Supply Chain and Logistics

When containers go by rail to or from ports, we would expect that any detention or storage fees would fall under the Surface Transportation Board (STB) which governs rail traffic in the US. And these fees have become more common, as railroads in the US struggle with manpower shortages, longer trains, lower traffic, and efforts to operate in a leaner fashion. But who to send the bill to?

Many containers are owned by ocean shipping firms, and it would seem like they should be billed if their containers are not picked up in a timely fashion. But it’s the shippers who get the bill.

The Federal Maritime Commission (FMC) has come down with some fairly explicit rules about detention and demurrage charges. The rules specify who is billed, what information must be provided and when, and how disagreements over bills can be resolved, through a process. But when the charges are from rail detention, the FMC claims they have no jurisdiction.

Shippers think the ocean carriers should be billed, and bill disputes be handled at the FMC under the new rules. But ocean carriers think the STB should handle rail demurrage.

I don’t think this can be settled without some Congressional input. It’s one of the gray areas that come up often in logistics, where many partners collaborate to move cargo or cause delays. The parties are never going to agree. For ocean carriers the divided authority is just fine; since they are not getting the rail bills, they have no stake in disputes.

We just need to get a single point of oversight, to lay down rules, like those of the FMC, for demurrage and detention charges including the rail lines. It’s a big ‘just’.

John Gallagher·Friday, May 05, 2023

Ocean carriers: Keep rail storage fee disputes at STB – FreightWaves