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April 1 2019

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April 1 2019 | The Journal of Commerce 27 Government nail those details down in advance, speakers said. "In your contract, do mention that the carrier shall make the cargo available at my DC [distribution center] three days after the vessel's arrival," said Siva Narayanan, global logistics director in the Technology Solutions unit of chemical company Solvay. "That's contractual. So, whether they can pick it up, or they can't pick it up, or they can't make it available … you are divorced from the weight of all those problems." Instead, the carrier is responsible for any charges due to delays, he said. "The point is, there is no clar- ity as to when free time starts," Narayanan said. The comments on how to avoid unnecessary demurrage-detention costs came just four days after Fed- eral Maritime Commissioner Rebecca Dye said her investigation into the issue was entering its final phase. She said "innovation teams" consisting of ocean freight and sup- ply chain industry experts will meet in Washington no later than mid- April. The investigation, launched a year ago, should conclude with a report by September, Dye said. The investigation is part of the commission's response to growing concern among BCOs and truckers that detention-demurrage penalties are rising — penalties they say often WITH NO OUTCOME expected for at least six months in the Federal Mari- time Commission's (FMC) investiga- tion into demurrage and detention fees, beneficial cargo owners (BCOs) are looking at ways to anticipate problems and take a more proactive approach to managing the potential- ly hefty penalties. One thing shippers can do is ensure annual service contracts with carriers are detailed and explicit with regard to the specific responsibilities of each party in a variety of scenarios and when penalties kick in. BCOs also should think about improving their leverage in case of problems by putting all of their cargo through one or a couple of terminals, speakers told the 2019 TPM Conference in Long Beach in March. Some may find it useful to negotiate demurrage- detention terms directly with those terminals, instead of the carrier. Part of the difficulty for shippers is inconsistency among ports and terminals as to when the clock starts ticking on demurrage and detention. The key to avoiding disputes is to appear to be arbitrary and unfair. The Coalition for Fair Port Practices, which represents cargo owners and truckers, petitioned the FMC to establish clear guidance of how the agency interprets "unjust" and "unreasonable" conduct. That has yet to happen. Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation, cautioned that the outcome of the latest investigation also may be more limited. "I don't think we're going to get any kind of remaking of regulations coming out of this, but hopefully you may see some establishment of best practices, common definitions," he said. Jack Oney, CEO of Oney Consult- ing and a former logistics executive at Procter & Gamble, said shippers should make the time and effort to understand the details and nuances of the supply chain so that they can understand the potential risks. "You can't then put your head in the sand, and then, when something comes up say, 'Well, we didn't contemplate that,'" he said. "Far more important than the contract is having a single point of contact with all the carriers," Oney added. That makes it easier and gives shippers' voices more weight if they have to argue that a penalty is unfair, he said. "That will solve 90 percent of your problems, [hav- ing] one person to call," he said, not- ing that such a tactic will naturally be more effective for those shippers with the greater leverage of moving a large quantity of cargo. Some shippers with sufficient cargo volume also may be able to negotiate with the terminal directly and lay out the ground rules for demurrage and detention, Nara- yanan said. In the long term, however, he said resolving issues of fairness in penalties will require a collective effort on the part of the entire industry. "Detention-demurrage is basically not for the shipper to solve, or the carrier to solve, or the terminal to solve, or for a trucker to solve," he said. "It's something that the logistics community, that we have to solve." JOC email: twitter: @HughRMorley1 Shippers' D&D dilemma The FMC's ruling on detention and demurrage is months away, but BCOs have options to manage risks By Hugh R. Morley A good strategy for shippers may be to put all their cargo through one or two terminals, rather than spreading them over three or four. APM Terminals "The point is, there is no clarity as to when free time starts." International | Washington | Customs | Security | Regulation

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