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June01, 2015

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14 THE JOURNAL OF COMMERCE TOP 100 IMPORTERS AND EXPORTERS 2015 JUNE 1.2015 By Joseph Bonney DEMURRAGE AND PER-DIEM detention fees at gridlocked U.S. ports have turned into a multimillion-dollar hot potato. Cargo interests, truckers, ocean carriers and marine terminals are locked in noisy, seemingly nonstop argument over respon- sibility for the fees. It's a complex problem with no easy solution — but plenty of fin- ger-pointing. Chronic port delays have transformed what once was an intermittent annoyance into a daily source of cost and controversy, said Curtis Whalen, executive director of the American Trucking Associations' intermodal council. "You used to have a flare-up every now and then. Now it's become systemic," he said. "There's a lot of angst in the industry." Demurrage and per-diem detention fees are designed to discourage use of terminals for long-term storage, and to improve equip- ment utilization. Demurrage is assessed on cargo left at the terminal beyond allotted free storage time. Per-diem detention is charged for containers that aren't returned before free time expires. The charges can be hefty. Demurrage charges are highest in the Port of New York and New Jersey, where members of the New York Terminal Conference assess daily charges on dry containers that begin at $145 on the first day after free-time expira- tion and rise in stages to $355 a day for the 10th day or beyond. The situation is muddled by free-time extensions in shipper-carrier service con- tracts. Many shippers, particularly large ones with bargaining clout, negotiate longer free time than specified in terminals' or ocean carriers' demurrage tariffs, or in equipment providers' rules for detention. Complaints about demurrage and deten- tion charges soared following gridlock at West Coast ports through late 2014 and early 2015, and congestion at the New York-New Jersey and Virginia ports during the last couple of years. Conf licts over per-diem fees for late return of equipment may be submitted for arbitration under the industry's Uniform Intermodal Interchange Agreement. Last winter's slowdowns at West Coast ports generated more than 100 trucker arbitration claims over per-diem detention bills assessed by ocean carriers. There is no similar process for demurrage charges, which involve use of terminal space, not equipment. In the first batch of rulings on the West Coast detention cases, UIIA arbitrators said that unless a terminal was completely closed, truckers couldn't claim they were denied ser- vice unless they could provide rejection slips, dispatch communications or other evidence their drivers were turned away. Cases filed for UIIA arbitration repre- sent the tip of the iceberg. Most grievances over congestion-related charges are settled informally. Carriers grant case-by-case waivers of charges in cases when weather or congestion cause undue delays. Termi- nals take a similar case-by-case approach to demurrage claims. Even so, it's a hassle for cargo owners. One supply chain manager described a case in which containers couldn't be returned within the allotted free time at Oakland because the carrier repeatedly pushed back sailing dates — and delivery windows for export shipments — but ignored requests for waivers. Other situations are less clear-cut. Truckers say they often receive delivery orders from shippers on the last day of allot- ted free time. Motor carriers say they often receive the blame — and the bill — if they can't deliver the export box or pick up the import container before free time expires. "Truckers are stuck in the middle," Whalen said. "They're billed demurrage for failure to pick up a container, and deten- tion when they can't return it before free time expires — and all of this is triggered by things beyond their control." Whalen said terminals and ocean carri- ers are using the charges as a profit center. Playing the Blame Game There's been plenty of finger-pointing over demurrage and detention fees, but all shippers see is a growing hassle

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