New D&D Billing Requirements Would Cause 'Commercial Strain,' Carriers Tell FMC

The National Association of Manufacturers said the FMC should finalize the proposed rules to “increase billing transparency” and “ensure that correct bills are invoiced within a reasonable window of time.” NAM specifically praised the new information that would need to be included in invoices, such as a “publicly accessible website” that states a carrier’s fee mitigation and dispute resolution instructions and defined time frames for the billing and due dates.

The FMC was right to propose that D&D invoices should include the reasoning for the charges along with the fee rate and timing information, the American Association of Exporters and Importers said. This will help the billed party “understand the basis for the charges and potentially dispute charges,” AAEI said. And if any D&D charges are incurred or removed “due to terminal or vessel operating deficiencies,” the invoices should also “include the details with standardized categories of billing exceptions,” the association said.

But major shipping lines Mediterranean Shipping Company and Hapag-Lloyd asked the FMC to change portions of the proposed regulations that they say don’t make sense. MSC said an FMC proposal that would require invoices to only be assessed to the contracting party would “cause significant administrative and commercial strain on [vessel operating common carriers] and their customers alike.” Shippers and carriers often negotiate billing arrangements in contracts, MSC said, which “suit the needs of both the customer and the VOCC, whether that customer is Shipper or Consignee.” This sometimes requires a carrier to bill a trucker for per diem, or to bill a broker or “third-party agent” for D&D invoices.

Hapag-Lloyd made a similar point, saying the new requirement would lead to charges being levied against a party that isn’t incentivized to resolve the charge. “In essence, the party with whom the contract of affreightment was concluded would be billed for the Consignee’s, the intermediary’s, or the trucker’s failure to retrieve or return a container,” the shipping line said. “Further, U.S. exporters would be receiving bills of detention and demurrage charges caused by consignees, intermediaries, or truckers overseas. Against this background, the NPRM will not support cargo fluidity.”

If the proposal is finalized, Hapag-Lloyd said, an ocean carrier may exercise its lien over a cargo until an overseas shipper agrees with the consignee, or the trucker instructed by the consignee, “to re-allocate the financial responsibilities according to the contractual agreement between shipper and consignee.” This arrangement “would be cumbersome, untransparent and to the detriment to removing cargo from the terminal promptly or returning equipment in a timely manner.”

Hapag-Lloyd also said the FMC’s proposed billing and dispute resolution timelines will lead to “unbalanced consequences.” Although the proposed regulations “create time bars" for VOCCs and marine terminal operators to invoice and resolve disputes, they don't “provide any similar consequence for the billed party’s failure to submit a dispute.” The carrier said it’s “unclear what incentive exists for timely disputes by a billed party,” adding that the proposal “would actively dissuade timely disputes in an effort to avoid payment.”

Both AAEI and NAM praised the FMC’s time-frame proposals, including the requirement the billing party must issue a D&D invoice within 30 days after the charge was incurred. But NAM said its members “would caution” the FMC that the same 30-day window for a shipper to dispute the charge may “incorrectly incentivize shippers to default to rejecting” any requests for mitigation or refund because the regulations “automatically” waive those fees if the request is not resolved in that window. NAM said the FMC should “consider additional flexibility in the timeframe for shippers to respond to a demurrage or detention bill in order that all information in an invoice may be accurately confirmed or disputed and to provide ample time for multi-party resolution.”

The National Customs Brokers & Forwarders Association of America said it generally supports the FMC’s efforts to create new billing regulations but urged the commission to clarify how the new rules would apply to non-VOCCs. NVOCCs sometimes fall within the FMC’s definition for both a “billed party” and a “billing party” because of their “unique role as ocean transportation intermediaries,” NCBFAA said, adding that the proposed rules “do not address the safe harbor provision provided to NVOCCs,” which exempts them from the invoice requirements and any “liability for any invoice inaccuracies when the NVOCC passes through an underlying ocean common carrier’s invoice.”

“Unlike ocean common carriers or marine terminal operators, NVOCCs generally do not assess demurrage or detention charges nor generate invoices for such charges pursuant to their own tariffs or non-tariff rate vehicles,” the NCBFAA said. “Therefore, the NCBFAA respectfully asserts that the proposed regulatory amendments should be modified to ensure NVOCCs remain exempt from the demurrage and detention requirements when passing through the charges or invoice.”

The FMC also should clarify whether its D&D definition covers “certain rail storage or demurrage fees for shipments moving on through bills of lading,” NCBFAA said. The association said shippers need more “certainty” around how they dispute unreasonable D&D fees and the “appropriate agency” to refer disputes.

“Therefore, further Commission guidance on whether the agency has oversight of rail demurrage charges on shipments moving on through bills of lading is necessary,” NCBFAA said.

“If the Commission’s position is that it lacks jurisdiction over such charges, shippers will have little to no avenues for effectively addressing unreasonable rail demurrage charges.”