Federal Maritime Commission Publishes New Rules for Demurrage and Detention Billing

3 min

Common carriers and marine terminal operators must start reviewing their current demurrage and detention billing process to ensure that their business practices fully comply with a new final rule issued by the Federal Maritime Commission (FMC or the Commission) on February 26, 2024. While the effective date of these new requirements is delayed, regulated entities may need to undertake substantive revisions to their invoices, systems, and policies as the final rule implements additional mandatory data elements for invoices, time frames for issuing invoices, and more. This final rule is part of a series of rulemakings by the Commission, as directed in the Ocean Shipping Reform Act of 2022 (OSRA 2022), and underscores the heightened regulatory environment and continued scrutiny of ocean shipping activities in the U.S. foreign commerce.

Who is subject to the new requirements?

Common carriers (which includes both vessel-operating common carriers and non-vessel-operating common carriers) and marine terminal operators must comply with new Part 541 of the FMC regulations when issuing demurrage or detention invoices to certain parties, including shippers and consignees.

What should a demurrage or detention invoice contain?

While there are no specific formatting requirements (e.g., required information can be contained in an invoice attachment), common carriers and marine terminal operators must ensure that any issued demurrage or detention invoice contains new mandatory data elements, which includes information to help billed parties identify the relevant containers, when charges applied, when invoice payments are due, how rates were calculated, and how to request fees, mitigations, refunds, or waivers. These data elements are required in addition to those originally mandated by OSRA 2022.

What happens if an invoice is inaccurate or incomplete?

The billed party will no longer be obligated to pay the charges; however, common carriers and marine terminal operators can cure any non-compliant invoices, provided they do so within newly established time frames. Thus, the final rule incentivizes billing parties to ensure that invoices are complete and accurate prior to issuance.

Does the final rule regulate the time frames for billing?

Yes. The Commission established several time frames, i.e., 30 calendar day periods, for certain billing activities. For example, the final rule establishes a time frame for an ocean common carrier to issue a detention or demurrage invoice and a separate time frame for non-vessel-operating common carriers due to the unique role of non-vessel-operating common carriers as both shipper and carrier.

When do these new requirements take effect?

Most of these requirements are effective May 28, 2024; however, the Commission shall announce a separate effective date for the new minimum invoice information requirements.

Venable's International Trade and Logistics Group is carefully monitoring the evolution of U.S. shipping laws and regulations and will continue to provide updates as developments occur. If you have any questions regarding how these the new requirements for detention and demurrage billing may impact your business, please reach out to the authors for guidance.