FMC Orders Formal Investigation in Detention and Demurrage Case
It’s been a long time coming, but the Federal Maritime Commission has voted to launch an investigation, focused on the practices of vessel operating common carriers and marine terminal operators related to detention, demurrage, and per diem charges. The investigation will headed by Commissioner Rebecca Dye.
The case dates back to December 2016 when an organization called the Coalition for Fair Port Practices filed a petition with the FMC that raised issues associated with these special charges, essentially penalties that kick in if cargo owners and trucking companies don’t return containers and chassis within a specified time.
The commission conducted hearings on the petition in January, soliciting testimony from shippers, ocean transportation intermediaries, ocean carriers, truckers, and marine terminal operators, and now has decided the launch an investigation. That proceeding is scheduled to wind up in December of this year with a final report of Dye’s findings and recommendations.
As the designated investigative officer, Dye will have the authority to conduct fact finding by issuing subpoenas, holding public and non-public sessions, and requiring reports. Under the FMC’s order, Dye is charged with making recommendations for commission action including investigations of prohibited acts, enforcement priorities, policies, rulemaking proceedings, or other actions warranted by the record developed in the proceeding.
The Coalition for Fair Port Practices ” raised substantive issues in both their petition and their testimony at our January hearing investigating carrier and terminal detention and demurrage practices,” said acting FMC chair Michael Khouri. “Various alleged practices were described that—without countervailing or explanatory testimony and evidence—would be troubling from my perspective.”
But Khoury noted that no cargo stakeholders have filed any complaints, requiring this investigatory fact finding to develop a factual record.
Dye will examine detention, demurrage, and per diem practices generally, and will evaluate the following key issues: whether the alignment of commercial, contractual, and cargo interests enhances or aggravates the ability of cargo to move efficiently through US ports; the billing practices for invoicing demurrage or detention; the practices with respect to delays caused by various outside or intervening events; and the practices for resolution of demurrage and detention disputes between carriers and shippers.