What is demurrage?
- Demurrage is “a penalty charge against shippers for delaying a shipment/container at a port of loading or destination beyond the allowed free”.
How Much Time is Provided for Free?
- “Free time is the grace period for which neither of these charges will be incurred.” There is no standard amount of free time. Free time can change from carrier to carrier, from port to port and sometimes from container type to container type. Normally it is anywhere between 3-5 calendar days.
- Free time is supposed to include a realistic time period to assemble cargo for loading, and provide consignees a realistic time period to retrieve cargo at a terminal after unloading.
- The fee charged after the expiration of the “free time” varies. For example, for one carrier, the per diem fee can range anywhere between: $200 to $800 per day!
What is Being Done to Change this Demurrage Fee?
- Back in December, “the Coalition for Fair Port Practices, a group of 25 members that represent shippers, receivers, motor carriers, port draymen, freight forwarders, third-party logistics companies and customs brokers”, petitioned the Federal Maritime Commission (FMC) in hopes that the FMC would issue a ruling on extending the free time for container storage and equipment use that is disrupted by events outside of their control. Such events could be poor infrastructure, weather events, a carrier bankruptcy, port labor issues, etc.
How is the FMC Involved?
- The FMC has invited comments on this petition until February 28th. You can find the comments and submit your own comments on the docket website. After the comment period is up, the “FMC staff will prepare a report for the five commissioners”, and will then determine how to proceed.
- If the (FMC) agrees to extending the free time for container storage, then this could help shippers and transport intermediaries economically by saving them millions of dollars that they usually would pay for the demurrage and detention fees. Many of the shippers that brought the petition to the FMC, felt that the “terminals and carriers were using the fees as a profit center instead of merely trying to keep equipment flowing smoothly”. Others that filed the petition felt that a lot of the carriers and terminals “lacked clarity in regards to what constitutes reasonable practices” under 46 U.S.C. §41102(c), also known as the Shipping Act.
What can I do to Make My Voice Heard?
- If you are interested in adding comments to the petition, the FMC requires that interested persons submit views or arguments in reply to the Petition no later than February 28th, 2017.
- Replies need to be sent both by mail and email. Requirements for sending the comments can be found here and a sample letter for you to send is here (with thanks to NCBFAA for the draft letter).
- Remember, you must send (1) original and (5) copies of the letter to: Assistant Secretary, Federal Maritime Commission, 800 North Capitol Street, NW; Washington DC 20573-0001 AND a PDF of the letter, showing the docket number of P4-16 in the reference line, to Secretary@fmc.gov AND mail a copy Karyn Booth, Thompson Hine LLP, 1919 M Street, NW, Washington DC 20036.
If you have any questions or would like to discuss your specific CBP and/or FMC issue, please contact email@example.com.