The Federal Maritime Commission (FMC) has recently mandated a new rule on demurrage charges for containers remaining at a port. On May 26th, terminal operators and carriers must issue demurrage and detention invoices within 30 days from the charge date. The shipper billed will also have 30 days to request a refund on the charges. Issuers of the charges must find a resolution to the dispute during that period. The reason for the new requirements is to provide responsibility and transparency for late fees given to shippers and truckers. Demurrage was a concern during the coronavirus pandemic, where carriers collected nearly $8.9 billion in charges from 2020 to 2022.
What Does The New Rule Mean For Domestic Shipping?
Although the regulation is for international imports coming into U.S. ports internationally, it directly affects domestic shipping. Demurrage is a charge if a container stays past the free days at the terminal. Detention is a fee for using the container outside the terminal beyond the allowed period. Along with the shipper of the cargo, the trucking company in charge of handling the container also pays the charges. The new rule places limitations on who receives the bill. According to the FMC, the ultimate recipient of the cargo will receive the charge instead of the shipper. Drayage truckers not contracted with ocean carriers will no longer collect demurrage and detention charges.
The American Trucking Association notes that the rule protects carriers from unreasonable charges and will help create efficiency in shipping. In the past, demurrage and detention fees would go to the trucker despite the shipper causing the container delays. Ocean carriers may soon have to work directly with their customers, which will incentivize quicker disputes. The World Shipping Council (WSC) recently warned that the new rule may have the opposite effect and increase port congestion. WSC believes the regulation will impede timely container pickups and empty container returns at terminals. The FMC, however, trusts that the fluidity of supply chains will grow from the implementation of the ruling.
Is The New Rule On Demurrage Charges Unfair To Shippers?
While the new rule takes late-bill fees from drayage truckers, many believe shippers will now face the liability. The burden of the demurrage and detention charges may now fall mainly on importers. In the long run, this can lead to higher costs, which can be partially unfavorable for smaller shippers. If the trucker is at fault for not picking up the cargo or returning the container, they are not liable. As previously mentioned, the rule can reduce the incentive for domestic carriers to do their jobs. Shippers will soon have to examine their contracts more carefully and take more steps to prevent demurrage and detention.
If you are moving cargo domestically or internationally, demurrage and detention are unfavorable when managing a supply chain. For a shipper, these charges can cause monetary loss and slow the shipping process. It is essential to take steps beforehand to prevent any disruptions to your supply chain. Using an experienced trucker can be crucial in avoiding demurrage charges and getting your goods to the final destination. Reach A1 Freight Solutions at 786-375-9420 or info@a1fsinc.com to learn about our drayage services. Along with drayage, we have heavy haul, temperature-controlled, expedited, and more solutions to move your shipment domestically.