Shippers cheer US FMC final rule on ‘abusive’ D&D practices

Source: The Loadstar 
Date: 26th February 2024

Shippers have welcomed the US Federal Maritime Commission’s final rule on detention and demurrage billing practices.

The Agriculture Transportation Coalition (AgTrans) said this was a “major step” towards reform of the “abusive” practices – but it warned that “there is work that remains ahead for shippers, carriers and all others in the supply chain”.

The final rule comes into effect on 28 May.

AgTrans noted that the problems with the proposed rule had been addressed by the commission.

“An important lesson should be learned: had the ocean carriers taken the interpretive rule seriously, and given even the slightest indication they were changing their practices to conform, there may not have been the need for the AgTC and the US shipping public to seek Congressional intervention. There may never have been OSRA, revisions to the long-standing Shipping Acts of 1984 and 1998, new rules from the commission.

“Carriers were ill-advised to ignore the interpretive rule. [It would have been] wiser for carriers to work with organisations representing their customer shippers, to learn what was transpiring with detention and demurrage billing ‘in the field’, and fixing those.

“We have found that, once informed of some of the realities of the billing, at the AgTC’s Ag shipper workshops with individual ocean carriers, most ocean carriers were grateful to be informed, and expressed the desire to address them.”

AgTrans said it was particularly pleased with the requirement that D&D invoices must provide specific information on the basis of the invoice – and if they don’t, there is no obligation to pay.

It said: “This addresses one of the major motivations for OSRA –the shipper was not informed why and how it was being assessed these charges, and all too frequently the ocean carrier wasn’t able to provide this information either. It seemed ‘the computer’ was to blame for spitting out these charges. Now, once OMB reviews and approves the commission’s specific requirements, all parties will know the basis for each charge, which will allow them to review and determine if justified.”

It also said the 30-day invoicing requirement was a “major improvement”.

AgTrans said the final rule had also made it clear that shippers or consignee may retain third parties to process, review and pay D&D invoices.

AgTrans thanked the FMC and bipartisan politicians – and even some carriers.

“We are encouraged that, even during the worst of the supply chain crisis, while carrier lawyers in DC were pursuing all means to derail reform, carrier executives and their AgTC shipper customers were meeting constructively to identify areas of friction and solutions.

“We appreciated those ocean carriers which engaged with the AgTC membership (as well as other organisations, such as the Pacific Coast Council of Customs Brokers, and freight forwarders on the issue of billing ‘notify parties’) on an ongoing basis, through our workshops and other opportunities, to identify D&D and other issues and to address them. We are eager to continue this productive engagement.”

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