FMC Checking Ocean Carrier & MTO Compliance with Recent Ruling on Per Diem Charges

The Federal Maritime Commission is actively seeking information to confirm that ocean carriers and marine terminal operators are complying with the law following a precedential decision it issued addressing when per diem detention charges can be billed.

In a December Order in TCW Inc. v. Evergreen Shipping Agency (Am.) Corp. & Evergreen Line Joint Service Agreement (Docket No. 1996(I)), the Commission held that the charging of per-diem when a port was closed and equipment could not be returned was unjust and unreasonable.

The Commission, through its Vessel-Operating Common Carrier Audit Program, is contacting the 11 largest ocean carriers calling the United States to confirm these shipping lines are adjusting their demurrage and detention practices accordingly.  A separate outreach effort to marine terminal operators is being conducted simultaneously to ensure they are fully complying with the May 2020 rule (46 CFR 545.5).

That regulation clarifies how the Commission interprets statutory prohibitions against unjust or unreasonable regulations and practices on receiving, handling, storing or delivering property.    In the recent TCW v. Evergreen case, the Commission ordered Evergreen to “cease and desist from imposing per diem charges when imposition of per diem charges does not serve its incentivizing purposes, such as when empty equipment cannot be returned on weekends, holidays, and port closures.”