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Regulators eye new container-fee rules to address alleged overcharging

FMC will seek industry comment on oversight and transparency of carriers’ demurrage and detention practices

Shippers brace for more congestion at Port of Los Angeles. (Photo: Jim Allen/FreightWaves)

In the wake of complaints that ocean carriers are overcharging customers, federal regulators are considering new rules related to fees imposed by ocean carriers for the use of their containers by shippers.

The Federal Maritime Commission voted last week to solicit public comments on two questions:

  • Whether the commission should require ocean common carriers and marine terminal operators to include certain minimum information on or with demurrage and detention billings.
  • Whether the commission should require carriers and marine terminal operators to adhere to certain practices regarding the timing of demurrage and detention billings.

“Demurrage and detention charges when properly utilized are intended to work to incent the movement of cargo by limiting the amount of time available for the pickup of cargo, and the retrieval of cargo equipment in order to maintain traffic fluidity,” said Commissioner Carl Bentzel, who voted in favor of a rule that would impose the above requirements.

“Carriers and marine terminal operators should not be charging demurrage or detention caused as a result of their own operational challenges, but on the other hand, shippers also need to pick up cargo left on-dock on a timely basis. While this is clearly a delicate balance, I believe that we should move forward to consider new standards for the imposition of demurrage and detention.”

The FMC also voted to issue a policy statement, proposed by Commissioner Rebecca Dye, on the ability of shippers, truckers and others to get reparations for conduct by carriers and marine terminal operators that violates the U.S. Shipping Act, including actions related to demurrage and detention.

According to the FMC, the statement will guide the scope of prohibitions against carrier retaliation, as well as specify who may file a complaint with the commission and when attorney fees can be imposed on parties that do not prevail in a complaint.

Shipper frustration with carriers regarding what shippers consider unfair demurrage and detention charges have coincided with disruptions throughout the supply chain over the past year, including at ports, intermodal rail yards and among port truckers.

In expanding her investigation into ocean carrier demurrage and detention practices last year, Dye warned that the crisis would affect international trade.

“The potentially unreasonable practices of carriers and marine terminals regarding container return, export containers, and demurrage and detention charges in the ports of Los Angeles, Long Beach and New York/New Jersey present a serious risk to the ability of the United States to handle trade growth,” Dye stated in November.

Congestion at the Port of Los Angeles has only increased since then, with shippers bracing for more supply chain disruptions as holiday peak shipping gets underway.

Click for more FreightWaves articles by John Gallagher.

One Comment

  1. Dawn Phillips

    These fees just hit my small company like a ton of bricks!! When my 20ft container of card games arrived at Seattle/Tacoma Port, it was pulled to (Mercer in Fife) for intensive exam. Because the ports were backed up and not able to examine my container at that time, they put it into a storage facility area until they were ready. I knew I would have to wait to get my goods but what I did not know is, I was going to be charged $280 a day for them to store my container until they had the time to examine it. After a good month of waiting for the exam, I finally received an invoice and $10,000 of this was just for the storage and exam. Not only did the import fees to get my goods go way up, but I had to pay an extra $10k that I was not expecting. These exams, when and if they have happened in the past, are usually under $400 total. The cost of my goods on this container was around $18k which was almost as much as all the import fees together.
    Where does this storage fee money go, who is profiting from this? I was not at all prepared to have to pay an extra $10,000 for my shipment and this is a hardship for my company. What’s going on in the ports will affect many of us trying to stay in business.
    Dawn :/

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John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.