top of page

Container Detention:  Who should get the bill?

Let’s first be clear about our definition of “Container Detention”. This is a fee that ocean carriers typically assess for use of their container while it is out of their direct possession – that is, from the time an empty or loaded container is collected from the carrier until the time that the then loaded or empty container is returned to them. Some people call this “per diem” (and this terminology is being discouraged for purpose of consistency as the public conversation progresses). Generally, some amount of “Free Time” is granted during which no fees are applicable but once the free time expires, the ocean carrier begins to charge because, reasonably enough, they want to keep their asset in motion so that it can continue to earn them revenue through the transportation of cargo.


Since this all seems reasonable, what’s the issue and why are cargo owners (shippers) and their drayage carriers (truckers) up in arms about detention bills?


In a nutshell, shippers and truckers claim that when they want to return containers to the carriers, they are prohibited from doing so because of obstacles – obstacles not of their own making and, in many cases, of the making of the ocean carriers themselves. Two well-publicized examples are the inadequate system for the identification of empty return locations and the return appointment systems that seem to offer fewer than necessary opportunities to support the demand.


Based on the “incentive principle” as established by the Federal Maritime Commission, it is considered unreasonable for ocean carriers to bill detention in such instances. And while the Ocean Shipping Reform Act of 2022 seeks to place the burden of proof on the ocean carrier, at the moment, the reality is that the recipient of the detention invoice needs to communicate the obstacles encountered when disputing the reasonableness of the charges.


So here we get to the crux of the question, Who should get the bill? And in case you are wondering why we even need to worry about this, it is because the Federal Maritime Commission is currently preparing a final rule that is expected to stipulate in regulations exactly who may (or may not) be billed for container detention. The decision will impact every shipper.


For decades, it has been the trucker who gets billed detention. In today’s discussions, there are some alternatives being floated – not surprisingly, with tremendous support from the trucking community who have been significantly burdened by the current detention billing practices of ocean carriers. To avoid wandering too widely here, let’s avoid getting into those alternative proposals and the multiple reasons why they are deficient and instead let’s stick to why it remains true that the trucker should get the bill.


Fundamentally, billing the trucker for detention fees reflects the trucker’s obligation as custodian of the ocean container by virtue of the interchange agreement that governs the transaction. This agreement may be the commonly applicable Uniform Intermodal Interchange and Facilities Access Agreement (UIIA) or another agreement or simply as published in the ocean carrier’s tariff. An interchange agreement necessarily includes provisions for the timely return of equipment to the equipment owner. Did you know that these agreements (that shippers are not privy to) typically also contain arrangements about unique and distant empty return locations and compensation to the trucker, among other things? It is truly as much of a performance contract as the one between us shippers and our truckers.


We can therefore understand that a trucker effectively has two masters for every move; on one hand, they must fulfill their obligation to the shipper to move the container to meet certain deadlines regarding collection and delivery of the container and its cargo, and on the other hand, the trucker must adhere to their commitments to the equipment owner in accordance with the interchange agreement.


Beyond that, the trucker rightfully operates in a way that optimizes their own efficiency. This is relevant because it underscores that it is the trucker who takes the decision, within the boundaries of these other obligations, about when containers move. It takes skill and talent to continuously evaluate the variables of the day – the obligations and constraints of which containers need to go where and by when – and to then dispatch the moves in a way that maximizes the use of the trucker’s assets and drivers. While the goal is surely to always avoid incurring detention charges, that decision can sometimes be strategic when managing the entirety of the company’s objectives.


During these recent years of extreme port congestion – and the corresponding pervasive detention bills - truckers have done tremendous work to dispute unreasonable detention charges and to document the obstacles that support those disputes. The trucker’s first-hand involvement with the issues of fact that are essential to the determination of reasonableness in any individual case further affirms that the drayage motor carrier is the appropriate party to be billed any detention charges.

All that being said, some US shippers have high-volume, complex operations involving complicated agreements with ocean carriers regarding equipment usage and/or individual equipment pools. Nothing here suggests, in such instances where the shipper is so actively managing their equipment moves, that a shipper could not exceptionally agree with their trucker and ocean carrier that they prefer to be the direct recipient of any detention invoices. Furthermore, any decent shipper will certainly compensate their trucker for any incidental detention charges billed to a trucker but incurred because of the shipper’s own delays or requirements.


As with anything, there will always be exceptions but, in practice and in principle, it remains the trucker who is master of the container movements and is the party who should be the recipient of any container detention invoices. Let’s hope that the Federal Maritime Commission finds likewise.







Comments


Commenting has been turned off.
bottom of page