The Federal Maritime Commission is proposing a new rule that seeks to bring more clarity, structure, and punctuality to the demurrage and detention (D&D) billing practices of vessel-operating common carriers (VOCCs), non-vessel-operating common carriers (NVOCCs), and marine terminal operators (MTOs).
This follows an investigation initiated in 2018 into conditions and practices of VOCCS and MTOs related to demurrage, detention, and per diem charges. That led to the Commission issuing a final rule in May 2020 addressing how the reasonableness of demurrage and detention practices of VOCCs and MTOs will be interpreted.
If this proposed rule is adopted, VOCCs, NVOCCs, and MTOs will all be required to issue bills for demurrage or detention only to parties with whom they have a contractual relationship, to be clear regarding the nature of the charges, issue invoices within 30 days after the charges stop accruing, and provide 30 days to dispute the charges, with clear information about how charges should be disputed.
Specifically, the Commission is proposing the following:
· Adopting the list of minimum information that common carriers must include in demurrage or detention invoices as mandated in the Ocean Shipping Reform Act (Osra).
· Adding to the list referenced immediately above additional information that must be included in or with a demurrage or detention invoice.
· Further defining prohibited practices by clarifying which parties may be billed for demurrage or detention charges.
· Establishing billing practices that billing parties must follow when invoicing for demurrage or detention charges.
The Commission is proposing that a properly issued invoice is only issued to the person that has contracted with the billing party for the carriage of goods or space to store cargo and the billed party is responsible for the payment of any incurred D&D charge. It has called for comments on whether it would be appropriate to include the consignee named on the bill of lading as another party who may receive a D&D invoice.
This Notice of Proposed Rulemaking is the latest initiative taken by the FMC to implement Osra, which was signed into law by President Joe Biden in June this year.
