NCBFAA Calls on FMC to Further Investigate Free Time and Demurrage
A decrease in the amount of free time given to shippers to drop off or pick up cargo and an increase in demurrage charges may indicate that ocean carriers are using these mechanisms to drive up profits despite increasing congestion at ports, said the National Customs Brokers & Forwarders Association of America in a letter to the Federal Maritime Commission dated May 5. The trade association requested that the commission conduct a detailed fact finding investigation on free time and demurrage to follow up on issues identified in an agency report released April 13 (see 1504140014).
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The NCBFAA was one of several industry associations that recently called on the FMC to “take action” on free time and demurrage, citing frustration with fees charged to cargo owners and motor carriers despite their lack of responsibility for port gridlock (see 1504280010). The FMC’s report found that ocean carriers, and not ports, are generally responsible for setting demurrage charges and free time policies. The NCBFAA’s May 5 letter clarified that the trade group is not asking the FMC regulate rates or “otherwise intervene inappropriately” in the relationship between carriers and ports on one hand, and cargo shippers and ocean transportation intermediaries on the other.
Nonetheless, the FMC needs to take a look at a situation where, despite an increase in port congestion caused by larger and larger ships, “carriers and marine terminal operators have reduced the time during which importers and consignees can pick up their cargo and increased the penalties for not doing so within the free time.” The report showed that demurrage fees charged by individual carriers vary widely across ports, raising the possibility that “these varying amounts have little or nothing to do with actual cost considerations, but instead are based upon revenue-generating considerations and/or the internal culture of the individual carriers,” said the NCBFAA.
The increasing charges also raise the question of whether recent vessel sharing agreements really benefit shippers, said the NCBFAA letter. “If the port infrastructure and operational procedures at a port cannot support the movement of cargo onto or off of the vessels that are calling at port, perhaps it is time to reconsider whether these agreements do in fact produce the economies and efficiencies that the [ocean carriers] have promised, especially in light of the significant demurrage and detention that have raised the costs of U.S. importers and exporters as well as the public at large."
Email ITTNews@warren-news.com for a copy of the letter.