On February 23, 2024, the Federal Maritime Commission (FMC) issued a Final Rule intended to add clarity to invoicing requirements outlined in the Ocean Shipping Reform Act of 2022 (OSRA 2022). In particular, the Final Rule provides minimum information for demurrage and detention (D&D) invoices and procedures for disputing charges. D&D invoices have created a host of issues for importers and shippers throughout the economy, especially as they relate to the lack of information provided on the invoices.

OSRA 2022 required minimum information that common carriers must include in a demurrage or detention invoice:

• Date container is made available
• Port of discharge
• Container number or numbers
• For exported shipments, the earliest return date
• Allowed free time in days
• Start date of free time
• End date of free time
• Applicable detention or demurrage rule on which the daily rate is based
• Applicable rate or rates per the applicable rule
• Total amount due
• Email, telephone number, or other appropriate contact information for questions or requests for mitigation of fees
• Statement that charges are consistent with all FMC rules with respect to D&D
• Statement that common carrier’s performance did not cause or contribute to the underlying invoiced charges

Failure to include the required information on a demurrage or detention invoice eliminates any obligation of the billed party to pay the applicable charge. The Commission initiated a rulemaking pursuant to OSRA 2022 to create minimum requirements by common carriers, marine terminal operators, shippers, and ocean transport intermediaries regarding the assessment of demurrage or detention charges. Most importantly, the Final Rule outlines who can be billed D&D charges, the timeframe within which bills must be issued, and the process for disputing bills.

1. The invoices must be issued to “[t]he person for whose account the billing party provided ocean transportation or storage of cargo and who contracted with the billing party for the ocean transportation or storage of cargo” or the consignee—but not both. Note that this party should not be the Customs Broker or the Notify Party if those parties are not the persons described above. 46 C.F.R. § 541.4.
2. If the invoice does not contain the required information, it does not have to be paid. 46 C.F.R. § 541.5.
3. Ocean carriers must invoice within 30 days from when demurrage or detention is incurred. 46 C.F.R. § 541.7.
4. Non-Vessel Operating Common Carriers (NVOCCs) have 30 days to invoice D&D from the date of the invoice received from the ocean carrier. 46 C.F.R. § 541.7.
5. Billing parties are not permitted a grace period to cure defective invoices that fail to meet statutory requirements. While there is no obligation on the billed party to advise of a defective invoice, a carrier may reissue the charges on a new invoice/bill that meets the statutory requirements.  46 C.F.R. § 541.6.
6. Billed parties have 30 days from the invoice issuance to request mitigation, refund, or waiver, and billing parties have 30 days from the date of the request to resolve the request. 46 C.F.R. § 541.8.

Notably, the Final Rule applies to multimodal transport operators, or MTOs, despite significant comments pushing back on this interpretation.

As the FMC noted, D&D charges have been significant in recent years for shippers since, many times, this is where it ends for payment. Over a two-year period between 2020 and 2022, nine of the largest carriers serving the U.S. liner trades individually charged a total of approximately $8.9 billion in D&D charges. Accordingly, these regulations affect not only shippers but also NVOCCs, steamship companies, customs brokers, warehousemen, and truckers—in short, the complete supply chain.

While most of the Final Rule takes effect on May 28, 2024, Section 541.6 (involving the “Contents of Invoice” information) has been delayed indefinitely. Husch Blackwell’s Maritime and Transportation Team continues to closely monitor regulatory requirements for importers and shippers.

[View source.]