Inbound containers moving through the Southern California ports of Long Beach and Los Angeles will soon be subject to new free time limits and escalating congestion dwell fees. The Long Beach Harbor Commissioners and the Los Angeles Harbor Commission announced separately that both ports will move forward on November 15 with this new fee to speed the flow of cargo from marine terminals during an unprecedented surge in shipments. Containers that linger too long on the port wharves are delaying the berthing of vessels, leading to record numbers of ships waiting off the coast, and consumers and businesses across the U.S. left waiting for crucial shipments. The two ports have worked closely with President Biden’s Supply Chain Disruption Task Force on this issue.

The new congestion free time rules filed by the two ports in their port tariffs will limit inbound containers that move off port wharves by truck to eight (8) calendar days of free time starting at 3:00 a.m. after the inbound container is discharged from the vessel. Inbound containers that move off port wharves to on-dock intermodal rail yards will be limited to five (5) calendar days of free time starting at 3:00 a.m. after the inbound container is discharged from the vessel.

The congestion dwell fee shall be assessed against each inbound container remaining on the wharf or wharf premises after the expiration of congestion free time allowed. Unlike other port and terminal fees, the congestion dwell fee is an escalating USD 100 per container per day. This means on day one after congestion free time allowed, the fee is USD 100 per container, on day two after congestion free time allowed, the fee is USD 200 per container, on day three after congestion free time allowed, the fee is USD 300 per container and for each subsequent day the Congestion Dwell Fee increases by USD 100 per day. For example, a container dwelling for five (5) days after congestion free allowed will incur a total of USD 1500 in Congestion Dwell Fees.

The Port of Los Angeles amended its FMC tariff to add a new Section 25 to provide its new free time rules and congestion dwell fee. The Port of Long Beach amended its FMC tariff rule no. 34-K, Section 11 – Port Congestion to add its new free time rules and congestion dwell fee. Ocean carriers serving the Southern California ports are widely expected to move as many inbound containers off port wharves as possible before the congestion dwell fee applies and to take steps to avoid incurring the fee. Ocean carriers have also begun filing new rules and surcharges in their FMC tariffs to authorize them to pass through the congestion dwell fees to shippers.

The U.S. Federal Maritime Commission’s new National Shipper Advisory Committee (NSAC) held its first meeting on Wednesday, October 27, 2021. The group, which is made up of 24 individuals representing U.S. importers and exporters, gathered virtually for a three-hour video conference to discuss their advisory work.

The NSAC was recently created by Congress as part of legislation enacted into law earlier this year. The purpose of the NSAC is to advise the FMC on policies relating to the competitiveness, reliability, integrity, and fairness of the international ocean freight delivery system.

FMC Chairman Daniel B. Maffei welcomed the committee and expressed his hope that the committee would provide the FMC with advice in six key areas: 1) industry data transparency, 2) cargo fees and surcharges, including detention and demurrage fees, 3) service contract reform, 4) how the FMC can address gaps in knowledge in the shipper community, 5) advice on whether the FMC and other federal agencies’ actions are hurting or helping shippers, and 6) increasing the FMC’s understanding of ongoing supply chain disruptions.

Following brief committee member introductions and administrative tasks, the committee tackled the topics of detention and demurrage fees, supply chain data transparency, and current supply chain woes. Members strongly questioned the legality and efficacy of recently announced Congestion Dwell Fees at the Ports of Long Beach and Los Angeles. Members pointed out that as of the meeting date these fees were not filed in the FMC tariffs of the ports and will be implemented in less than 30 days. Many members emphasized that there is little to nothing they can do to move containers due to lack of chassis and rail delays. Members expressed concern that these new “super demurrage” fees will only serve to worsen the supply chain backlog.

NSAC committee members also lamented the lack of a single source of truth for cargo data that could be relied upon to build efficiency into the supply chain. Without solid cargo data, members agreed it will be difficult to propose long-term solutions to supply chain snarls. Members questioned the lack of widespread use of cargo data systems such as the Port of Los Angeles’ Port Optimizer. Regarding current supply chain disruptions, members pointed to the absence of industry standards. Members observed that the lack of requirements around accurate cargo availability notifications and container return information are major contributors to the current cargo backups experienced across the nation.

