New 2024 FMC Regulations: How to Adapt & Leverage to Your Benefit

The freight industry is undergoing some notable changes in 2024, particularly with the Federal Maritime Commission’s (FMC) recent regulations and rules. These rulings include new regulations that refine demurrage and detention billing practices, explicitly stating who can be billed and within which timeframe, and affirm motor carriers’ rights to choose their chassis providers, aiming to decrease supply chain costs and delays.

These drayage fee changes are set to make some major changes to the billing practices for demurrage and detention, as well as chassis choice rules.

For those who don’t know, a demurrage fee is charged by the shipping line each day per container from the date of discharge until the full container is moved out of the terminal or port for unpacking. Detention fees are then charged from that time until the empty container is returned to the shipping line’s designated station.

Let’s break down these rulings and explain how FMI is here to help you navigate these new regulations in a way that will keep your supply chain running smoothly and turn challenges into opportunities.

The New Federal Maritime Commission Regulations

First, let’s examine the two major decisions that the FMC has recently made and clarify what this might mean for your logistics.

1. New Billing Practices for Demurrage and Detention

The FMC has established clearer guidelines on who can be billed for demurrage and detention, aiming to improve efficiency in supply chains.

Effective May 28, 2024, these bills will only be issued to the party responsible for contracting the cargo’s transportation or storage or to the consignee, eliminating the previous confusion over billing multiple parties.

Detention and demurrage cannot be billed directly to draymen anymore. The invoices will have to go to the customer/BCO now.

2. Empowering Motor Carriers with Chassis Choice

Another landmark decision by the FMC upholds motor carriers’ right to choose their chassis providers, which will help reduce costs and delays associated with shipping. This ruling impacts key logistics hubs across the U.S., promising to smooth out the supply chain and potentially lower costs.

Steamships cannot require draymen to use specific chassis pools for their containers anymore.

3 Opportunities These FMC Regulations Will Bring You

While these changes may present some challenges, they will also bring opportunities. New legislation can be complex, and while in the beginning it might give you a headache, hopefully, it will have an overall positive impact on the industry.

Here are some ways we might see that.

1. Increased Demand for Brokerage Services

The direct billing of demurrage increases the need for specialized knowledge in managing these charges. FMI’s expertise in brokerage services allows us to assist shippers and forwarders in navigating these complexities, ensuring efficient handling of demurrage and per diem charges.

2. Risk Mitigation

With the new ruling, shippers are more likely to rely on intermediaries to buffer against direct interactions with carriers. Freight Management Inc. stands ready to protect your interests, acting as a crucial mediator in resolving disputes and handling documentation.

3. Value-Added Services

FMI is well-equipped to offer additional services such as dispute resolution, time tracking, and comprehensive reporting. These services are designed to help you manage your shipping costs and operations more efficiently, resulting in better control over your logistics expenses.

4 Challenges Ahead Due To The Recent FMC Ruling

There will also be some challenges to overcome. While these might be new problems, they all have a solution.

1. Payment Disputes

The clarity in billing might lead to disputes over payment timings and amounts. FMI anticipates these challenges and is prepared to manage potential cash flow issues effectively, ensuring that both carriers and clients feel fairly treated.

2. Increased Pressure on Accuracy

Accurate time tracking and invoicing are more crucial than ever. Freight Management Inc. is committed to maintaining precise records to avoid disputes and build trust with our clients.

3. Negotiation Complexity

Contract negotiations might become more intricate as shippers seek terms that buffer them against the new billing dynamics. FMI is prepared to handle these negotiations, advocating for terms that meet the needs of all parties involved.

4. Chassis Pool Complexity

With the new flexibility in chassis provider selection, coordinating and managing various chassis pools may introduce additional logistical challenges.

This can lead to complications such as extra split charges and more frequent shortages, which FMI is equipped to navigate and manage for our clients.

Strategic Considerations for Navigating Recent FMC Regulations

If you are feeling a bit panicked by these new rulings, don’t worry; you’re not alone. Here are some helpful strategies to help you navigate these new waters.

1. Clear Communication

It’s important to stay informed about the latest FMC rulings and understand how they directly affect your operations. Knowing the specifics of billing practices and chassis choice options will help you make more informed decisions and plan your strategies effectively.

2. Embrace Diversified Service Options

Consider leveraging a variety of services related to demurrage management and contract negotiation. Staying connected with knowledgeable partners and using their expertise can help you manage the complexities of the new regulatory environment more effectively.

This approach will assist you in optimizing your operational efficiency and reducing potential costs.

3. Monitor and Adapt

Keep a close watch on how these new regulations are impacting the industry’s landscape. Regular monitoring of your own logistics and billing processes is crucial.

Adjust your operations as needed to align with new legal requirements and to take advantage of emerging opportunities for efficiency improvements and cost savings.

4. Stay Proactive with Dispute Resolution

Establish clear procedures and guidelines to prepare for potential disputes. This preparation will help you handle any discrepancies in demurrage and detention billing or challenges in chassis provisioning.

Being proactive in dispute resolution can safeguard against operational disruptions and maintain smoother relations with carriers and terminal operators.