Exporters Ask FMC to Require Carriers to Document Extenuating Circumstances in Detention Bills
Exporters told the Federal Maritime Commission that detention and demurrage invoices need to include the earliest return dates containers will be allowed at the terminal, and that "clock-stopping events," such as a lack of appointments to bring a container to the terminal, should also be on the invoices. However, the World Shipping Council said that while the earliest return date is something shippers need to know, they need to know it before a carrier invoice.
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The FMC, which collected comments through April 16 on a proposed rulemaking on how to fix detention and demurrage billing practices, has received a mixed bag of feedback on the rules. Some shippers say the rules are sorely needed, while carriers said the industry shouldn’t face additional regulations (see 2203250028).
The New York-New Jersey Foreign Freight Forwarders & Brokers Association said it's wrong for brokers to be charged for not returning the container in a timely fashion, since it's not their responsibility, but the trucking company's.
"One of our export members has complained about being charged the full detention from initial pickup of an import container until it was delivered to the port for export," the group wrote. "Only four free days were allowed, when there should have been a standard four for the use of time to unload the import and four for the loading of the export."
They also argued that if the earliest return date is pushed out, or if other carrier actions prevent loading exports, the shipper should not be charged detention. The trade group gave the example of a company that was asked to bring four loaded containers to the port on April 6 and 7. But on April 6, the carrier decided the final cut-off for loading was that day. So the company only got two of the containers ready in time, and one of those two did not get a spot on the ship. The next sailing's earliest return date was April 12, so that company had to pay detention fees between April 6 and April 12.
The National Milk Producers Federation and U.S. Dairy Export Council said their members have received demurrage charges that covered times when terminals were not open. They, like the NYNJFFBA client, were assessed detention charges after vessel bookings were canceled or delayed. "Detention charges have also occurred when drayage providers cannot access the port to retrieve the containers, again through no fault of the exporter," the trade groups wrote.
They advised that the FMC rule should apply to charges that are similar to detention or demurrage even under another name, such as "dwell fee."
They also asked that the FMC consider requiring carriers to certify the invoice's accuracy, as is part of the Ocean Shipping Reform Act (see 2204050050). "The FMC would be required to issue regulations swiftly should this legislation become law, so it would be prudent to contemplate such certification standards in this current rulemaking," the groups said.
The American Chemistry Council said invoices should be provided in a spreadsheet, or another readable format, because auditing invoices manually "increases the chance of errors that lengthen the audit task." It said that 78% of its members have had more detention and demurrage charges since the supply chain snafus began.
USA Rice said the rule should cover ocean carriers, intermediaries and marine terminals, and, like many, complained that it can take more than six months to receive a detention invoice, though one to two months is more typical. Most USA Rice members said a 60-day deadline is best, and added, "Any charges invoiced beyond that 60-day window should be rendered moot and shippers should have no responsibility to pay charges issued so late."
USA Rice said most of its members that expressed views on the rulemaking said that common carriers invoice multiple parties for demurrage or detention charges, and sometimes more than one firm ends up paying for the same charge. "Most [members] indicated that if multiple parties are invoiced for charges, the billing party should be required to identify all such parties receiving an invoice for the charges at issue." And, the organization said, all the members who responded to a trade group survey said the biller should be required to identify why the invoiced party is the liable party for the charges.
The World Shipping Council disagrees with that last proposal, writing: "As a practical matter, creating a detention or demurrage invoice cannot become a law school exam."
The Council also said that putting information about how the earliest return dates changed on a detention invoice would be difficult to do in current information management systems, and if they had to add it, it would "involve large amounts of manual work that -- as a practical impact -- would undermine supply chain fluidity by slowing down the invoicing process."
And if trucking companies are unable to get an empty container when the carrier told them it would be there, the trucking company needs to notify the carrier, the Council said. "Similarly, if a customer/motor carrier experiences challenges with securing a pick-up or return location for a particular shipment, then the customer/motor carrier is best positioned to know of those challenges. The same applies to challenges encountered by a customer or motor carrier for obtaining appointments or due to chassis-related restrictions. These elements are vital considerations for disputes since they involve information that a carrier likely did not have visibility to prior to invoicing; that said, the same inherent limited visibility to these type of 'intervening clock-stopping' events renders them inappropriate required fields for invoicing."