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June01, 2015

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Page 16 of 87 THE JOURNAL OF COMMERCE 17 THE JOURNAL OF COMMERCE 17 Susan Kohn Ross CUSTOMS UPDATE TOP 100 IMPORTERS AND EXPORTERS TOO LITTLE, TOO LATE ON DEMURRAGE, DETENTION THE FEDERAL MARITIME Commis- sion in early April issued a report entitled "Rules, Rates and Practices Related to Detention, Demurrage and Free Time for Containerized Impor t s a nd Expor t s Mov ing Through Selected United States Ports" that summarized the results of a series of listening sessions the FMC conducted during recent port congestion challenges. While it's understandable the FMC wanted to report what it learned, the agency missed a golden opportunity to be relevant during a critical time. Yes, the FMC stopped steam- ship lines from charging a $1,000 congestion fee by pointing out such a surcharge was not provided in the carriers' tariffs, but that did noth- ing to prevent the shipping public from getting stuck with ridiculous amounts of demurrage and deten- tion in circumstances where the carriers couldn't deliver the cargo because of their own actions. There should be no confusion: The unions aren't off the hook. They made a mess of the economy, too, but in this context, it's the carriers the FMC oversees that handled the con- gestion so poorly, and that included their inability to release cargo. What the FMC heard in its Los Angeles, Baltimore, Charleston and New Orleans listening sessions was relatively uniform. Shippers were told repeatedly that cargo couldn't be picked up because of on-dock congestion and gate delays, and demurrage and detention were still charged even though there was nothing the beneficial cargo owner could do to get its goods moving. A corresponding problem the FMC neglected to report on was the mess the situation caused for truckers, many of whom reported multiple occasions of being told a shipment was available, only to arrive to find it wasn't. In one case, this occurred 13 times. The FMC report also acknowl- edged that many more informal complaints were received after the listening sessions were completed. The agency then instructed its staff to prepare a report about demur- rage and detention free times, rates, practices and the like, and to sum- marize situations where charges were assessed even though the car- rier caused the delays and charges. The report has some interest- ing facts, but little more is truly usef ul. For example, the FMC found demurrage and detention charges are higher for imports than exports. There is also no generally used formula to determine free time, or when it might be increased or decreased. Some shippers said carriers waived or reduced fees resulting from terminal congestion, but there was no clarification about how many of those instances came about because the cargo owner had a service contract on which to rely. Two other facts from the report: No standard measure of terminal velocity exists, because terminals and truckers disagree about how to measure waiting time, and detention charges can vary widely among car- riers and terminal operators. One common factor for imports and exports was the inability to move goods. Exporters also suf- fered the indignity of rolled booking fees, truckers weren't able to return empties in a timely fashion, and the cargo stowage aboard vessels has been a mess. Meanwhile, although East Cost terminals have a habit of extending free time in the face of bad weather, shippers using those ports told the FMC that adding one day's free time isn't enough to clear the congestion. The critical point the FMC did report was that vessel operators have the power to stop the clock and waive, reduce or compromise their fees if so provided in their tariffs or service contracts. But the FMC didn't publicize to cargo own- ers during the port congestion mess those carriers with such provisions in their tariffs. Anyone with a ser- vice contract with such a provision is likely a sophisticated shipper with little need for assistance, but few individual shippers know what's in a carrier's tariff or how to get that data, and the carriers weren't adver- tising their flexibility. Oddly, even if one knew of the provision, the carriers still put the burden on the claimant to document the delays. What, they couldn't tell from their own records? Terminals and ports, the FMC report also noted, have the ability to require productivity standards. In the real world, what may exist on paper often has nothing to do with how things work. One need only look to Portland, which lost 99 per- cent of its container business when Hapag-Lloyd and Hanjin Shipping pulled out because of a long-running labor dispute — even if labor under- stands job loss is a risk. The FMC report acknowledged that truckers will need to resolve their disputes with carriers and terminals through the arbitration provisions in their interchange agreements, but how does that help cargo owners? The trucker faced a Hobson's choice: Refuse to pay and arbitrate (thereby holding up cargo release) or pay and arbitrate later (but not get paid in the meantime). Finally, the FMC outlined its options. It begins by stating that since the Ocean Shipping Reform Act of 1998, and based on congressional instruction, the commission should

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