FMC to Begin Auditing Demurrage/Detention Billings

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FMC to Begin Auditing Demurrage/Detention Billings

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22-Jul-21

FMC to Begin Auditing Demurrage/Detention Billings

In response to accelerated pressure from shippers and the White House, the U.S. Federal Maritime Commission (FMC) has announced on Tuesday, July 20, 2021, that they will begin re-evaluating all applicable rules for issuing detention and demurrage charges.

This audit will target container lines with the largest share of U.S. cargoes, including: Cosco Shipping Group, CMA CGM, Evergreen, Hapag-Lloyd, HMM, Maersk, Mediterranean Shipping Co., Ocean Network Express, and Yang Ming.

Previously, the FMC stance on this matter was that these charges “should be viewed through a lens of whether they encourage the timely retrieval of import containers and return of empties”.

However, given the recent increase of hefty fines imposed on shippers, the statement in question is proving to be too subjective to apply across all circumstances, and it is ultimately difficult to use as the sole justification for charges.

According to one article, shippers are no stranger to dealing with unreasonable detention and demurrage bills; they have become wary after being presented with upwards of hundreds of thousands of dollars in charges, all a result of ship congestion preventing them from handling imports and container equipment in a timely manner.

The FMC has since come to agree that shippers’ concerns are “palpable” and must be addressed.

In recent months, the National Industrial Transportation League and the Agricultural Transportation Coalition (AgTC) have proposed legislative changes to shift the legal burden of proof in detention and demurrage billing from shippers to carriers. In May, the NITL decided to propose changes to the Shipping Act. The AgTC has also made recommendations on how to ensure demurrage and detention charges are accurate and fair.