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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On September 13, 2019, the Federal Maritime Commission (Commission or FMC) proposed an <a href="https://www2.fmc.gov/readingroom/docs/19-05/19-05_NPRM.pdf/" target="_blank" rel="noopener">interpretive rule</a> that provides important guidance on when marine terminal and ocean carrier demurrage and detention rules and practices for containerized cargo may be found to be unlawful. The rule is anticipated to benefit the U.S. economy by promoting fluidity in the U.S. freight delivery system and enhancing competition and innovation among ocean transportation providers. The Commission seeks comments on the proposed rule by October 17, 2019.

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The proposed rule is the result of a nationwide fact-finding investigation initiated by the FMC in response to an industry petition filed by the Coalition for Fair Port Practices, a group of trade associations representing importers and exporters, draymen, freight forwarders and customs brokers. In the petition, the Coalition identified concerns about a lack of clear demurrage and detention policies, the assessment of charges when delays are beyond the shipper’s or drayman’s control, poor communication regarding container availability, and inadequate processes for disputing demurrage and detention charges.

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Under the proposed rule, the Commission will assess the reasonableness of demurrage and detention rules and practices based on how well they promote the movement of freight. Historically, the purpose of demurrage and detention charges has been to incentivize cargo movement and the productive use of freight containers and port or terminal property. Under this approach, demurrage and detention charges that apply when a container is not available for pickup or cannot be returned due to lack of return appointments would likely be unreasonable absent extenuating circumstances.

The proposed rule also contains a non-exhaustive list of factors the Commission will consider when evaluating whether demurrage and detention practices adequately incentivize cargo movement in the context of specific facts involved in a case filed with the agency:

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Based on our direct involvement in the proceedings that resulted in the FMC’s proposed interpretive rule, we are well positioned to assist companies and organizations with preparing comments on the rule.

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Karyn A. Booth 202.263.4108 <a href="mailto:Karyn.Booth@ThompsonHine.com">Karyn.Booth@ThompsonHine.com</a>

Jason D. Tutrone 202.263.4143 <a href="mailto:Jason.Tutrone@ThompsonHine.com">Jason.Tutrone@ThompsonHine.com</a>

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2022/04/Transportation_Update_-_FMC_Proposes_Guidance_Clarifying_How_It_Will_Assess_Unreasonable_Ocean_Demurrage_and_Detention_Practices.pdf

FMC Proposes Guidance Clarifying How It Will Assess Unreasonable Ocean Demurrage and Detention Practices

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