The U.S. Federal Maritime Commission announced a Final Rule establishing new requirements for how common carriers and marine terminal operators (MTOs) must bill for demurrage and detention charges, providing clarity on who can be billed, within what timeframe, and the process for disputing bills. Key provisions of the rule are listed below:

• Demurrage or detention charges can only be invoiced to a single party, either:
  • (1) the person for whose account the billing party provided ocean transportation or storage of cargo and who contracted with the billing party for the ocean transportation or storage of cargo; or
  • (2) the “consignee,” defined as “the ultimate recipient of the cargo; the person to whom final delivery of the cargo is to be made”.
• Vessel-operating-common carriers (VOCCs) and MTOs must issue detention and demurrage invoices within 30 calendar days from when charges were last incurred.
• Non-vessel-operating common carriers (NVOCCs) must issue demurrage and detention invoices within 30 calendar days from the issuance date of the invoice they received.
• If an invoice is issued after the 30-calendar day deadlines listed above, the billed party is not required to pay the charge.
• Billed parties have at least 30 calendar days to make fee mitigation, refund, or waiver requests. If a timely filed request is made, the VOCC, NVOCC, or MTO must attempt to resolve the matter within 30 calendar days, unless both parties agree to a longer timeframe.

The Commission hopes the new rule will provide relief to parties who should never have received a bill for detention or demurrage.

Most of the rule, including the invoicing deadlines and billing party regulations, takes effect on May 28, 2024. A section of the new rule dealing with invoice contents listed in section 541.6 is still pending approval by the FMC’s Office of Management and Budget. The Commission will announce the effective date of section 541.6 once approved.

The Commission issued the new rule on February 23, 2024 with over 100 pages of discussion. DPI will send out more detailed information about the rule and what it means for NVOCCs in the coming weeks.

FMC Chairman Daniel B. Maffei and Commissioner Rebecca F. Dye recently appeared before the U.S. Senate Committee on Commerce, Science and Transportation for a renomination hearing.

Chairman Maffei read a prepared statement which reviewed the work of the agency during the COVID pandemic and current implementation of the Ocean Shipping Reform Act of 2022. In his remarks Chairman Maffei stressed the progress made to improve the supply chain since the COVID pandemic, but also highlighted the difficulties and uncertainties that lie ahead:

The FMC has evolved into a stronger regulatory agency than it was before the pandemic. And we will continue this hard work for the public and our industry stakeholders that we were created to serve. But make no mistake the ocean-linked supply chains responsible for trillions of dollars in U.S. economic activity remain vulnerable. The Houthi’s unprovoked and unanticipated attacks on commercial vessels transiting the Suez Canal suddenly meant the re-routing of roughly 30% of global container shipping. This comes at the same time as the Panama Canal’s unexpected reduction in capacity. Add to that a slew of other challenges including shifting carrier alliances, potential trade disputes, and a historically high threat of cargo theft inland – and any major shipper will tell you they are concerned about unpredictable future disruptions.

The Senate Committee questioned Chairman Maffei and Commissioner Dye closely on detention and demurrage fees and pending FMC rules that would help U.S. exporters by preventing ocean carriers from unreasonably denying export cargo. Senator Maria Cantwell (D-Wash.), Chair of the Senate Committee, emphasized FMC’s important role in U.S. trade stating, “I represent a big trade state . . . so we want to see a more aggressive FMC.”

Both Chairman Maffei and Commissioner Dye were renominated to their FMC posts by President Joe Biden last year. Chairman Maffei was nominated for reappointment as FMC Chairmen to a term ending in June 2027. Commissioner Dye was renominated to her position as Commissioner for a term expiring in June 2025. Both appointments are still pending Senate confirmation.

The U.S. Federal Maritime Commission (FMC) received nine new formal complaints in February 2024 alleging violations of the U.S. Shipping Act and FMC regulations.

Unreasonable Cargo Practices and Unlawful D&D – FMC Dockets No. 24-05 – 10:  Impact Products, LLC and Safety Zone, LLC, cleaning and safety product importers, filed six formal complaints against ocean carriers alleging various violations of the U.S. Shipping Act. The importers’ complaints allege that the ocean carriers unjustly and unreasonably exploited shippers during and following the COVID-19 pandemic. Specifically, the importers allege that the ocean carriers unjustly charged them for detention and demurrage in violation of the FMC’s incentive principle. Alleged damages in each complaint range from $150,000 to $6.1 million.

The importers request the Commission investigate the ocean carriers’ actions and order them to pay reparations for their unlawful conduct along with attorneys’ fees, as well as provide any other further relief that the Commission deems appropriate. The complaints were filed against the following six carriers:  Mediterranean Shipping Company S.A. (MSC), CMA CGM S.A., Orient Overseas Container Line Limited (OOCL), COSCO Shipping Lines, Co., Ltd., Yang Ming Marine Transport Corp., and Lihua Logistics Company Limited.

