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US FMC's proposed D&D Rule divides shipping industry

On 31 October, the comment period for the US Federal Maritime Commission’s Notice of Proposed Rulemaking (NPRM) related to the Interpretive Rule on Demurrage and Detention under the Shipping Act came to an end, with the agency having received more than 70 comments.

https://www.federalregister.gov/documents/2019/09/17/2019-19858/interpretive-rule-on-demurrage-and-detention-under-the-shipping-act

Public comments, submitted by different parties in the logistics supply chain, reveal unresolved disagreements about when the clock to retrieve cargo should begin, what events should pause the clock and the costs each party incurs when terminal fluidity is disrupted.

Stakeholders are also deeply divided when it comes to whether regulators should pass the rule, amend the rule or abandon it. While the shipping lines have argued that the interpretive rule “is neither an interpretive rule nor is it properly constructed,” outlining in its submission why the FMC’s rule is too broad and must not go ahead, shippers and freight forwarders have countered that the FMC is correctly clarifying how it determines whether penalties truly incentivise cargo flow.

“There are clear indications that current general practices are not just and reasonable and the proposed guidance will be a step into the right direction to assure that demurrage and detention practices are focused to meet their purpose to incentivise the movement of cargo through port and terminals,” noted the International Federation of Freight Forwarders Associations (FIATA) in its submission to the consultation.

The FMC published the proposed rule after a nearly year-and-a-half-long investigation into complaints by multiple shippers and non-vessel-operating common carriers that they have been unfairly assessed demurrage and detention fees by ocean carriers and marine terminals. By the proposed rule, the FMC provided guidance under the Shipping Act on what it will consider fair and reasonable practices for ocean carriers and marine terminals to assess demurrage and detention fees.

The FMC’s approach to an interpretive rule reflects an agency seeking to encourage commercially driven solutions rather than government edicts to resolve disputes between parties. If a dispute rose to the FMC level, however, the rule could lay the groundwork for the agency to examine the reasonableness of detention and demurrage fees on a case-by-case basis.

The FMC has not yet set a date for finalising the rule.

Source: CLECAT



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