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March 1, 2024 23 mins

Topic of the Week (3/1/24):

The FMC released their final D&D rule last week; this week we simply talk about what will the rule require. Just the highlights.

Federal Maritime Commission Final Rule on Demurrage and Detention Billing Requirements:

The Maritime Professorᵀᴹ presents By Land and By Sea - an attorney breaking down the week in supply chain

with Lauren Beagen (Founder of The Maritime Professorᵀᴹ and Squall Strategies)

The Maritime Professorᵀᴹ is an e-learning/educational based company on all things maritime and supply chain - we provide employee trainings, e-content/e-courses, general trainings/webinars, and executive recruiting. Make sure to sign up for the email list so that you will be alerted to when the e-learning content is available, but also, being on the email list will give you exclusive access to promo/discount codes!

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I got so coming through flying free sky to blue,
full away to mix and room.

I got so coming through no stopin the feast.
Then, on top of the world,can't walk to the beat when you
see me coming, make some room.
Everywhere I go, I'm in thespotlight.
This is a good life.
I'm living for it.

This is what it looks like.
I'm the king of the world.
I'm the king of the world.

I'm the king of the world.

I'm the king of the world.

I'm the king of the world.

I'm the king of the world.

Everything goes into effect May28th, except contents of invoice
, which is those, those 13billing requirements.
That's going to be section 541,so CF 46, cfr 541.6, and that's
due to pending office ofmanagement and budget approval,
So the contents of invoice itmight line up right, it might

still be the same, but whatthey're saying is that they
can't guarantee that it'll bethat day so forthcoming.
But I mean, those were part ofsome things that were included
with AASRA anyways.
So contents of invoice, I mean,I don't that.
I don't think that's too muchof a big deal.
This new rule defines billingpractices for detention and
demerge, with the main purposeof simplicity and identifying

what is being billed by whom.
I'm gonna say that again, theCommission actually put that in
their text what is being billedand by whom.
They just wanted to still itdown.
That was the intention of thisrulemaking.
They really wanted to get someclarity around the whole thing.
So through this final rule, theFMC clarified who may be
invoiced, right.

That was kind of there.
What's being billed by whom,information to be included in
the invoices, right.
So what is being billed?
The timeline for invoicing thisis going to be, I think, one of
the biggest changes.
I have clients all the timetelling me that they're getting
bills months, years, sometimesyears, sometimes.
Now the timeline for invoicing,I mean, it shrinks it way up

right, we're talking about 30calendar days and then
requirements for clear invoicedispute processes and I think
that that is going to also be avery effective new thing.
That wasn't maybe necessarilychanged when kind of everyone
was changing their D&D billingpractices over the summer in
advance of this rulemakingcoming out, kind of in

anticipation of the final rule,but this dispute resolution
mechanisms or dispute processesthat companies who issue issue
D&D invoices will now have tohave so that they can be
questioned, right If somethingon that invoice has a maybe
something's incorrect, maybeit's just a simple clerical

incorrect thing, you can disputeit and say, hey, you got this
wrong and you know.
Or if you're like I though mycontainers were not there during
that time dispute process right, this will be helpful.
This will help get some ofthose conversations started
earlier, instead of having theFMC and their dispute mechanism
processes being the only optionor kind of one of the only

options, this kind of keeps itin a business relationship.
So this dispute process, so whatare the kind of the key
takeaways of being, of what'sbeing changed here?
Right, I mean, I wanted todistill down really the themes
of what's happening here.
So the key takeaways?
Right, clarity, clarity.
We went and I've said thisbefore we went from you could

write $2,000 on it on a barnapkin with just scribbled pen,
nothing else, and pass itthrough and say, hey, this is
your Demerge Bill.
There wasn't a requirement ofclarity and of course nobody was
doing that, but like I don'tthink so, right, maybe there
just wasn't, it wasn't far offfrom that.

I mean, maybe put it on a legalsize paper and put invoice and
detention to merge, but I meansame thing.
It could just say $2,000detention to merge.
There wasn't a requirement ofclarity, there weren't container
numbers required, there weren'ttime periods required, none of
the kind of general things, duedate of the invoice or who it's
being sent to.

Right, that was one of thethings the Commission talked
about was if it was being sentto multiple people sometimes it
was being paid by multiplepeople was what some of the
commenters were saying and sothat invoice might be triple
paid, so that the clarity.
Clarity is a big one.
Timeliness, I think that is Ikeep saying that's going to be
one of the largest changes forthe better.

