March 6, 2018

FMC To Investigate Demurrage Charge Practices

Holland & Knight Transportation Blog
J. Michael Cavanaugh | Jameson B. Rice

In the wake of a hearing held by the Federal Maritime Commission (FMC) in January regarding detention, demurrage, and per diem charges, the FMC voted on Monday, March 5, to launch an investigation focusing on the practices of vessel operating common carriers and marine terminal operators related to these storage and equipment charges.

Commissioner Rebecca Dye will lead the investigation, focusing on five key issues:

  1. Whether the alignment of commercial, contractual, and cargo interests enhances or aggravates the ability of cargo to move efficiently through U.S. ports?
  2. When has the carrier or marine terminal operator tendered cargo to the shipper and consignee?
  3. What are the billing practices for invoicing demurrage or detention?
  4. What are the practices with respect to delays caused by various outside or intervening events?
  5. What are the practices for resolution of demurrage and detention disputes between carriers and shippers?

She will have authority to hold public or nonpublic sessions, issue subpoenas, and require reports, among other powers.

Acting Chairman Michael A. Khouri indicated that the investigation will provide an opportunity to create a more balanced record than what was established during the hearing, stating: “The Coalition raised substantive issues in both their petition and their testimony at our January hearing investigating carrier and terminal detention and demurrage practices. Various alleged practices were described that—without countervailing or explanatory testimony and evidence—would be troubling from my perspective. However; without any filed complaints by cargo stakeholders, where the crucible of adversary proceedings can bring light and transparency to such practices, I supported this investigatory fact finding so as to more fully develop a tested factual record.”

Commissioner Dye is to issue an interim report of findings and recommendations no later than Sept. 2, 2018, and issue a final report of findings and recommendations no later than Dec. 2, 2018. These recommendations may include investigations into prohibited acts, enforcement priorities, policies, and rulemaking proceedings. The hearing and investigation were spurred by a petition from the Coalition for Fair Port Practices.

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