Court Reversal Reopens Demurrage Exposure
A recent U.S. Court of Appeals decision has reshaped the landscape of ocean freight billing, reintroducing potential exposure for motor carriers to demurrage and detention charges that had been largely off the table for more than a year. The ruling, handed down late last month by the U.S. Court of Appeals for the District of Columbia, reversed a key portion of the Federal Maritime Commission’s (FMC) 2024 rule that had prohibited ocean carriers and marine terminal operators from billing trucking companies directly for demurrage or detention.
The decision arose from a challenge filed by the World Shipping Council (WSC), which represents the world’s largest ocean carriers. The WSC successfully argued that the FMC’s rule was inconsistent and lacked proper justification. The Court agreed, describing the FMC’s restriction as “arbitrary and capricious” — particularly since it barred billing to some contracting parties while allowing billing to others with no direct contractual ties.
For companies that operate in the complex ecosystem between ocean freight, ports, and inland delivery, this ruling represents a meaningful shift in operational and legal exposure. It raises new concerns for motor carriers that serve as a vital link between container terminals and final destinations.
At PNG Worldwide, a global logistics service provider managing thousands of door-to-door shipments each month, the news has prompted close monitoring — but not alarm. PNG Worldwide has built its reputation on precision execution, data visibility, and proactive coordination that keeps its customers insulated from unnecessary costs. The company confirmed that 99.98% of its international door-to-door moves are completed without detention or demurrage, a performance level virtually unmatched in the industry.
In the few rare instances where delays occur, PNG Worldwide noted that the root cause almost always traces back to external customs brokerage issues not to carrier or drayage performance. The company’s integrated systems and direct management of port-to-final-destination operations continue to minimize risk and provide the transparency that customers need as the regulatory landscape evolves.
The Court’s Reasoning: “Arbitrary and Capricious” Policy
The case centered on whether the FMC’s 2024 final rule had overreached by banning demurrage and detention invoices to motor carriers even when those carriers were in contractual privity with ocean carriers. The Court found that the FMC’s logic conflicted with its stated principle — that only contracting parties should be subject to such invoices.
By excluding trucking companies that had direct contracts with ocean carriers, while allowing invoices to consignees that lacked such contracts, the Commission effectively contradicted itself. The Court wrote: “The Commission failed to explain the seeming inconsistency between its contractual-privity-based rationale and its categorical bar against billing motor carriers even when in privity with the billing party.”
In simpler terms, the FMC cannot claim that billing depends on contractual relationships, then exclude one group of contracting partners without explaining why.
The ruling sets aside only the portion of the FMC rule that defined who could be billed for demurrage and detention. Other provisions, including those establishing timelines for issuing invoices and defining documentation requirements, remain in force.
Industry Response: A New Wave of Caution
Legal observers have described the outcome as a partial but meaningful victory for ocean carriers. According to analysis from maritime law specialists at Husch Blackwell and Scopelitis, the decision does not require that motor carriers be billed — it merely removes the blanket prohibition that had shielded them.
That subtle difference matters. The court’s reversal reopens a possibility that was closed, but whether carriers will exercise it depends largely on commercial relationships, contractual language, and the practical realities of port operations.
The Scopelitis firm noted the irony that the FMC’s rule, intended to restrict billing to parties in privity, ended up excluding some who were in privity and including others who were not. The appellate judges concluded that the Commission never gave an adequate explanation for this imbalance, leaving the door open for further rulemaking or clarifications in the future.
What This Means for Shippers and Motor Carriers
For most importers and exporters, the direct impact will depend on how their logistics providers and drayage partners manage port activity. In theory, the reinstatement of billing rights could mean that motor carriers once again face invoices for delays caused by congestion, documentation errors, or customs holds. In practice, leading operators with real-time visibility and active port management — such as PNG Worldwide — have already structured their operations to prevent those issues from reaching the billing stage.
Demurrage typically applies when loaded containers remain in a terminal beyond the free-time period after being unloaded from a vessel. Detention applies when a container is kept outside the terminal for too long before being returned. Both charges can escalate quickly, sometimes reaching hundreds of dollars per day per container.
For smaller carriers or operators lacking integrated systems, the renewed exposure could pose a financial risk. Miscommunication between a steamship line, a broker, and a drayage carrier could once again trigger disputes.
PNG Worldwide’s model, however, was designed precisely to avoid those pitfalls. Its MyPNGLC transportation management platform synchronizes data between ocean carriers, terminals, and inland drayage in near real time, ensuring that every milestone — from vessel discharge to delivery — is documented and visible. Automated notifications alert teams long before free time expires, and coordination with customs brokers, especially in Asia and Europe, keeps documentation flowing without interruption.
