Month: May 2020

The coronavirus (COVID-19) pandemic has disrupted business operations on a world-wide scale. As a result, many businesses have looked to government loans and aid to help offset their losses. It is important to remember, however, that business insurance policies also may cover some of your company’s losses depending on the language of your insurance policy and the law in your jurisdiction. Indeed, while some business owners (and most insurers) assume that business interruption coverage does not apply in the absence of direct physical harm to your premises, this assumption may not be well founded.

Does Your Policy Include Business Interruption Insurance?

Business interruption insurance is intended to compensate policyholders for loss of income caused by certain damaging events that require your company to vacate insured property. The scope of business interruption coverage varies widely between policies, but often requires the policyholder to demonstrate direct physical loss or damage to insured property. If you have business interruption insurance, it is important to identify what types of events are explicitly covered or excluded from the policy.

While some business interruption insurance policies may only require that the policyholder demonstrate direct physical loss or damage to the premises, other policies may limit business interruption coverage to loss or damage resulting from covered events, such as fires. Policyholders should review their business interruption coverage to determine how it fits into the broader insurance policy. For example, your policy (or the underlying property insurance) may cover infectious diseases, government mandates, or even your supply chain (through contingent or dependent property insurance).

Infectious Disease Coverage

Your policy may include infectious disease coverage and could cover business interruption caused by COVID-19. While many insurers may be updating their infectious disease coverage to expressly exclude the coronavirus, pre-existing policies from 2019 may not include this carve-out.

“Civil Authority” Clauses

Civil Authority coverage is intended to apply to situations where government mandates prevent the use of property. For example, Civil Authority insurance often covers business interruption where the government prevents the policyholder from using its facility because a nearby or adjacent property was damaged in a fire or natural disaster. Accordingly, while the state-wide coronavirus lockdowns would likely meet a policy’s definition of a government mandate, the more contentious question for courts may be whether pandemic contamination constitutes a direct physical loss to property (somewhere) that triggers coverage.

Contingent or Dependent Property Insurance?

Contingent or dependent property insurance can cover business interruption resulting from issues in your supply chain. Like standard business interruption coverage, policyholders will likely need to demonstrate some type of physical damage or loss to property somewhere in the supply chain.

How Courts Interpret “Direct Physical Loss or Damage”

Not surprisingly, businesses and insurance companies are currently evaluating to what extent the COVID-19 pandemic or facility contamination may constitute or cause direct physical loss. If it does, companies may have multiple paths for compensation under business interruption, civil authority, or contingent property insurance. Some courts (prior to the coronavirus pandemic) have held that direct physical loss requires damage to the insured’s premises. Courts in other jurisdictions, however, have not construed the language so narrowly. Further, although different jurisdictions have interpreted the scope of direct physical loss differently, the unprecedented circumstances of the coronavirus pandemic may re-open the question for many courts seeking to determine the scope of the applicable coverage.

As noted above, a number of courts have held that direct physical loss can exist without actual destruction or structural damage to property. For example, courts have found direct physical loss in situations where facilities become unusable as a result of contamination by a substance that is harmful to workers (e.g., lead, asbestos, sulfur gas) even where the substance does not harm the property itself. Depending on the pandemic’s effect on your company, you may have grounds to argue that your facility, nearby property, or property in your supply chain was contaminated by the coronavirus.

These issues are currently being examined by businesses, insurance companies, and courts across the country. Some jurisdictions may also answer this question through legislation. For example, legislatures in Louisiana, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, and South Carolina are considering legislation expressly providing that business interruption insurance covers losses attributable to the coronavirus pandemic and associated government mandates.

If you have any questions regarding business interruption or related insurance coverage for losses suffered during the coronavirus pandemic, please contact Brendan Collins (bcollins@gkglaw.com / 202.342.6793) or Oliver Krischik (okrischik@gkglaw.com / 202.342.5266).

On April 30, 2020, the Surface Transportation Board (Board) issued a final rule in Docket No. EP 759, Demurrage Billing Requirements, which requires that a Class I carrier directly bill the shipper, rather than a warehouse, for demurrage occurring at destination. This requirement is conditioned upon there (1) being an agreement to that effect between the warehouse and the shipper, and (2) the agreement being communicated to the railroad.

Many shipper and warehouse parties sought this change, while various railroads were opposed to the action. Generally, the shipper/warehouse parties wanted to again have the ability to determine between themselves which entity would be responsible for demurrage costs associated with delays in unloading rail equipment or returning empties or loads to the railroad.