Failure to Maintain Public Tariff – FMC Docket No. 24-11:  OL USA LLC, a US-based non-vessel operating common carrier (NVOCC), filed a formal complaint against Maersk A/S alleging that Maersk violated the U.S. Shipping Act by failing to maintain a publicly accessible tariff.

Specifically, OL alleges that in late 2021 it misdelivered five containers to Maersk’s terminal. Despite OL’s repeated attempts to correct the error and recover the containers, Maersk refused to release the containers. Ultimately, the owner of the containers forced OL to purchase the containers due to OL’s failure to return them. Maersk allegedly cited various provisions in its tariff allowing use of the misdelivered containers. OL was unable to verify the tariff provisions in a publicly accessible online tariff and Maersk never provided verification of the tariff provisions either. Due to Maersk’s refusals to return the containers in a timely manner, OL requests that Maersk pay OL for detention charges totaling over $500,000.

OL requests the Commission to investigate Maersk’s actions, order Maersk to release one remaining container in its possession, cease and desist from these unlawful actions, pay OL damages, interest and attorneys’ fees, as well as provide any other further relief that the Commission deems appropriate.

Unreasonable Cargo Practices & Various Shipping Act Violations – FMC Docket No. 24-12:  Bed Bath & Beyond Inc. (BBB) filed a formal complaint against Evergreen Line, alleging that Evergreen violated the U.S. Shipping Act by exploiting price inflation in container shipping during the COVID-19 pandemic and unjustly and unreasonably exploiting shippers.

Specifically, BBB alleges that between 2020 and 2022 Evergreen consistently failed to meet its existing service contract commitments and thereby forced BBB to buy space on the spot market at enormous expense and to pay additional extracontractual surcharges. BBB also alleges Evergreen charged detention and demurrage fees when BBB was unable to pick up or return containers due to circumstances outside of BBB’s control, such as congestion at ports and shortages of equipment.

As a result of Evergreen’s actions, BBB alleges that it suffered at least $5 million in damages due to additional charges.

BBB requests the Commission order Evergreen to pay BBB reparations for damages and lost profits for the unlawful conduct, including interest, attorneys’ fees and costs, order Evergreen to cease and desist from the unlawful conduct, and provide any other further relief that the FMC deems appropriate.

OOCL, Yang Ming, and MSC are also facing similar complaints filed by BBB earlier this year. BBB filed for Chapter 11 bankruptcy in April 2023.

Unreasonable Cargo Practices and Unlawful D&D – FMC Dockets No. 24-13:  Access One Transport, Inc., a California-based motor carrier, filed a formal complaint alleging that COSCO Shipping Lines Co. Ltd. violated the U.S. Shipping Act by failing to establish just and reasonable practices related to receiving, handling, storing and delivering property.

Specifically, Access One alleges that from April 2021 to August 2022 it regularly picked up containers of COSCO-handled shipments from various terminals in the Ports of Long Beach and Los Angeles. Access One was often unable to return the containers to the locations that COSCO advised it would accept return containers at due to lack of appointments or other location restrictions such as dual transaction requirements. As a result of COSCO’s failure to provide adequate locations for container returns, Access One was charged detention and other various fees. Access One further alleges that as a result of disputing these fees with COSCO, COSCO threatened to ban Access One from transporting COSCO shipments.

Access One alleges over $650,000 in damages from charges related to COSCO’s failure to provide adequate locations for container return.

Access One requests the Commission investigate these actions, order COSCO to cease and desist from these unlawful actions, pay Access One damages, interest and attorneys’ fees, as well as provide any other further relief that the Commission deems appropriate.

For more details visit the FMC’s online reading room. The FMC’s reading room provides access to FMC dockets, related documents, notices, and orders.

Several leading carriers serving the Transpacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective March 15, 2024, including CMA CGM, COSCO, Evergreen, Hapag Lloyd, HMM Company Limited, Ocean Network Express (ONE), Yang Ming, and ZIM. See table below for GRI amounts per 40ft container. GRI amounts for all other container sizes are as per formula. The March 15th GRIs will be the sixth GRI of 2024 for the East Asia/USA trade lane.

NOTE 1:  COSCO GRIs apply on all cargo moving under service contracts only.

NOTE 2:  Evergreen GRIs will be USD 1000 per 40ft container for dry cargo, and USD 1000 per reefer container. GRI amounts for all other container sizes are as per formula.

Some carriers also updated their tariffs to include new General Rate Increases (GRIs) effective April 1, 2024, including CMA CGM, COSCO, Evergreen, Hapag Lloyd, HMM Company Limited, Ocean Network Express (ONE), Yang Ming, and Zim. See table below for GRI amounts per 40ft container. GRI amounts for all other container sizes are as per formula. The April 1st GRIs will be the seventh GRI of 2024 for the East Asia/USA trade lane.