Overall right, because if theintention is the fair and
efficient movement of goods,that's the FMC's whole mission.
Right, it's the fair andefficient movement of goods,
it's the fluidity of goodsmovements.
Timeliness, right, having atime period, that this must be,
that this business must beconducted.
Right, that the, that thesurcharges of a detention to
merge, which under, you know,the, the incentive principle

that the FMC has adopted, thatCongress adopted through ASRA
and put into the CFR, theregulations, if, if the
Incentivization of the movementof goods is what detention to
merge is all about.
And I mean even just this week,commissioner Die at her
nomination hearing in the Senate, which that would have been one
of our top three stories of theweek.

So you should go watch thathearing.
It was over in the Senate Evenjust this week commissioner died
or at her nomination hearing,was saying that it really is so
That's what we're here for.
Detention to merge is for theincentivization of the movement
of goods.
It needs to continue andencourage the movement of goods
and so this timeliness pieceForces that, at least on the on

the billing side of things.
Right, you're not going to geta bill a year later that says
two thousand bucks containerwith no container number and D&D
You won't.
So now, and and it's there arenow it's 30 calendar days.
There are not 30 calendar dayrequirements for the invoice.
There are now 30 calendar dayrequirements for the invoice to

be issued and the disputeresolution filing and An
attempted resolution to adispute filing.
So 30 days to issue the invoice, 30 days to pay the invoice or
File a dispute, and then there'sa 30 calendar days and remember
, this is our, these are allcalendar days another 30
calendar days For an attemptedresolution to dispute filing.

I mean, there they're.
The FMC didn't say, look, youhave to always have it wrapped
But they said you have toattempt to dispute to To solve
Because that was anothercomplaint that was seen in the
comments was that sometimesthere might be an email to know
where or a telephone line toknow where, and Having and how
do you kind of force that sideof things.
So having an attemptedresolution of dispute filing to

also be required on a 30 daycalendar day requirement kind of
helps with that right and theanother another kind of key
theme here, the emphasis on thedirect Contractual relationship.
This was something that theykept talking about.
They wanted to make sure thatthese invoices Were only being
issued to the person who knew itbest.
So the FMC really kept withthat direct contractual

relationship or consignee, theysaid, or or ultimate receiver of
the goods, but the only onlythat direct contractual
relationship could be sent theinvoice.
Truckers have been talking aboutthis a lot of rage.
Providers have been talkingabout this a lot because now
they're not required to pay.
They didn't know what the termsof the contracts were, right,
how could they dispute it?
And that's what the FMC wassaying how could they dispute it

if they didn't know what theterms were for the detention
emerge if they said well, youtold me five free days and you
only wrote three free days.
The, the drage providers maybedidn't know that.
And so who would?
The direct contractualrelationship, and that's what
the FMC's point here was byhaving it Required that who's on
the hook for the bill?

The directly contractualrelationship person, the people
who knew the negotiated contract.
Anybody can pay, the truckerscan still pay for it, but who's
being sent the invoice?
Only the person who knows itbest.
So, like I said, today was justkind of to go over the
So what?
What's in the new rule?
What's in the new ruleeffective May 28th?

The purpose it establishesminimum information that must be
included on or with emerged indetention invoices, right?
So very, very basic it's.
It's establishing this minimuminformation.
It's creating some clarity.
The scope now this is what wetalked about last week.
This is what we're gonnacontinue to kind of break down.
But it includes ocean commoncarriers, of course, marine

terminal operators.
That was the big question.
We didn't know if MTOs weregonna be included.
They are.
Or NVO CC's non-vesseloperating common carriers does
not govern billing relationships, though, between ocean common
carriers and MTOs on that scoperight.
So what the FMC said was thatthey are going to kind of rely
on that commercial relationshipBetween the ocean common

carriers and the MTOs for thosebilling relationships.
So this rule doesn't cover that.
Definitions it defines divergentattention as any charges,
including per diem charges,assessed by ocean common
carriers, mtos or NVO, cc'srelated to the use of marine
terminal space and, for example,land, because they wanted to

capture that through bill oflading.
So It'll be interesting to seehow this gets Interpreted and
brought into kind of operationalsense because there were a lot
of questions Throughout thiswhole process on does this cover
rail yards?
They're saying marine terminalspace, for example land, and I

don't know if that's kind of anod toward the inland side or if
that's just a nod toward Okay,obviously the yard is land.
That'll be interesting to seeif, if, where, where that is.
But there was some discussionabout a through bill of lading
and capturing that.
So Continue along with thedefinition, mvocc is related to

the use of marine terminal space, example land or shipping
containers, but not includingfreight charges.
So that's what they said.
Demergent extension is Properlyissued invoice, direct
contractual relationship areproperly issued in voices and
they added a consignee whenultimate recipient of cargo or
final delivery.
So those are the only, that'sthe only person who is

