EXPOSING PER DIEM & DETENTION

Exporters, importers and motor carriers have long been objecting to the assessment of detention and demurrage charges.  The Federal Maritime Commission (FMC) heard our pleas and launched an investigation into the practice.  The investigation yielded six areas for development:

1. Transparent, standardized language for demurrage, detention, and free time practices;
2. Clarity, simplification, and accessibility regarding demurrage and detention billing practices and dispute resolution processes;
3. Explicit guidance regarding types of evidence relevant to resolving demurrage and detention disputes;
4. Consistent notice to shippers to container availability;
5. An optional billing model wherein
   1. MTOs [Marine Terminal Operators] bill shippers directly for demurrage; and
   2. VOCCs [Vessel Operating Common Carriers aka ocean carrier] bill shippers for detention; and

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6. An FMC Shipper Advisory or Innovation Team.

The terms “detention” and “demurrage” are frequently used interchangeably, but they are two distinct charges denoting the two different free time clocks for ocean containers, one on-dock and the other off-dock.

Demurrage is a daily charge assessed when a container remains on-dock beyond the allowed free time.  It represents the storage of a container on-site at the marine or rail terminal and MUST be paid before the container can be picked up.

Detention is a daily charge assessed when a container and/or chassis is off-dock longer than the allowed free time.  Detention also goes by the name Per Diem and is billed by the ocean carrier after the fact.