By Fello Logistics
Helping to Protect Shippers from the Potential Consequences of New Demurrage/Detention Rules
The Federal Maritime Commission (FMC) has issued a new rule on demurrage and detention fees, which has carriers cheering and shippers nervous. Our job at Fello is to make sure no one in our circle is hurt or surprised by this.
The new rule says drayage truck drivers can no longer be billed for demurrage and detention on cargo contracted between ocean carriers and their shippers. It doesn’t matter whose fault the delay was. And that has the National Industrial Transportation League (NITL) concerned that terminal operators will turn around and sock shippers with these costs:
Because truckers are not usually part of the ocean transportation contract, “it really seemed like [the FMC] wanted to carve the truckers out of the billing process, and the best way to do that was with this billing provision within the rule,” NITL general counsel and Thompson Hine LLP partner, Karyn Booth, told FreightWaves.
“But if the trucker knows they’re not going to pay demurrage and detention invoices — unless contractually obligated to do so with the shipper — the rule could reduce their incentive to do everything in their power to get the container out of the port, or return it, in a timely way? (sic)
“That’s where our members have concerns. They’re going to have to pay even when they’re not at fault for delays in picking up or returning containers, and will have to have contractual relationships that will allow them to get reimbursed. That’s the practical implication of this rule — shippers are going to have to look at their contracts carefully with their ocean carriers and truckers.”
We understand NITL’s concern, and shippers need to be aware of it. The FMC seems to think it’s no big deal for shippers to pay these fees because they’re often sitting on more capital than the carriers. But we know better.
When shippers have to absorb demurrage and detention fees, it raises the costs of doing business and certainly the cost of shipping goods to market. That ends up hurting everyone.
The strategy for dealing with this is not simple but it is straightforward, and it’s what we always do anyway.
We work very hard with the drayage carriers in our network to make sure they’ll be able to get in and out of port efficiently with our clients’ goods. This is factored into every agreement we make with a carrier. There will be no incentive to just sit around in the port terminal and bide time because the shipper will be paying the demurrage/detention fees.
Much of this effort requires knowing what’s going on at the ports and making sure our carriers can get in, access the containers off the ships, load them and get them on the road. That’s our job. It’s not for our clients to worry about. And we want you to know that we’re on the case.
This rule change from the FMC is significant, and everyone who gets involved with drayage needs to understand how it will change things.
But the best thing you can do is have a well-planned and well-executed strategy at the ports, so there are no demurrage/detention fees. That’s what we’re here to make sure of.
Fello Logistics is known for integrity, reliability, industry-leading customer service and genuine care for it’s clients. Learn more about our freight shipping services.
