The British International Freight Association (BIFA) has joined FIATA (The International Federation of Freight Forwarders Associations) in calling for governments to support the key considerations laid out by the US Federal Maritime Commission (FMC) in its Final Rule on Demurrage and Detention. They want governments to investigate the reasonableness of these practices in the container shipping sector.
BIFA director general Robert Keen says that freight forwarders and the shippers they work for are reeling from unjust demurrage fees linked to congestion in ports around the world.
“They should not be penalized by demurrage and detention practices when circumstances are such that they cannot retrieve containers from, or return containers to, marine terminals because, under those circumstances, the charges cannot serve their incentive function,” Keen says.
The FMC’s pronouncement came after six years of investigation with all participants in the supply chain, which concluded that there had most likely been a long history of unjust and unfair demurrage and detention practices.
While there are country and port-related variances, the FMC findings apply globally as demurrage and detention is a common and widespread issue.
Keen adds: “If the FMC has identified demurrage and detention practices that are likely to be considered as unjust for the USA, these practices are also unjust and unreasonable for the rest of the world.
“It is wrong for container shipping lines not to respect the interpretative rule introduced by the FMC in May that sought to govern conflicts on the issue of demurrage and detention fees.
“Governments must therefore have greater scrutiny over demurrage and detention practices to ensure that they are considerate and reasonable for the good of their own economies. It is crucial to ensure fluidity and good function of the supply chain, in unprecedented times as illustrated by Covid-19 and the chaotic state of international container shipping at present.”
Consider the factors
BIFA and FIATA is encouraging policymakers to consider the FMC’s non-exclusive list of factors for consideration when assessing the reasonableness of demurrage and detention fees.
Such guidance will promote fluidity in freight delivery systems by ensuring that demurrage and detention serve their purpose of incentivizing speedy cargo delivery; and that the interpretive rule will also mitigate confusion, reduce and streamline disputes, and enhance competition and innovation in business operations and policies.
BIFA is urging decision makers to ensure a level playing field for all actors in the supply chain of the reasonableness of demurrage and detention charges. This includes consideration of the extent to which demurrage and detention practices are serving their intended purposes as financial incentives to promote freight fluidity.
All international maritime supply chain stakeholders should also benefit from transparent, consistent and reasonable demurrage and detention practices that improve fluidity in global ports and terminals for the benefit of fair, reasonable and ethical interactions between stakeholders in the maritime supply chain.
The FMC rule is therefore intended to stop unreasonable and unjust practices to which shippers and freight forwarders alike have been exposed to for years.