NOTE 1:  COSCO GRIs apply on all cargo moving under service contracts only.

NOTE 2:  Evergreen GRIs will be USD 2000 per 40ft container for dry cargo, and USD 2000 per reefer container. GRI amounts for all other container sizes are as per formula.

Each carrier maintains its own tariffs and controls its own pricing.

Several carriers serving the East Asia/USA trade lanes (U.S. Imports) have adjusted fuel surcharges effective April 1 through June 30, 2024. Here is a table of BAF amounts posted by carriers:

NOTE 1:  CMA CGM calls the above surcharge the Bunker Adjustment Factor Surcharge (BAF03), Tariff Rule No. 010.08. Low Sulphur Surcharge IMO2020 (LSS20) is not applicable at this time.

NOTE 2:  COSCO calls the above surcharge the Bunker Charge (BUC), Tariff Rule No. 010-003.

NOTE 3:  HMM calls the above surcharge the Bunker Charge, Tariff Rule No. 2-63. HMM also filed in its FMC tariff Rule 2-95, Environmental Compliance Charge (ECC), effective April 1, 2024. The ECC amounts are USD 240/267/300/338 per 20/40/40HC/45ft, respectively, for destination USWC/USWC Local/IPI/MLB; and USD 396/440/495/558 per 20/40/40HC/45ft, respectively, for destination USEC (all water)/USGC/RIPI.

NOTE 4:  ONE calls the above surcharge the ONE Bunker Surcharge (OBS). Any reference to Bunker Adjustment Factor (BAF) or Fuel Adjustment Factor (FAF) within a duly filed service contract shall be construed as referencing the same surcharge as ONE Bunker Surcharge (OBS) as detailed within Tariff Rule No. 102.001, whether as an exception or as a reference to this charge.

NOTE 5:  OOCL calls the above surcharge the Fuel Cost Recovery Charge (T-62). The Fuel Cost Recovery Charge will not apply to shipments when Bunker Surcharge and/or Low Sulphur Fuel Surcharge and/or Low Sulphur Adjustment Charge are already applied or included in the base rate.

NOTE 6:  ZIM calls the above surcharge the New Bunker Factor – Far East (NBF), Tariff Rule No. 010-NB. Service contract cargoes subject to Carrier’s published BAF and/or EBS shall not be subject to NBF.

NOTE 7:  Subject to Low Sulphur Fuel Charge (LSF or LSS).

NOTE 8:  Updated on a monthly basis.

Each carrier maintains its own tariffs and controls its own pricing.

Several carriers serving the USA/East Asia trade lanes (U.S. Exports) have adjusted their fuel surcharges for the April to June 2024 quarter. Here is a table of carriers that have posted BAF amounts:

NOTE 1: CMA CGM calls the above Bunker surcharge the Bunker Adjustment Factor Surcharge (BAF-03), tariff Rule No. 010.4. Low Sulphur Surcharge IMO2020 (LSS20) is not applicable at this time.

NOTE 2:  COSCO calls the above surcharge the Bunker Surcharge (BUC), Tariff Rule No. 010-001.

NOTE 3:  HMM calls the above charge the Bunker Surcharge (BUC) Rule No. 10-2A. HMM also filed in its FMC tariff Rule No. 10-02F, Environmental Compliance Charge (ECC), effective April 1, 2024. The ECC amounts are USD 63/125/125/125 per 20/40/40HC/45ft, respectively, for dry cargo moving via West Coast; and USD 36/72/72/72 per 20/40/40HC/45ft, respectively, for dry cargo moving via East Coast, Gulf.

NOTE 4:  ONE calls the above surcharge the ONE Bunker Surcharge (OBS). Any reference to Bunker Adjustment Factor (BAF) or Fuel Adjustment Factor (FAF) within a duly filed service contract shall be construed as referencing the same surcharge as ONE Bunker Surcharge (OBS) as detailed within Tariff Rule No. 102.001, whether as an exception or as a reference to this charge.

NOTE 5:  OOCL calls the surcharge the Fuel Cost Recovery Charge (T-62). The Fuel Cost Recovery Charge will not apply to shipments when Bunker Surcharge and/or Low Sulphur Fuel Surcharge and/or Low Sulphur Adjustment Charge are already applied or included in the base rate.

NOTE 6:  Yang Ming calls the above Bunker surcharge the New Bunker Charge, Tariff Rule No. 10-AH.

NOTE 7:  ZIM calls the above Bunker Charge the New Bunker Factor – Far East (NBF), Tariff Rule No. 010-NB.

NOTE 8:  Subject to Low Sulphur Fuel Charge (LSF or LSS).

NOTE 9:  Updated on a monthly basis.

Each carrier maintains its own tariffs and controls its own pricing.

The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.