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Tuesday, May 17, 2022

Maritime Logistics Professional

January 28, 2022

FMC Addresses Detention and Demurrage, and Data Initiatives

© MichaelVi / Adobe Stock

© MichaelVi / Adobe Stock

The Federal Maritime Commission met in both open and closed session today to be briefed on efforts to address detention and demurrage, improve supply chain data transparency, and an ongoing investigation of Canadian government regulations that affect U.S. flag Great Lakes shipping. The Commission was also advised of the work its Area Representatives are doing at locations key to shipping around the Nation.

Lucille Marvin, the Commission’s Managing Director is leading both the Vessel-Operating Common Carrier (VOCC) Audit Program and VOCC Audit Team, told Commissioners that detention and demurrage issues remain persistent, but direct engagement with ocean carriers is yielding progress in changing behavior and practices. As a result of the Team’s initial review of carrier data last year, the VOCC Audit Team urged carriers industrywide to adopt detention and demurrage best practices. Since then, several carriers have restructured the information available on their websites, created streamlined dispute resolution processes, and developed more structured documentation regarding their detention and demurrage policies.

While commissioners expressed concern about Audit Team data that showed carrier revenues from detention and demurrage charges were up sharply over 2021, Commission staff made clear this is not an unexpected development given record volumes of trade and congestion throughout the U.S. supply chain. Additionally, chassis shortages, insufficient warehouse space, and some shippers abandoning cargoes are contributing to the issuance of detention and demurrage charges.

“The vast increase in detention and demurrage charges being billed by the carriers is certainly concerning but must be seen in the context of the overall congestion situation at U.S. ports and inland networks. Carriers are also waiving a much higher percentage of detention and demurrage charges and that’s one indication that the 2020 interpretive rule and enhanced enforcement is changing some practices and reducing collections of unreasonable detention and demurrage charges. However, the audit findings also tell me that we have a long way to go and must not let up one bit either on our enforcement efforts or the additional rulemaking on detention and demurrage recommended by Commissioner Rebecca Dye,” stated FMC Chairman Daniel B. Maffei.

During the closed session, Commission staff provided a brief on a draft Advance Notice of Proposed Rulemaking (ANPRM) that will be presented to the Commission soon. The draft ANPRM would seek comment on whether the Commission should require common carriers and marine terminal operators to include certain minimum information on, or with, demurrage and detention billings. Commissioner Rebecca F. Dye proposed issuance of this ANPRM as one of the recommendations contained in her Fact Finding 29 Interim Report issued to the Commission in July 2021.

Commissioner Carl W. Bentzel updated his colleagues about the Maritime Transportation Data Initiative (MTDI) he is leading. This initiative has three key goals: cataloging the status quo in maritime data, storage, and access across the transportation chain; identifying key gaps in data definitions/classification; and developing recommendations for common data standards and access policies/protocols. The MTDI is examining the data generated by a container from its arrival at a US port to its destination. Commissioner Bentzel is hosting meetings to gather information from representatives of all sectors of the supply chain involved in moving a container. To date, he has heard from beneficial cargo owners, drayage truckers, chassis providers, and providers of warehousing, distribution, and third-party logistics services. Information about past and future meetings have been organized on a dedicated landing page on the Commission’s website where links to video recordings of meetings can also be found. The MTDI will culminate in a Data Summit tentatively scheduled for June of this year.

The VOCC Audit Program, VOCC Audit Team, and the MTDI were all established last year at the direction of Chairman Maffei to address underlying issues contributing to domestic supply chain network congestion.

The Commission also received a report from its Area Representatives about their regional activities.

Topics addressed in the closed session were the VOCC Audit Program, detention and demurrage, Area Representative activity update, and updates to the ongoing investigation into the conditions created by Canadian Ballast Water Regulations.