FEDERAL MARITIME COMMISSION

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Fact Finding Investigation No. 28

CONDITIONS AND PRACTICES RELATING TO DETENTION, DEMURRAGE,

AND FREE TIME IN INTERNATIONAL OCEANBORNE COMMERCE

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ORDER OF INVESTIGATION

Pursuant to the Shipping Act of 1984, 46 U.S.C. 40101 et seq. (“Shipping Act”), the 

Federal Maritime Commission (“FMC” or “Commission”) is charged with regulating the common 

carriage of goods by water in the foreign commerce of the United States (“liner service”). In doing 

so, the Commission must be mindful of the statutory purposes of its regulation. Those purposes 

include an efficient and economic transportation system with a minimum of government 

intervention and regulatory costs, promotion of the growth and development of U.S. exports by 

placing a greater reliance on the marketplace. 46 U.S.C. § 40101.

On December 17, 2016, the Coalition for Fair Port Practices filed a petition with the 

Commission. This petition argued, among other things, that the current practices of demurrage, 

detention, and per diem, i.e., charges by ocean common carriers and marine terminal operators 

(MTOs) for the use of space and equipment, is unjust and unreasonable. Shippers, consignees, 

drayage providers, and others described the alleged practices of MTOs and ocean common carriers 

(OCCs) that came about as a result of federal government inspection requirements, truck shortages, 

chassis shortages, discrete weather events, labor disputes, lack of effective appointment systems, 

and general conditions in and surrounding port areas. These stakeholders also aver that they lack 

control over such events and have incurred significant demurrage and detention charges in 

connection with these events. 

The Commission oversees 255 marine terminals across the East, Gulf, and Pacific coasts, 

in addition to Alaska. Policies on free time practices vary, even among terminals at the same port. 

Although some MTOs and ports have tariffs that allow for additional free time or lesser rates where 

the terminal or port is unable to tender cargo for delivery during free time, these practices do not 

S E R V E D

MARCH 5, 2018

FEDERAL MARITIME COMMISSION
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appear to be universal. There are also several models of how the MTOs collect the charges from 

shippers, consignees, drayage providers, or carriers. These varying models may generate 

uncertainty among shippers, consignees, and drayage providers about how demurrage and 

detention will be assessed when access to ports is restricted or ports are congested.

Collectively, these reports of demurrage practices, and the lack of visibility surrounding 

those practices, have raised questions over whether the current practices allow for a competitive 

and reliable American freight delivery system. Under 46 U.S.C. § 41102, carriers and MTOs must 

adopt just and reasonable regulations and practices governing free time and demurrage and 

detention charges. The test of reasonableness as applied to terminal practices “is that the practice 

must be otherwise lawful, not excessive, and reasonably related, fit and appropriate to the ends in 

view.” W. Gulf Mar. Ass’n v. Port of Houston, 18 S.R.R 784, 790 (FMC 1978), aff’d without 

opinion sub nom. W. Gulf Mar. Ass’n v. Fed. Mar. Comm’n, 610 F.2d 1001 (D.C. Cir. 1979), cert. 

denied, 449 U.S. 822 (1980). Demurrage and detention practices are encompassed within 

§ 41102(c) because they relate to the handling, storing, and delivery of property at terminals. See, 

e.g., California v. United States, 320 U.S. 577, 584-85 (1944) (interpreting the analogous provision 

in the Shipping Act of 1916 as applying to demurrage); Am. Export-Isbrandtsen Lines, Inc. v. Fed. 

Mar. Comm’n, 444 F.2d 824, 829 (D.C. Cir. 1970) (interpreting the analogous provision in the 

Shipping Act of 1916 as applying to detention).

The international ocean liner trade has changed dramatically over the last fifty years, driven 

in large part by the advent of containerization. Unloading a 10,000 TEU vessel in a modern 

terminal is a very different operation than the unloading of a relatively small breakbulk vessel 

seventy-five years ago. A related issue to consider is whether the legal duty to tender and its 

relationship to free time and the imposition of demurrage, detention, and per diem fees have kept 

up with the changes in port practices unloading vessels, moving cargo off the dock, and delivering 

it to consignees. Also fundamental to the issue of free time and detention and demurrage charges 

is the question of who bears the economic burden of delay resulting in detention and demurrage, 

which involves the allocation of risk and can vary greatly depending on the circumstances.

