Ocean carriers will need to provide shippers with more thorough documentation on demurrage fees and how to dispute charges, according to a proposed rule unveiled by the Federal Maritime Commission on Friday.
The rule, introduced as part of the Ocean Shipping Reform Act of 2022 signed into law earlier this year, would address the fees imposed on shippers when cargo isn’t moved within a specified amount of time. Carriers have collected a record number in demurrage fees during the pandemic, and shippers say charges are often opaque with little pathway to challenge them.
The FMC’s proposal would mandate that carriers issue bills only to parties with which they have contractual relationships. Additionally, carriers must issue invoices within 30 days after charges stop accruing and give shippers 30 days to dispute the fees.
Shippers have alleged that carriers have expanded the definition of who is a “merchant” and imposed charges on those who have “no beneficial interest in the cargo,” former FMC Chairman Michael Khouri said in a statement in 2020 during an investigation of billing practices. The agency has been working over the past two years to investigate and audit carriers’ demurrage and detention practices, and found that nine major ocean carriers charged shippers $5.3 billion in 2021 with just $646.7 million ultimately waived.
Stakeholders have 60 days to respond to the FMC’s proposal. The agency said it is particularly interested in “receiving comments on whether it would be appropriate to include the consignee named on the bill of lading as another party who may receive a demurrage or detention invoice.”