Will FMC’s New Demurrage & Detention Rules Aid NVOCCs?

On April 28, 2020, the Federal Maritime Commission (FMC) released the long-awaited interpretive rules in Docket No. 19-05 relating to how ocean common carriers may lawfully apply demurrage and detention charges to exporters, importers and ocean transportation intermediaries, including Customs brokers in certain circumstances and still be compliant with the “reasonableness” requirement of 46 U.S.C § 41102(c). The analyses and guidance in the interpretive rules have been in high demand in view of the oftentimes strained circumstances pursuant to which five and six figure demands have been made by ocean carriers for demurrage and detention, especially against OTIs. This article has the objective to focus OTI entities on the selective structuring of relationships, and the requirement to analyze these relationships in the context of the Incentive Principle with the objective of minimizing risks of the demurrage/detention variety. We believe that non-vessel operating common carrier (NVOCC) will be assisted if they structure their relationships accordingly.

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