The Federal Maritime Commission (FMC) has rolled out new guidelines to bring clarity and order to the billing practices for detention and demurrage charges by shipping companies and terminal operators. These rules aim to ensure that billing is straightforward and fair.
Demurrage?, Detention?, What's the difference?
Although they may seem similar, these are two common (and different) charges related to the use of containers. Demurrage refers to fees incurred when containers are not picked up from the port on time, while detention applies when containers are not returned within the agreed timeframe.
IMPORTANT: It's worth mentioning that depending where you are in the world, these definitions might be "switched" or "reversed". In areas like South America, demurrage refers to detention and vice versa, but the meaning stays the same.
Who Can Be Billed?
The FMC has specified exactly who can receive these charges:
- Contracting Party: The person or entity that arranged for the shipping or storage of the cargo. This is the party that directly contracts with the shipping line or terminal operator.
- Final Consignee: The ultimate recipient of the cargo, to whom the delivery is made.
This means that invoices can no longer be sent to multiple parties at once, reducing confusion and disputes over responsibility for these charges.
Billing Timelines
To further streamline the process, the FMC has set strict timelines for when these invoices must be issued:
- For Shipping Lines and Terminal Operators: Invoices must be issued within 30 calendar days of the charges being incurred.
- For Non-Vessel Operating Common Carriers (NVOCCs): Invoices must be issued within 30 calendar days of receiving the original bill.
Dispute Period
The new rules also provide a clear framework for disputing charges:
- Billed parties have at least 30 days to contest the charges, seek refunds, or request fee waivers.
- The billing party must respond to these disputes within 30 days unless an extension is mutually agreed upon.
Stay tuned for further updates on relevant logistic news.