The commenting railroads objected, largely on the ground that their contractual arrangements were with the shippers, not warehouses. Hence, according to the carriers, the proposed rule interfered with those contractual arrangements and could make the assessment and collection of demurrage far more difficult.

Those objections were brushed aside by the Board on the basis that the railroads should not have the power to prevent shippers and warehouses from assigning responsibility for these charges based on their own determination of which party would be better able to account for the movement of rail equipment into and out of warehouse facilities. Additionally, while the proposed rule would have required one of the parties to provide notice of this type of arrangement to the rail carrier, the final rule requires both parties to jointly notify the rail carrier. That eliminates one railroad concern about whether they could properly rely on those types of agreements. Further, to address concerns that a rail carrier may not know which party would be responsible, the final rule requires that the notice contain the responsible party’s contact information and that notice to a rail carrier could be provided in hard copy or electronic format.

The final rule also makes it clear that a rail carrier would not be required to determine which of the shipper or warehouse parties was actually responsible. Once notified that an agreement between them was in place, the railroad would bill demurrage based on the notice those parties provided, and enable the shipper and warehouse to sort out which party was actually responsible.

The final rule does not apply to Class II and Class III carriers; however, they are encouraged to comply to the extent they can. The final rule will go into effect on June 20, 2020.

On April 30, 2020, the Surface Transportation Board (Board) issued a Supplemental Notice of Proposed Rulemaking (SNPRM) in Docket No. EP 759, Demurrage Billing Requirements, seeking additional public input on possible modifications to proposed rules on demurrage billing practices. Those proposed rules were originally issued in this docket on October 7, 2019 and resulted from testimony and comments submitted in the Board’s Oversight Hearing on Demurrage & Accessorial Charges, Docket No. EP 754 (served April 8, 2019).

The proposed rules suggested that the following information, at a minimum, was to be included on or with Class I carriers’ demurrage invoices:

1. Unique identifying information of each car involved

2. The following shipment information, where applicable:

• Date the waybill was created;
• The status of each car as loaded or empty;
• The commodity being shipped (if the car is loaded);
• The identity of the shipper, consignee, and/or care-of party, as applicable; and
• The origin station and state of the shipment.

3. The dates and times of:

• Actual placement of each car;
• Constructive placement of each car (if applicable and different from actual placement);
• Notification of constructive placement to the shipper, consignee, or third-party intermediary (if applicable); and
• Release of each car.

4. The number of credits and debits attributable to each car (if applicable).

In the SNPRM, the Board has asked for public comment on the following modifications and expansions of the original proposals:

Additional Invoice Information
Based on the comments received in the NPRM, the Board is now considering requiring that the following additional information also be included on or with demurrage invoices issued by Class I carriers:

1. The date range (the Billing Cycle) covered by the invoice.
The SNPRM indicates that this type of information is already standard for several carriers, so that actually requiring it be provided to rail customers should not be burdensome.

2. The original estimated date and time of arrival (ETA) of each car (as established by the invoicing carrier) and the date and time each car was received at interchange either on or, alternatively, upon reasonable request from the invoiced party.
Many commenters asserted that the inclusion of this information would allow them to compare the original ETA to the actual car placement information and determine if carrier-caused problems (e.g., bunching) effected the timing of a car’s placement. This information would accordingly allow rail users to know when to dispute demurrage charges caused by a carrier’s actions and verify credits when applicable. Similarly, knowing when a delivering rail carrier received rail cars at interchange (if applicable) would help rail users identify upstream carrier-caused bunching. Accordingly, this proposal could provide rail users with enough information to determine the cause and validity of demurrage charges. And, as this information appears to be readily available to rail carriers, as it is used in the ordinary course of business to track car movement and place cars, requiring that it also be made available to rail customers would not appear to be a burdensome requirement.

3. The date and time each rail car is ordered in.
The SNPRM recognizes that the ordered-in date and time is essential to the calculation of demurrage at closed-gate facilities, so that the inclusion of this information in invoices would be valuable for both demurrage accrual and verification purposes. Further, disagreements over the ordered-in date and time may be the source of some demurrage disputes; as such, having this information to both parties may alleviate disputes on demurrage bills.

