** September 20, 2019 **

The Federal Maritime Commission is seeking public comment on a proposed interpretive rule on demurrage and detention under the Shipping Act. The Federal Maritime Commission has extended the deadline for submitting public comments.

This interpretive rule would provide the public with guidance about how the Commission assesses the reasonableness of demurrage and detention practices and regulations under the Shipping Act. The interpretive rule describes a non-exclusive list of factors the Commission may consider in evaluating claims and complaints that come before the agency under 46 U.S.C. 41102(c) and 46 C.F.R. 545.5(d)

The Commission voted last week to adopt Commissioner Rebecca Dye’s recommendations on Fact Finding 28 . Her first recommendation was that the Commission issue guidance in the form of an interpretive rule.

Comments to the Commission are now due not later than Thursday, October 31, 2019.

Bi-State Members are strongly encouraged to submit feedback on the current assessment of detention & demurrage fees, and join the Association in expressing support for the proposed changes.

To submit comments via Email
Email secretary@fmc.gov . Include in the subject line: “Docket 19-05, Demurrage & Detention Comments.” Comments should be attached to the email as a Microsoft Word or text-searchable PDF document. Only non-confidential and public versions of confidential comments should be submitted by email.

To submit comments by Mail:
Address your comments to Rachel E. Dickon, Secretary, Federal Maritime Commission, 800 North Capitol Street NW, Washington, DC 20573–0001.


WHAT INTERPRETATIVE CHANGES ARE BEING PROPOSED?

The Fact-Finding Report offered the following assessment:

-- Demurrage and detention are valuable charges when applied in ways that incentivize cargo interests to move cargo promptly from ports and marine terminals. The Commission proposes that in assessing the reasonableness of demurrage and detention practices and regulations, it will consider the extent to which demurrage and detention are serving their intended purposes as financial incentives to promote freight fluidity. 

-- All international supply chain actors could benefit from transparent, consistent, and reasonable demurrage and detention practices , which would improve throughput velocity at U.S. ports, allow for more efficient use of business assets, and result in administrative savings; and

-- Focusing port and marine terminal operations on notice of actual cargo availability would achieve the goals of demurrage and detention practices, and improve the performance of the international commercial supply chain. A particularly important context for the incentive principle, and one given its own subparagraph in the proposed rule, is cargo availability. If cargo interests or truckers cannot pick up their cargo within free time, then demurrage cannot serve its incentive purpose. Cargo availability is key to demurrage serving its intended function , and thus the Commission may consider the relationship between demurrage and cargo availability in its analysis under 46 U.S.C. 41102(c).15 The more a demurrage practice is tailored to cargo availability, the less likely the practice is to be found unreasonable

-- The proposed interpretive rule would also indicate that absent extenuating circumstances, practices and regulations that provide for imposition of detention when it does not serve its incentivizing purposes, such as when empty containers cannot be returned, are likely to be found unreasonable.  The paradigmatic example is that if the marine terminal designated by an ocean carrier refuses to accept empty containers, no amount of detention can incentivize the return of those containers. Absent extenuating circumstances, assessing detention in such situations, or declining to pause the free time or detention clock, would likely be unreasonable.