Spotlight on Demurrage and Detention

Spotlight on Demurrage and Detention

The call for an industry wide adoption of best practices in demurrage and detention came in a letter last week from Federal Maritime Commission managing director, Lucille Marvin. This was sent to 25 container lines and the World Shipping Council, the trade association that represents liner shipping companies.

 

The What

Lucille Marvin is heading up the Vessel-Operating Common Carrier (VOCC) Audit Program and VOCC Audit Team, which were both established in July 2021 at the direction of Commission chairman Daniel B Maffei.

This team has engaged the top nine ocean carriers, by market share, and called on ports in the US to assess their compliance with the FMC rule on Demurrage and Detention that was instituted last year. As part of their work, the VOCC Audit Team has looked for examples of model behaviour by individual carriers that should become industry standards.

 

The How

Ocean carriers need to adopt three common best practices that relate to detention and demurrage. These best practices promote clarity and certainty about how and when fees will be assessed, as well as how to challenge disputed charges.

The correspondence that was sent out to industry encourages ocean carriers to:

  • Display Demurrage and Detention charges clearly and prominently on their webpages or customer portals
  • Develop and document clear internal processes on all matters related to Demurrage and Detention where they have not already done so
  • Clearly delineate dispute resolution procedures, contacts, and required documentation on their website and invoices

 

The Why

The aim of detention and demurrage is to incentivise cargo movement and equipment return. The best practices communicated in the letter were identified by the audit team as initial measures that can align carrier documents and policies with the goals of this rule.

In addition to the work that the VOCC Audit Team has been busy with, the Commission is also looking at other ways to achieve compliance with its rule on Demurrage and Detention.

In September 2021, a vote was taken to start work on an Advance Notice of Proposed Rulemaking on Demurrage and Detention billing practices that will be published in the next few months.

Shipping costs are high enough! TSI manages our clients’ Demurrage and Detention for free so that they don’t they don’t get hit with these costs too. Visit our website to find out more about our ground-breaking technology and shipping services. 

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