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Federal Register :: Interpretive Rule on Demurrage and Detention Under the Shipping Act

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Ocean carriers and marine terminal operators further urge the Commission to reaffirm that notwithstanding the rule, the principle of “once-in-demurrage, always-in-demurrage” still governs. According to these commenters, under this principle shippers “bear the risk of any disability that arises after free time has ended.” In other words, once free time ends, it would not be unreasonable to impose demurrage on a shipper even if the shipper is unable to retrieve the container due to circumstances outside the shipper’s, or anyone’s, control. Conversely, other commenters request that the Commission expressly overrule the once-in-demurrage, always-in-demurrage principle.

II. NPRM and Summary of Comments

When property lies at rest on a pier after free time has expired, and consignees, through reasons beyond their control, are unable to remove it, the penal element of demurrage charges assessed against such property has no effect in accelerating clearance of the pier. To the extent that such charges are—penal, i.e., in excess of a compensatory level—they are a useless and consequently unjust burden upon consignees, and a source of unearned revenue to carriers. WSC at 17 (“In addition, the Commission does not acknowledge or address the fact-specific nature of all dispute resolution policies, which are created by each individual carrier.”). CV Int’l at 2 (“Accelerated D/D charges should not be permitted for cargo under government hold.”); Meat Import Council of Am. At 3; John S. Connor Global Logistics at 5 (“e do not believe it is appropriate for the carriers and/or MTO operators to escalate charges (i.e., impose penalty demurrage) in these situations.”).

P4-16, guidance will help regulated entities avoid incurring liability under section and will encourage shippers, intermediaries, and truckers to examine their practices as well. Leaders Ass’n at (“Similarly, where shippers and carriers have agreed to credit terms as a part of an existing, contracted business relationship, there is no basis for requiring advance payment of all charges prior to release of cargo”). Notice of cargo availability. In assessing the reasonableness of demurrage practices and regulations, the Commission may consider whether and how regulated entities provide notice to cargo interests that cargo is available for retrieval.


The Commission is capable of distinguishing between a regulated entity simply changing its terminology, which would in most cases would not raise any issues, and a regulated entity using its own terminology inconsistently. Likewise, regulated entities are free to use terminology that differs from that used in a particular port or the U.S. trade generally, so long as they make it clear what the terms mean. While the commenters do not explain how operational differences between, say, marine terminal operators, would result in different definitions of demurrage and detention, the proposed guidance does not mean that the Commission would ignore such differences if raised in a case. The Commission’s point was that disputes about demurrage and detention might be resolved more efficiently if a shipper or trucker knows in advance what type of documentation or other evidence an ocean carrier or marine terminal operator needs to see to grant a free time extension or waiver. If an ocean carrier or marine terminal operator provides things like trouble tickets or log records to its customers or their agents, so much the better. Dispute resolution policies that contain guidelines on corroboration will weigh favorably in the totality of the reasonableness analysis.

While that may have been the case at the port forums in 2014, the record in Fact Finding No. 28 suggested that demurrage and detention collections have only increased since then, Interim Report at 7-8, and shipper complaints have not abated. 120.E.g., Letter from 67 Organizations to Michael A. Khouri, Chairman, Fed. Comm’n (Mar. 16, 2020) (“urg the Commission to promptly adopt the rule as published which will assist the maritime industry in evaluating the fairness of these charges and resolving potential disputes”). Nat’l Retail Sys.

Interpretive Rule on Demurrage and Detention Under the Shipping Act

AgTC at 7; see also IMC Companies (“In turn, ocean carriers on carrier haulage should bill their shippers for detention/per diem directly given motor carriers are not party to the service contract. Motor carriers are also not party to service contract exceptions on merchant haulage moves, and therefore any exceptions under service contract should require billing by ocean carrier directly to their shipper.”); J. Shippers, intermediaries, and truckers do not necessarily oppose ocean carriers and marine terminal operators recovering, in certain circumstances, legitimate costs. Mohawk Global Logistics at 6 (noting that in government hold situations, “here should be compensation to both the terminals and the carriers in these cases.”); Agregar Consultoria at 1. Nor do most of them deny that demurrage and detention have a necessary place in ocean commerce. E.g., Mohawk Global Logistics at 2.

  • NAWE at 3-4 (“Because the NPRM would have the effect of specifying those regulations and practices which are reasonable and those which are not, it is beyond the scope of the Commission’s authority under the Shipping Act and would be unlawful.”); WSC at 10-11.
  • Two commenters point out that some of the practices mentioned in the NPRM regarding notice would require “significant additional sharing of information between the terminal and the carriers and clear guidelines as to who bears what responsibility.” Ocean Network Express at 2; WSC at 16.
  • Executive Order 13777, like Executive Order 12866, is not binding on the Commission.
  • For purposes of the rule, demurrage and detention includes any charges, including “per diem,” assessed by ocean common carriers, marine terminal operators, or ocean transportation intermediaries (“regulated entities”) related to the use of marine terminal space (e.g., land) or shipping containers, not including freight charges.
  • Set caps on the levels of, or total amount of, demurrage or detention that may be charged.

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B. Notice of Proposed Rulemaking and Comments

The Commission cannot assume that in this preferred scenario that ocean carriers would have to absorb their equipment costs. Rather, they presumably recover their equipment costs in other ways, such as in their freight rate. Government inspections. In assessing the reasonableness of demurrage and detention practices in the context of government inspections, the Commission may consider the extent to which demurrage financial models for equity research and detention are serving their intended purposes and may also consider any extenuating circumstances. The main thrust of the rule is that although demurrage and detention are valid charges when they work, when they do not, there is cause to question their reasonableness. It appears from ocean carrier and marine terminal operator comments, however, that some may have misunderstood the nature of the proposed rule.

