MAJOR LINES TO CEASE CHARGING CONTAINER STORAGE FEES WHEN TERMINALS ARE INACCESSIBLE
Major container lines are revising their detention and demurrage fees as the Federal Maritime Commission (FMC) considers container storage rules changes. The Ocean Shipping Reform Act of 2022 (OSRA-22) mandated FMC evaluate rule changes for detention and demurrage billing when carriers cannot gain access to the containers due to port closures or congestion.
Demurrage vs Detention: Demurrage and Detention are used interchangeably for the extra charges a shipper pays for detaining a freight car or ship beyond the time permitted for loading or unloaded. Demurrage refers to cargo while detention applies to equipment.
Storage fees became a point of contention between shippers, ports, and carriers at the peak of the COVID-19 pandemic. Equipment and labor shortages led to an excess of containers which ground port operations to a near-standstill. Ports charge carriers detention and demurrage fees to encourage the movement of equipment and cargo through the supply chain. Fees are charged when cargo storage at ports exceed the “free time” grace period. Marine Terminal Operators (MTO) assert that the fees are necessary to ensure the movement of freight and to mitigate storage costs to the ports. Historically, these fees were passed onto the container liners’ customers.
“The costs borne by the MTO in storing a container at the terminal that has improperly exceeded its free time remain constant, whether or not the terminal is open. A marine terminal is not intended to be used as a warehouse.”
Matthew Leech
Ports America President & CEO
Subcommittee on Coast Guard and Maritime Transportation Hearing Testimony
The growing list of container liners to nix passing detention and demurrage fees to customers when marine terminals are closed and inaccessible includes:
- OOCL
- HMM
- MSC
- Maersk
- Hapag-Lloyd
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