Logistics Weekly

TIA Submits Comments on FMC Demurrage Rule

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Last week, TIA submitted comments to the U.S. Federal Maritime Commission on its proposed interpretive rule on demurrage/detention charges.

The interpretive rule aims to bring clarity to how the agency will determine whether a demurrage charge is “just and reasonable” and proposes criteria the agency would consider when making that determination. For example, FMC would consider whether the charge was assessed while the cargo was actually available, whether the carrier was properly notified that their cargo was ready for pick-up, or whether the port has been transparent about its dispute resolution processes.

Broadly, the rule seeks to realign demurrage and detention policies with their intended purpose: to provide a financial incentive to move cargo promptly. This “Incentive Principle” would make it clear that a demurrage charge is only reasonable insofar as it actually incentivizes efficient cargo handling and movement. For example, if a terminal is closed or there is severe weather preventing the carrier from picking up their load or dropping off their equipment within the free time, FMC would likely determine that it isn’t reasonable to charge demurrage because of those extenuating circumstances.

TIA’s comments are largely supportive of the proposed rule. In our comments, we express appreciation for FMC’s efforts to ensure demurrage charges are reasonable, to tie demurrage to actual availability of cargo and ensure cargo availability is communicated properly, and to bring more transparency to demurrage dispute resolution processes.

TIA recognizes that cargo interests need to fulfill their responsibilities to receive and pick up their cargo and equipment in a timely fashion – and detention and demurrage charges are helpful tools to ensure that happens. However, we remain concerned that these charges are levied even during extenuating circumstances; detention/demurrage should not be used as an unfair revenue enhancement device.

Read TIA’s comments here. If you have any questions, please contact TIA Advocacy at advocacy@tianet.org or 703.299.5700.


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