No more detention fees with FMC rule for container billing practices

With the new resolution, cargo transportation companies won't need to seek reimbursements from shippers

The Federal Maritime Commission recently announced a final rule aimed at simplifying international container billing practices. This addresses detention and demurrage fees that maritime carriers have been imposing, leading truckers to seek reimbursements from shippers.

Armand Patella, Executive Vice President of the Maryland Motor Truck Association, stated that the new FMC rule is extremely beneficial for intermodal motor carriers. On behalf of everyone, he added they are satisfied with the outcome. However, he clarified that this rule doesn’t eliminate detention and demurrage but rather redirects them.

Demurrage fees are levied on containers that remain at docks beyond the designated free time. On the other hand, detention fees, also known as daily charges, are applied once the free period after removing a container from the dock has expired.

The regulation will take effect on May 28, except for two forthcoming amendments. Instead of the previous 60-day period for invoicing these charges, maritime carriers must now do so within 30 days. Patella noted that by directly assigning this responsibility to contractors, it will provide cargo carriers with a better understanding of rates and services with their customers.

During the pandemic, these charges were significantly high for carriers and have become a major source of controversy within the supply chain, as mentioned by Jonathan Eisen, Executive Director of the Intermodal Motor Carriers Conference of the American Trucking Associations to Transport Topics. In 2022, when the Ocean Shipping Reform was passed, the IMCC and ATA urged Congress to include this clarification, as cargo carriers have faced significant charges from maritime carriers when containers are delayed.

With the new resolution, cargo transportation companies won’t need to seek reimbursements from shippers, which will alter the supply chain. The FMC stated that this new regulation will impact short-haul transportation companies operating at ports, as well as trucking companies tasked with transporting international containers from inland rail facilities. Eisen emphasized the importance of contracting parties collaborating closely.

Matt Schrap, CEO of the Harbor Trucking Association, noted that issues with billing practices have persisted for over 20 years. He highlighted that the key word in this resolution is responsibility, emphasizing that it’s not just about how much is charged, the type of equipment billed, or the allowable storage time. Clearing up misunderstandings about cargo transportation will be possible thanks to this new provision from the FMC.