Industry Welcomes New Guidelines on Demurrage and Detention Charges

Foreman wearing safety vest, holding clipboard and cellphone, stands in front of forklift moving shipping containers
Time is money
May 08, 2020
WASHINGTON, DC -- Last week, the Federal Maritime Commission (FMC) issued new guidance under the Shipping Act on how it will assess demurrage and detention charges – essentially storage fees a merchant pays for use of a shipping container at a terminal or depot outside of a “free time” period.  

Ocean carriers and terminal operators often impose detention and demurrage charges on trucking and shipping companies when their shipping containers cannot be returned to, or picked up from, marine terminals within a short “free time” window.  In the past, these charges were incurred even when the delay was caused by the ocean carriers or terminals themselves, for instance when the terminal is closed or a ship is late.

“According to the new FMC demurrage and detention guidelines, there should be no charge or penalties for failure to pick up or return a container within contracted deadlines when compliance is not possible through no fault of the shipper or trucker,” said Bobby Hanks, a Louisiana rice miller and chair of the USA Rice International Trade Policy Committee.  “Getting clarification through these new guidelines is a big step forward, however enforcement by the FMC will be critical.”

USA Rice joined other agriculture and transportation organizations on a letter to Director of the U.S. National Economic Council Larry Kudlow and U.S. Secretary of Agriculture Sonny Perdue requesting their assistance to urge the FMC to finalize the rule.

The final rule will go into effect upon its publication in the Federal Register.