What the New FMC Rules for Ocean D&D Billing Mean for You

In a recent regulatory development, the U.S. Federal Maritime Commission (FMC) introduced new rules that significantly impact detention and demurrage (D&D) billing processes by shifting responsibilities and establishing new response time requirements. The three main changes are:

1. Billing to Consignees and Contracting Parties: This rule clarifies that the consignee or the party in contract with a carrier can be billed for D&D charges, eliminating confusion and ensuring accountability.
2. Defined Invoicing Timeframes: Invoices must now be issued within 30 calendar days from the last incurred charges, establishing a standard for timely invoicing.
3. Defined Dispute and Response Timeframes: The same timeframe applies for dispute submissions by the receiving party and dispute resolution by the billing party, streamlining the overall billing process.

With these new rules, supply chain professionals must streamline their billing and auditing processes, ensuring that the information they need can be retrieved quickly — if you fail to dispute charges within the 30-day window, you risk forfeiting your right to do so. And while standardizing invoice details should reduce disputes driven by insufficient information, it’s now even more important to be familiar with the OSRA 2022 filing requirements. 

Adapting to the Changes and Improving D&D

So, what specific steps can you take to better navigate the new rules and D&D in general? Consider these 5 tips:

1. Thoroughly Understand Free Time and Last Free Days: It’s essential to know the free time allowances and last free days for your containers, as these can vary significantly based on location, carrier, contractual terms, and equipment type. Clarity on your container flows and the exact ports they will transit is essential.
2. Enhance Container Tracking: Dynamic estimated times of arrival (ETAs) and real-time notifications can help you stay informed about container discharge, availability for pickup, and potential risks for demurrage or detention.
3. Proactively Manage Costs: Use historical data and predictive analytics to foresee potential D&D charges and take preventative measures. Platforms like FourKites combine steamship lines (SSL) & Non-Vessel Operating Common Carrier (NVOCC) contract data with live visibility into container movements, allowing for proactive cost management.
4. Maintain Accurate and Comprehensive Records: Ensure that all invoicing details align with the OSRA 2022 requirements, which stipulate that invoices must include detailed information to ensure transparency and consistency, to avoid disputes and ensure clarity.
5. Communicate Proactively with Stakeholders: Regularly update all relevant parties about the status of shipments to preempt issues related to D&D charges.

Putting It Into Practice

The new FMC regulations represent a significant shift towards greater transparency and accountability. But for many shippers, the strategies that will help them navigate these rule changes are the same ones that have helped many others operate a more efficient international supply chain.

Take, for example, Kimberly-Clark. Their portfolio of brands, which includes Cottonelle, Huggies, Kleenex and many others, is an indispensable part of life for people in more than 175 countries. Bryan Kennedy, Transportation Manager, Exports, shared with us the difference that having real-time visibility has made in their ocean shipping operations:

We have a very large export volume — over 20,000 TEUs going out to about 54 destination countries annually — and one of our greatest struggles was visibility. We had eyesight on pickups, but as soon as the shipment departed, we relied heavily on our forwarders and steamship lines for updates. With FourKites, we can see things more clearly than ever before. We’ve been able to get live visibility to interruptions, monitor hand-off points, be proactive to save shipments and alert our customers if there will be a delay.

And they’re not the only ones. Check out this video to learn how another customer dramatically reduced their detention and demurrage while improving on-time performance and adhering to their transit time agreements.

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