Machine Readable Data
The SNPRM also proposes requiring Class I carriers to provide access to demurrage invoicing data in a machine-readable format. In this way, rail users would be able to more easily verify the car movements and, accordingly, the applicability of demurrage charges. However, not all rail users have the means to process machine-readable data and not all rail carriers currently provide machine readable data. Accordingly, the Board is seeking comments on how to (1) make the data accessible to all rail users and (2) whether requiring this information would be unduly burdensome to carriers.

Actions to Ensure Demurrage Charges are “Accurate and Warranted”
In the initial proposed rules, the Board contemplated adopting a new regulation requiring Class I carriers take “appropriate action to ensure that demurrage charges are accurate and warranted” prior to issuing an invoice. Proposed 49 C.F.R. 1333.4(b). The Board received numerous comments on this proposed regulation and, as part of its ongoing consideration of this issue, has invited “further comments from the Class I carriers regarding what actions they currently take, and from all stakeholders on what actions Class I carriers reasonably should be required to take, to ensure that demurrage invoices are accurate and warranted.”

Opening comments on these proposed additions and modifications to the proposed rules in this docket are due by June 5, 2020. Reply comments are due by July 6, 2020.

On April 30, 2020, the Surface Transportation Board (Board or STB) culminated a process that began in the Fall of 2018 with the issuance of a final policy statement that provides shippers, receivers, and railroads with information on the principles the Board will consider when evaluating the reasonableness of demurrage and accessorial rules and charges in formal complaint cases. In general, the Policy Statement provides much needed guidance in key areas where disputes have arisen. The Board’s involvement in this area was prompted in large part by its receipt of a significant number of complaints from rail shippers and receivers of unfair and onerous practices and charges being imposed by the Class I railroads as part of their implementation of “precision scheduled railroading,” a strategy that requires major changes to rail operations and reductions in equipment and personnel to achieve its goals of lower operating ratios and achieving efficiencies. These complaints resulted in the Board instituting EP 754, Oversight Hearing on Demurrage and Accessorial Charges, where the Board received input from dozens of industry stakeholders on railroad practices and suggestions for changing the status quo.

The Board declined to make any binding determinations as to the reasonableness of any particular rule, practice or charge, and the Policy Statement does not require uniformity from Class I rail carriers with respect to their demurrage and accessorial rules and charges. Moreover, the Policy Statement does not provide any guidance on how the reasonableness of the level of a demurrage or accessorial charge would be determined, only whether the charge should be imposed at all.  Rather, the twin purposes of the Policy Statement are to provide guidance to parties to reach commercial resolutions to such disputes, and to inform stakeholders of the principles the Board will apply in a formal case while examining the particular facts of the dispute.

Shippers and receivers should carefully review the demurrage and accessorial rules and charges in the tariffs of the Class I carriers they deal with, as well as the billing and dispute resolution practices of such carriers, in light of the principles set out in the final Policy Statement. These principles are summarized herein.

The overarching principles of the policy statement, issued in Docket No. EP 757, Policy Statement on Demurrage and Accessorial Rules and Charges are that in order for demurrage and accessorial rules and charges to be reasonable they must (1) serve to incentivize shippers and receivers to encourage the efficient use of rail assets and (2) promote “transparency, timeliness, and mutual accountability” by both rail carriers and the shippers and receivers they serve. Although the Board recognized that a rail carrier is entitled to assess demurrage charges on a shipper when it uses equipment or track beyond a specified period, a railroad is not entitled to compensation for delays attributable to the railroad and outside of a shipper’s control. The key aspects of the Policy Statement implementing these main principles are as follows:

1. The Policy Statement applies to accessorial charges and rules.

A significant clarification in the final Policy Statement sought by rail shippers and receivers is that its principles apply to “accessorial” charges and rules “that are designed or intended to encourage the efficient use of rail assets.” Accessorial charges are not defined in any statute or regulation, but are generally defined to be charges other than linehaul charges. This clarification is important for many rail shippers, such as unit train shippers, who do not typically incur demurrage charges but are assessed similar accessorial charges for not having trains ready when required by a railroad’s tariff, or when locomotives are removed from trains while they are being loaded or unloaded.

2. Charges may not be assessed for circumstances beyond the shipper’s or receiver’s reasonable control.

A critical aspect of the Policy Statement favorable to rail shippers and receivers is that it proceeds from the fundamental premise that the purpose and objective of demurrage and comparable accessorial charges is to incentivize behavior to encourage efficiency. As such, if a charge is imposed in circumstances where the shipper’s or receiver’s behavior cannot be incentivized because the circumstances are out of its reasonable control, then the charge may not be assessed. In making this decision the STB rejected arguments from the Association of American Railroads and its Class I railroad members that railroads should always be paid the “compensation” portion of a charge regardless of shipper fault.

