FMC to Audit Ocean Carriers’ Detention, Demurrage Practices

The Federal Maritime Commission has established a new audit program and dedicated audit team to assess carrier compliance with the agency’s rule on detention and demurrage as well as to provide additional information beneficial to the regular monitoring of the marketplace for ocean cargo services.

The “Vessel-Operating Common Carrier Audit Program” was established July 19 at the direction of FMC Chair Daniel B. Maffei and launched immediately.

The audit program will, according to the Commission, analyze the top nine carriers by market share for compliance with FMC rules relating to detention and demurrage practices in the United States. The Commission has said that it will work with companies to address their application of the rules and clarify any questions or ambiguities.

Information supplied by carriers may be used to establish industry best practices, according to the FMC, which added that other focus areas of the audit process could include practices of companies related to billing, appeals procedures, penalties assessed by the lines, and any other restrictive practices.

“The Federal Maritime Commission is committed to making certain the law is followed and that shippers do not suffer from unfair disadvantages,” Maffei explained. “The work of the audit team will enable the Commission to monitor trends in demurrage and detention practices and revenue, as well as to establish ongoing dialog between staff and carriers on challenges facing the supply chain.”

“Of course, if the audit team uncovers prohibited activities, the Commission will take appropriate action. Furthermore, the information gathered by the audit process might lead to changes in FMC regulations and industry guidance if warranted,” he added.

The audit program is beginning with an information request establishing a database of quarterly reports, thereby allowing the Commission to assess how detention and demurrage is administered. Responses will be followed by individual interviews with the carriers. Each of the nine largest carriers by market share will be audited irrespective of whether a formal or informal complaint has been filed at the Commission, according to the FMC.

The audit team will initially be comprised of existing Commission employees. Leading both the team and the audit program will be Lucille Marvin, the Commission’s managing director.