Lightning like Steve McQueen I'm in the fast lane when the light turns green and I built tough find nothing but grit cause I made rugged blood, sweat and spit yeah like a horse I fly for a bumpy ride I like to play hard but I work harder and I weather the storm cuz I'm built stronger.
What is up, ladies and gentlemen, we are back. We are live. It is the freight coach morning show. The top morning show in transportation. Coming to you guys every single weekday, 08:30 a.m. Pacific, 1030 Central to break down some industry headlines and most importantly, provide some actual insight into what you can do with all of this information. If this is your first time tuning in, welcome. This is the real side of freight, ladies and gentlemen. And I say that before every single show. And what I mean by that is I only speak to transportation professionals because at the end of the day, I want to talk to the right individuals who have done what you're looking to do or who are currently doing what you're trying to achieve.
So you can take all of this information, apply it, utilize it, and see a meaningful difference in your business and your life. I got a very special guest for you guys here. I'm going to bring him up right away. We are going to talk about the Federal Maritime Commission, the FMC, their new everything on per diem's detention damage, all of that stuff and what it actually means and what you guys need to be on the lookout for. So with that being said, I got my friend Mike angel on the show. He's with the jocundhorne, my preferred news source out there in the transportation world. So, Mike, thank you so much for joining me.
All right, thanks very much, Chris, for having me on the show.
No, I appreciate it, man. And, you know, like were saying before went live, the reason I love your guys's articles so much is there's. There's no. At least from my perception, there's no bias towards it. It is fact based, it is data driven. And it's like legitimately just information that people need inside of their business. And, you know, I've told that to Eric and Ari and Bill and everybody who's been on the show so far. And I. And I try and say that every single time I can. Every single time I break down a joc article. Because the information out there is just to the point to me. And it's just. I love it.
Well, well. Thanks very much for that. You know, I learned journalism by watching dragnet. Just. Just the facts, ma'am.
So, you know, before went live, were talking about this. I mean, you brought up a very large number, that was billed in detention and demoralidge there, over that time frame, it was $18 billion. Is that what it was?
Yeah, it's something like that. I got to look up the exact number. But basically, between 2021 and 2022, when there was just a boatload, literally and figuratively, of containers coming into the US, and all the terminals were jammed up and the truckers were busy and the warehouses were full, the Federal Maritime Commission found that ocean carriers, marine terminals, between those two parties charged about, I believe it's maybe about $18 billion in detention and demurrage. And, you know, just to lay it out there, you know, I know maybe in the trucker world, detention just refers to the time that a driver is spending picking up a load. But in container world, detention is basically holding on to a container for longer than your allotted time.
And demurrage is basically letting a container sit in a marine terminal or rail ramp for longer than it's allotted time. And so a lot of shippers were complaining about their bills and, you know, why did I get this bill and the reasoning behind that? So, basically, since even prior to the pandemic, the Federal Maritime Commission has been trying to button down some rules behind why ocean carriers can charge detention to merge. And sort of the overarching principle that the FMC sort of laid out is that the detention to merge has got to be sort of the financial disincentive for letting your container sit or not turning over the equipment. Basically, if you're not bringing that container out of the terminal, you're not turning that container back. You're going to get charged this. And, you know, they're fine with that.
They figure it's a way to, you know, make freight fluid and, you know, cause any jams or delays and things like that. And so in light of that, they want to promulgate a bunch of sort of more specific rules about how detention demurrage is being charged. Because a lot of shippers, they were getting bills months after they pulled their container records, are getting built. Sometimes two different parties are getting the same bill and expect to pay it. So there's, you know, it's been, I guess you might say, a little bit of a wild west.
And I think that I was going to say because, like, when you. Your original article about this was back on June 12, and I broke it down on my show because, you know, it was because, like, I moved drage. You know, at the end of the day, I have customers that were moving drage. And it was ironic because something literally happened to these loads that I was doing that aligns with just that. So it's like, it's seemingly like the ocean carrier build the, for biz, billing a forwarder, and then they're also billing the port, and then the port charges the drivers when the drivers are returning containers and everything at the time of that. So it's like, it's a mass. Like, I don't know how this went on as long as it did to where this is now becoming a thing.
