The Federal Maritime Commission will adopt a final rule to give industry guidance on how it assesses the “reasonableness” of detention and demurrage charges, the agency said. The rule, which was proposed in September and has garnered new attention due to charges caused by COVID-19-related shipping delays, is expected to give industry clarity on how FMC will consider whether detention and demurrage policies incentivize the movement of cargo or whether they are unjustified. The rule will become effective upon its publication in the Federal Register.

The Federal Maritime Commission is using newly formed Supply Chain Innovation Teams to look into potential agency actions to reduce supply chain slowdowns related to the COVID-19 pandemic, the FMC said in an April 6 news release. Commissioner Rebecca Dye, who is overseeing the effort, and the teams will “begin work this week to identify what actions can provide immediate relief to the most pressing challenges the American freight delivery system faces from COVID-19 related disruptions,” it said. The information provided by team members about possible FMC actions “will dictate the scope and priorities of the Teams’ work,” it said. Dye said the teams “are committed to minimizing disruptions to the Nation’s cargo delivery system and will be prepared to offer practical solutions about what must be done to promote the competitive advantage of our supply chain networks,” The teams are an offshoot of the FMC's investigation into detention and demurrage fees that resulted in a proposed interpretive rule (see 2003170058).

Eighty agricultural trade groups are asking the Trump administration to push through a proposed Federal Maritime Commission rule that would provide guidance about how the FMC assesses the fairness of demurrage and detention practices. The rule would help mitigate the “ongoing unconscionable imposition of millions of dollars” of detention penalties being faced by agricultural exporters, whose shipments are being delayed by the COVID-19 pandemic, the groups said in an April 3 letter. The groups -- which include dairy, meat, grain, vegetable and fruit trade associations -- urged White House Economic Council Director Larry Kudlow and U.S. Department of Agriculture Secretary Sonny Perdue “to work with the FMC to expeditiously adopt the Interpretive Rule as published.”

Agricultural exporters and shippers are losing “hundreds of millions of dollars” due to shipping uncertainty and cargo detention penalties caused by the response to the coronavirus pandemic, said Peter Friedmann, executive director of the Agriculture Transportation Coalition. Friedmann was critical of the Federal Maritime Commission, which has yet to finalize a proposed rule issued last year that would provide guidance about how the FMC assesses the fairness of demurrage and detention practices. The rule’s public comment period ended in October.

The Federal Maritime Commission should quickly adopt its proposed interpretive rule for addressing detention and demurrage charges (see 1909130026), trade associations said in a March 16 letter to the FMC. “With ongoing challenges posed by the coronavirus, there is real concern about these fees being assessed when there are equipment issues beyond the control of the shipper or motor carrier,” the groups said. “Thus, these fees appear to be punitive measures by the ocean carriers, not an incentive to expedite container flow.”

A recent Federal Maritime Commission proposed rule would lead to a much fairer enforcement process for alleged violations of the Shipping Act, the National Customs Brokers & Forwarders Association of America said in comments submitted to the agency. The proposal would create a process for notifying a target of an investigation and allowing it to respond, and ensure that FMC commissioners see the target’s statement before deciding how to proceed. “As the members of the Commission would necessarily be involved at the outset, it seems more likely that potential enforcement cases would focus on issues that have a material adverse effect on trade or competition and minimize the initiation of cases that are based on relatively minor or technical infringements of regulations,” the NCBFAA said. The proposal would also make it “less likely that there would be an anecdotal approach to enforcement where only [the Bureau of Enforcement] and a respondent know what the issues in any prosecution actually involved.” But FMC should go beyond its proposal and create penalty and mitigation guidelines for Shipping Act violations, the trade group said.

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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The Federal Maritime Commission will accept comments on its proposed interpretative rule on detention and demurrage charges until Oct. 31, the agency said in a notice. The agency previously said comments are due Oct. 17 (see 1909130026).

The Federal Maritime Commission will look at multiple factors, including cargo accessibility and the transparency of involved terminology, when it considers whether detention or demurrage practices are reasonable, the agency said in a notice it posted ahead of publication in the Federal Register. The proposed interpretive rule is meant to help address issues with detention and demurrage charges and follows a multiyear effort on that front (see 1606130005). Comments are due Oct. 17, the FMC said in a news release.