Navigating New Waters: The Impact of FMC’s Billing Rule on Shippers and Drayage Truckers

The Federal Maritime Commission’s (FMC) recent rule on demurrage and detention billing has sparked a significant debate within the shipping industry, particularly concerning its impact on shippers and drayage truckers. Under the new standards aimed at curbing abusive container late fees, drayage truckers are relieved from direct billing for demurrage and detention, shifting the financial responsibility primarily onto shippers. This change, while intended to streamline billing processes, has raised concerns among shipping industry stakeholders, especially the National Industrial Transportation League (NITL).

A Shift in Billing Dynamics

Previously, both truckers and shippers could be billed for delays in picking up or returning cargo containers. However, the FMC’s new provision exempts drayage truck drivers from being billed unless explicitly agreed upon in contracts between shippers and ocean carriers. This alteration has caused unease within the NITL, which argues that the rule unfairly burdens shippers with the financial repercussions of delays, potentially increasing their administrative costs and complicating reimbursement processes.

Concerns and Implications for Shippers

The rule’s practical implications suggest shippers must meticulously review their contracts with ocean carriers and truckers to manage new billing responsibilities effectively. Larger shippers with dedicated departments might navigate these changes more smoothly, but smaller shippers face increased distress and costs, as they must first pay the invoices and then seek reimbursement from truckers, assuming the delay wasn't their fault. This scenario could disincentivize truckers from ensuring timely container movements, as they no longer bear the direct cost of demurrage and detention fees, raising concerns about the overall efficiency and fluidity of cargo movement.

Industry Reactions and Regulatory Intentions

While the American Trucking Associations’ Intermodal Motor Carriers Conference (IMCC) has welcomed the change, citing it as a step towards clearer invoicing responsibilities and supply chain efficiency, the NITL’s preference was for a conduct-based rule. Such a rule would allocate demurrage and detention charges based on the party responsible for the delays, directly linking financial consequences to conduct and potentially fostering greater accountability and efficiency in container movements.

Awaiting the Rule's Real-World Impact

FMC Chairman Daniel Maffei has defended the rule as a measure to prevent container late-fee abuses and ensure fees promote cargo movement rather than inflate ocean carriers’ profits. However, questions remain about whether the contract-based billing approach will align incentives correctly to improve supply chain fluidity.

As the shipping industry adapts to these new billing standards, stakeholders are closely monitoring the rule’s impact on operational practices and cost dynamics. The overarching goal remains to enhance the efficiency of cargo movements while ensuring fair and reasonable practices across the board. Only time will tell if this new rule will lead to the desired improvements in supply chain fluidity or if adjustments will be necessary to address the concerns of shippers and maintain the balance of responsibilities within the industry.

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Source:

https://www.freightwaves.com/news/are-drayage-truckers-getting-off-easy-under-fmcs-new-billing-rule