Shippers push for stronger FMC regulation for rail storage fees

05/16/2023

Shippers formed a committee to ask the FMC to be more aggressive in regulating rail storage charges for containers shipped to the US inland under the carrier’s shipping agreements and made suggestions for the next steps.

The National Shipping Advisory Committee (NSAC) aims to get the FMC to adjust the penalty for rail storage charges in the same way as the demurrage rate for inland ports in the United States. The NSAC said while it agreed with reasonable detention and demurrage measures, it wanted to fix what it called “abuses” of the system by stipulating that rail operators must bill rail storage fees directly to the shipping lines, not the direct consignees.

As FMC Chairman Daniel Maffe said at the Trade Journal’s TPM23 conference in March and before that at the Inland Distribution Conference in 2022, the agency’s authority does not extend beyond the port to inland markets like Chicago or Memphis. However, the shipper group wanted a more formal FMC assertion as to the beginning and end of their jurisdiction over demurrage on carrier haulage. Maffei and Commissioner Carl Bentzel have said that the US Shipping Act empowers the FMC, but only to prevent shipping lines from passing through demurrage to shippers because rail lines are not covered by the US Shipping Act.

The NSAC makes three possible recommendations for the next steps as follows:

  1.  Asking US Congress to increase FMC’s authority to include more authority for invoicing rail-related fees.
  2.  Asking stipulates that railways can only issue invoices for storage costs to Shipping lines
  3.  Requesting the US Department of Transportation to intervene in directing the US Surface Transportation Board to investigate the matter.

However, shippers were frustrated by the lack of answers to two questions:

  1.  If a railway line evaluates DEM under conditions that clearly violate the FMC’s interpretation of port DEM, who has the authority to intervene in this?
  2.  And why does the FMC interpretation of DET & DEM not apply to the entire journey covered under an international bill of lading?

NSAC President Mike Symonanis, director of strategic networking at Louis Dreyfus, believes that rule-making may be the best method to solve the problem. As a result, Roche requested a meeting with the committee’s general counsel before the next NSAC meeting to find instructions on how to progress.