition argues that the “federal Shipping Act requires that fees and related practices be just and reasonable,” and as such, FMC should adopt a policy that extends free days for shippers and carriers when “during times of port congestion, weather-related events, port disruptions or delays caused by government actions or requirements beyond the control of the parties picking up or returning containers.”

The FMC investigation will gather information from ocean common carriers and marine terminal operators at container ports in the U.S. FMC is expecting to receive detailed information on detention and demurrage (charges payable to the owner of a ship when loading or unloading is not conducted within the agreed upon time) practices, especially regarding circumstances where shippers are not able to retrieve cargo, from those involved.

Because detention and demurrage can have ripple effects for shippers, trucking companies and drivers, and others, FMC is encouraging those groups that can document specific allegations and supporting materials of unreasonable port detention and demurrage practices and fees to provide that material to the agency for use in the investigation. Information can be sent to FF28@fmc.gov or mailed to the agency at:

Commissioner Rebecca Dye
Federal Maritime Commission
800 North Capitol Street, Northwest
Washington, District of Columbia 20573

“The ultimate resolution of this investigation will have the potential to affect every ocean common carrier calling the United States. It is vital that the information we gather is representative of business and operational practices, as well as market conditions, nationally,” said Dye. “We expect concerned parties to participate robustly in this investigation. Their cooperation is essential.”

FMC oversees 255 marine terminals across the East, Gulf and Pacific coasts in addition to Alaska. It is expected to issue an interim report of findings and recommendations no later than Sept. 2, 2018 with a final report issued to the Commission for discussion no later than Dec. 2, 2018.