FMC Demurrage Rules: Impact on Free Days

The FMC's Role in Demurrage and Detention Regulation

The Federal Maritime Commission (FMC) is the independent federal agency that regulates ocean shipping under the Shipping Act of 1984, as amended. Its jurisdiction covers ocean common carriers, marine terminal operators (MTOs), and non-vessel-operating common carriers (NVOCCs) engaged in US foreign commerce. When it comes to FMC demurrage guidelines, the agency's authority is grounded in 46 U.S.C. §§ 41102 and 41104, which prohibit unreasonable practices and unjust discrimination.

For most of the industry's history, demurrage and detention (D&D) existed in a regulatory gray zone. Carriers set their own tariff rates, applied them inconsistently, and faced no meaningful standard for what constituted an "unreasonable" charge. That changed in 2020 with the FMC's first major demurrage rulemaking — and accelerated further with the Ocean Shipping Reform Act of 2022 (OSRA 2022).

The 2020 Interpretive Rule: Docket No. 19-05

In May 2020, the FMC published its Interpretive Rule on Demurrage and Detention under the Shipping Act (Docket No. 19-05), codified at 46 CFR Part 541. This was the first formal federal guidance on how demurrage and detention charges should be assessed and when they may be legally challenged.

The rule established what the FMC calls the "incentive principle": demurrage and detention charges are reasonable only when they serve as an incentive for cargo movement. When charges accrue during periods when a shipper or consignee is unable to pick up or return equipment — due to circumstances outside their control — those charges fail the incentive test and may constitute an unreasonable practice under 46 U.S.C. § 41102(c).

The FMC identified specific factors it would consider in evaluating D&D complaints: whether cargo was available for retrieval, whether the billing party contributed to the delay, and whether the charge was actually serving to move cargo or merely generating revenue. This interpretive framework gave shippers their first meaningful legal basis to dispute D&D invoices beyond simple contract arguments.

FMC D&D Billing Requirements: What's Required vs. Prohibited

OSRA 2022 and the implementing regulations under 46 CFR Part 545 created specific billing requirements that took effect in May 2024. The table below summarizes what is now mandated and what is explicitly prohibited under FMC rules:

46 CFR Part 545: The OSRA 2022 Implementing Regulation

The Ocean Shipping Reform Act of 2022 (Pub. L. 117-146) directed the FMC to issue new rules on demurrage and detention billing within 60 days of enactment. The FMC published its final rule implementing OSRA 2022's D&D provisions as 46 CFR Part 545, with an effective date of May 28, 2024. This regulation operates alongside — not in replacement of — the 2020 interpretive rule under 46 CFR Part 541.

The key addition in Part 545 is the formal codification of billing standards. Before OSRA 2022, D&D invoices routinely arrived with no itemization, no clear calculation methodology, and no stated dispute process. A Maersk or MSC detention invoice might simply list a container number and a dollar amount. Part 545 ended that practice for regulated carriers operating in US commerce.

Part 545 also creates explicit obligations for marine terminal operators — not just ocean carriers. Terminal storage billing at ports like Savannah's Garden City Terminal, the Port of Houston's Barbours Cut, or APM Terminals at the Port of LA must now comply with the same itemization and issuance timeline requirements as carrier demurrage bills.

For the broader regulatory context — including how OSRA 2022 changed free time calculation rules and shipper protections — see our OSRA 2022 impact on container free days.

Billing Transparency Requirements in Detail

Under 46 CFR § 545.5, every D&D invoice must contain specific line items. A compliant invoice identifies: the entity issuing the bill, the specific container number(s), the vessel and voyage or booking reference, the date free time commenced, the LFD, each calendar day for which charges are assessed, the per-diem rate applied each day, and a total. If the rate escalates in tiers (as most carrier tariffs do), each tier must appear as a separate line.

The 30-day issuance window is a hard deadline. A demurrage invoice issued on day 31 is untimely under 46 CFR § 545.5(c). Freight forwarders who receive late invoices should note the date the charge period ended, count 30 calendar days forward, and flag any invoice received after that date as potentially unenforceable. This is a legitimate dispute basis — not a technicality.

The 30-day dispute window runs from the date the invoice is issued, not the date it is received. If a carrier issues an invoice on March 1, the dispute deadline is March 31 regardless of when it hits your inbox. Establish internal processes to log invoice receipt dates and calendar dispute deadlines.

Government Hold Protections Explained

One of the most practically significant provisions in the FMC's demurrage framework is the government hold protection. Under 46 CFR § 545.4(b) and the 2020 interpretive rule, carriers and terminals cannot charge demurrage for any period during which a container cannot be retrieved because it is subject to a government examination hold — including CBP intensive exams, FDA holds, USDA inspections, and CPSC detentions.

