In December 2016, The Coalition for Port Practices filed a petition with the Federal Maritime Commission (FMC). The coalition asked the agency to address fees that are being levied when shippers can’t pick up and return containers, cargo, and chassis for reasons they can’t control. The Coalition for Fair Port Practices is a group of 25 shippers, motor carriers, receivers, port draymen, third-party logistics companies, freight forwarders, and customs brokers. The petition has been gaining strong support shippers’ associations, custom house brokers, and forwarders.
Detention and Demurrage
Trucking companies and cargo owners are typically given a set number of free days to pick up imported goods from ports after the cargo has been unloaded. A demurrage fee is charged after the free period to encourage the removal of the containers in a timely manner. Detention fees are charged if the containers and trailers used to haul the cargo is not returned to the terminal within a specific time.
The Dispute
The Federal Shipping Act states that any fees levied must be “just and reasonable”. The petition asks the FMC to create a policy that would extend free days during times when ports are congested, when there are delays caused by government, port disruptions, and any situation that is beyond the control of the ship that is returning or picking up containers.
The coalition has stated that millions of dollars in demurrage and detention fees have been charged in recent years. The coalition highlighted one instance where a retailer had to pay $80,000 because it was not able to pick up containers within a four-day period (it took nine days) and when a motor carrier had to pay $1.2M after long truck lines at the Port of New Jersey and New York prevented it from returning container on time.
In 2014 and 2015 there were major work slowdowns at ports on the West Coast that caused disruptions in exports, mainly pork, which caused exporters to deal with demurrage charges.
CEO of the American Cotton Shippers Association (ACSA), a company supporting the petition, stated that a more fair detention and demurrage policy “would help bring about more reasonable demurrage and detention practices for cargo moving through our nation’s seaports…Our members have experienced repeated incidents of severe congestion at container terminals in ports on both the West Coast and East Coast in different crop marketing years, which have prevented our members from delivery of their cargo to the terminal.”
As of right now, the situation is at a stand-still. Formal policy changes take time and money and the FMC is not obligated to respond to the petition within a certain amount of time or at all. It is still too early to tell how things will shake out.
