Quest News™

May 4, 2020

FMC Issues New Guidance on Detention & Demurrage

On April 28, 2020, the Federal Maritime Commission (FMC) issued new guidance about how it will assess the reasonableness of detention and demurrage regulations and practices of ocean carriers and marine terminal operators (MTOs) under 46 U.S.C. 41102(c). The Final Rule will become effective once it is published in the Federal Register.

The FMC published its proposed Interpretive rule in September 2019. The rule followed years of complaints from U.S. importers, exporters, transportation intermediaries, and drayage truckers that ocean carrier and marine terminal operator demurrage and detention practices unfairly penalized shippers, intermediaries, and truckers for circumstances outside their control.

In summary, the Final Rule advises that carriers and terminals should not charge detention, demurrage, per diem when it is not possible for the shipper or truck to pick up or return a container within the 'free time.' It also adds two provisions that were not included in the proposed rule published in September 2019. One of the provisions clarifies that the guidance in the rule is applicable in the context of government inspections. The second clarifies that the rule does not preclude the Commission from considering additional factors, arguments, and evidence outside those specifically listed. It is important to note that it will be up to the exporter or importer to enforce this guidance. If you have any questions on cargo insurance, please contact your local Avalon representative.

You may read the full Demurrage and Detention Interpretive Rule here, and you can also read the FMC Announcement here.

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