Maersk Shifts Detention Billing to Consignee Ahead of FMC Regulation

  • Maersk Shifts Detention Billing to Consignee Ahead of FMC Regulation

    Maersk Shifts Detention Billing to Consignee Ahead of FMC Regulation

    Maersk will begin billing container detention charges directly to consignees on so-called merchant haulage moves from April 1 in a move that portends evolving invoicing practices related to potential new requirements from the US Federal Maritime Commission (FMC).

    “With the FMC’s ongoing rulemaking process, we’re aiming to line up a better billing process that helps truckers and customers,” a Maersk spokesperson told the Journal of Commerce Wednesday.

    Merchant haulage involves container moves where the importer manages the pickup and empty return of a box with its own drayage providers. Detention fees are assessed when a container is returned to a terminal after contractual free time expires.

    In general, drayage providers or non-vessel-operating common carriers (NVOs) that handle drayage on behalf of shippers are billed by carriers for detention. The drayage companies and NVOs then bill the shippers for those charges.

    “We will update our US import detention billing practices to no longer invoice motor carriers by default on merchant haulage moves,” Maersk said in a customer advisory Monday. “Instead, all import detention invoices will by default be issued to the consignee on the bill of lading.”

    Maersk said in the advisory that shippers can indicate whether they would prefer to still have drayage providers billed first for detention.

    The move by Maersk comes as the FMC is in the midst of a rulemaking process around detention and demurrage billing mandated by the passage of the Ocean Shipping Reform Act of 2022 (OSRA-22) last June. The legislation sought to clarify billing practices, and the FMC, in an October notice, said one of the aspects it will consider is whether only parties that are contractually related to one another can be billed for detention and demurrage.

    The initial rulemaking by the FMC proposes that “a properly issued invoice is only issued to the person that has contracted with the billing party for the carriage of goods or space to store cargo, and the billed party is responsible for the payment of any incurred demurrage or detention charge.”

    An FMC spokesperson told the Journal of Commerce Tuesday the agency received about 90 comments on the proposed rulemaking from industry players, many of which addressed the issue of who can be billed for detention and demurrage. According to OSRA-22, the FMC has one year to finalize rulemaking around such billing, meaning it must issue final rules by June 16.

    Potential unintended consequences of FMC rules 

    While Maersk’s new policy may serve as an early test of the impact of shifting detention billing directly to shippers, even within the category of merchant haulage it isn’t so easy to determine whether the consignee or drayage provider should be billed for detention.

    A national dray carrier that asked not to be identified told the Journal of Commerce that a so-called container yard-to-container yard move often involves an NVO managing the drayage leg, which could make it appropriate for the NVO, and not the shipper, to be billed for detention.

    But if the consignee handles the drayage legs independently with its own providers, it makes little sense for the carrier to bill detention to those providers, the dray carrier said.

    While OSRA-22’s billing mandate does seem to simplify the process by requiring the billing parties to be contractually bound, the drayage carrier said what is likely to happen in practice is a shift from one paperwork headache to another for trucking companies.

    Instead of working directly with the container line to determine whether a detention invoice is accurate, a dray provider may be on the sideline while an importer pays detention to the container line and then seeks an equivalent credit from the dray carrier. In that situation, the dray carrier may not know whether the shipping line, the importer, or the driver was the cause of the detention.

    The dray provider said the FMC’s intent to connect contracted parties during the billing process was laudable, and that, on the whole, charging the consignee would help truckers more than hurt them. But he urged shipping lines and the agency to consider potential unintended consequences.

    By Eric Johnson/ JOC

    Leave a comment

    Required fields are marked *

International Tracking