The Federal Maritime Commission (“FMC”) warned carriers that it will “scrutinize any demurrage and detention charges assessed during terminal closures” that relate to “the potential work stoppage at ports in the East Coast and Gulf of Mexico regions.” The FMC is referring to the workers’ strike that could begin on October 1^st at several ports represented by the U.S. Maritime Alliance if the latter is not able to renew its contract with the International Longshoremen's Association before it expires on October 1^st.  The International Longshoremen's Association is the dominant union representing longshore workers along the East and Gulf Coasts of the United States.  Longshoremen load and unload cargo at U.S. ports.  Without these critical workers, ports are expected to quickly become congested, with vessels waiting in line to enter the port, unload and reload. 

Some of the cost of the delays will likely be passed by carriers to shippers in the form of demurrage and detention charges.  These charges accrue for extra time incurred by the shippers to pick up their cargo upon arrival at a port (after the contractually agreed “free time” has expired), and to return the empty containers afterwards.  However, the FMC has amended its regulations in the context and aftermath of the COVID-19 port congestion crisis to set some limits on the demurrage and detention practices of carriers.  Specifically, the regulations now require that demurrage and detention charges be reasonable and applied in a way that serves their intended primary purposes as financial incentives to promote freight fluidity. For example, carriers must give sufficient notice to the shippers that their cargo is available for pick up before the free time and demurrage clock can start running, and carriers cannot impose detention fees for the late return of empty containers when the containers cannot be returned. 

These new rules will likely come into play in the context of the upcoming port strike, if it occurs. There may be complaints by shippers that they were charged for demurrage before they could pick up their cargo, and for detention before they could return the empty containers.  If carriers submit their demurrage and detention invoices late, or do not include sufficient information on them, or try to recover these charges from third parties that did not contract for the transportation, such as truckers, this will likely also lead to additional complaints, given that the new FMC regulations protect against such practices as well.  It remains to be seen to what extent carriers will comply, and to what extent shippers will invoke the new rules and actually file complaints before the FMC in the event of violations. 

For an analysis of the risk of a port strike, please refer to this post by my colleagues Han Deng and Julia Norsetter.