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Detention and Demurrage Charges Targeted in White House Executive Order

President Biden is set to sign an executive order directing over a dozen federal agencies to take action to promote competition in the American economy.

The order includes a total of 72 initiatives aimed at tackling “some of the most pressing competition problems across our economy.” One of the initiatives directs the U.S. Federal Maritime Commission to take steps to protect American exporters high costs imposed by the ocean carriers and crack down on “unjust and unreasonable fees,” including detention and demurrage charges that have soared during the pandemic, costing shippers big.

Demurrage and detention charges are widely used in container shipping and are often unclear to shippers. The charges cover the use of shipping containers beyond a free time period and are applied to encourage timely pickup and return of cargo and equipment. D&D charges have gained a lot of attention at the Federal Maritime Commission during the pandemic as cargo flows are disrupted and often unpredictable.

A White House fact sheet describes shippingrelated actions to be taken in the Executive Order:

“Shipping: In maritime shipping, the global marketplace has rapidly consolidated. In 2000, the largest 10 shipping companies controlled 12% of the market. Today, it is more than 80%, leaving domestic manufacturers who need to export goods at these large foreign companies’ mercy. This has let powerful container shippers charge exporters exorbitant fees for time their freight was sitting waiting to be loaded or unloaded. These fees, called “detention and demurrage charges,” can add up to hundreds of thousands of dollars.

In the Order, the President:

Encourages the Federal Maritime Commission to ensure vigorous enforcement against shippers charging American exporters exorbitant charges.

FMC Commissioner Rebecca F. Dye in February issued information demand orders to ocean carriers and marine terminal operators (MTOs) to determine if legal obligations related to detention and demurrage practices are being met. The orders were issued under her authority as Fact Finding Officer for Fact Finding 29, “International Ocean Transportation Supply Chain Engagement,” initiated in March 2020 to identify solutions to cargo supply chain challenges related to the COVID19 pandemic.

The opinions expressed herein are the author’s and not necessarily those of News2Sea.

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