Future meetings of the NSAC will be announced on the FMC’s website and in the Federal Register. The committee’s elected Chair and Vice Chair, Brian Bumpass of Brenntag North America, and Michael Symonanis of Louis Dreyfus Company, respectively, are tasked with setting meeting agendas and cadence. Committee members are appointed for three-year terms that expire December 31, 2024. Minutes of the meeting will be posted for the public on the FMC’s website after they are certified.

At a recent meeting of the U.S. Federal Maritime Commission (FMC) the focus was enforcement matters and information learned to date from recent audits of carrier detention and demurrage practices. The Commissioners reviewed these topics at their meeting of October 13, 2021, in a closed session. In a short press release following the meeting, the Commission revealed that it was briefed by the Director of the Bureau of Enforcement, Ben Trogdon, about ongoing enforcement matters related to ocean carrier behavior in the marketplace, including the separate inquiries into the appropriate use of merchant clauses and congestion surcharges.

In the same session, FMC Managing Director Lucille Marvin updated the Commissioners on information the Vessel-Operating Common Carrier (VOCC) Audit Team has gathered to date from its work. The VOCC Audit Program was established in July at the direction of FMC Chairman Daniel B. Maffei to assess carrier compliance with the Commission’s interpretive rule on detention and demurrage. The audit program began with an examination of the top nine ocean carriers by market share that call the United States. In addition to generating additional information beneficial to the regular monitoring of the marketplace for ocean cargo services, the VOCC Audit Team will identify any best practices it believes should become industry standards.

Federal Maritime Commission’s Managing Director, Lucille Marvin, has urged 25 ocean carriers and the World Shipping Council to rapidly adopt three best practices related to detention and demurrage that promote clarity and certainty about how and when detention and demurrage fees will be assessed as well as how to challenge disputed charges. The call for an industry-wide adoption of these best practices came in a letter sent by Ms. Marvin to the carriers and the trade association that represents liner shipping companies. Ms. Marvin is leading the FMC’s Vessel-Operating Common Carrier (VOCC) Audit Program and VOCC Audit Team. In her letter to ocean carriers and the World Shipping Council Ms. Marvin urged them to:

1. Display detention and demurrage charges clearly and prominently on their webpages.
2. Develop and document clear internal processes on all matters related to detention and demurrage.
3. Clearly delineate dispute resolution procedures, contacts, and required documentation on their websites and invoices.

The FMC’s VOCC Audit Team recently engaged nine leading ocean carriers to assess their compliance with the FMC’s interpretive rule on detention and demurrage that became effective in May 2020 and sought examples of model behavior by individual carriers that should become industry standards. The FMC’s rule, which is part of 46 CFR Part 545.5, sets forth an underlying principle that demurrage and detention serve the purpose of incentivizing cargo movement and equipment return. Carrier and terminal practices and regulations that provide for imposition of detention when it does not serve its incentivizing purposes, such as when empty containers cannot be returned, are likely to be found unreasonable.

In addition to the work of the VOCC Audit Team, the FMC is also pursuing other actions to achieve compliance with its rule on detention and demurrage. Recently, the Commission voted to issue an Advance Notice of Proposed Rulemaking on detention and demurrage billing practices, and this is expected shortly.

Several leading carriers serving the Trans Pacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective November 15, 2021, including COSCO, Evergreen, HMM Company Limited, Ocean Network Express (ONE), and ZIM. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The November 15th GRIs will be the twenty-second GRI of 2021 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 dry container for dry cargo, and USD 2000 per reefer container. GRI amounts for all other container sizes are as per formula.

NOTE 3: HMM GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.

Some carriers updated their tariffs to include new General Rate Increases (GRIs) effective December 1, 2021, including COSCO, Evergreen, 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 December 1st GRIs will be the twenty-third GRI of 2021 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 dry container for dry cargo, and USD 2000 per reefer container. GRI amounts for all other container sizes are as per formula.

NOTE 3: HMM GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.

NOTE 4: Yang Ming GRIs will be USD 1000 per 40ft container for cargo to destinations USWC, USEC, US Gulf coast, and USD 2000 per 40ft container for cargo to destinations IPI, MLB, RIPI. GRI amounts for all other container sizes are as per formula.