PNG Worldwide’s Record: A Near-Perfect Performance Rate
Asked about the potential implications of the court decision, a PNG Worldwide spokesperson said the company is closely following developments but sees no operational risk to its customers. “Our demurrage and detention exposure has always been effectively zero,” the spokesperson said. “In more than 99.98% of our door-to-door shipments, we complete the process without a single hour of detention or demurrage. The rare exceptions have always involved non-U.S. customs brokers or documentation issues outside our operational control.”
That level of precision is not accidental. PNG Worldwide’s internal metrics track every container from the moment it is loaded at an overseas factory until it reaches its final consignee. Integrated APIs with port terminals and carrier EDI feeds provide timestamp-accurate data. The company’s operations teams review exception reports daily, and each office — from Bucharest to Shanghai to Pennsylvania — follows a unified escalation protocol.
The result is not just compliance with FMC rules but a near-elimination of the conditions that trigger those charges in the first place.
“Demurrage and detention are, in most cases, symptoms of communication gaps or process failures,” said one senior operations manager at PNG Worldwide. “When the right systems are in place — when the drayage team, customs broker, and consignee are all working in one digital environment — those charges simply don’t materialize.”
The Broader Policy Context
The FMC’s original rulemaking process began in 2020, following widespread frustration among U.S. importers during the pandemic when supply chain congestion led to historic levels of demurrage and detention billing. The 2024 rule aimed to increase fairness and transparency, especially for truckers who were being billed even when they had no ability to control port delays.
The Commission defined who could be billed — only the party that contracted with the carrier for ocean transport or storage, and the consignee — effectively excluding truckers. But after the World Shipping Council’s legal challenge, the D.C. Circuit Court ruled that such exclusion lacked a rational basis when applied to trucking companies that actually did have contracts with ocean carriers.
The Court did not strike down the FMC’s entire regulatory framework, nor did it invalidate the Commission’s authority to regulate billing practices. Rather, it directed the FMC to revisit the issue and provide a more reasoned explanation if it intends to maintain its exclusion policy.
This means the FMC could issue a revised rule or clarification in the coming months, either reaffirming or redefining which entities can be billed. For now, the regulatory pendulum swings back toward allowing demurrage invoices to be issued to motor carriers that are in contractual privity with ocean carriers.
PNG Worldwide’s Proactive Measures
PNG Worldwide has communicated to its customers and partner carriers that it remains in full compliance with all FMC requirements and is prepared to adapt instantly to any regulatory adjustments. The company’s compliance and legal teams, in coordination with industry associations and external maritime counsel, are tracking the FMC’s response closely.
At the same time, PNG Worldwide emphasizes that the best defense against demurrage and detention is not regulation — it is execution. With nearly all shipments completed without incident, the company has effectively neutralized the risk through operational excellence rather than policy dependency.
Its European and Asian offices, including its logistics hub in Bucharest, play a crucial role in that performance. These teams oversee customs documentation, local pickup, and export compliance, ensuring that the U.S. inbound leg begins with clean paperwork and pre-cleared documentation. When exceptions arise — typically due to third-party customs brokers outside the company’s ecosystem — PNG Worldwide engages directly with the client and the overseas partner to resolve the issue before it cascades into cost exposure.
Looking Ahead: Stability Through Precision
While some in the trucking sector may view the appellate ruling as a step backward, industry veterans recognize that such regulatory reversals are part of a longer evolution toward balanced accountability. What matters most is operational readiness — the ability to prevent charges rather than litigate them.
PNG Worldwide continues to demonstrate that readiness. Its near-perfect demurrage and detention record, achieved across tens of thousands of container moves annually, underscores a model that others in the industry are striving to emulate: one built on integrated data, disciplined process control, and consistent communication between every stakeholder in the supply chain.
The company’s leadership summarized the approach succinctly: “Whether the FMC rule stands or changes again, our results speak for themselves. The system works because every shipment is monitored, every partner is informed, and every container moves on time. That’s the real solution to demurrage and detention — not a legal exemption, but operational discipline.”
For shippers, consignees, and carriers navigating an increasingly complex regulatory landscape, the lesson is clear. The difference between being exposed to new fees and being protected from them lies in choosing a logistics partner that treats every container as a commitment — not just a transaction.
PNG Worldwide’s ongoing monitoring of the FMC’s actions ensures that its customers remain fully informed and unaffected, regardless of how policy lines are redrawn.
In an industry where costs can compound overnight and rulings can change the rules of engagement, PNG Worldwide’s consistent performance provides something increasingly rare in global logistics: certainty.
View All News Articles