3. Free time must take into account railroad service variability.

In the policy statement, the Board declined to establish a minimum amount of “free time,” which is the time period a rail car could be in the possession of a shipper or receiver before a charge may be assessed. However, the free time provided by the rail carrier must be reasonable and consistent with the overarching objective and purpose of demurrage stated above. Accordingly, reductions in free time that do not serve to incentivize the behavior of shippers are likely to be found unreasonable. Significantly, the Board stated it “continues to have serious concerns about the adverse impacts of reductions in free time … if rail carriers do not have reasonable rules and practices for dealing with, among other things, variability in service and carrier caused-bunching, and for ensuring that rail users have a reasonable opportunity to evaluate their circumstances and order incoming cars before demurrage begins to accrue.”

Examples of unreasonable free time and free time reductions include: missed switches, charging demurrage to move cars from “constructive placement” (cars stopped short of the shipper’s facility) from remote locations, carrier-caused bunching of railcars, and sudden changes to historical practices, such as reduced switch days or delivery frequency. The Board recognized in some instances a reduction in free time may be justified. However, in those instances, the rail carrier must be able to produce evidence that those reductions are warranted.

4. Railroad demurrage policies must take into account the actions of upstream carriers.

The Board acknowledged that bunching (the practice of a railroad delivering to a facility or interchange point many more cars than a facility can physically handle) is a significant problem in the industry today, and it stated that disputes over the assessment of charges where bunching occurs will continue to be considered on a case-by-case basis. Significantly, however, the Board stated, “it is the Board’s view that carriers should consider the actions of upstream carriers when administering their demurrage rules and charges.” This view is in reaction to the testimony of numerous shippers that bunching is often caused by the Class I railroads who interchange cars with the railroad who ultimately delivers the cars to the shipper’s facility. In adopting this view, the STB rejected Class I railroad arguments that they have no legal obligation to deal with bunching by upstream carriers. The strong implication in Policy Statement is that railroads should attempt to resolve bunching issues between themselves before trying to foist all the costs from bunching onto the party ultimately receiving the railcars. The Board also encouraged railroads to ensure that their automatic billing processes and dispute resolution procedures account for carrier-caused bunching, implying that the failure to do so would be considered an unreasonable practice.

5. Invoicing and dispute resolution practices must be transparent and timely, and there must be mutual accountability.

The Policy Statement responds to the complaints from shippers and receivers about the billing and dispute resolution practices of many Class I railroads, concluding, among other things, that “demurrage charges are difficult, time-consuming, and costly to dispute and that invoices are often inaccurate or lack information needed to assess the validity of the charges.” In general, the Board articulated a policy that “if carrier rules and practices effectively preclude a rail user from determining what occurred with respect to a particular demurrage charge, then the user would not be able to determine whether it was responsible for the delay; the responsible party would not be incentivized to modify its behavior; and the demurrage charges would not achieve their purpose.”  

To encourage more transparency the Board encouraged all Class I carriers, at a minimum and on a car-specific basis, include the following in its invoices: the unique identifying information of each car, the waybill date, the status of each car as loaded or empty, the commodity being shipped, the identity of the shipper, consignee, and/or care-of party, the origin station and state of the shipment, the dates and times of actual placement, constructive placement (if applicable), and notification of constructive placement (if applicable). The Board also indicated that it expects rail carriers to bill for demurrage only when the charges are warranted, and to send invoices on a regular and timely basis.

As to providing guidance or prescriptive action on appropriate time frames to dispute demurrage charges, the Policy Statement makes it clear the Board will have serious concerns about dispute resolution processes that impose a short deadline to dispute charges or a process that places no meaningful restriction on the time carriers can take to respond. With respect to comments calling for the establishment of streamlined dispute resolution procedures, the Board responded that formal mechanisms already exist, both within and outside of the Board’s purview, and that arbitration could be a means to resolve some demurrage disputes.

6. Rail users should be paid the value of unused demurrage credits.

The Policy Statement also addresses a disputed area in the Class I carriers’ demurrage programs by which demurrage credits are awarded for meeting free time requirements and debits are assessed for exceeding free time. Specifically, under most Class I demurrage programs, earned credits that are not used to offset debits expire at the end of the month, thereby reducing their value. In the Policy Statement, the Board confirmed its proposal in the draft policy statement that rail users should be compensated for the value of unused credits at the end of the month. The Board clarified that it is not suggesting credits should never expire. However, it believes that compensating rail users for unused credits may hold rail carriers accountable for service failures and make rail users less likely to incur future demurrage charges that could be offset by the credits.

