The Federal Maritime Commission (FMC) is looking at whether some ocean carriers and terminal operators have been unfairly administering free time and assessing demurrage and detention charges against importers and their truckers that have been caught up in the ongoing congestion problems at West Coast ports. The independent federal agency, which is tasked with regulating international ocean transportation in the United States, also is watching how ocean carrier alliances are affecting port operations, importers, and exporters, including their role in the business disruptions and cargo loss that have plagued the West Coast for months.
On April 13 the FMC released a 64-page staff report that reviews carriers' and terminals' rules and rates for detention, demurrage, and free time. The report also lays out concerns expressed by importers, exporters, and drayage carriers—most prominently, a "Catch-22" situation where they are not allowed to pick up or return containers and chassis within the allotted free time because of congestion yet are charged detention and demurrage. Finally, it presents some steps the industry and the FMC could potentially take to address concerns about demurrage and detention. The FMC defines demurrage as a charge for the use of space at a terminal, and detention (also known as per diem) as a charge for the use of equipment such as containers and chassis. Free time is the grace period before these fees are imposed—either four or five days, depending on the port.
The FMC has a number of tools at its disposal, including initiating a formal fact-finding study, a full investigation, or a formal complaint, among others, said FMC Commissioner Richard A. Lidinsky Jr. earlier this month at the Coalition of New England Companies for Trade (CONECT) Northeast Trade & Transportation Conference. The staff report makes no recommendations, saying there are insufficient facts to warrant specific action at this time.
Lidinsky said the FMC wants to make sure any charges are legitimate and are applied fairly. When, for example, a group of carriers requested approval to impose a congestion surcharge at West Coast ports, he recounted, the agency immediately turned them down on the grounds that it would be wrong to make customers pay for a problem the carriers had caused themselves.CARRIER ALLIANCES DRAW ATTENTION
The FMC is looking at demurrage and detention charges within the larger context of port congestion and its underlying causes. One thing that's under the microscope is the operating practices and policies of the four major carrier alliances that call at U.S. West Coast ports: CKYHE (five carriers), and the 2M, Ocean 3, and G6, whose names reflect the size of their membership. Several speakers at the CONECT conference, including port and terminal executives, said they believe that the alliances, with their huge ships carrying enormous numbers of almost randomly stowed containers, forced inefficiency and near chaos on the terminals, and that the longshoremen's work slowdown before and during contract negotiations simply exacerbated an already bad situation.
The commission is looking at what role the alliances played in creating and prolonging the West Coast port congestion and, by extension, associated business damages, such as excessive fees, curtailment of exports, supply chain disruptions, and cargo losses, Lidinsky said.
"If we can ascribe certain problems to the alliances, then the FMC has the authority to impose requirements on the lines involved" to force the carriers to make improvements, Lidinsky said.
Lidinsky also urged importers, exporters, truckers, or other parties that believe they have been unfairly hit with charges and can provide relevant documentation to contact the FMC's Office of Consumer Affairs and Dispute Resolution Services at (202) 523-5807 or by e-mail to firstname.lastname@example.org.