With ever-changing dynamics within the shipping realm, FGN has a dedicated Compliance Team that diligently monitors current events affecting our industry. One recent development that has significant implications is related to demurrage and detention practices. 

In 2018, the Federal Maritime Commission (FMC) released its Final Report following an investigation focused on “Conditions and Practices Relating to Detention, Demurrage, and Free Time in International Oceanborne Commerce.” Commissioner Rebecca F. Dye, the Fact Finding Officer, made several key findings and recommendations related to demurrage and detention in the U.S. freight delivery system.

Key Findings:

1. Incentives for Cargo Pickup: Demurrage and detention charges serve as incentives for cargo interests to promptly retrieve cargo from ports and marine terminals.
2. Transparency and Consistency: The industry would benefit from transparent, consistent, and reasonable demurrage and detention practices, which would improve asset utilization.
3. Focus on Cargo Availability: The Commissioner emphasized that achieving the goals of demurrage and detention practices requires focusing on providing notice of actual cargo availability.

Recommendations:

1. Standardization of Language: While the need for standardized, transparent language for demurrage and detention practices was highlighted, challenges remain in defining these terms and implementing standardization.
2. Billing Practices and Dispute Resolution: The Final Report recommends explaining demurrage and detention billing practices on public web pages to address the lack of uniformity. It also recommends clear dispute resolution processes and evidentiary guidelines be detailed.
3. Notice of Cargo Availability: Concerns related to ocean carrier and marine terminal operator practices regarding container availability and timely notice are discussed. Improving notice of cargo availability is crucial to reduce detention and demurrage occurrences.

In response to these findings and recommendations, the FMC recently issued a “Final Rule” that addresses demurrage and detention billing requirements in the ocean shipping industry. Let’s take a look at the key points:

1. Billing Requirements:
   • The Final Rule specifies new requirements for billing practices:
     • Entities Billed: Demurrage and detention invoices can only be issued to either:
       1. The person who contracted with the billing party for ocean transportation or storage of cargo.
       2. The “consignee,” which refers to the ultimate recipient of the cargo.
     • Timeframe: Vessel-operating common carriers (VOCCs) and marine terminal operators (MTOs) must issue invoices within 30 calendar days from when charges were last incurred. Non-vessel-operating common carriers (NVOCCs) have the same timeframe from the invoice issuance date.
     • Disputes: Billed parties have at least 30 calendar days to dispute charges, and the billing party must attempt to resolve disputes within that time frame.
     • Contents of Invoice: The rule requires specific identifiable information to be included on the invoice. Failure to include this information eliminates the obligation to pay the charge.
2. Effective Date:
   • Most provisions of the Final Rule take effect on May 28, 2024.

After extensive research and thoughtful recommendations, the implementation of the Final Rule represents a pivotal moment for the shipping industry. By aligning cargo pickup and equipment return with fair fees, this regulation promotes supply chain fluidity. Transparency and fairness in billing practices will undoubtedly enhance the experience for carriers, shippers, and all stakeholders involved.

FGN takes pride in minimizing additional charges for our customers. We achieve this by ensuring proper planning and coordination among all parties involved. We remain committed to monitoring industry updates closely, ensuring our clients stay informed and prepared for further developments.