Because think about all of that, because, you know, a lot of the drage carriers that are out there, they're prepaying a lot of these fees, you know, like, they might not even be notified that this container is ready. So they're thinking they can just go in and grab it and then they arrive. And then the ports like, hey, you got to pay this demerit bill before you can remove the container to even be offloaded. And they're like, well, wait a second here. So it's like, there's a massive convoluted mess that goes on because, like, I laid it out. There's like seven parties that are involved here for one ocean container, right?
You have the ocean liner itself, you have the port, you have the drainage carrier, you have the freight forwarder, you have the shipper, and you have a freight broker on top of that. So that's like six different parties that are involved at that point. And it's like, how many times? You know, like, there's been some pretty high profile cases here that of some freight forwarders that are being sued for tens of millions of dollars by companies for these demerit fees that have kind of came about. So it's like to see in here, because in your article, it says that now that what they're saying is there, that there's only one party that the ocean liners can bill. They can't send out a spraying pray method. Not saying anybody was doing that, but seemingly there's only one transaction that can happen.
If an ocean liner needs to charge detention or damage. They can only bill one party.
Yep. Yep, you're right. And that's a good way of putting it, is that they did the, what was that praying press say and spray. Say and spray anybody that had, like, any touch on the container. I mean, you know, there's been instances of customs broker even being billed demerged because a container is on hold, not through any responsibility of their own, but because it's been a backed up at customs. So, yeah, you're right in that the ocean carriers and marine terminals have used this, say, and spray or pay and spray method, spray and pay method of billing, demurrage and detention to anybody that might touch the container.
So basically, kind of what has been happening in that is that the Federal Maritime Commission back in 2023, they were going to try to further button down the rules on who's supposed to pay detention to merge. And this is sort of an offshoot of sort of a broader ocean shipping law that was put in 2022, the Ocean Shipping Reform act. And sort of, kind of one of the last pieces of that was being developed through 2023. And this is this sort of final rulemaking, detention and demurrage. And, you know, the entire container shipping community was asked to weigh in on it through various comment periods, publication of federal rules, things like that. The FMC is looking at all these rules.
So the long and the short of it is that after this whole process in, I believe it was February, they published the final rules on detention demurrage. And there's certain aspects of that, and that goes to who is supposed to pay the detention demerit bill and the FMC, which intuitively makes sense. It's that the party that is contracted for the carriage of the container, basically. So that would involve the shipper, the forwarder, who's ever sort of directly responsible for putting that container on a ship and all that, and through the chain of custody. So ostensibly that means that your trucker, your forwarder, your customs broker, they're not on the hook for paying that bill.
And, you know, to your point that, you know, a drayage carrier might show up in a marine terminal and all of a sudden get hit with some bill, or even in some instances, they might be locked out picking up a container because they haven't paid the detention demurge on previous instances. So the rulemaking was ostensibly to sort of protect them and at least not necessarily to protect them, but at least sort of ostensibly absolve them of being responsible for that. And, you know, not to get into too many weeds on it, but the rulemaking essentially said that it is the. There is a build party, and that build party has got to be the one that's either contracted for the freight to begin with, or they can be the receiver of the freight.
Yeah.
Now, the rub has been that there's instances wherever I, the party, the shipper contracts with the ocean carrier, of course, to move the freight, but then the ocean carrier contracts with a drayage carrier to move the container in a, you know what the industry jargon is a carrier haulage, as opposed to a merchant haulage, where the shipper has responsibility for the trucker and all that. So kind of what's been happening recently is that some of the ocean carriers in particular, led by the World Shipping Council, as well as an outfit called Osima, the ocean carrier equipment something alliance, I'll have to look that up. They basically said that, you know, there can be instances where, you know, yes, we might have a contract with the shipper.
The ocean carrier has that contract, but at the same time, the ocean, the shipper doesn't have a contract with a trucker. We have the contract with the trucker. So how do we make sure that our trucker is performing as they are? And their argument is that the only way to do that is by charging them detention and demurrage. So I'd say that this is sort of the little, it's not necessarily a hang up for anything right now, but I think this is still something that they're still trying to work out is where you might be in that situation. Where can an ocean carrier charge a trucker or another party that they have a contract relationship with to move the container if they're not performing?
