INDUSTRY PETITIONS FMC FOR REPRIEVE FROM “UNFAIR” PORT FEES

A broad range of retailers, manufacturers, truckers and other business groups in the United States are appealing to the Federal Maritime Commission to set new policy preventing terminal operators and ocean carriers from charging unfair fees when uncontrollable incidents such as storms and strikes keep cargo from being picked up from ports on time.

The 25-member Coalition for Fair Port Practices, which includes the National Retail Federation, the National Customs Brokers & Forwarders Association, the National Industrial Transportation League, and others, is asking the FMC to clarify what constitutes “just and reasonable rules and practices” with respect to the assessment of demurrage, detention, and per diem charges by ocean common carriers and marine terminal operators when ports are congested or otherwise inaccessible.  Additionally, the group proposes that demurrage, detention, and per diem charges should be reevaluated on a situational basis.  It is a long-awaited move aimed at spurring the FMC to make a policy statement and clarify its stance on detention and demurrage.

NVOCCs, cargo owners and trucking companies are normally given a certain number of free days to pick up containers of imported goods from ports after they have been unloaded from ships. Afterwards, they can be charged demurrage, a fee intended to ensure that containers are removed quickly and efficiently. In addition, detention and per diem fees can be charged if the chassis are not returned within a specified time.  The fees are designed to discourage the use of terminals for long-term storage and to incentivize more efficient utilization of equipment.

That system was thrown into disarray this fall when the bankruptcy of South Korea’s Hanjin Shipping left NVOCCs and cargo owners unable to pick up containers on time and later prevented them from returning containers and chassis. Delays have also occurred during other port disruptions cited in the petition, including the 2014-2015 labor slowdown at West Coast ports and Hurricane Sandy on the East Coast in 2012.

In its rule making petition, the coalition said millions of unfair detention and demurrage fees have been levied in recent years. The coalition cited $1.2 million billed to a motor carrier after long truck lines at the Port of New York and New Jersey prevented the on-time return of containers. A retailer had to shell out $80,000 because it took up to nine days to retrieve containers when only four free days were allowed due to forces out of their control.  In another cited instance, a transportation company was charged $1.25 million after containers it tried to return were turned away at West Coast ports.  The amount was eventually reduced to $250,000 but only a year after the company was forced to pay the fees upfront.

Unfortunately, it is still in question whether the FMC has the authority to make these petitioned changes.  “We believe the FMC has very clear authority under the Shipping Act to provide this policy guidance to all parties engaged in the ocean-borne transportation of our imports and exports,” said NITL Executive Director Jennifer Hedrick. “The Shipping Act clearly requires demurrage and detention practices to be just and reasonable. And that is all we are seeking in this petition.”

The FMC in the coming days will determine whether or not to notice the petition for public comment. There isn’t a predetermined schedule for how soon the FMC must respond to the petition.  It is yet to be determined how the petitions will be received, but we will keep you posted with any developments pertaining to this situation.

In the meantime, if you would like more information please do not hesitate to contact us at sales@pnglc.com or 717-626-1107 x 3.