FMC intends to require carriers to refund the unreasonable demurrage and detention charges to shippers

The Los Angeles port of US

In November, the US Federal Maritime Commission (FMC) launched an investigation into the role of shipping lines in the country's congestion, including container handling and demurrage charges. and detention charges - D&D), the return of empty containers and the fact of some agricultural product exports have been reduced due to the move of empty containers to Asia.

FMC Commissioner Rebecca Dye is leading an investigation into possible violations of the Shipping Act and in particular an interpretive D&D rule published in May.

"There are good charges and bad charges,” she said during a podcast with Australia’s Freight & Trade Alliance. “We are no longer going to allow the ocean carriers and the ports to push-off costs of port inefficiencies to shippers, truckers and intermediaries”.

For example, she said, if a shipper does all they have to do, about paying the freight and trying to get a container within the agreed timeframe, then “they don’t pay anything" in terms of D&D.

"And if a trucker returns an empty container within the time allotted, and is prevented by congestion from returning it, then he doesn’t pay."

In February, the Harbor Trucking Association reported that charges typically go up to $ 200 per container and that 89% of the members of the surveyed association experienced a "a highly-negative effect on their overall business from recent D&D”.

"The cost and disruption imposed by excessive detention and demurrage is threatening the ability of the intermodal transport industry to survive", the association added.

Indeed, Ms Dye said the influx of goods from the pandemic has flooded the system, so that in September and October of last year "many businesses were being overwhelmed with D&D".

She added: "We understand it can be hard to distinguish between the incentivising part of D&D, as of course there are people who keep containers too long and they should pay. And there are people who do not pick up cargo in a timely basis, and they should pay".

"The challenge, of course, for the carriers and ports is to distinguish between the two."

However, Ms. Dye also said that Hapag-Lloyd carrier recently gave free D&D free of charge at the Los Angeles / Long Beach port, because “they understand it is unreasonable to impose charges in situations of such extreme congestion."

"Not many other carriers have followed that [decision] I’ve noticed" she added.

"We’re working on that now in this investigation, and we’re also searching for a process we could use to get shippers’ money back from last year."

Source: The Loadstar