Consequently, the final rule includes a new paragraph confirming that nothing in the rule precludes the Commission from considering other factors, arguments, and evidence in addition to the ones specified. PMSA is an association of marine terminal operators and ocean carriers. Incentive principle— General. In assessing the reasonableness of demurrage and detention practices and regulations, the Commission will consider the extent to which demurrage and detention are serving their intended primary purposes as financial incentives to promote freight fluidity. Finally, it is worth highlighting comments about “carrier haulage,” because, while not specifically the subject of the Commission’s rule, the topic was mentioned by several commenters.


Sheriff’s Return on A Bench Warrant (Changes case management status, see Note 1 below.) Cases with this code display in JIS case history with a warrant status of N . Order Quashing Warrant Of Arrest (Changes case management status, see Note 1 below.) Cases with this code display in JIS case history with a warrant status of N . Order Quashing Bench Warrant (Changes case management status, see Note 1 below.) Cases with this code display in JIS case history with a warrant status of N .

In promulgating this final rule and as discussed below, the Commission has considered all comments filed on or before the comment deadline of October 31, 2019, as well as all comments filed between November 1, 2019 and March 31, 2020. Although we received additional comments in April 2020, it was not possible to consider these comments given the drafting schedule for the final rule. For chassis availability or the interests of chassis lessors, none argued that the scope of the rule should be enlarged to include charges imposed by chassis owners.

The Commission, based on the Fact Finding Officer’s reports, noted in the NPRM that these were potentially valuable ideas, but they were not intended to be the only ideas. The second application of the incentive principle discussed in the rule is empty container return. The rule states that absent extenuating circumstances, practices and regulations that provide for imposition of detention when it does not serve its incentivizing purposes, such as when empty containers cannot be returned, are likely to be found unreasonable. The Commission explained that such practices, absent extenuating circumstances, weigh heavily in favor of a finding of unreasonableness, because if an ocean carrier directs a trucker to return a container to a particular terminal, and that terminal refuses to accept the container, no amount of detention can incentivize its return. In addition to refusal to accept empty containers, the Commission listed additional situations where imposition of detention might weigh toward unreasonableness, such as uncommunicated or untimely communicated changes in container return, or uncommunicated or untimely communicated notice of terminal closures for empty containers.

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Merchant Shipping Ass’n at 13-15; WSC at 17 (“The Commission’s interpretation of reasonable billing practices would require separate invoices by MTOs and carriers.”). 3 U.S.M.C. at 96; id. at 99 (“As regarding either commodity, the sampling is not an operation required in connection with delivery by the carriers. Therefore, it can provide no valid ground to contend that free time allowed is unjust or unreasonable.”). 315.NYI, 3 U.S.M.C. at 96, 99; id. at 101 (holding that “the carriers, in determining the duration of free time, are not obliged to take account of delays in the removal of cargo which arise from the causes hereinabove discussed.”). PMSA at (noting that few industry players use push notifications because existing technology does not accommodate them.”); PONYNJSSA (“he NPRM suggests that if such a system does not `push’ relevant information, then such a system might not be considered a reasonable notice of cargo availability.”). 230.NYII, 9 S.R.R. at 874 (noting obligation to “tender for delivery free of assessments of any demurrage”); NYI, 3 U.S.M.C. at 101 (“This is an obligation which the carrier is bound to discharge as a part of its transportation service, and consignees must be afforded fair opportunity to accept delivery of cargo without incurring liability for penalties.”).

WCMTOA does not, however, explain why this would be a problem. IICL at 2 (“We note, however, that statements and contentions by interested parties are generally reflections of the problems they have had; they have not been subjected to cross-examination; they may be true or partially true; they may reflect a single occurrence or many; they may be legally admissible or inadmissible; they frequently contain hyperbole.”). The Commission is also making minor changes in the final rule, described in more detail below. The Commission has also made technical formatting changes to the paragraph levels in the final regulatory text. Depending on the facts of the case, the Commission may consider things such as appointment systems and appointment availability and trucker access to the terminal, i.e., congestion. If you are using public inspection listings for legal research, you should verify the contents of the documents against a final, official edition of the Federal Register.

Specifically, the Commission is providing guidance as to what it may consider in assessing whether a demurrage or detention practice is unjust or unreasonable. The Commission did not, as OCEMA insists, “propose to limit billing practices by function such that terminal would bill solely for land use and ocean carriers would bill for equipment use.” OCEMA at 7. The Commission reiterated that ocean carriers were entitled to compensation for use of their piers during longshoremen’s strikes for cargo in demurrage when strike began and also allowed the assessment of demurrage after the end of a strike, despite legacy fx reviews post-strike congestion, on containers in demurrage when the strike began. NAWE at 6 (“Here, the NPRM would have the effect of shifting the burden of proof from a complaining shipper, receiver or motor carrier to the marine terminal operator, which would be required to overcome the presumption of unreasonableness effectively established by the NPRM and demonstrate the reasonableness of assessing the charge in that situation.”); Am. Ass’n of Port Authorities at 2; OCEMA at 2-3; WCMTOA at 5 n.2. Shippers, intermediary, and trucker commenters strongly support the rule’s emphasis on clear language.

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