Yeah, I think that, you know, at least from my perspective, you know, again, I'm not an expert in any of this stuff. This is why I have a lot of other subject matter experts come on the show and explain it. But like, on any of the moves that I have ever done, you know, that were in import, you know, or if it was a cross border load into Canada and Mexico or any of that stuff, there's a freight forwarder or there's a customs broker that's involved at that time. And I just think it would be a pretty easy fix here for my opinion is that the freight forwarder is the one who essentially contracts with the ocean carrier to do a lot of the work, at least for the most part. Right.
Because your customer, your mAnufacturer here in the United States, that is importing something from China, hires a freight forwarder to organize all of that stuff. In China, for example, I don't see why the ocean carrier should bill anybody outside of the freight forwarder for this stuff, and that's where the bill should go, because then the freight forwarder is the one who's organizing a lot of it into the ports in the United States as well. Right. So it's like if they're the ones who are going out there and they're organizing anything with the ports, it should be, the freight forwarder should be the one who is in contract with the ocean container, the ocean liner, and then the port itself. And then the customer who is the manufacturer who hired the freight forwarder utilizes a broker or a drayage carrier direct.
That's where those relationships should come from. And then if there's any additional fees, the freight forwarder should bill the customer direct. They shouldn't bill the carrier, in my opinion.
Okay, well, that, I guess that would be sort of an ideal real world kind of chain of custody as far as those charges. And. Yeah, you're right. I mean, you know, the freight forwarder just kind of depending on sort of how it all works with their shipper, they would sort of, under these rules that were prominent, that were published in May or went into effect in May, 90 days after their publication, would be considered one of the build parties under these new rules, meaning that they could be a party that would be considered a shipper, potentially a receiver of cargo, a consignee, that would, they would be subject to detention, demurrage, billing because they were the ones that contracted for the freight. And when a forwarder is typically involved, that would be a merchant haulage kind of move. Basically.
In that instance, it's up to the forwarder to sort of coordinate everything. They coordinate the ocean leg, they coordinate the trucking or the rail leg, they coordinate customs and all that. And that would make sense in a lot of these rules. It's more, say, in the instance where maybe a forwarder, if they contract with an ocean carrier to perform carrier haulage, where the responsibility for the truck move, for the inland move is basically on the ocean carrier and with their contracted drayage provider. And sort of in that instance, well, forwarder can say, you know what, I contracted with the ocean carrier and their trucker failed to perform. Now why am I getting hit with a detention demerge bill? So that could be the argument then in this instance, should I be the one?
Now, if it was up to them, if there's a forwarder they contract with the trucker failed to perform, then it's on to the forwarder. It's the forwarder's responsibility, of course, to make sure that trucker performs. But in this instance, it's like, you know, whose responsibility is it to make sure performance that the container gets moved?
It's you know. Cause it's like, I've had so many. I've had different guests on the show, and they're. And they're talking about this because, like, you know, essentially, it's the. Just a trickle down effect of it where they're gonna go after so many different parties. But then. Then there's these billion resolutions that come out. And I had a guy on my show a while ago. I forget what his. What his name was. Off the top of my head, I've done almost like a thousand of these, so I can't remember every single guest that I've had. But were talking about how manufacturers can recoup a lot of this stuff because, like, if they're going out there and then, you know.
Cause there's a couple of the law, like, the peloton lawsuit is, I think, the big one that I remember off the top of my head where they're getting billed for this, and then they. They sue the forwarders or they sue whomever. And then, like, so, like, there was an instance where in this particular episode that we had on the show, wherever manufacturers were miss build or they were, you know, like, essentially their. Their freight was being held hostage in the ports and stuff like that. And, like, it was, like, time sensitive product where it ended up actually expiring because somebody like the port couldn't find it or I don't know what it was. So, like, there. That's a whole other portion of this as well where the. To get. To get the recoup on it.