7. Overlapping charges likely to be found unreasonable.

The Board indicated that when adjudicating specific cases, it would have significant concerns about a tariff provision that imposed a charge that was intended to serve the same purpose as demurrage, or a charge arising from the assessment of demurrage for congestion and delay that is not within the reasonable control of the rail user to avoid. Such “overlapping” charges would likely be found to be unreasonable.

8. Railroads encouraged to provide sufficient notice of major tariff changes.

Finally, the Policy Statement encourages railroads to provide “sufficient notice of major changes to demurrage and accessorial tariffs …,” recognizing that 49 U.S.C. §11101(c) only requires carriers to provide 20 days’ notice. The Board noted that some carriers testified they generally provide between 45-60 days’ notice of changes, and that these timeframes might still not be sufficient for some tariff changes.

The policy statement will go into effect on May 30, 2020. 

On April 28, 2020, the Federal Maritime Commission (FMC or Commission) issued its long-awaited interpretive rules on the reasonableness of carrier and marine terminal operator (MTO) policies and practices when assessing demurrage and detention.

This proceeding was initiated in 2016 due to a petition filed by the Coalition for Fair Port Practices, which involved a number of trade associations, including the National Customs Brokers & Forwarders Association of America (NCBFAA). As counsel for the NCBFAA, we were actively involved in submitting testimony, comments and arguments throughout this process.

Citing examples of situations where non-vessel operating common carriers (NVOCC) and shippers were assessed these charges even though they were not responsible for the delays underlying the charges, the petition requested that the FMC initiate a rulemaking proceeding for the purpose of clarifying what constitutes just and reasonable practices with respect to the assessment of demurrage and detention by the carriers and MTOs. And, to the extent that the assessment is deemed to be unreasonable, that would contravene the provisions of former section 10(d)(1) of the Shipping Act, now 46 USC 41102(c), and subject the carrier or MTO to pay reparations and attorneys’ fees.

Three and a half years later, after rounds of investigations by FMC Commissioner Dye and the filing of numerous briefs and comments, the Commission has now acted and issued final rules. These rules are set forth in a 95-page decision that carefully articulates the issues and contentions. Among other things, the decision concludes that arguments in favor of the status quo, raised almost exclusively by the carriers and MTOs, were largely self-serving, ineffectual and unpersuasive.

The final rules adopt, as the primary principle, the point that when assessing the reasonableness of demurrage and detention practices, the Commission will look to whether they are meeting their intended purpose as financial incentives to facilitate the prompt and efficient movement of freight (the “Incentive Principle”). Although the Commission recognized that these charges might be justified to reimburse regulated entities for the costs associated with the use of equipment and terminal space, tariff items of this nature should not be regarded as a blank check to run up charges without regard to the actual cost to the carriers and MTOs.

In essence, the rules list a number of factors the FMC would consider when determining the reasonableness of these types of charges in complaint cases. The FMC also indicated that the factors listed were not meant to be exclusive and that it would consider additional factors if presented in any given case.

Essentially, the rules list seven factors the Commission might consider when determining the reasonableness of demurrage and detention in any complaint case. These are:

1. Cargo Availability

The overriding principle is based on whether a carrier or MTO practice provides a shipper a reasonable opportunity to retrieve its cargo or return containers before assessing demurrage and detention. As to how the actual availability of cargo may vary from terminal to terminal, the Commission determined that it could not issue a general rule dictating when free time would start. The Commission nonetheless made it clear that “availability” at a minimum means that the container would need to be physically available. Depending on the facts of the case, the Commission might consider whether there is an appointment system, appointment availability, a trucker’s access to the terminal and chassis availability (when appropriate) in its analysis for determining whether the cargo is actually available. Practices that apply demurrage when a container is not actually available will likely be found unreasonable.

2. Empty Container Return

Under the rules, absent extenuating circumstances, instances where empty containers cannot be returned for no fault of the NVOCC or shipper and detention is nonetheless assessed will likely be found to be unreasonable. Similarly, in addition to simple refusals to accept empty containers, the following types of situations might also justify challenging detention bills: a requirement that the trucker engage in dual moves; uncommunicated or untimely communicated changes in container return requirements; or uncommunicated or untimely communicated notice of terminal closures for empty containers.

