The maritime industry, with its intricate network of logistics and time-sensitive operations, relies heavily on the smooth functioning of ports. However, the billing practices related to demurrage and detention charges have long been a source of confusion and contention in the global trade market. In response, the Federal Maritime Commission (FMC) has stepped in to bring clarity and fairness to these critical financial transactions. Read on to learn about the international shipping demurrage and detention rule changes.
Starting May 28th, truckers will no longer receive per diem invoices directly. Instead, they will go to the party that contracted the ocean transportation or the party listed as the consignee on the ocean bill of lading. Before, drayage truckers like PITT OHIO were receiving the demurrage and per diem invoices directly from the steamship lines and terminals. With these demurrage and detention rule changes, after May 28th, importers or the party responsible for the cargo will receive the invoices. Billed parties have 30 days from the invoice date to dispute, mitigate, or request a refund for the charges.
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What Is Demurrage and Detention?
- Demurrage: This charge applies when cargo containers remain at a port beyond the allotted free time. It compensates for the delay in returning containers to circulation.
- Detention: Detention charges occur when cargo owners or shippers hold containers for an extended period, preventing their timely return to the port or terminal.
The New Requirements
The FMC’s Final Rule establishes several key requirements:
- Billing Clarity: Common carriers and marine terminal operators (MTOs) must now bill demurrage and detention charges with precision. The rule specifies who can be billed and within what timeframe.
- Invoice Recipients: Demurrage and detention invoices can only be issued to either:
- The party responsible for the ocean transportation or storage of cargo (the account holder).
- The “consignee,” which refers to the ultimate recipient of the cargo.
- Timely Invoices: Vessel-operating-common carriers (VOCCs) and MTOs must issue invoices within 30 calendar days from the last incurred charges. Non-vessel-operating common carriers (NVOCCs) have the same timeframe from the invoice issuance date they received.
- Dispute Process: Billed parties have at least 30 calendar days to dispute charges. If a valid request is made, the billing party must attempt resolution within the same timeframe.
- Contents of Invoice: The rule mandates that certain identifiable information be included in the invoice. Failure to comply absolves the billed party from payment obligations.
Whether you’re a shipper, consignee, or port operator, understanding these demurrage and detention rule changes is crucial. As the countdown continues, the industry braces for a more equitable billing landscape. With greater transparency and accountability, this rule ensures a clearer path ahead for the maritime industry.
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