FMC Report on Detention and Demurrage Practices
The Federal Maritime Commission (FMC) has released its final report of an eight-month investigation regarding “Conditions and Practices Relating to Detention, Demurrrage, and Free time in International Oceanborne Commerce.” The report found that while demurrage and detention could be valuable tools to move cargo promptly, the lack of standardized definitions and practices were concerns.
The FMC identified the need for consistent standardized language, transparent and simplified billing (when fees will be applied and how much), dispute resolution processes, and a method to notify the interested parties of container availability.
Demurrage, which occurs after “free time” expires, is derived from a carrier’s obligation, “to tender for delivery cargo to a consignee.” This means that it is a carrier’s responsibility to “(1) unload cargo onto a dock or pier, (2) place it at a location where it is accessible to the consignee, (3) segregate it by bill of lading and count, (4) give the notice to the consignee, and (5) afford the consignee a reasonable opportunity to come and get it.” The report found that “some of the demurrage problems complained of may benefit from a focus on container availability.”
The FMC report recommends that the Commission organize FMC Innovative Teams composed of industry leaders to develop and refine viable demurrage and detention practices to the following key areas:
• Transparent, standardized language for demurrage and detention practices;
• Clear, simplified, and accessible demurrage and detention billing practices and dispute resolution processes;
• Explicit guidance regarding the types of evidence relevant to resolving demurrage and detention disputes;
• Consistent notice to cargo interests of container availability;
Due to the complexity of port operations and the wide variations in port procedures, the report concluded that the Commission would benefit from the establishment of a Shipper Advisory Board to offer insights and information to the Commission on emerging maritime issues.
The report is available at: https://www.fmc.gov/assets/1/Documents/FF%2028%20Final%20Report2.pdf
For more information, please contact your Krieger Worldwide representative.