Motor carriers may again face demurrage charges after the US Court of Appeals for the District of Columbia struck down a Federal Maritime Commission (FMC) rule that barred such fees. The court deemed the exclusion of truckers "arbitrary and capricious," reported New York's FreightWaves.
The ruling came in a case filed by the World Shipping Council, challenging the FMC's 2024 regulation that prohibited demurrage charges against motor carriers. The court found the FMC failed to justify why truckers with direct contracts could not be billed, while consignees without such contracts could.
The overturned rule was part of a broader FMC effort launched in 2020 to clarify acceptable billing practices for demurrage and detention. It stipulated that only entities with a direct contract with the carrier - typically shippers - could be invoiced.
Legal analysts Julie Maurer and Benjamin Nashed of Husch Blackwell noted the rule barred invoices to motor carriers even when they had contractual privity with the billing party, such as an ocean carrier or non-vessel operating common carrier.
The Scopelitis law firm highlighted the inconsistency, pointing out that the FMC allowed invoices to consignees without privity but disallowed them to motor carriers with privity. The court agreed, stating the commission's rationale lacked coherence.
The court clarified that its decision does not mandate billing motor carriers, only removes the categorical ban. Complaints from truckers about being charged without contractual ties were acknowledged but not resolved by the ruling.
The judgment leaves other parts of the FMC's 2024 rule intact, focusing solely on the provision excluding motor carriers from demurrage charges. The ruling underscores the need for consistent application of contractual principles in maritime billing.