BRi USA NEWS - US Maritime Regulators Formalize Detention and Demurrage Rule
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Regulatory guidance is expected to be significant to American shippers facing container availability charges from carriers and marine terminals during COVID-19 pandemic.
US maritime regulators said this week they would formalize interpretive rulemaking aimed at helping it gauge whether levied demurrage and detention fees truly incentivize the retrieval of cargo and return of containers. Under the final rule taking effect once it is published in the federal register, the US Federal Maritime Commission (FMC) signals to the industry that the fairness of detention and demurrage fees should be viewed through a lens of whether they encourage the pickup of import containers and return of empties. The rule is expected to be published in the register within two weeks.
For years, shippers have complained to the FMC about the unfair imposition of these fees whenever container equipment cannot be returned or picked up during the free period for reasons out of their control. The daily fees reportedly range from $150 to $350 per container. The finalized rule comes as the threat of detention and demurrage rises due to reduced gate hours at US ports as marine terminals adjust operating hours to match declines in demand caused by the coronavirus disease 2019 (COVID-19). US port directors reported last week that the coming plunge in import volumes will be even deeper than they feared.
Mounting shipper pressure
The final rulemaking comes after a coalition of more than 65 groups representing shippers, transportation intermediaries, and trucking interests in mid-March urged the agency to adopt the rulemaking. Less than two weeks later, a group of agricultural and food shippers asked the Trump administration to work with the FMC to address detention and demurrage penalties linked to disruptions caused by the COVID-19 pandemic that they deem unfair.
Under the finalized rule, the FMC will consider the reasonableness of detention and demurrage based on how carriers and marine terminal operators communicate their penalties to cargo owners and truckers, and the clarity of their terminology for defining each. The FMC said the final rule also includes two provisions that were not part of the initial proposed rule published in September. The provisions include a clarification that the FMC’s guidance covers government cargo inspections and does not prevent the agency from considering additional factors, arguments and evidence outside those specifically listed.
“The FMC’s guidance on detention and demurrage is over 90 pages long, and we are still in the process of reviewing it,” John Bulter, president and CEO of the World Shipping Council, which represents major global carriers, said in a statement. “Because the purpose of the commission’s interpretive rule is to provide guidance to an administrative law judge in future complaint cases at the FMC, it will take some time to determine the effect of the guidance, especially since the commission has properly pointed out that each case must be decided on its own facts.”
U.S. Port Status Updates
Below is a general overview of the operations BRi USA has been able to gather for most major U.S. ports. This list will be updated as information is made available.
Port of Seattle and Tacoma – Despite a 21% drop in container flow, the Northwest Seaport Alliance (NWSA) remains open and operational, although planning for another 12 blanked sailings in May and June. Approximately half of the NWSA terminals are closed on Friday, May 1.
Ports of Los Angeles/Long Beach – The ports are currently preparing for 15 blanked sailings in May and June. All terminals are open on Friday, with Pier C terminal being the only facility open second shift. All terminals are closed Saturday and Sunday this week.
Port of Oakland – The Port of Oakland is planning for decreased inbound volume due to 20 scheduled blanked sailings May – June. All terminals will be closed except for Shippers Transport on Friday, May 1, for the May Day Holiday.
Port of Houston – The port received approval this week for a $1 billion project to widen the Houston port channel, allowing marine terminals to handle two approximately 14,000 TEU vessels simultaneously. This initiative is eligible for federal funding from the US Army Corps of Engineers (USACE). Evergreen container lines has confirmed a new weekly feeder service to the port beginning in May, providing transhipment service via Manzanillo, Colon, and Kingston. All terminals are open and operating normally.
Port of New York/New Jersey – This week a judge ruled against a request from GCT New York terminal on Staten Island to prevent Maersk from leaving the terminal for the APM Terminals (APMT) facility in Elizabeth, New Jersey. Maersk is scheduled to make the last call to GCT on May 8. The port posted a statement this week that both the NY and NJ ports remain open for business and fully operational despite the COVID-19 crisis. The port will also begin hosting webinar briefings on operations, register here for the first one on April 30.
Port of Virginia - Due to a downturn in volume, the port has announced that effective May 4, 2020, the Portsmouth Marine Terminal (PMT) will be closed. Truck gate openings at Norfolk International Terminals and Virginia International Gateway will also be shortened one hour to open at 0700 hours, Monday – Friday. The port is closed Saturday and Sunday.
North Carolina Ports - The port is open for normal operations at this time, and closed Saturday-Sunday.
South Carolina Ports - SC Ports in Charleston, Greer and Dillon are operating normally for gates and vessels at this time.
Port of Georgia - The port is open for normal operations, with Saturday gate hours suspended at this time.
Chinese Government Announces Quality Restrictions on Medical Items & Non-Medical Masks
In an announcement this week, the Chinese State Administration of Market Supervision and Administration of the General Administration of Customs of the Ministry of Commerce announced the further strengthening of the supervision of the quality of the export of anti-epidemic materials.
The announcement, published on the ministry’s website here, states that with the global pandemic, and “in order to more effectively support the international community to jointly cope with the global public health crisis, the relevant measures for further strengthening the quality control of epidemic prevention materials and regulating the export order are announced as follows:
- Non-Medical Masks - As of April 26, non-medical masks for export should meet Chinese quality standards or foreign quality standards. Non-medical manufacturers must obtain foreign standard certification or registration from the China Chamber of Commerce. A list of approved manufacturers and products are posted on the General Administration of Market Supervision’s website. For orders submitted prior to April 26, the exporter and importer must submit a joint declaration.
- Medical Materials – As of April 26, manufacturers and exporters that have obtained new coronavirus detection reagents, medical masks, medical protective clothing, ventilators, and infrared thermometers whose products have obtained certification or registration of foreign standards must submit a written declaration of quality standards. Both parties are verifying the commitment that their products meet the quality standards and safety requirements of the importing country, and the customs will check and release them based on the list of manufacturers that have obtained certification or registration of foreign standards provided by the Ministry of Commerce.
Importers are strongly encouraged to work with their suppliers/manufacturers to ensure they are on the approved list by the Ministry of Commerce.
Manufacturers may submit their appropriate documentation to be approved here.
Ensuring this is completed prior to shipment of the goods, expedites the declaration process and lessens the likelihood for customs inspections.
As we have reported for several weeks now, ports in India are severely congested as a result of the country’s lockdown.
Reports have surfaced that some carriers are not calling Indian ports; however, our carrier relationships do not validate this information.
They are blanking some sailings to the ports and experiencing some vessel delays, but still calling on a regular basis.
Many members of the logistics industry are still working remotely, and the ports are operating as normal, but with limited crews for Customs officials.
Below is an update from our India office on the logistics conditions in India:
- It is expected that the Indian Government may direct the carriers to extend detention/demurrage waivers to May 3.
- All passenger flights are suspended until May 3, leaving only freighters to operate cargo shipments. Medical supplies and other essential cargo is still being prioritized, although general cargo has started slowly moving by air.
- Export shipments have commenced, but cargo is moving slowly with some terminals have increased terminal handling fees. Container freight stations are still working backlogs from importers not taking incoming freight.
- Road transportation has begun with few driver shortages in major states, others are still struggling due to those drivers remaining in lockdown.
- Select states are considering an extension of the lockdown, but others that are not in “hotspot” areas have already begun reopening some businesses.
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As a valued customer, we hope that you will continue to trust us to source the best options for your supply chain needs now and into the future. Feel free to contact your Customer Solutions Representative, should you have any questions regarding USA News.
Keeping you updated,
BRi Customer Solutions Team
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