The controversial charges have been finally regulated!

Source: Shipping Gazette

According to the regulations from the Federal Maritime Commission (FMC), if carriers and terminal operators fail to provide necessary information on the invoice, the payer can choose not to pay the related fees.

Regarding the contentious issue of Demurrage and Detention (D&D) charges, there has been a phased outcome. On February 23, the FMC announced the final regulations on the collection of D&D by carriers and terminal operators, implementing new rules to combat overcharging practices.

Demurrage refers to charges levied by carriers and terminal operators when the consignee fails to pick up the goods within a specified time. Detention, on the other hand, is the fee charged when the consignee fails to return an empty container to the terminal on time.

Under the new FMC regulations, D&D invoices can be issued to either the shipper or the consignee, but not to both simultaneously. Additionally, carriers and terminal operators must issue D&D invoices within 30 days after the last charge. The party being charged has at least 30 days to request a reduction in fees or a refund. In case of disputes, both parties must resolve the issue within 30 days, unless an extension is mutually agreed upon.

Furthermore, the new regulations specify the content of D&D invoices to ensure that the payer understands the invoice information. It is mentioned that if carriers and terminal operators fail to provide necessary information on the invoice, the payer can choose not to pay the related fees.

Apart from the requirement for approval of certain invoice information, the other requirements for D&D invoices will take effect on May 26th of this year.

The final regulations on D&D introduced by the FMC are authorized by the 2022 Shipping Reform Act. The enactment of this act represents the first significant reform in U.S. container trade regulations in 24 years, indicating that carriers will face stricter regulation in the United States.

After the outbreak of the COVID-19 pandemic, the volume of imports into the United States surged, leading to a substantial increase in D&D charges. According to FMC statistics, from 2020 to 2022, the nine largest carriers serving the U.S. container market collectively collected approximately $8.9 billion in D&D charges.

There have been widespread complaints in the United States, especially from some trucking companies and truck drivers who often receive D&D invoices despite not having a direct contractual relationship with carriers and terminal operators. To continue serving customers, they are forced to pay this disputed fee.

The FMC has clarified that trucking companies are not obligated to pay these fees, a move welcomed by the American Trucking Associations. The Agriculture Transportation Coalition (AgTC) believes that the FMC's regulations are a significant step toward achieving AgTC's goal of opposing the abuse of D&D.

As the international organization representing carrier interests, the World Shipping Council (WSC) President John Butler stated that they are digesting this final regulation and will discuss it with members, currently making no public statement.

In 2022, the WSC warned that if the U.S. imposes stricter requirements on carriers, supply chain participants may be unwilling to timely pick up cargo from the terminal or promptly return empty containers, leading to increased port congestion and further deterioration of this contentious issue.

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