responsible for this bill.
The direct contractualrelationship for properly issued
invoices Added the consigneetimeline.
So the billing party must issuewithin 30 calendar days to have
to issue this invoice within 30to calendar days from the last
date of Demergent retention.
So if it's an nvo cc, this isthis is kind of.
This is kind of a Interestinglittle switch that the FMC kind

of nodded toward.
So if the nvo cc, if it's thenvo cc, they must issue within
30 calendar days from when theyreceived it.
Because right, becausesometimes the nvo cc Might be
receiving the invoice but thenalso passing it through, so they
have 30 days to receive it.
And then they have another 30calendar days from the issuance
date of the invoice received.

And then at least 30 calendardays must be allowed from
invoice issuance for dispute.
So at least 30 calendar daysallowed from invoice issuance
For disputes.
Disputes must be attempted tobe resolved within 30 calendar
days received.
This keeps it simple.
At some point in the commentsthey were talking about 16 90.
This keeps it simple.

That look 30 calendar daychunks.
That's what we're sticking toand actually at the notice of
proposed rulemaking stage.
So the last stage, uh, fromlast December 2022, 13, 14.
Oh gosh, it's art.
It's march 14 months ago, Isuppose, um, what they were
saying was that most of thecommenters were saying, look, 30

days is no big deal, that'sfine, we can make that happen.
Most bills happen within thattime.
There were a few concerns saying, look, our systems aren't ready
for this and that's partly whythe fmc gave 90 days.
Also, it's not like this 30 daywas a surprise, because we've
been talking about it now forabout 14 months at least, like
beyond that, and and quite a fewpeople have already kind of

started to make those changes intheir systems.
But if you haven't definitelydo that, this is going to be the
rule Um, come, come may.
So, uh, it's effective upon.
So the next part this is thepart that's effective upon omb
So this is the part that's noteffective may 28th but will be
effective upon omb approval.

And this is the dnd invoice Um,contents right, so it's the
identifying information.
So the build lading, thecontainer number, ports of
discharge for imports Um, thebasis for why the build party is
the proper party.
Uh, we have timing information,so the invoice date, the
invoice due date, the allowedfree time in days and start and

end dates of free time,container availability for
imports, the earliest returndate for exports and specific
dates for when dnd were actuallycharged.
So at one point there was somediscussion over Well, tell us
the dates that aren't included,like give us the whole whole
chunk and then tell us the datesthat aren't included within,
like that was going to be toocomplicated.
The f&c said look, if it goeslike monday to wednesday and

then it wasn't thursday thenjust write that monday,
wednesday, friday, saturday, youknow, or well, I shouldn't say
the weekends, right?
Um, that's still kind of up andthat's still being talked about
That's the evergreen case.
But, um, basically that's whatthey said look, chunk it up,
let's just show me the datesthat it that it's effective for,
and part of why they wanted todo that was just for the clarity
, right, they wanted to keep itsimple.
They wanted to also make itsomething that you could follow

the paper trail but like checkyour work, and so that's part of
Timing information is so thatthe invoice recipient can look
at it, do the math themselves,make sure it all lines up with
their data and what they have ontheir records and that they can
say, yep, they got that right.
Those are, those are the dndCharges, those were the dates.
Um, I see the rate here clearlyand and I agree with the the

final invoice amount.
So that's, that's the next part.
Right rate information.
So the total amount?
Do, obviously, uh, theapplicable dnd rule.
So where in the tariff or theschedule or the service contract
What rule are we pulling fromfor this amount?
Um, and specific rates for theapplicable tariff rule or
service contract?
Right, so what was the actualrule that was being?

What was the actual rate beingused in that dnd rule?
Dispute information this is abig one.
This is a new thing, um, Ithink it was probably partially
A practice previously, but nowit's going to be required.
So, dispute information, socontact info for dispute
And this was that telephonenumber to know where.

Email address to know where.
I've heard that a few times.
I'm not everybody right, butthere were a few times when they
said they just couldn't get ahold of anybody because we kept
calling and emailing and nobodygot a hold of us.
So, contacting for for disputeresolution, for dispute requests
publicly accessible websiteshowing detailed description of
info or documentation fordispute request.

