Shipping companies and port operators are advised to re-examine their billing procedures for demurrage and detention to align with the newly introduced rules by the Federal Maritime Commission (FMC), effective from February 26, 2024. Although the application of these rules is postponed, affected entities might have to modify their billing systems, practices, and policies significantly. This adjustment is necessary to incorporate the rule’s requirements for additional data on invoices, specific timelines for billing, among other stipulations. This regulation is a continuation of the Commission’s efforts as mandated by the Ocean Shipping Reform Act of 2022 (OSRA 2022), highlighting the increased regulatory focus and ongoing scrutiny of maritime commerce in the United States.
Who needs to adhere to these updated regulations?
Both vessel-operating and non-vessel-operating common carriers, along with marine terminal operators, are required to follow the new FMC regulation, Part 541, for issuing demurrage or detention bills to certain stakeholders such as shippers and receivers.
Requirements for demurrage or detention bills:
There are no strict format guidelines, but carriers and terminal operators must ensure that their demurrage or detention bills include specific data elements to aid the billed party in identifying the pertinent containers, charge periods, payment deadlines, rate calculations, and methods for requesting charge adjustments or waivers. These requirements extend beyond those initially set by OSRA 2022.
Consequences of issuing non-compliant invoices:
Should an invoice be issued with errors or omissions, the recipient is not obligated to settle the charges. However, issuers have the opportunity to rectify any errors within a set timeframe, thereby encouraging the issuance of accurate and complete bills from the outset.
Invoice timing regulations:
The FMC has defined several 30-day periods for different billing procedures. For example, specific timelines have been set for vessel-operating common carriers to send out a detention or demurrage bill, with a distinct period allocated for non-vessel-operating common carriers, acknowledging their dual role in shipping.
Implementation timeline for the new rules:
While most rules come into force on May 28, 2024, the FMC will announce a different date for the implementation of the revised minimum invoice data requirements.
Venable’s International Trade and Logistics Group, acting as NCBFAA Transportation Counsel, is closely monitoring changes in U.S. maritime regulations and will keep providing updates on significant developments. For inquiries on how these new billing rules for detention and demurrage might affect your operations, please contact the authors for advice.