Therefore, consistent with its statutory duty, pursuant to 46 C.F.R. § 502.281 et seq., the 

Commission hereby ORDERS an investigation into current conditions and practices of vessel 

operating common carriers and marine terminal operators, and U.S. demurrage, detention, and per 

diem charges. The Commission will use the information obtained in this investigation and

recommendations of the Fact-Finding Officer (FFO) to determine its policies with respect to 

detention, demurrage, and free time practices of regulated entities.

Specifically, the FFO named herein may develop a record on the following:

1. Whether, and if so, how, the alignment of commercial, contractual, and cargo interests 

enhance or aggravate the ability of cargo to move efficiently through United States ports.

a. Whether the commercial and contractual conditions in the United States are 

similar to the conditions in other maritime nations; and

b. Whether other maritime nations have practices to address detention or demurrage 

charges imposed due to conditions beyond carriers’, MTOs, or shippers’ control, 

and if so, whether they are effective.
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2. Whether, and if so, when, the carrier or MTO has tendered cargo to the shipper and 

consignee.

a. Common practices for notification of when cargo is tendered; and

b. Impediments to cargo pickup when notified of tender.

3. Billing practices for invoicing demurrage or detention, specifically: 

a. Billing relationships for VOCCs and MTOs, including which party bills for which 

services and charges relating to demurrage and detention;

b. Billing practices on describing or specifically identifying detention or demurrage 

charges imposed; and

c. Timeframes for issuance of demurrage or detention invoices.

4. Practices with respect to delays caused by various outside or intervening events;

a. Whether and when an MTO or VOCC determines to waive or reduce demurrage 

or detention charges when access to the terminal is impacted by such events; and

b. The role of truck and chassis issues in different types of container cargo 

movements (door-to-door versus port-to-port).

5. Practices for resolution of demurrage and detention disputes between carriers or MTOs 

and shippers.

a. Existing processes for reviewing or mitigating demurrage or detention charges;

b. Timeframes for the resolution of demurrage or detention disputes; and

c. Practices relating to the cancelation or mitigation of demurrage or detention 

invoices. 

The FFO is directed to report to the Commission on these issues and any recommendations

for further Commission action, including any investigations of prohibited acts, enforcement 

priorities, policies, rulemaking proceedings, or other actions warranted by the factual record 

developed in this proceeding.

IT IS FURTHER ORDERED, That, pursuant to 46 C.F.R. §§ 502.284 and 502.25, 

Commissioner Dye is designated as the FFO. The FFO shall have, pursuant to 46 C.F.R. §§ 

502.281 to 502.291, full authority to hold public or nonpublic sessions, to resort to all compulsory 

process authorized by law (including the issuance of subpoenas ad testifacandum and duces 

tecum), to administer oaths, to require reports, and to perform such other duties as may be 

necessary in accordance with the laws of the United States and the regulations of the Commission. 

The FFO shall be assisted by staff members as may be assigned by the Commission’s Managing 

Director and other officials, and the FFO is authorized to delegate any authority enumerated herein 

to any assigned staff member that the FFO determines to be necessary.

IT IS FURTHER ORDERED, That the Investigative Officer shall issue an interim report 

of findings and recommendations no later than September 2, 2018, a final report of findings and 

recommendations no later than December 2, 2018, and provide further interim reports if it appears 

that more immediate Commission action is necessary, such reports to remain confidential unless 

and until the Commission provides otherwise;
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IT IS FURTHER ORDERED, That this proceeding shall be discontinued upon

acceptance of the final report of findings and recommendations by the Commission, unless 

otherwise ordered by the Commission; and

IT IS FURTHER ORDERED, That notice of this Order be published in the Federal

Register.

By the Commission.

Rachel E. Dickon

Secretary