Change urged in best practice for US detention and demurrage regime

Date Added: 26 October 2021

Davies Turner's ocean shipping customers exporting containers to the United States may potentially see a change in the detention and demurrage regime at US import quaysides following a recent communication to ocean carriers.

Whether our clients’ shipments are LCL or FCL solutions, from single carton moves through to large global contracts, there will be greater clarification and certainty created by a range of adoptions to existing rules and practices that are being recommended.

United States maritime authorities are alerting ocean carriers that they should rapidly adopt three common best practices related to detention and demurrage. These will promote clarity and certainty about how and when fees will be assessed as well as how to challenge disputed charges. This will bring assurance to managers and transport managers in relation to costs.

The call for an industry-wide adoption of best practices came in a letter Federal Maritime Commission Managing Director Lucille Marvin sent to 25 container lines and the World Shipping Council (WSC), the trade association that represents liner shipping companies.  Marvin is leading the Vessel-Operating Common Carrier (VOCC) Audit Program and VOCC Audit Team, both of which were established in July at the direction of Commission Chairman Daniel Maffei.

The VOCC Audit Team has engaged the top nine ocean carriers, by market share, that call on ports in the US to assess their compliance with the FMC rule on detention and demurrage instituted last year. As part of their work, the Team sought examples of model behaviour by individual carriers that should become industry standards.

The correspondence sent to industry urges ocean carriers to:

- Display detention and demurrage charges clearly and prominently on their webpage or customer portal;

- Develop and document clear internal processes on all matters related to detention and demurrage where they have not already done so; and

- Clearly delineate dispute resolution procedures, contacts, and required documentation on their website and invoices.

Eighteen months ago, in May 2020, the Commission published a final interpretive rule on the reasonableness of ocean carrier and marine terminal operator detention and demurrage practices. The underlying principle of the rule is that demurrage and detention serve the purpose of incentivising cargo movement and equipment return. The practices in the letter were identified by the Audit Team as initial measures that can align carrier documents and policies with the goals of the rule.

In addition to the work of the VOCC Audit Team, the Commission is pursuing other actions to achieve compliance with its rule on detention and demurrage. In September, the Commission voted to begin work on an Advance Notice of Proposed Rulemaking on detention and demurrage billing practices that will be published in the coming months.

The Commission is also moving forward implementation of five of the eight Interim Recommendations Commissioner Rebecca Dye made to address detention and demurrage from her work on Fact Finding 29. The remaining three Interim Recommendations require action by Congress to change existing law.

With a nationwide network of local warehouse and branch offices, Davies Turner’s global freight and logistic solutions are able to run seamlessly, ensuring Ocean services meet the needs of each customer.

DT works in partnership with an extensive range of carriers across the globe to deliver efficient, quality Ocean freight moves. It has a whole-team approach, working closely with each member of staff who each have personal regional expertise, offering a wide range of services.

For more information about Davies Turner’s ocean freight forwarding and logistics services, please contact [email protected] or visit https://www.daviesturner.com/ocean

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