SIMIC

A PROPOSED Federal Maritime Commission (FMC) regulation on detention and demurrage would damage container flow by limiting which parties can be billed, according to comments filed, reports IHS Media.
Industry comments, invited by the FMC, are linked to proposed detention and demurrage rulemaking associated with the Ocean Shipping Reform Act of 2022 (OSRA-22) implemented earlier this year.
"The last two years have shown the industry what the future of forecasted elevated volumes may look like and how stakeholders' behaviours can affect the flow of global commerce and the entire supply chain," said the Port of New York and New Jersey (PANYNJ) said in its comment.
"Per diem charges [a term often used interchangeably with detention and demurrage] should foster the movement of long-dwelling goods to keep ports fluid," said PANYNJ.
A negative impact on flow through terminals would result from limitations the rule would place on the ability of ocean carriers, marine terminals and non-vessel-operating common carriers (NVOs) to bill certain parties such as consignees and truckers for detention and demurrage.
Such parties, if they were no longer financially responsible for moving containers, would in the aggregate contribute to a potential mass slowdown of containers moving through terminals or returned to ocean carriers, leading to the possibility of ongoing port congestion well into the future, according to some of the comments.
Said the National Retail Federation (NRF): "The proposal essentially shifts complete responsibility for all demurrage and detention charges to the shipper who contracts with the common carrier ... regardless of whether the contracting shipper's conduct was the reason for incurrence of the charges."
The original notice of proposed rulemaking was published on February 15 and the agency will review the 250 comments and issue a final rule by June. The final rule could deviate from the proposed rule based on the FMC's response to the submitted comments.
In many cases that is not the consignee who plays a central role in picking up cargo from terminals, nor is it the trucker, but rather the shipper who might not be located in the US and may have no involvement in downstream logistics.
Said the American Association of Port Authorities: Not being able to bill truckers would represent "an unprecedented change to port operations".
But truckers' comments expressed strong support for the proposed rule.
The proposed rule puts in question "whether MTOs [marine terminal operators] could collect demurrage as the agent of a carrier from the party arranging cargo pickup," say terminal operators representative, Ports America and SSA Marine said. "The proposed rules appear to prohibit MTOs from charging terminal users for demurrage pursuant to the terms of its published tariff schedules."
The result, comments assert, would impact flow following a debilitating two years when slow movement of containers through terminals resulted in ships backed up by the dozens off US ports such as Los Angeles-Long Beach, Savannah, New York-New Jersey, Houston, and others.
Said the World Shipping Council: "This proposal abandons the 'incentive principle' by failing to consider how billing certain parties other than shippers incentivizes freight fluidity through the supply chain."
Said PANYNJ: "The cost to leave containers at ports and on terminals must become financially inconvenient for cargo owners and shippers so that it motivates the pick-up of cargo.".
Indeed, a key issue that could affect flow is the frequent lack of proximity of the "shipper" or contracting party with the ocean carrier, relative to the physical handling of cargo at a US port.
"Our members are concerned that application of the commission's rule may undermine network efficiency at US ports and terminals in cases where payment of the charges is required for release of the goods to the consignee/receiver," the NRF said.
"This is because an overseas party who contracted for the carriage but fulfilled the 'delivery' obligations under the sale of goods contract upon the goods' arrival at the US destination may ignore or delay payment of invoices for demurrage and detention charges."