Actions Taken to Address Detention and Demurrage Fees

Brian GermanAgri-Business, Trade

Efforts to address detention and demurrage fees are moving forward at both the state and federal level. A state assembly bill has been proposed to strengthen rules prohibiting certain fees from being imposed by intermodal marine equipment providers. The bill, AB 2406, is being supported by groups including the Western Agricultural Processors Association (WAPA), California Citrus Mutual, and the Specialty Crop Trade Council. AB 2406 further defines the circumstances where fees can be imposed. Since the onset of COVID-19, complications within the supply chain created by a multitude of factors have been costly for ag exporters.

Detention and Demurrage Fees

“This issue has been going on for two years now where we’re getting charged for storing our containers there or not picking up the containers because the ship doesn’t show up. In introducing legislation with the California Trucking Association and us and several groups this year, we two weeks ago passed out of the Assembly Transportation Committee on a unanimous vote, 10-nothing. Then it actually passed off the floor at a unanimous vote,” said WAPA President and CEO Roger Isom. “So, it is really moving.”

While AB 2406 moves through the legislative process, action is being taken at the federal level to address detention and demurrage fees. Among its provisions, the Ocean Shipping Reform Act of 2021 seeks to address ocean shipping policies and application of fees. The bill has most recently been referred to the Senate Committee on Commerce, Science, and Transportation.

Actions have also been taken by the Federal Maritime Commission (FMC) to reassert authority over charges imposed on exporters. After an investigation, FMC found that Hapag-Lloyd had more than a dozen violations of the U.S. Shipping Act. The German carrier has been ordered to pay $822,220 in penalties, which Isom sees as a positive indicator of further action.

“It will be challenged and all that, but FMC sent the message saying ‘we’re watching you. These fees are inappropriate and we’re going to fine you big dollars for doing this,’” Isom noted. “In our opinion, it doesn’t solve our shipping issue – we need ships to come to Oakland and take our exports – but the penalties were really insult to injury. So now seeing that happen and change is fantastic.”

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Brian German

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Ag News Director, AgNet West