Business coalition asks FMC to ban high demurrage charges during unusual events

A group representing the broad swath of the maritime user supply chain asked federal maritime regulators yesterday to set policies preventing steamship lines and marine terminal operators from charging what the group called "unfair fees" for late port pickups due to events such as strikes, bad weather, or carrier bankruptcies.

The "Coalition for Fair Port Practices" told the Federal Maritime Commission (FMC) that its members face "demurrage" charges even when events beyond their control make it impossible to pick up import containers after they've been unloaded. Ship lines and terminal operators generally give port truckers and beneficial cargo owners (BCO) a certain amount of "free time" for the goods to be retrieved. After that window closes, demurrage is charged.

Users are also being hit with per diem charges if they fail to return boxes and chassis within a specified time, even if extraordinary situations make port property inaccessible to draymen or BCOs, the group said.

The most recent example cited by the coalition was the Aug. 31 bankruptcy filing by South Korea's Hanjin Shipping Co., the world's seventh-largest container line, which left cargo owners unable to pick up containers on time, and later prevented them from returning containers and chassis. Delays have also occurred during the labor slowdown at West Coast ports in late 2014 and early 2015 and during Hurricane Sandy on the East Coast in 2012, both situations out of users' control, the group said.

"Shippers, consignees, and drayage providers do not create and cannot avoid these events," the group said. "They cannot control the weather. They do not choose the terminals that carriers use. They are not parties to port labor collective bargaining agreements."

The combined fees that have been imposed have totaled into the millions of dollars, the group said. It did not provide a more specific number.

The group asked the FMC to adopt a policy to extend the number of free days before demurrage would be charged in the event of port congestion, weather disturbances, and other port disruptions or delays beyond the control of parties picking up or returning containers. Demurrage and similar fees charged during such incidents would be declared "unreasonable" under the Shipping Act of 1984, a law that gave the FMC rulemaking power over this issue.

Jon Gold, vice president of supply chain and customs policy at the National Retail Federation (NRF), one of the coalition members, said the FMC could issue a policy statement that provides clarity on how detention and demurrage can be assessed. The agency has "heard from multiple shippers and truckers about the ongoing issue of fees being assessed for issues beyond their control," Gold said in an e-mail.

The group said it could accept the levy of "compensatory" fees in the event of an extraordinary situation, as long as the charges did not exceed the actual storage or equipment-use costs.

"We are not opposed to the imposition of detention/demurrage when appropriate," Gold said. "The concern is when there are issues that prevent BCOs or truckers from picking up or returning containers or equipment which are beyond their control."

Besides NRF, the coalition members include the Transportation Intermediaries Association (TIA), the National Industrial Transportation League (NITL), and the American Apparel & Footwear Association (AAFA).