FEDERAL MARITIME COMMISSION

800 North Capitol Street, N.W.

 Washington, DC 20573-0001

Phone: (202) 523-5725

Secretary@FMC.gov

June 30, 2022 

Mr. Brian Bumpass 

Chair, National Shipper Advisory Committee 

Dear Chairman Bumpass: 

On behalf of the Federal Maritime Commission, this letter responds to Recommendation 

1 from the National Shipper Advisory Committee (NSAC) submitted on May 6, 2022. The 

statute that created NSAC provides a 60-day timeline for the Commission to respond in writing 

to NSAC recommendations, publish the recommendations on the FMC website, and submit the 

recommendations to Congress. Your full recommendation and this response will be posted to the 

FMC’s website and submitted to Congress in order to fulfill these statutory requirements. Please 

thank the NSAC for its diligent work and thoughtful recommendation. 

NSAC Recommendation 1: A recommendation to codify regulation in concert 

with the Interpretive Rule incentivizing the movement of cargo that prohibits 

any unreasonable application of charges on containers for Dwell Fees while 

shifting the burden of proof to vessel operators and/or marine terminals and 

strengthening requirements for proper dispute resolution.

Commission Response

The dwell fees cited in the NSAC’s full recommendation are subject to the general 

prohibition contained in 46 U.S.C. § 41102(c) against failure “to establish, observe, and enforce 

just and reasonable regulations and practices relating to or connected with receiving, handling, 

storing, or delivering property.” Therefore, when these fees are charged to a shipper, the 

Commission’s interpretive rule on demurrage and detention contained in 46 C.F.R. § 545.5 

applies. The interpretative rule broadly defines demurrage to include any charges assessed that 

relate to the use of marine terminal space. It is the purpose of the fee, not the label or title, that is 

controlling. The various types of dwell fees outlined in your recommendation meet this 

definition of demurrage. Further, the interpretative rule made clear that it applies when these 

types of fees are imposed on shippers by a Marine Terminal Operator (MTO) or an ocean

common carrier.

The reasonableness of the dwell fees is evaluated against the standard in § 41102(c) and 

the interpretative rule. The reasonableness of demurrage practices will be assessed against the 

ability to serve their primary purpose as financial incentives to promote freight fluidity. This 

includes the general principle that shippers, intermediaries, and truckers should not be penalized 

by demurrage charges when they cannot retrieve containers despite having met all of their 

obligations to retrieve the cargo. In addition, the interpretative rule highlights the importance of 

accessible and clear demurrage and detention polices on the reasonableness assessment. 
2

Additionally, there should be clear parameters and metrics for when a fee starts/stops and dispute 

resolution, under § 41102(c) and the interpretive rule.

The Commission has taken several actions related to your recommendations. The 

Commission will continue its aggressive enforcement policy, including application of the 

interpretative rule in situations where demurrage charges are assessed despite cargo being 

unavailable. This situation is present in two of the Commission’s existing enforcement cases. In 

addition, the Commission recently sought comment in an Advance Notice of Proposed 

Rulemaking on whether it should regulate elements of the demurrage and detention billing 

process, including situations where MTOs impose fees directly on shippers. The Commission is 

evaluating the 80 comments it received, as well as this NSAC recommendation, in considering 

whether to issue a Notice of Proposed Rulemaking. Further, the Commission will consider 

NSAC’s recommendation on adding a burden-shifting regime to future regulatory efforts on 

dwell fees.

Your full recommendation includes two additional matters. First is the question of 

whether dwell fees can be extended to the account of the cargo (or the importer). Under 46 

U.S.C. § 40501(f), an MTO may impose its schedule of rates immediately on a shipper (or an 

ocean carrier). You also raise concerns about what is described as a “pay first, argue later” 

regime. Such practices are already subject to the Commission’s interpretive rule and will 

continue to be evaluated for reasonableness against the interpretive rule, including whether there 

is an adequate dispute resolution process.

In addition, Public Law No. 117-146, the Ocean Shipping Reform Act of 2022, requires 

the Commission to do a new rulemaking to clarify the interpretative rule on detention and 

demurrage and add additional detail based on our experience since its promulgation on May 18, 

2020. It would be appropriate, along with a number of Final Recommendations related to 

detention and demurrage included in the recently released Final Report for Fact Finding 29 

(“Effects of the COVID-19 Pandemic on the U.S. International Ocean Transportation Supply 

Chain: Stakeholder Engagement and Possible Violations of 46 U.S.C. § 41102(c)”), to include 

this recommendation on “dwell time” in this rulemaking because, as noted above, dwell fees are 

governed by the incentive principle of the interpretive rule. 

Thank you for NSAC’s proactive role in advising the Federal Maritime Commission on 

policies related to the competitiveness, reliability, integrity, and fairness of the international 

ocean freight delivery system. Please contact me or the Designated Federal Officer for the NSAC 

to confirm receipt of this response and if you have any questions. 

Sincerely, 

William Cody

Secretary