United States: FMC Commissioner Issues Final Report For Fact Finding 28

J. Michael Cavanaugh is a Partner in Holland & Knight's Washington D.C. office

Eric Lee is a Partner in Holland & Knight's Washington D.C. office

Daniel L Burkard is an Associate in Holland & Knight's Washington D.C. office

HIGHLIGHTS:

  • On March 5, 2018, the Federal Maritime Commission directed Commissioner Rebecca F. Dye to initiate a fact finding investigation (Fact Finding 28) into demurrage and detention practices at U.S. ports.
  • Commissioner Dye issued her Final Report on Dec. 7, 2018, concluding that all international supply chain actors would benefit from greater transparency, consistency and reasonableness in demurrage and detention practices.
  • While it does not recommend any formal rulemaking, the Final Report proposes forming "FMC Innovation Teams" comprised of maritime industry leaders to consider the demurrage and detention issues identified in the Final Report.

Commissioner Rebecca F. Dye has issued her Final Report for the Federal Maritime Commission's (FMC) fact finding investigation into demurrage and detention practices at U.S. ports (i.e., FMC Fact Finding 28). In the Final Report issued on Dec. 7, 2018, Commissioner Dye concluded that demurrage and detention practices at U.S. ports would benefit from greater transparency and consistency in notice, billing practices, dispute resolution and terminology. The Final Report proposes to address these issues through the creation of "FMC Innovation Teams" comprised of industry leaders that would suggest commercially viable refinements to demurrage and detention management. In an effort to avoid additional future issues, Commissioner Dye also recommended that the FMC create a Shipper Advisory Board to provide the FMC insight and information into emerging maritime issues. The FMC will now consider whether to adopt the Final Report's recommendations.

Background

The FMC's investigation into port demurrage and detention practices originated with the filing of a formal petition on Dec. 7, 2016, by the Coalition for Fair Port Practices. The petition requested that the FMC adopt an interpretative rule pertaining to demurrage and detention practices. The Coalition filed its petition in response to port disruption in 2015 resulting from labor disputes and other port congestion events on the U.S. West Coast. The FMC received more than 110 comments to the petition and held public hearings on Jan. 18 and Jan. 19, 2018. On March 5, 2018, the FMC voted to commence a fact finding regarding demurrage and detention practices, selecting Commissioner Dye to lead the study.

The FMC issued questions and requests for documents to 23 ocean carriers and 44 marine terminal operators (MTOs) concerning demurrage and detention practices. Commissioner Dye issued an interim report on Sept 5, 2018 (Interim Report), detailing preliminary findings. The Interim Report focused on billing practices, cargo retrieval notification and terminology.

During the second phase of the investigation, her team conducted field interviews with maritime stakeholders, including shipping companies, port officials, MTOs, ocean transport intermediaries (OTIs), drayage truckers, and importers and exporters at ports in Southern California, New York and New Jersey, and Florida. According to the Final Report, these interviews revealed important details that informed many of the recommendations contained in the Final Report.

Summary of Fact Finding 28 Final Report

The Final Report highlighted the primary issues Commissioner Dye and her team discovered during their investigation into demurrage and detention practices. It initially noted the complex web of contractual and non-contractual relationships contributing to the issues at the heart of the investigation. However, it also noted that these circumstances are unlikely to change due to longstanding commercial practices in the maritime industry. Therefore, the Final Report focused on important areas of change that the investigators believe would not cause major disruption to maritime commerce, including:

  • notice of cargo availability
  • billing practices
  • dispute resolution processes and procedures
  • terminology

The Final Report encourages MTOs to establish notification policies that tailor the demurrage and detention practices to the particular circumstances of each cargo interest or trucker, and provides crucial points for carriers and MTOs to consider, including a) whether carriers and MTOs gave reasonable opportunity to make an appointment to pick up cargo following notice of availability; b) whether carriers and MTOs extended free time when shipments are subjected to government inspections and holds; and c) whether carriers and MTOs took into account terminal closures after notice of availability is given.

The Final Report also discusses billing practices for demurrage and detention, noting that there are many unique billing circumstances due to the complex nature of maritime commercial relationships. However, the Final Report notes that the most meaningful practice, in terms of billing, would be for the institution of public billing portals on the MTOs' websites that contain explanations of charges.

Dispute resolution processes and procedures are another issue Commissioner Dye highlighted. The Final Report recommends that all dispute resolution processes and procedures be clearly established, made available on public websites, and include contact information and the identity of the individual that can assist with resolution of any demurrage or detention dispute.

Further, the Final Report discusses the standardization of demurrage and detention terminology. The Report notes the existence of challenges with this issue, starting with the differing definitions of "demurrage" and "detention," which cause much confusion among cargo interests and truckers. The Report recommends that, where possible, a definition of each term should be created and applied across the industry.

The Final Report concludes by recommending that the FMC create "Innovation Teams" to discuss and suggest ways to standardize solutions for the issues identified in the Final Report. The Final Report also recommends the creation of a Shipper Advisory Board to anticipate and avoid future investigations resulting from disruptions in the maritime industry. The anticipation is that the Shipper Advisory Board will be closer to industry trends and provide effective warning to the FMC of any future issues.

Considerations and Takeaways

The Final Report identifies key areas where the maritime industry's demurrage and detention practices would benefit from additional clarity, including notice of cargo availability, billing practices, dispute resolution processes and procedures, and terminology. Importantly, the Final Report does not attempt to initiate rulemaking on these subjects. The FMC will now accept or reject the recommendations of the Fact Finding 28 Final Report.

Most likely, the FMC will eventually issue a manual or other publication suggesting the best practices for handling each demurrage and detention issue. Such guidance could be used as persuasive evidence in any demurrage or detention dispute. However, it is not clear what the final impact may be. In the history of the FMC, there is no instance of a shipper initiating a formal complaint case regarding demurrage or detention practices of a carrier or MTO.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Country
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions