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April 27 2020

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22 The Journal of Commerce | April 27 2020 www.joc.com Government AGRICULTURAL AND FOOD shippers are urging the Trump administration to engage with the Federal Maritime Commission (FMC) to address deten‑ tion and demurrage penalties linked to disruptions caused by the coro‑ navirus disease 2019 (COVID‑19) pandemic, fees the shippers consider to be unfair. In an April 3 letter to the National Economic Council (NEC) and US Department of Agriculture (USDA), a group of 80 signatories said it's time for the FMC to set‑ tle the three‑year debate about detention and demurrage practices, without further delay. The FMC last October sought public comment on a proposed rule, but the agency has taken no action since. Commissioner Rebecca Dye has said the agency isn't seeking to determine fault, but to provide guidance with its interpretative rule on how the agency will consider whether fees are reasonable when adjudicating a formal complaint. "We believe six months has been more than sufficient for the Com‑ mission to read 104 comments, the overwhelming majority of which support the rule," the group wrote in the letter to NEC director Larry Kudlow and USDA secretary Sonny Perdue. The call to resolve the detention and demurrage battle came as the FMC was forming supply chain innovation teams to discuss how to settle issues related to coronavirus bottlenecks. Ocean carriers, also are working with the FMC, counter that if beneficial cargo owners (BCOs) do not retrieve, unload, and return containers, supply chain bottlenecks will harm everyone until the corona‑ virus pandemic passes. The agriculture and food ship‑ pers objected to "the ongoing, unconscionable imposition of mil‑ lions of dollars of unfair detention and demurrage penalties on US agriculture by ocean carriers and marine terminal operators during the coronavirus crisis," which they maintain is why the FMC must act immediately. Ocean carriers and terminal oper‑ ators object to the characterization of detention and demurrage fees as unreasonable, as well as the idea that they are using the fees as a revenue generator during a time of crisis. They don't believe the federal government should intervene in contractual issues between carriers and BCOs. The World Shipping Council (WSC), which represents approx‑ imately 90 percent of global liner shipping capacity, said the first draft of the interpretive rulemaking was too broad and exceeds the powers afforded to the commissioners via the Shipping Act of 1984. Resolving the detention and demurrage conversation has taken on new urgency as coronavirus‑related closures have rapidly broken down the traditional international supply chain. In February and into early March, with Chinese factories shut down and sailings being blanked, detention was a critical issue for BCOs and truckers unable to find a place to return empty containers, although terminal operators coun‑ tered that truckers often cause the very issue they complain about by canceling or missing appointments with little notice. "About six or seven weeks ago, it was pretty bad. We personally had over 1,000 containers sitting either in our yard or at trusted facilities that we weren't being able to pick up because of the closures that the marine terminals implemented," Robert Loya, vice president of dray‑ age provider CMI West, said during a Journal of Commerce webcast, TPM20: What We Missed — The Trucking and Intermodal Outlook, on April 2. "Despite the fact that marine termi‑ nals are opening more gates, we're still having trouble making appoint‑ ments to return equipment." The primary concern now has shifted to how BCOs will handle laden containers if their distribu‑ tion centers are shut down or they are suppliers to companies that are closed. BCOs have used detention‑ in‑transit requests to keep containers in international markets where storage costs are lower, while port authorities and ocean carriers have provided storage options in the US. Rachael Acker, logistics director for Wolverine Worldwide, warned BCOs not to leave containers in ter‑ minals, because ports aren't mobile warehouses. "Work directly with your forwarder or ocean liner to come up with solutions that are ben‑ eficial for both sides," she suggested during the webcast. "As shippers, we really should be partnering to find the best solutions for our busi‑ nesses, carriers, and terminals to keep cargo flow fluid." How to accomplish this is the question facing the FMC supply chain teams. The FMC has asked each member to discuss what all stakeholders can do to address exist‑ ing bottlenecks and restore fluidity. "Shipping companies are offer‑ ing solutions including extended transit times, storage in transit, and other innovative approaches, but at the end of the day everyone in the supply chain must remain focused on keeping cargo moving through the ports," the WSC wrote in a recent statement on coronavirus. "This issue cannot become 'some‑ one else's problem.' It is everyone's problem, and the pain and the solu‑ tions must be shared." JOC email: ari.ashe@ihsmarkit.com twitter: @arijashe No (free) time to waste Ag shippers urge federal intervention on detention and demurrage rule By Ari Ashe A group of 80 agricultural and food shippers is asking the Trump administration to help the FMC settle a three- year debate over detention and demurrage practices. Giannis Papanikos / Shutterstock.com International | Washington | Customs | Security | Regulation

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