Recent Federal Maritime Commission Developments

Transportation Update

Date: September 11, 2018

Interim Report Issued on Detention, Demurrage and Free Time Practices

On September 4, 2018, the Federal Maritime Commission (FMC) issued an interim report on its ongoing Fact Finding Investigation No. 28, Conditions and Practices Relating to Detention, Demurrage, and Free Time in International Oceanborne Commerce (Report). The investigation was initiated on March 5, 2018 in response to a petition submitted by a coalition of 26 trade associations representing thousands of American cargo interests, truckers and transportation intermediaries that expressed concerns regarding ocean carrier and marine terminal demurrage and detention practices, as well as public hearings before the FMC.

The Report details the FMC’s preliminary observations on detention, demurrage and free time practices, including:

  • Standardization of language: Unambiguous, standard terminology should be developed to accurately reflect the nature and source of detention and demurrage charges.
  • Increasing billing clarity and accessibility: It would be useful and feasible to have all of a carrier’s or marine terminal operator’s demurrage and detention policies in one easily accessible website.
  • Dispute resolution transparency: More transparency into demurrage and detention dispute resolution procedures is needed, including having accessible information on who to contact in the event of a dispute about a particular charge, how a dispute is resolved by a carrier or marine terminal operator, and how long the dispute resolution process can be expected to take.
  • Evidentiary guidelines: Developing external guidance regarding the type of evidence relevant to resolving demurrage and detention disputes would benefit cargo interests, drayage providers, carriers and marine terminal operators.
  • Tender and notice of container availability: The record suggests that reasonable notice of container availability and reasonable opportunity to retrieve cargo would resolve many demurrage and detention disputes at U.S. container ports and enhance the ability of marine terminal operators to move cargo.
  • Optional billing model: There are advantages to a billing model wherein marine terminal operators bill cargo interests directly for cargo storage on terminal and carriers bill cargo interests directly for use of container (whether on or off terminal).
  • FMC Shipper Advisory Board or Innovation Team: The FMC seeks continual input from U.S. shippers regarding issues affecting the international freight delivery system, which might include the formation of a Shipper Advisory Board or Innovation Team. The FMC will also consider advisory boards or innovation teams composed of ports and FMC stakeholders as well.

Commissioner Dye, the fact-finding officer of the investigation, will meet with industry leaders to obtain additional information on these items and will issue a final report by December 2, 2018.

Comments Sought on Limiting Prohibition on Unjust and Unreasonable Practices and Regulations of Ocean Transportation Providers

On September 6, 2018, the FMC issued a notice of proposed rulemaking inviting public comments on a proposed interpretation that limits the scope of the Shipping Act’s prohibition on unjust and unreasonable practices and regulations concerning the receipt, handling, storage or delivery of property in ocean transportation (see 46 U.S.C. § 41102(c)). The interpretation would narrow the prohibition to only those unjust and unreasonable practices and regulations that an ocean carrier, marine terminal operator or ocean transportation intermediary conducts on a normal, customary and continuous basis, rather than on a discrete or occasional basis.

For shippers, drayage truckers and others who deal with ocean transportation providers, this interpretation will eliminate claims before the FMC as an avenue for remedying discrete or occasional unjust and unreasonable activities concerning the receipt, handling, storage or delivery of property in ocean transportation. While there may be alternative legal remedies concerning these activities, the FMC would like comments on the adequacy of those alternatives.

Interested persons may file comments on the interpretation by October 10, 2018. The FMC has specifically asked for comments on the following:

  • The legal basis for the interpretation.
  • The interpretation’s impact on ocean carriers, MTOs, OTIs and members of the shipping public.
  • The adequacy of alternative legal remedies for discrete and occasional unjust and unreasonable activities.

For more information, please contact:

Karyn A. Booth

Jason D. Tutrone

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgement 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.