FMC Issues New Regulations to Combat Overcharging for D&D!

On February 23,2024, the Federal Maritime Commission(FMC) announced its final regulations targeting the collection of Demurrage and Detention (D&D) fees by carriers and terminal operators, implementing new rules to combat overcharging practices.

This marks a significant milestone in addressing the long-debated issue of Demurrage and Detention fees, particularly amidst the challenges posed by port congestion during the pandemic.

During the pandemic, port congestion in the United States has led to delays in returning containers, resulting in significant demurrage costs, typically borne by shipping companies.

In response, the FMC clarified that D&D charges should only apply to containers detained beyond the allotted time at ports. While these charges facilitate the flow of goods in the supply chain, they should not serve as an additional source of income for carriers and port operators.

The FMC has repeatedly criticized unreasonable maritime charges and announced temporary procedures for reviewing, investigating, and adjudicating complaints by the end of 2022.

The enactment of the "OSRA 2022" legislation by the FMC has simplified dispute procedures related to additional charges by carriers and terminal operators. Through the charge complaint process, consumers have the opportunity to dispute charges and request refunds.

If shipping companies indeed violate charging standards, the FMC can take measures to address disputes, including refunds or fines.

Recently, according to the new regulations announced by the FMC on February 23,2024, D&D invoices can be issued to either the consignor or the consignee but not to multiple parties simultaneously.

Additionally, carriers and terminal operators are required to issue D&D invoices within 30 days after the final charge. The invoiced party has at least 30 days to request fee reductions or refunds. Any disagreements must be resolved within 30 days, unless both parties agree to extend the communication period.

Furthermore, the new regulations specify the invoicing details for D&D charges to ensure transparency for the invoiced party. It stipulates that if carriers and terminal operators fail to provide necessary information on the invoice, the payer may withhold payment of related charges.

Except for aspects requiring approval from relevant authorities regarding invoicing details, all other requirements concerning D&D invoices will come into effect on May 26 this year. This final regulation on D&D issued by the FMC signifies tighter oversight for carriers operating in the United States.

Regarding the FMC's new regulations, John Butler, Chairman of the World Shipping Council (WSC), representing carrier interests, stated that they are currently digesting the final regulations and will engage in discussions with members, withholding any public statements for the time being.