Biden targets detention and demurrage chargesWritten by Nick Blenkey
Should containership lines and ocean shipping alliances be getting hot and bothered by President Biden’s executive order aimed at increasing competition in U.S. economy?
The only aspect of liner shipping specifically addressed in the order looks to be detention and demurrage charges. Here’s what the order says:
The Chair of the Federal Maritime Commission is encouraged to work with the rest of the Commission to:
i) vigorously enforce the prohibition of unjust and unreasonable practices in the context of detention and demurrage pursuant to the Shipping Act, as clarified in “Interpretive Rule on Demurrage and Detention Under the Shipping Act,” 85 Fed. Reg. 29638 (May 18, 2020);
ii) request from the National Shipper Advisory Committee recommendations for improving detention and demurrage practices and enforcement of related Shipping Act prohibitions; and
iii) consider further rulemaking to improve detention and demurrage practices and enforcement of related Shipping Act prohibitions.
The level and extent of detention and demurrage charges has long been a sore point with shippers.
- Detention fees are charged when an importer has picked up a container for unpacking, but has not returned the empty container within the agreed free time.
- Demurrage charges are incurred when the full container is not moved out of the port/terminal for unpacking within the allowed free days offered by the shipping line.
The level of these charges has been under FMC scrutiny for quite a while.
Here’s what FMC Chairman Daniel B. Maffei said after attending the White House signing ceremony for the executive order:
I applaud President Biden for his leadership in calling “all hands on deck” to ensure fair competition across the supply chain. The Federal Maritime Commission is an independent agency led by five independent Commissioners. However, as Chairman, I commit to doing all I can to have the Commission fully participate in this government-wide coordinated effort to benefit the U.S. economy.
In recent months, we have increased our scrutiny of the ocean carrier alliances to identify evidence of anticompetitive behavior regarding rates and capacity, and we will continue to do so as the COVID-19 and import surge crisis continues. We welcome the assistance and cooperation from other agencies, including the Department of Justice.
With regard to detention and demurrage charges, it remains a top priority of the agency to identify and take action against those who flout the Commission’s recent interpretive rule on reasonable regulations and practices. The President’s action today reinforces these efforts and indicates his prioritization of a fair and reliable supply-chain.