In June 2022, the Ocean Shipping Reform Act (OSRA) took effect, and this new regulation provided the Federal Maritime Commission (FMC) with some new tools to monitor shipping activity in the United States. One of the important items that impacted shippers was the process that involved the billing of Demurrage and Detention.
As rising cargo volumes placed new pressures on common carrier, port and terminal performance, demurrage and detention charges have for a variety of reasons substantially increased. For example, over a two-year period between 2020 and 2022, nine of the largest carriers serving the U.S. liner trades individually charged a total of approximately $8.9 billion in demurrage and detention charges and collected roughly $6.9 billion.
The FMC issued a Notice of Proposed Rule Making (NPRM) on October 17, 2022 and is seeking public comment on the proposed rule that requires common carriers and marine terminal operators to include specific minimum information on demurrage and detention invoices and outlines certain billing practices relevant to appropriate timeframes for issuing invoices, disputing charges with the billing party, and resolving such disputes.
The proposed rule would adopt minimum information that common carriers must include in a demurrage or detention invoice; add to this list additional information that must be included in or with a demurrage or detention invoice; further define prohibited practices by clarifying which parties may be appropriately billed for demurrage or detention charges; and establish billing practices that billing parties must follow when invoicing for demurrage or detention charges.
DATES: Submit comments on or before December 13, 2022.
ADDRESSES: You may submit comments by using the Federal eRulemaking Portal at www.regulations.gov,
This proposed rule has defined the minimum information that must be included, defined some new terminology to be used as well as how to resolve any issues with the billing party. Please take the time to review the following proposed rules before submitting commentary:
541.2 Scope and applicability
- This part sets forth regulations governing any invoice issued by an ocean common carrier, marine terminal operator, or non-vessel operating common carrier to a billed party or their designated agent for the collection of demurrage or detention charges.
- This regulation does not govern the billing relationships among and between ocean common carriers and marine terminal operators.
541.3 Definitions
In addition to the definitions set forth in 46 U.S.C. 40102, when used in this part:
Billing dispute means any disagreement with respect to the validity of the charges, or the method of invoicing raised by the billed party or its agent to the billing party.
Billed party means the person receiving the demurrage or detention invoice and who is responsible for the payment of any incurred demurrage or detention charge.
Billing party means the ocean common carrier, marine terminal operator, or non-vessel operating common carrier who issues a demurrage or detention invoice.
Demurrage or detention mean any charges, including ‘‘per diem’’ charges, assessed by ocean common carriers, marine terminal operators, or non-vessel operating common carriers related to the use of marine terminal space (e.g., land) or shipping containers, but not including freight charges.
Demurrage or detention invoice means any statement of charges printed, written, or accessible online that documents an assessment of demurrage or detention charges.
541.4 Properly issued invoices
A properly issued invoice is a demurrage or detention invoice issued by a billing party to the person for whose account the billing party provided ocean transportation or storage.
- This person must have contracted with the billing party for the carriage or storage of goods and is therefore responsible for the payment of any incurred demurrage or detention charge.
- A billing party cannot issue an invoice to any other person.
541.5 Failure to include required information
Failure to include any of the required minimum information in this part in a demurrage or detention invoice and eliminates any obligation of the billed party to pay the applicable invoice.
541.6 Contents of invoice
At a minimum, an invoice for demurrage or detention charges must include the following information:
Issuance of demurrage and detention invoices
- A billing party must issue a demurrage or detention invoice within thirty (30) days from the date on which the charge was last incurred. If the billing party does not issue demurrage or detention invoices within the required timeframe, then the billed party is not required to pay the charge.
- If the billing party invoices the incorrect party, the correct billed party must receive an invoice within thirty (30) days from the date the incorrect party disputes the charges with the billing party. An invoice to the correct billed party must be issued within sixty (60) days after the charges were last incurred. If the billed party does not receive demurrage or detention invoices within the required timeframe, then it is not required to pay the charge.
541.8 Requests for fee mitigation, refund, or waiver
With the amount of monies that was billed and collected over the past several year, it time for change to occur and set straight a path where everyone know and follows the new processes that are being setup under OSRA.
If you have any questions, please do not hesitate to contact me for further information or assistance.
