The U.S. Federal Maritime Commission (FMC) has issued new guidance about how it will assess the reasonableness of detention and demurrage regulations and practices of ocean carriers and marine terminal operators (MTOs). The move is welcomed by those in the agriculture sector who had called for changes.

The National Grain & Feed Assn. (NGFA) and 79 other associations representing the U.S. food and agriculture supply chain sent a letter April 3 urging federal officials to ensure that FMC adopts a rule that will address “the ongoing unconscionable imposition of millions of dollars of unfair detention and demurrage penalties on U.S. agriculture by ocean carriers and marine terminal operators during the coronavirus crisis.”

Under the new interpretive rule, FMC will consider the extent to which detention and demurrage charges and policies serve their primary purpose of incentivizing the movement of cargo and promoting freight fluidity. The rule also provides guidance on how the commission may apply that principle in the context of cargo availability (and notice thereof) and empty container return.

In assessing the reasonableness of detention and demurrage practices, FMC may also consider factors related to:

Related:Ag shippers seek immediate action on demurrage fees

The final rule adds two provisions that were not included in the proposed rule published in September 2019. The first clarifies that the guidance in the rule is applicable in the context of government inspections. The second clarifies that the rule does not preclude the commission from considering additional factors, arguments and evidence outside those specifically listed.

This final interpretive rule is the culmination of a process initiated by a petition (Petition P4-16) submitted to FMC in December 2016 by a coalition of shipper groups. In the intervening period, FMC held public hearings in January 2018, initiated a fact-finding investigation in March 2018 led by commissioner Rebecca Dye (Fact Finding 28) and issued a proposed rule in September 2019.

A spokesperson for NGFA noted: “NGFA is encouraged that these newly adopted guidelines will help curtail non-incentivizing charges by ocean carriers and terminal operators when shippers and receivers cannot timely pick up or return shipping containers to marine terminals within a short ‘free time’ window, even when the delay is caused by the ocean carriers or terminals themselves.”

Related:Action sought on detention-demurrage final rule