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October 1 2018

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32 The Journal of Commerce | October 1 2018 Government "It appears from a preliminary review that there is general agree- ment that the duty to deliver is linked to the concepts of 'reason- able notice' of cargo availability and 'reasonable opportunity' to retrieve the cargo," the report stated. "While several VOCCs asserted that there was no direct relationship between tender (or, alternatively, delivery) and demurrage, the investigation will consider whether it is reason- able for free time to begin before a container is available." Revenue generators? In January, shippers accused ocean carriers of using detention and demurrage as revenue generators. Dye wrote a 30 percent increase in detention and demurrage last year couldn't be completely explained by labor unrest, weather, and rise in container volumes. She didn't take additional steps, however, to con- clude ocean carriers knowingly used these fines as revenue generators. What is also missing from the report is anything besides survey data. How much money is collected in detention and demurrage each year? What is the per-day average? How frequently is detention and demurrage assessed? How often do shippers lodge a dispute to rescind the fee, and in what percentage of cases do they succeed? What terminals and ocean carriers have the highest percentage of detention and demurrage? These are questions that would determine the scope of the problem and where it's most acute. Dye took the same conciliatory approach on the confusing and com - plex invoicing process. She explained three different methods used in the industry. The first is an MTO collects the fee, keeps a portion, and then pays the ocean carrier. Second, the ocean carrier collects and reimburses the MTO. Third is the two entities separately invoice the shipper or trucker. Dye recommends the final billing model because it's the most trans - parent, but she labels it as optional, rather than necessary. Ocean carriers believe a uniform standard would be nearly impossible since there are hundreds of US ports and terminal operators. An option could be rejected out of hand without consequence. This could also be the case on evidentiary guidelines. In her report, she outlines the problem. "Overall, [vessel operating com- mon carriers] and MTO practices for resolving demurrage and detention disputes are varied, and many are informal," she wrote. "Many of those policies were limited to describing how to enter a waiver into the invoic- ing system, and few provided guidance on how a disputed charge should be evaluated or what evidence should be considered. Most of the respondents indicated simply that disputes are han- dled on a case-by-case basis." Here Dye pushes for a develop- ment of external guidance, rather than a need to set evidentiary stan- dards. Guidelines are not rules. That said, shippers feel like this might be easy to solve with a common sense guidelines while ocean carriers and terminal operators will be pleased with a decision that isn't mandatory. Transparency seems to be the easiest issue to resolve. Dye recom- mends more accessible, user-friendly information about who a cargo owner or draymen can contact to resolve a dispute and how long it should take. That doesn't seem to be too difficult to accomplish. Neither should the recommendation of having all of a carrier's or MTO's demurrage and detention policies on one, easily accessible website. No one seems to be opposed to transparency. Finally, Dye expressed the need for continual input through a potential Shipper Advisory Board or Innovation Team. But in the history of working groups, advisory panels, and other in - formal meeting sessions, some never get off the ground while others meet a few times and produce nothing. Shippers can feel upbeat because Dye acknowledged inconsistencies and ambiguity in basic definitions and a rise of cases warranting further study. Her report, however, didn't claim unjust and unreasonable practices were plaguing the indus- try, so the final verdict may not be a decisive win for either side but rather a decision providing everyone a small victory. JOC email: twitter: @ariashe_joc Demurrage ties up equipment and land on the terminal while detaining a container is a lost business opportunity for ocean carriers.

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