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Ocean Carriers Urged to Adopt Detention and Demurrage Best Practices

Federal Maritime Commission (FMC) managing director Lucille Marvin sent a letter to 25 container lines and the World Shipping Council, the trade association that represents liner shipping companies, calling for them to rapidly adopt three common best practices related to detention and demurrage that promote clarity and certainty about how and when fees will be assessed, as well as how to challenge disputed charges.

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 FMC chairman Daniel B. Maffei. The creation of the VOCC came after industry calls for greater monitoring of detention and demurrage charges.

The VOCC Audit Team has engaged the top nine ocean carriers by market share, calling on ports in the United States 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 behavior 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.

Carriers should also 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.

In May 2020, the FMC 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 demurage and detention serve the purpose of incentivizing 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 said it is pursuing other actions to achieve compliance with its rule on detention and demurage. In September, the FMC voted to begin work on an “Advance Notice of Proposed Rulemaking” on detention and demurage billing practices that will be published in the coming months.

The FMC is also moving ahead in implementing five of 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. The FMC said the work of the VOCC Audit Team and Fact Finding 29 continues.