Ag welcomes FMC guidance on demurrage

Newly adopted guidelines will help curtail non-incentivizing charges by ocean carriers and terminal operators.

Jacqui Fatka, Policy editor

April 30, 2020

2 Min Read
Cargo ships and planes

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:

  • The content and clarity of carrier and MTO policies addressing detention and demurrage.

  • The clarity of carrier and MTO detention and demurrage terminology.

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

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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