The U.S. Federal Maritime Commission (FMC) plans to help carriers “get their money back” for “unreasonable” demurrage and detention (D&D) charges.
In November, the FMC launched an investigation into the role of shipping lines in the nation’s port congestion, including D&D charges, empty container returns, and the practice by some of them of reducing agricultural exports in favor of repositioning empties to Asia.
FMC Commissioner Rebecca Dye is leading the investigation into possible violations of the Shipping Act and, in particular, an interpretive rule on D&D issued in May.
“There are good charges and bad charges,” she said during a podcast with the Freight & Trade Alliance of Australia. “We are no longer going to allow ocean carriers and ports to pass on the costs of port inefficiencies to shippers, truckers and brokers.”
For example, he said, if a shipper does everything it is supposed to do, in terms of paying freight and trying to pick up a container within the agreed timeframe, then “they pay nothing” in terms of D&D.
“And if a trucker returns an empty container on schedule and congestion prevents them from returning it, then they don’t pay.”
In February, the Harbor Trucking Association said charges often reached $200 per container, and that 89% of its members surveyed had experienced “a highly negative effect on their overall business from recent D&D.”
The association added: “The cost and disruption imposed by excessive detention and demurrage is threatening the ability of the intermodal transportation industry to survive.”
In fact, Ms. Dye said the pandemic influx of freight had so overwhelmed the system that by September and October of last year “many companies were being overwhelmed by D&D.”
He added: “We understand that it can be difficult to distinguish between the incentive part of D&D, because of course there are people who keep containers too long and should pay. And there are people who don’t pick up cargo on time, and they should pay.”
“The challenge, of course, for shippers and ports is to distinguish between the two.”
However, Ms. Dye also said Hapag-Lloyd had recently waived D&D charges at LA/Long Beach, because “they understand that it is unreasonable to impose charges in such extreme congestion situations.”
“I haven’t noticed many other carriers following that [decision],” he added.
“We’re working on that now in this investigation, and we’re also looking at a process we could use to recover money from shippers last year.”