But I think, like, you know, fundamentally, when it boils down to it, the. The ports are like a phenomenal operation at the end of the day, when they're offloading the amount of containers that come in and out of some of these things, you know? So, again, I always want to give credit where credit's due, but I think, like, the billing aspect of this stuff. How many times does this put a lot of these businesses in a very, like, manufacturers, we'll call them who. They're getting billed so much additional money for this stuff because, you know. Or else. Or else how many times is it the invoice amount, Mike comes in and it's like $400, and they just don't even realize it. And it's, you know. Cause again, they're just like, oh, we'll just pay it. It's $400.
And then it turns out that they paid $40,000 out throughout the year of fees that they didn't need to. So.
Well, it's. It's it's your right there. I mean, it's kind of a lot of people's responsibility in this. And it is interesting that, you know, basically after Covid, then all of a sudden this wave of complaints at the FMC about why am I getting billed this detention emerge where this freight bill come from? I moved this container years ago. All of a sudden this is being built to me. And, you know, not to take one side or the other, but during the pandemic, which was its whole separate issue, is that a lot of these shippers, a lot of big shippers were leaving their freight at the ports.
And, you know, I've heard that from multiple marine terminals, even some of these companies now that have complained or complaining to the FMC about their detention to merge Bill, you know, I've at least been told on background, I mean, they're leaving their container there for a two months, three months, four months now. You know, maybe they expect, and that could be for a variety of reasons, you know, they didn't have the space in their warehouse. They couldn't find a trucker. I mean, there's just all kinds of issues in it. And, you know, not that anyone's to blame, really, but a lot of shippers, they just did leave their freight at the terminal for an excessive amount of time, well beyond sort of the free time that they're allowed. And so I guess it's basically, it's sort of catching up with them now.
Now the marine terminals and the ocean carriers are looking, it's like, well, how long did you leave that container there? How long did you hold on to my container after free time? And they're just trying to sort out the bills now. And, you know, at least to the point of your, well, your earlier point about sort of these bills, and now they're coming in to, you know, there were further rules that were developed around detention demerge billing that ocean carriers and marine terminals, they have to itemize detention demerge bills, you know, with, I think it's like 13 different data points now that they have to include, you know, basically sort of when the container was available, what was the amount of free time, what's the rate of detention or demerge per day? When was the container returned?
So, you know, which is all very reasonable and basically, so any bill that the shipper might get, shipper forward or whomever might get after that has to contain these data points or they can just contest it. They said, you know what? You ain't following the federal law. Here. So I ain't paying this. But of course, this is for all bills that were done after Oz run, after the reform act. So it's basically any bills that you get after, what was it, June 2022 does have to follow up. But any bills prior to that, it's, you know, that's kind of on you.
I think what a lot of these things are, you know, essentially geared towards is it is cleaning up a lot of these things. Because again, if, like, you brought up a good point there and about the, you know, people just weren't picking up containers for a myriad, my rate of reasons at the end of the day. But this keeps people accountable and that's what needs to happen, right? Because for whatever reason, maybe somebody ordered inventory and now, you know, off of a handshake agreement, and then they find out that, hey, they're not going to actually purchase these goods. And then it's like they're just like, well, screw it. Just let it sit there, you know, and this honestly does, because again, nobody makes money when stuff sitting there, right?
Like ocean can, ocean liners, if those containers aren't getting back, they're losing out on revenue, too. This is all required to get this out there. And I think, like, if anything, what this is going to do is it is going to clean it up. And I think that having that single point of billing contact is going to be crucial moving forward on this to kind of eliminate or at least minimize a lot of the billing discrepancies that can come about. But I think at the end of the day, this is going to push people and maybe create a timeline on there, right?
Where it's like, because in the full truckload space where like, that's the bulk of my experiences, you know, you have a certain timeline that you can file certain things, whether it's an insurance claim or a rebill or anything like that, you have to do that. And at least from my understanding, that wasn't really a thing in the ocean world here. But I think it's going to become that, right? Where it's like, hey, you got a 30 days to bill us for, you know, detention and damage, or I wouldn't be surprised if there's going to be some timelines and this might even be a thing right now where, hey, if you don't get your container out of our port and emptied and brought back within a 30 day timeframe, there's going to be massive fines that are going to be thrown on there.
So I think, like, this just opens up that door to essentially push efficiencies.