3. Notice of Cargo Availability

An essential prerequisite to any assessment of demurrage is that the carrier and/or MTO provide some notice that the cargo is physically available. When assessing the reasonableness of that notice, the rules state that the Commission may consider to whom notice is provided, the format of the notice, method of its distribution and the timing. In other words, the Commission is prepared to look into whether the type of notice was reasonably calculated to apprise shippers and their agents that a container is available for retrieval. If not, the free time clock should not have commenced until the NVOCC or shipper had reason to know the cargo was available.

4. Government Inspections

In the NPRM, the Commission had proposed three options with respect to assessing demurrage and detention when cargo was being held for government inspections. Rather than establish a single principle, the Commission revised its approach and will look to whether assessing demurrage and detention under the specific circumstances in any given case was warranted. As government inspections are complicated and the type of inspection can vary, the Commission will instead inquire whether the assessment of demurrage and detention serves the Incentive Principle; if not, assessing demurrage and detention in these circumstances would be considered suspect.

5. Demurrage and Detention Policies

In reviewing whether the carrier and MTO practices on assessing these charges are reasonable, the FMC would also consider the existence, accessibility, content and clarity of their demurrage and detention policies and whether they reflect the entities’ actual practices. So, if their policies on assessing these charges or resolving disputes are not clear or accessible, if you can’t get anyone to take the issue seriously or even return your calls, that might be a factor in determining whether the assessment of disputed charges was reasonable. The Commission accordingly indicated that it would look favorably on a carrier or MTO making its demurrage and detention policies easily accessible on a website, in addition to their inclusion in ocean carrier tariffs and MTO schedules. This would be expected to include points of contact, timeframes for resolving disputes and any evidentiary requirements that are allegedly needed. The rule also provides any policies that contained burdensome evidentiary requirements or failed to provide appropriate evidentiary guidelines may themselves be found to be unreasonable.   

6. Transparent Terminology

Another provision of the new rules indicates that the Commission may consider the extent to which carriers and MTOs have appropriately defined the terms used in their demurrage and detention tariffs and practices,  the accessibility of those definitions, and the extent to which the definitions differ from how the terms are generally used.

7. Non-Preclusion

Finally, the Commission added the “Non-Preclusion” provision. This makes it clear that the FMC is not bound to follow any prescribed formula in determining whether a challenged practice is reasonable, but may instead consider additional factors, arguments and evidence as appropriate. 

STB Decision on Demurrage and Accessorial Charges

Perhaps not coincidentally, a few days later, on April 30, 2020, the Surface Transportation Board (STB) issued three separate decisions pertaining to railroad demurrage and accessorial charges policies and practices. The primary decision was the STB’s final Policy Statement on Demurrage and Accessorial Rules and Charges, issued in Docket EP 757.

As was the case with the FMC’s decision, the STB policy statement proceeds from two fundamental principles: (1) “demurrage rules and charges may be unreasonable when they do not serve to incentivize the behavior of shippers and receivers to encourage the efficient use of rail assets. In other words, charges generally should not be assessed in circumstances beyond the shipper’s or receiver’s reasonable control,”; and (2) “transparency, timeliness and mutual accountability by both rail carrier’s and the shippers and receivers they serve are important factors in the establishment and administration of reasonable demurrage and accessorial rules and charges.” 

We will address this decision in further detail. But, suffice it to say here that the timing and issuance of decisions from both the FMC and STB on these issues indicate that the agencies are now willing to reign in unreasonable demurrage and detention practices, and not simply permit the carriers and MTOs to hide behind their tariffs and traditional lack of responsiveness.

Effective Date

Returning to the issues of the FMC’s new rules, they were issued in the decision in FMC Docket No. 19-05, Interpretative Rule on Demurrage and Detention under the Shipping Act. A copy of the decision is available on the FMC’s website at www.fmc.gov. The rules will be effective when published in the Federal Register, which should take place shortly.

The final rules will not mean the end to unreasonable demurrage and detention billing practices, as they only provide guidance on how the Commission is likely to rule if a complaint is actually filed with the agency. In other words, it is now up to NVOCCs and cargo interests to not accept the unreasonable application of these types of charges just because invoices and claims are made. Nonetheless, there is hope that this will encourage the carriers and MTOs to review their practices and commence acting more responsibly.

Please contact Ed Greenberg or Kristine Little with any questions you might have.