FMC Publishes Final Rule on Detention and Demurrage Billing Practices

A Final Rule issued today by the Federal Maritime Commission establishes new requirements for how common carriers and marine terminal operators (MTOs) must bill for demurrage and detention charges, providing clarity on who can be billed, within what timeframe, and the process for disputing bills.

A key provision of this rule determines that demurrage or detention invoices can only be issued to either: (1) the person for whose account the billing party provide ocean transportation or storage of cargo and who contracted with the billing party for the ocean transportation or storage of cargo; or (2) the “consignee,” defined as “the ultimate recipient of the cargo; the person to whom final delivery of the cargo is to be made”. Demurrage and detention bills cannot be issued to multiple parties simultaneously.

The rule also requires vessel-operating-common carriers (VOCCs) and MTOs to issue detention and demurrage invoices within 30 calendar days from when charges were last incurred. Non-vessel-operating common carriers must issue demurrage and detention invoices within 30 calendar days from the issuance date of the invoice they received.

Billed parties have at least 30 calendar days to make fee mitigation, refund, or waiver requests. If a timely filed request is made, the billing party must attempt to resolve the matter within 30 calendar days, unless both parties agree to a longer timeframe.

The new rule will advance the Commission’s goal of promoting supply chain fluidity by ensuring a clear connection between the failure to pick-up cargo or return equipment in a timely manner and the appropriate fee. The rule ensures that billed parties understand the demurrage or detention invoices they receive by requiring certain identifiable information be included by the billing party on the invoice. Failing to include any of the required information in a detention or demurrage invoice eliminates any obligation of the billed party to pay the applicable charge. Of course, if an invoice does comply, a charged party does have an obligation to pay charges billed. The new rule will provide relief to parties who should never have received a bill for detention or demurrage.

Most of the rule takes effect on May 28, 2024. The “Contents of Invoice” section 541.6 involves information collection and must be approved by the Office of Management and Budget. The Commission will announce the effective date of section 541.6 once approved.

Updated 2/26: Replaced public inspection link with published Federal Register link and corrected the date the rule will take effect from 5/26 to 5/28