So if you are one of thoseissuing invoice people, you need
to have on your website what doyou need?
What documentation do you needif somebody wants to Dispute one
of your invoices?
So that needs to be on thewebsite, right, detailed
description of the info ordocumentation that's required
for dispute request and thendefine timelines for dispute

requests, right?
So that was also included andand I think that this, this
dispute request thing is goingto be uh important and and
hopefully potentially Take someloads off of the FMC.
We we have the chargecomplaints process, for sure,
but this will hopefully kind ofkeep it in that business
relationship side of things,which I think would be Good,

obviously, but I think thatthat's going to be a helpful
thing so that people feel likethey have a voice with their,
with their business partners.
Um, and the 30 days forattempted dispute resolution
that's going to be a big one too.
So certifications this gotincluded.
I don't know how I feel aboutthe certifications, right, I
think that this is a little bitof it's fine, um, so invoices

must include a statement thatcharges are consistent with FMC
rules on detention.
To merge Fine, right, it has toinclude a statement.
This is these charges areconsistent with FMC rules on
To merge Okay, so there's acertification, uh, and then also
a billing parties performancedid not cause or contribute to
underlying invoice charges.
Previously, that said, theocean common carrier, or

whatever it said, um, itbasically was saying that the
common carriers performance didnot cause or contribute.
My big question was well, it'snot always the common carrier
issuing these.
So, uh, if, if you're saying,well, the ocean common carriers
performance Did not cause orcontribute, you're the mto
issuing it, it's like, why areyou letting them off the hook
when I'm the one?
So I, I like that.

They changed it to billingparties performance did not
cause or contribute tounderlying invoice charges.
Um, but still, I mean, I don'tknow these certifications.
I mean, if you write that onthere, it's not like I don't
know it's, it's not like it'sautomatically true, maybe they
just wanted people to have thatpause of Making sure that they
put it on there so that you feela little guilty or you somehow

like it checks you, uh, butthat's fine.
Certifications, right.
So invoices must include astatement that the charges are
consistent with FMC rules andthat the billing parties
performance did not cause orcontribute to underlying invoice
So that's the highlights, right?
Those are the overview.
That's what's in this text.
If you want to just quickly seeNot all the discussion about

what's happening next, butwhat's happening next, what the
language of the law will be,what will be the new reg of part
Go to the last four pages,right?
The whole rule is about 115pages.
If you go to the last four,maybe five pages, you can see
the rule very clearly.
It's it's completely writtenout of what the text will say.

You can go, you can fastforward through all that other
It's important.
The other stuff is important.
It's a.
It's justification, it's it'sdiscussion.
It's why did we take thiscomment?
We're going to take thatcomment under consideration.
We're going to see how thisrule goes and maybe make some
modifications come in the future.
We're going to see how case lawinterprets this.

I mean, the fmc talks about alot of different things in those
110 pages, but the last fivepages or so are really just the,
the, the simple law of the text.
So if you want to go check outwhat does this rule, without all
the discussion, but what willthis rule require.
Go check out those last fivepages.
But, as always, this is notlegal advice.

This is provided simply forgeneral and educational purposes
If you need an attorney,contact attorney.
And also, accuracy and directapplication should be confirmed
Right, you need to go checkanything that I'm saying.
Go check to see how it appliesto you.
Right, because there's going tobe a little bit of a nuance
Depending on your role in the inthe supply chain ecosystem, as,

as commissioner die alwayscalls it, the ecosystem.
That's the highlight, that's theoverview.
That's the simple podcast fortoday.
So, as always, the guidancehere is general and for
educational purposes.
It should not be construed tobe legal advice directly related
to your matter.
If you need an attorney,contact an attorney.
But if you have specific legalquestions, feel free to reach

out to me at my legal company,skull Strategies.
Otherwise, for the non-legalquestions, the e-learning and
general industry information andinsights, the webinars of what
this rule means I have beenasked to do quite a few of those
I'm happy to do it.
I'm happy to provide webinarsfor your employees and just

general overview.
Come find me at the MaritimeProfessor.
That's something that we dothere.
The industry training that'swhat we do with the Maritime
Happy to do it.
I'm putting together thosee-courses that I talked about
forever ago and then I went andhad a baby.
So now we're putting thee-courses together again.
So if you like these videos,let me know, comment, like and

If you want to listen to theseepisodes on demand, or if you
missed any previous episodes,check out the podcast by Landon
by C.
If you prefer to see the video,they live on my YouTube page by
Landon by C, presented by theMaritime Professor.
And, while you're at it, checkout our website Maritime
The e-courses are coming.
I've jumped back into them.
I'm excited about it.

I am going to be puttingtogether a detention and merge
e-course, so keep an eye out forit.
But go over tothemaritimeprofessorcom sign up
for the email list.
I don't send out a newsletteron there, but I will let you
know when the courses drop andstart getting more active.
So until next week, this isLauren Began, the Maritime
Professor, and you just listenedto by Landon by C, and if
you're at TPM this week, have agreat time.

All right, see you next time.
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