New demurrage and detention billing rule releases truckers from charges

Truckers will no longer have to pay detention and demurrage charges at ports thanks to a new Federal Maritime Commission rule.

On Monday, Feb. 26, the Federal Maritime Commission published its final rule that sets regulations overseeing detention and demurrage billing requirements. In addition to setting minimum information and timeframe requirements, the rule clarifies who can be billed.

Specifically, detention and demurrage invoices can be issued to only two parties:

• The person for whose account the billing party provided ocean transportation or storage of cargo and who contracted with the billing party
• The consignee, defined as “the ultimate recipient of the cargo; the person to whom final delivery of the cargo is to be made”

Detention and demurrage bills cannot be issued to both parties simultaneously.

The rule provides relief to motor carriers that have been getting billed for detention and demurrage charges but were never involved with the contracts. According to the Intermodal Motor Carriers Conference, trucking companies have been footing the bill despite never being party to contracts between ocean lines and shippers. The new rule defining who can be invoiced will eliminate that practice.

The new detention and demurrage billing rule goes into effect on May 28.

“The Ocean Shipping Reform Act required the (Federal Maritime Commission) to clarify who can be billed for detention and demurrage charges, and we are extremely pleased to see that motor carriers who do not contract with ocean carriers will no longer receive these bills,” Intermodal Motor Carriers Conference Executive Director Jonathan Eisen said in a statement. “The new rule will require ocean carriers to work directly with their customers, increasing incentives for faster dispute resolutions and bringing greater efficiency to the supply chain.”

Signed into law in June 2022, the Ocean Shipping Reform Act was a reaction to major supply chain disruptions that came in the wake of the COVID-19 pandemic. It is the first time significant changes have been made to ocean transportation regulations since the reauthorization of the Shipping Act in 1998.

Shortly before signing the bill, President Joe Biden noted that during the pandemic, ocean carriers increased prices by as much as 1,000%. From July to September of 2021, eight of the largest ocean carriers charged detention and demurrage fees totaling more than $2.2 billion, a 50% increase from the previous three-month period.

Pre-pandemic shipping rates for a 40-foot container were around $1,300. By September 2021, rates jumped to $11,000, according to a one-pager issued by Sen. Maria Cantwell, D-Wash.

In addition to addressing detention and demurrage charges, the Ocean Shipping Reform act also:

• Stops international ocean carriers from unreasonably declining American cargo
• Directs the Federal Maritime Commission to self-initiate investigations of ocean carrier business practices and apply enforcement measures
• Improves transparency of movement of U.S. agricultural and other exports by requiring international ocean carriers to report to the Federal Maritime Commission regarding how many empty containers are being transported
• Stops retaliation by international shipping companies against exporters and importers

“Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase four-fold in just two years, raising costs for consumers and hurting our businesses,” Sen. Amy Klobuchar, D-Minn., said in a statement. “Meanwhile, ocean carriers that are mostly foreign-owned have reported record profits. This bipartisan legislation will level the playing field for manufacturers, farmers and consumers – a major win as we work to strengthen our nation’s supply chain.”

Changes to detention and demurrage billing marks another win for intermodal truckers. Earlier this month, the Federal Maritime Commission issued a ruling that gives motor carriers more freedom to choose their chassis provider. LL