NCBFAA Flags Availability Notices, Customs Holds as Issues for FMC Detention and Demurrage Rule
Several issues related to detention and demurrage remain to be addressed as the Federal Maritime Commission moves forward with its recent proposed rule on detention and demurrage practices, said Richard Roche of Mohawk Global Logistics, at the National Customs Brokers & Forwarders Association of America’s government affairs conference Sept. 23 in Washington. Key among these are notices of availability for cargo and charges for customs holds, he said.
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Brokers and forwarders “all understand the reason for detention and demurrage,” said Roche, who chairs the NCBFAA’s non-vessel operating common carrier (NVOCC) committee. The charges cover the actual cost to terminals and carriers of lost terminal space and equipment availability, and also have a “punitive aspect” designed to incentivize cargo owners to take equipment off terminals and return it in a timely fashion. It’s “when you can’t get those containers off of the terminals, and when you can’t return them back to the terminals in a timely fashion,” that the charges become an issue, he said.
The creation of a mechanism to provide notices of availability of cargo is one issue that the NCBFAA would like to look deeper into, Roche said. It remains to be seen what the notifications will look like -- Roche mentioned a push notification -- as well as whether notifications will be provided if a container subsequently becomes unavailable, “which happens frequently at the ports when they close a section of the port,” Roche said. “Can we turn the free time switch off so it’s not counting against us during those times when the container becomes unavailable?”
Treatment of customs holds is a particularly thorny issue, and one that is particularly fresh in the minds of brokers after recent shifts in CBP officers to the southern border caused inspection times to soar to three or four weeks. Carriers still billed for containers affected by the delays -- and were right to according to the terms of their tariffs -- but the detention fees did nothing to incentivize quicker return of the containers, Roche said. While there’s an actual cost to carriers of containers being unavailable, it may be possible not to charge the punitive part of the fee, or cap the total, he said.
FMC Commissioner Rebecca Dye, speaking shortly after Roche, said the FMC issued the proposal as an “interpretive rule” rather than a “legislative rule” to maintain flexibility and account for a diversity of port practices. Rather than impose legally binding requirements or regulate how fees are set, the interpretive rule tells carriers and terminals how FMC will judge the reasonableness of practices if they are challenged at the commission, Dye said.
“When incentives work, charges are allowed. When incentives no longer work because the cargo interest is not able to pick up or return” the container, they are unreasonable, Dye said. The interpretive rule “reaffirms tariff rules and charges must be tailored to meet their intended purpose,” she said. On the other hand, a legislative rule that tells carriers and marine terminals “what to do and how to do it would not accommodate the diversity of business practices,” she said. Comments on the proposal are due Oct. 31 (see 1909230032).