FEDERAL MARITIME COMMISSION 800 North Capitol Street, N.W.

 Washington, DC 20573-0001

Phone: (202) 523-5725

Secretary@FMC.gov

February 9, 2023

Mr. Michael Symonanis

Acting Chair, National Shipper Advisory Committee

Dear Acting Chair Symonanis:

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

Recommendation of the National Shipper Advisory Committee (NSAC) submitted to the 

Commission within the statutorily mandated 60-day period for the Commission to respond in 

writing to NSAC recommendations.

On December 12, 2022, you sent the below recommendation to the Commission on 

behalf of NSAC. 

NSAC Recommendation:

We, as the unified National Shipper Advisory Committee, hereby recommend that 

the Federal Maritime Commission codify a regulation that requires fees related to 

random Government inspections be charged on a reduced scale to shippers. We 

recommend that the following structure be the foundation for such action:

• Terminals and/or Vessel-Operating Common Carriers (VOCCs) agree 

to invoice, and shippers agree to pay, up to 25 percent of the contracted 

or published [demurrage and detention] amount for any storage days 

required by government holds and/or inspections. No dwell fees or 

tiered structure [should be] allowed. Alternatively, a universal flat fee 

for government hold demurrage or detention, could be considered.

• If the government hold is released within the initial free time, and the 

container is removed within that period, then no [demurrage and 

detention] charges should apply. Once the government hold is released,

contractual free time will commence.

NSAC stated that the recommendation seeks to apply the incentive principle of the 

interpretive rule to all containers that are subject to any type of government hold. It explained 

that one aspect of international shipping is the chance that containers will be held by the U.S. 

Government, specifically U.S. Customs and Border Protection for inspection. The 

recommendation states that, in extreme cases, government holds for reasons outside the control 

of all other parties continue for weeks or months and could result in millions of dollars in 

demurrage or detention charges. NSAC stated that the interpretive rule does not directly address 

who should bear the costs associated under such circumstances.
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Commission Response:

The imposition of any demurrage or detention charge, regardless of cause, is 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.” This includes charges resulting from government 

holds. 

In 2020, the Commission issued an interpretive rule clarifying what it may consider when 

assessing whether a demurrage or detention practice is unjust or unreasonable under 46 U.S.C. § 

41102(c). Interpretive Rule on Demurrage and Detention Under the Shipping Act, 85 Fed. Reg. 

29638 (May 18, 2020) (codified at 46 C.F.R. § 545.5). As NSAC noted in its recommendation, 

the focus of the interpretive rule is the “incentive principle,” which is based on the wellestablished precedent that a regulation or practice must be tailored to meet its intended purposes 

for it to be considered reasonable under 46 U.S.C. § 41102(c). See Distribution Services, Ltd. v. 

Trans-Pac. Freight Conference of Japan and Its Member Lines, 24 S.R.R. 714, 722 (FMC 1988). 

Because the purpose of demurrage and detention is to incentivize cargo movement, when 

“assessing the reasonableness of demurrage and detention practices and regulations [under 

section 41102(c)], the Commission will consider the extent to which demurrage and detention 

are serving their intended primary purposes as financial incentives to promote freight fluidity.” 

46 C.F.R. § 545.5(c)(1); see 85 Fed. Reg. at 29651.

The reasonableness of a demurrage or detention charge, including a charge that has its 

origins in a government hold, is evaluated against the standard in 46 U.S.C. § 41102(c) and the 

interpretive rule. The Commission will evaluate the reasonableness of demurrage or detention

practice against the practice’s ability to serve the primary purpose as a financial incentive to 

promote freight fluidity. 

The interpretive rule specifically addresses the application of the incentive principle to 

demurrage and detention charges for containers held for government inspection. The rule makes 

clear that the Commission will apply the incentive principle in the context of government 

inspections as it would in any other context. 46 C.F.R. § 545.5(c)(2)(iv). In addition, the 

interpretive rule states that the Commission will also consider any extenuating circumstances 

when assessing the reasonableness of demurrage or detention practice (e.g., shippers not 

complying with their obligations to complete their paperwork, properly loading and securing

their cargo in containers, and carefully verifying the nature, quantity, safety, or labelling of its 

cargo). Id.; see 84 Fed. Reg. at 48858-59. 

Your recommendation proposes a new regulation that either limits the amount charged to 

25 percent of the contracted or published rate, or the application of a universal flat fee for 

government hold demurrage or detention, and no charge if the container is released during the 

initial free time. The Commission thanks the NSAC for this recommendation and will take it into 

consideration, including as part of the implementation of the Ocean Shipping Reform Act of

2022. Similar approaches were considered during the interpretive rule’s rulemaking proceeding. 

These approaches included, in the government hold context, prohibiting the escalation of 

demurrage or detention, requiring some level of mitigation, or requiring a cap on the amount that 

may be imposed while cargo is undergoing an inspection. Id. at 29657. At that time, the 
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Commission chose not to adopt any of these approaches, but instead reiterated that the 

Commission may consider the incentive principle in the government inspection context as it 

would in any other context. Id. at 29659.

Significantly, we note that there are recently filed complaints pending before the 

Commission related to these types of charges that, once resolved, may be instructive in further

interpreting the Commission’s interpretive rule as it applies to government holds. (e.g., Docket 

No. 22-32, Doka U.S.A. Ltd. v. MSC Mediterranean Shipping Company (USA) Inc.; Docket No. 

22-33, CCMA, LLC v. Mediterranean Shipping Company S.A. and Mediterranean Shipping 

Company (USA) Inc.). Additional information related to these proceedings can be found in the 

FMC Reading Room at https://www2.fmc.gov/readingroom/ProceedingSearch. 

Thank you again for sharing this recommendation. Per the requirements set forth in the 

legislation establishing the NSAC, these recommendations will be published on the Commission 

website and will be submitted to the appropriate Congressional committees. Please direct any 

questions regarding this response to the NSAC Designated Federal Officer.

Sincerely, 

 William Cody

Secretary