The protection applies from the moment the hold is placed until the hold is released and the container is physically available for pickup at the terminal. If CBP places an intensive exam on a container at the Port of Baltimore and the exam takes 5 days, those 5 days are excluded from the chargeable demurrage period. The LFD effectively pauses.

Documentation is the critical practice requirement here. Obtain the CBP hold notice (typically an ABI system message or CBP Form 28/29), FDA detention notice, or relevant government agency correspondence. Provide this to your carrier and terminal in writing immediately. Carriers who continue to charge during documented government holds are in violation of 46 U.S.C. § 41102(c) and subject to FMC enforcement.

Note that the protection covers government-ordered holds — it does not automatically cover delays caused by missing documents, duty payment issues, or other shipper-side clearance failures. For a comprehensive overview of LFD tracking best practices, including how to manage holds, see our LFD tracking guide for US freight forwarders.

FMC Enforcement: Penalties and the Complaint Process

The FMC can assess civil penalties against ocean common carriers, NVOCCs, and marine terminal operators for violations of the Shipping Act and implementing regulations. Under 46 U.S.C. § 41107, the maximum penalty for a knowing and willful violation by a common carrier is $17,272 per violation per day. For violations that are not knowing and willful, the maximum is $8,636 per violation per day. These figures are adjusted annually for inflation.

Enforcement actions can be initiated by the FMC's Bureau of Enforcement on its own motion or in response to a formal complaint. The FMC conducts periodic D&D audit reviews — it published a D&D billing practices report in late 2022 identifying systemic non-compliance across multiple carriers, including instances of late invoice issuance, missing invoice elements, and improper government hold charging at ports including Los Angeles, Long Beach, and New York/New Jersey.

Carriers found in violation may be ordered to pay refunds to affected shippers in addition to civil penalties. The FMC's Bureau of Enforcement handles formal investigations; the Office of Consumer Affairs and Dispute Resolution Services (CADRS) handles informal complaints and mediation.

How to File a D&D Complaint with the FMC

There are two complaint pathways at the FMC. The informal route goes through CADRS and is free, non-adversarial, and typically resolves in 30–90 days. You submit a complaint online at FMC.gov, describe the disputed charge, attach supporting documentation (invoice, container details, government hold notices if applicable), and CADRS facilitates a discussion between you and the carrier. Most informal complaints settle without formal proceedings.

The formal complaint route is filed under 46 CFR Part 502 and initiates an adjudicatory proceeding before an FMC administrative law judge. Formal complaints must be filed in writing with the FMC Secretary, served on the respondent, and comply with pleading requirements. Legal representation is not required but is advisable. Formal proceedings can take 12–24 months but can result in reparation orders (monetary refunds) and civil penalties against the carrier.

For either pathway, gather your documentation before filing: the D&D invoice, evidence the charge was improper (government hold documentation, terminal availability records, email correspondence with the carrier), and any prior dispute correspondence. The FMC complaint portal is accessible at fmc.gov.

Practical Compliance Tips for Freight Forwarders

The most effective defense against improper D&D charges is contemporaneous documentation. When a container arrives and a government hold is placed, request the official hold notice the same day and transmit it to your carrier and terminal in writing — not just a phone call. Create a paper trail that can survive an FMC complaint proceeding.

Audit every D&D invoice against the 46 CFR Part 545 checklist before paying. Confirm the invoice was issued within 30 days of the last charge date. Confirm it includes all required line items. If any required element is missing or the invoice is untimely, preserve the invoice and open a dispute immediately — before the 30-day dispute window closes.

Track government holds in your TMS or container tracking system as a distinct event type. When a CBP exam or FDA hold is placed, log the start date, the release date, and the terminal availability date after release. These three dates define the protected period. Any demurrage charged within those dates is challengeable under the FMC framework.

Build LFD extension requests into your standard operating procedure for any container flagged with a hold. Most carriers will grant an administrative extension for CBP-held containers when requested in writing before LFD expires — Maersk, Hapag-Lloyd, and CMA CGM all have documented extension processes for government holds. Getting the extension prevents the dispute from being necessary in the first place.

Finally, know which entity issued each charge. Carrier demurrage comes from the SSL (e.g., Evergreen, Yang Ming, ONE). Terminal storage comes from the terminal operator (e.g., TRAPAC, TraPac, GCT Bayonne, Ports America). They are separate legal entities, regulated separately under the Shipping Act, and disputes must be directed to the correct party. Filing an FMC complaint against the wrong entity wastes time and may miss the statute of limitations — three years from the date the cause of action accrued under 46 U.S.C. § 41301.