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The leadership of the Federal Maritime Commission says it is becoming worried that ocean carriers may be assessing unfair detention and demurrage charges at the ports of Los Angeles and Long Beach, Calif., as well as the Port Authority of New York and New Jersey.
In the past several months, those ports and several others have been operating at a record or near-record level as the U.S. transitions toward a more e-commerce-based economy and warehouses restock due to the COVID-19 pandemic.
“The commission has a responsibility to investigate serious impediments to performance in our major port gateways,” FMC Chairman Michael Khouri said Dec.8 at the Global Maritime Conference. “Therefore, on Nov. 20, the commission approved a supplemental order to expand Fact-Finding 29 to investigate ocean carriers operating in alliances and calling at the Port of Long Beach, the Port of Los Angeles, and the Port of New York and New Jersey to determine if policies and practices related to detention and demurrage, container return, and container availability for U.S. export cargoes are violating the Shipping Act.”
Commission Approves Supplemental Order Expanding Fact Finding 29 Authority https://t.co/6YlXAVuwGY— FMC (@FMC_gov) November 20, 2020
Fact-Finding 29 is an FMC order that began March 31 and is designed to “identify operational solutions to cargo-delivery system challenges related to Coronavirus-19.”
The order gives the FMC authority wide latitude to investigate operations issues at the ports to ensure that freight delivery continues uninterrupted and to seek solutions if problems are found.
Demurrage fees are charged when a container is still full and under the shipping line’s control, and has not been cleared through customs or picked up by the consignee. Detention costs include those for using equipment, such as a chassis, beyond the given free time and typically outside of the terminal.
Some companies have complained that ocean carriers are penalizing truckers by using detention and demurrage fees as a revenue source when the ports are bustling. Long Beach-based Harbor Trucking Association recently asked the ocean carriers that move millions of tons of cargo into the ports to temporarily suspend detention and demurrage fees at Los Angeles and Long Beach until the congestion issues ease.
Port of Los Angeles Executive Director Gene Seroka told Transport Topics his facility has been operating at a record pace the past several months, and he is sympathetic to the truckers who work at his facility.
“Most of us are not purchasing services. We’re not going to ballgames or movies. We’re not flying on airplanes or staying at hotels. We are at home, or going to stores that have been open through the pandemic, or going online and buying a lot of retail goods,” Seroka said. “It has put a lot of strain on the system. The flag has been raised about those containers, holding on to them longer than allowed.
“It was never meant to be weaponized. They were meant to make sure these ports throughout the country were a transit facility. If there are bad actors out there, let’s smoke them out.”
In October, the Port of Los Angeles set a record, moving 980,729 20-foot-equivalent units, an 18% year-over-year increase from 770,289 TEUs.
“While some early evidence indicated that marine terminals and ocean carriers were reducing or even canceling charges in certain fact situations, we continue to hear increasing serious concerns and creditable complaints from shippers and other stakeholders, such as port trucker groups, about how the ocean carriers, ports and terminals are assessing unfair detention and demurrage charges,” FMC’s Khouri said. “They also have raised complaints concerning chassis equipment issues.”
The chassis issue still is front and center for the trucking industry regarding the ocean carriers and the Ocean Carriers Equipment Management Association. On Nov. 20, an administrative law judge with FMC on Nov. 18 rejected a motion from OCEMA seeking dismissal of a claim filed by the Intermodal Motor Carriers Conference, a division of American Trucking Associations. In this case, IMCC alleges that OCEMA and 11 international ocean carriers violated the Shipping Act of 1984 by inflating intermodal chassis prices at dozens of ports nationwide. IMCC says this has cost the trucking industry $1.8 billion over the past three years.
Last year, IMCC announced its displeasure with leasing arrangements for chassis at ports and suggested legal action could follow. It alleged trucking companies were being overcharged for chassis and that shipping companies were leasing inferior, outdated equipment.
In May, IMCC issued a warning and a deadline to OCEMA, and the two sides began negotiations. Talks concluded with no agreement reached, and the claim was filed.
At most major ports, ocean shipping companies historically have controlled the chassis-leasing business under the Uniform Intermodal Interchange and Facilities Access Agreement, which is administered by a 10-member group of industry representatives. At these ports, trucking companies are directed toward chassis available for rent and the rates being charged. It is not known when the case may advance to trial.
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