Digital Edition

January 6 2020

Issue link:

Contents of this Issue


Page 71 of 147

70 The Journal of Commerce | Januar y 6 2020 Government 2020 ANNUAL REVIEW & OUTLOOK IT'S BEEN THREE years since a group of shippers and truckers filed a peti- tion with the US Federal Maritime Commission (FMC) on detention and demurrage practices, and they are hopeful 2020 will bring a new avenue to resolve these disputes. Beneficial cargo owners (BCOs) have been reluctant to bring up dis- putes in the past because the federal agency has had limited power. If a proposed rule passes, however, the FMC would take a more active role in judging whether the often hotly contested fees are reasonable. Steamship lines won't go down without a fight, however, and are laying the groundwork for a potential legal challenge in 2020 should the FMC enact the rule. FMC Commissioner Rebecca Dye, who spearheaded the investi - gation, has recommended creating standardized definitions of detention and demurrage, simplifying dispute resolutions and fee billing practices, offering guidance on the necessary evidence for dispute resolution, and linking so-called free time to actual container availability. Dye has said she isn't seeking to determine "fault" in detention and demurrage disputes, nor whether the fees are "fair." Instead, the FMC will determine whether the fees are reasonable and encourage supply chain fluidity. "There is a recognition that this needs to move forward. And if the issues aren't worked out commer- cially, then I think the FMC will get more involved," Jon Gold, vice presi- dent of supply chain for the National Retail Federation, told The Journal of Commerce. "When this began, there were those saying it isn't a problem. The FMC has clearly determined there is a problem." Gold said he believes BCOs will be more open to filing an issue with the FMC if they feel wronged in the future. "This whole process has made BCOs realize the FMC is actually there for them," added Lori Fell - mer, vice president of logistics with BassTech International, a supplier of specialty chemicals and raw materials used in manufacturing. "The first time one of those rulings occurs [on a dispute], I think the FMC is going to evaluate whether the tariffs being filed [by ocean carriers] are contrary to existing regulations." Real-world impact Fellmer cited a recent instance in which an ocean carrier tried to charge demurrage when a terminal operator didn't transfer one of BassTech's con- tainers to a train within the allotted timeframe. Because the move was a ship-to-train transfer on dock, it was out of the shipper's control, but the company was still on the hook for the fee. In other cases, shippers are charged when an ocean carrier fails to pick up a container within the free time window on a door delivery. Even though the ocean carrier is responsi- ble for door-to-door logistics, the BCO is still penalized, she said. But even the new proposed rule has a glaring loophole, according to Fellmer, in that the FMC will not extend its purview over intermodal rail, even if the demurrage and deten- tion involves an ocean container in popular destinations such as Chicago, Dallas, or Memphis, Tennessee. The jurisdiction and logistics involved in such an extension are complicated. Once inland, does the jurisdiction transfer to the Surface Transportation Board or Federal Railroad Adminis- tration? And is there a distinction between domestic intermodal and international intermodal? Is a Schnei- der National or CSX-owned box treated differently than a CMA CGM or Maersk box? No agency has stepped forward to assume oversight of either domestic or international intermodal. "If the railroad bills the steamship line, then it's passed onto me. I have no recourse [if the charge was unrea- sonable]," Fellmer said. This happens on a regular basis because Class I railroads bill for storage — a form of terminal demur- rage — after 24 hours on domestic containers and 48 hours for interna- tional boxes. Ocean carriers are working behind the scenes to come up with workable solutions, even though they are unhappy with the FMC recommendations. "If the railroad bills the steamship line, then it's passed on to me. I have no recourse." Practical resolution BCOs, carriers at odds over FMC detention and demurrage proposal By Ari Ashe

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - January 6 2020