The new demurrage and detention charges (OSRA 2022) cleared by the US

  • July 20, 2022
  • News

The US has passed the Ocean Shipping Reform Act 2022 (OSRA 2022) to expand the scope of what the Federal Maritime Commission (FMC) could do to accomplish the mandate, which is to “Ensure a competitive and reliable international ocean transportation supply system that supports the US economy and protects the public from unfair and deceptive practices.”

Now when the new legislation is sanctioned, apart from other drafts, emphasis will be given to invoicing for Demurrage and Detention with immediate effect. In June 2022, the FMC note said that the law and its requirements related to demurrage and detention charges need to be checked for content compliance with the new law. The details for invoicing comprise precise requirements for VOCCs (Vessel Operating Common Carriers) which pertain to all the major carriers and liners serving US ports. The invoice must include:

  • Date that container is made available.
  • The port of discharge.
  • The container number or numbers.
  • For exported shipments, the earliest return date.
  • The allowed free time in days.
  • The start date of free time.
  • The end date of free time.
  • The applicable detention or demurrage rule on which the daily rate is based.
  • The applicable rate or rates per the applicable rule.
  • The total amount due.
  • The email, telephone number, or other appropriate contact information for questions or requests for mitigation of fees.
  • A statement that the charges are consistent with any of Federal Maritime Commission rules concerning detention and demurrage.
  • A statement that the common carrier’s performance did not cause or contribute to the underlying invoiced charges.

There is also a disclaimer at the end that mentions that “Failure to include the information required under subsection (d) on an invoice with any demurrage or detention charge shall eliminate any obligation of the charged party to pay the applicable charge”. This means that cargo owners could witness delays in getting their actual invoices as carriers need to ensure that bill captures the requisite data fields.

The law will allow the US shipping regulator, the Federal Maritime Commission, to investigate container lines’ business practices and impose enforcement measures. It will also require ocean common carriers to report total import/export tonnage to the FMC each calendar quarter and prohibit ocean carriers from arbitrarily declining opportunities for US export.