Toy Association Submits Comments to FMC on Regulating Demurrage and Detention Charges

shipping-crisis-responseApril 19, 2022 | The Toy Association, on behalf of its members, submitted comments to the Federal Maritime Commission (FMC) on April 14 to support its recently proposed rule change that seeks to curb increases of demurrage and detention charges. Costs have climbed due to rising cargo volumes and have put increased pressure on common carrier, port, and terminal performance.

The feedback was provided in response to the FMC’s solicitation of public comments on its Advanced Notice of Proposed Rulemaking on Demurrage and Detention Billing Practices. The Commission asked whether it should regulate the demurrage and detention billing practices of common carriers and marine terminal operators (MTO), including both vessel-operating common carriers (VOCCs) and non-vessel-operating common carriers (NVOCCs).

In its comments, The Toy Association encouraged the agency to quickly move to finalize the billing requirements in the hopes that the requirements will alleviate some of the financial damages incurred by the U.S. toy industry and other industries during the ongoing shipping crisis.

“Since the onset of the pandemic, these rising demurrage and detention charges have played a key factor in the systemic transportation breakdown from factory loading docks to retailer receiving ports,” said Ed Desmond, executive vice president of external affairs at The Toy Association. “Our hope is that initiating the proposed regulations and distinguishing between the demurrage MTOs charge to shippers and the demurrage MTOs charge to VOCCs will help increase transparency and lead to lower charges per day and extended free time at the ports.”

As noted by the Association in its comments to the FMC, 20 to 25 percent of days billed for demurrage and detention charges can be misreported. The Toy Association also requested the FMC to consider allowing businesses to dispute charges that result from equipment shortages or port congestion (main reasons for demurrage and detention charges during peak times) and to require more timely invoicing, which will help companies avoid the undue burden of reviewing and researching older container transactions.

The Toy Association continues to actively advocate on this issue in the U.S and globally. In addition to hosting webinars with FMC leadership and key U.S. ports that gave members a platform to speak with officials, the Association has kept channels of communication open with lawmakers and fellow toy associations on the ongoing challenges; encouraged the U.S. government and FMC to implement solutions; and supported the Ocean Shipping Reform Act.

As the shipping crisis and pandemic-related disruptions are not expected to clear overnight with this bill’s passage, members are encouraged to bookmark The Toy Association’s Shipping Crisis Resource Center for the latest developments. Members seeking additional information and assistance may contact Ed Desmond, executive vice president of external affairs at The Toy Association.