Statement of Commissioner Carl W. Bentzel on the Demurrage and Detention Billing Requirements Final Rule

I voted to approve the Final Demurrage and Detention (D&D) Rule released today. This rule has been a long time coming. D&D penalties provide an important tool to protect the shipping public from market abuses caused by excessive delays in the pick-up of cargoes from marine terminals, and to ensure the prompt return of containers to ocean carriers which facilitates the optimal use of terminal space and containers. The final rule takes necessary steps to protect shippers from being unfairly assessed D&D penalties while protecting truckers that are not consignees or in privity of contract from being assessed D&D penalties.

I want to thank the FMC staff for their tireless work in getting this rule to where it is today. The time and effort that went into reviewing, drafting and editing this rule consumed many hours. Their work is appreciated.  Equally, I want to thank the 191 groups and individuals that submitted comments to help inform and shape this rule. Everyone might not be completely happy with the end product, but I can assure everyone that their views have been carefully considered in the process.

I also want to acknowledge my colleague, Commissioner Dye, who got this process started years ago with her leadership on Fact Findings 28 and 29. The Commission initiated the Interpretive Rule in response to these Fact Findings and to address concerns that practices in issuing demurrage and detention bills were being used to force payment of unfair D&D penalties. I would note, that even before the passage of the Ocean Shipping Reform Act of 2022, the Commission had initiated regulatory action to implement better practices in the invoicing of D&D penalties.

One of the more contentious issues faced in this rulemaking was whether to include both ocean carriers and marine terminal operators (MTOs). The decision to make the rule applicable to both common carriers and MTOs was correct. To waive MTO participation would create such a large-scale exemption, it would eviscerate the protective intent of the rule. That would not be good precedent.  Further to the point, shippers and now the FMC expect common carriers and MTOs to cooperatively work together on D&D invoicing issues in practice, so to do so under the auspices of this rule is no different.

In addressing an MTO’s ability to properly invoice, the final rule states, “the Commission is confident that the strong commercial relationships between the parties is enough to ensure that the proper information is shared and that the party who ultimately receives the invoice is receiving accurate information.”

I am not as confident in the existence of such a strong commercial bond, but I encourage both common carriers and MTOs to quickly work toward those ends. This rule does not regulate the billing practices between MTOs and VOCCs. This may need to be looked at further.

Specifically, MTO tariff schedules and practices imposing those obligations, and the ocean carriers underlying service contracts or tariff, will need to be reconciled to avoid D&D invoicing conflicts.  I have additional concerns that ongoing MTO practices will also have to be adjusted where trucker/consignees are willing to be responsible for D&D invoices, and where there could be invoicing conflicts. I will be watching the development of these practices.

Finally, the pandemic brought many supply chain issues to a head. This D&D rule impacts and connects areas of billing; however, work still remains on information sharing, in-transit visibility, and standardization of lexicon and defining operational status. Current geopolitical events are drastically impeding the movement of containerized cargo through both the Panama and Suez Canals and once again illustrating the need for better data on cargo shipping, and the need for more to be done to ensure industry transparency.

Carl W. Bentzel is a Commissioner with the U.S. Federal Maritime Commission. The thoughts and comments expressed here are his own and do not necessarily represent the position of the Commission.