Yeah, yeah, definitely. And, you know, to your earlier point about leaving the containers on there, you know, I guess that was sort of a cost benefit decision by these shippers that, you know, we don't have the warehouse space. We can't, you know, can't find a trucker at any rate. So you know what? We'll just, we'll just eat the cost. You know, it's cheaper than all our alternatives.
And also with regard to sort of the buttoning up this billing process that's also part of the Ocean Shipping Reform act is that I believe it's that detention demerge invoices now have to also be received within, I believe it's 30 days after the last charge cruise as opposed to some of the horror stories I've heard from dredge carriers and forwarders about why am I getting a bill from eight months after I moved this contest six months or, you know, I don't even have like the record of it anymore. So detention emerge bills, they have to come after 30 days, I believe, after the last charge accrues. I think that once the bill is received that then the shipper, whoever received the bill has essentially kind of a 30 day window to contest it and some other aspects of that.
But, yeah, it is basically trying to button up these rules and to make sure that there is a procedure in place and that people aren't just getting kind of hit willy nilly with sort of a bill out of the blue. And also, as well, of course, it also comes down to that only one party is going to receive the bill as opposed to the pray and spray approach. Yeah.
And I really think that this is, I wouldn't be surprised if this just opens up a bunch of lawsuits and people challenging, you know, fees over these, essentially whenever. What was the date of anything thereafter is what it was. What, what was that date?
Yeah. Yeah, it's essentially so whenever the sort of the last charge accrues on the, your container, whatever sort of the last date was that you picked it up. And if it. So 30 days from that date, the detention demerge bill has to come out. And, you know, I think that's going to be, you know, and that's indefinitely. The onus is on the ocean carriers. Well, of course it is because now they have to be sort of a little bit more timely on this as well as the marine terminals. And, you know, at least I anecdotally kind of what I've heard from ocean carriers are sort of they're not the most tech savvy and, you know, they move a lot, but, you know, their billing processes can be kind of convoluted and, you know, take a lot of time.
So ocean carriers are having to invest more in their billing to make sure that these are accurate. You know, kind of another offshoot of this has been that sort of when shippers or truckers have gotten these detention to merge invoices that, you know, it can be a little convoluted because, you know, that also includes the charges that the marine terminals might charge to the ocean carriers who then bill the shipper or the trucker. So, you know, you can get this whole list of charges, but, you know, some of that might be from the ocean carrier for detention. Some of that might be from the marine terminal for demurrage. But then ocean carriers, in some instances, they've even charged their own demurrage on top. Marine terminals demerged. So I guess to their credit or at least, you know, sort of a natural offshoot of this.
A lot of marine terminals now are saying, you know what, oceancarrier, we're not going to mess with your bills because they were sort of the point of contact for paying these bills. They were the ones that if a trucker showed up at their gates, it's like we got this bill from an ocean carrier. You have to pay before you can remove the container. So now the marine terminal is like, you know what? There's too much hair on these bills. There's been too much regulation. There's too much stuff we got to think about now. So there are actually a lot of marine terminals now. They're, they're saying that we're not going to collect anything from, for the ocean carriers. That billing has to be done by them. Specifically, we might bill shipper or trucker for something that's specific to our marine terminal.
But, you know, that's the extent of it. We're going to let you guys handle that.
And I think that's a great start with this, man. But, Mike, we're maxed out on time today, man, but I'm going to have you back on. I enjoyed our conversation, and I think that this is, there's a lot more that's going to come on about this because this is going to be challenged and there's going to be a bunch of other things that are going to come about here in the coming months, man. But how does anybody reach out to you if they want to find out more or, you know, outside of going to the Joc to find the articles that you're releasing?
Well, I would say just go to joc.com. You can always get a free trial subscription. Read me there. I'm on LinkedIn and kinds of things like that if you just want to get a little headline, a little blur, but I'm out there but happy to be on the show, Chris. And thanks for taking an interest in the topic.
No, absolutely, man. I appreciate it as always. If you guys got value in what you heard today, subscribe to the show. You guys share it out there. Dear network, this is how we grow. But most importantly you guys, this is how we help more people is because if you saw value, your network is going to see value as well. I appreciate you guys. I love you guys and we'll be talking to you soon. Bye.