The Federal Maritime Commission (FMC) recently implemented a new rule that will have a significant impact on drayage truckers across the country. Drayage trucking, the transportation of goods over short distances, plays a crucial role in the supply chain and logistics industry, connecting ports, warehouses, and distribution centers.

The FMC's new rule aims to address longstanding issues within the industry, including unfair practices, lack of transparency, and insufficient compensation for drayage truckers. This rule is a step towards promoting fair competition, improving working conditions, and ensuring that drayage truckers are fairly compensated for their services.

As a result, drayage truckers may experience changes in their operations, rates, and relationships with shippers and freight brokers. It is important for drayage truckers to understand the implications of this new rule and how it may impact their business practices and bottom line.

In this article, we will explore the details of the FMC's new rule and provide insights on how drayage truckers can adapt to these changes in order to thrive in an evolving industry landscape.

Simplified billing provision

The National Industrial Transportation League has raised concerns regarding the recent ruling by the Federal Maritime Commission on demurrage and detention fees for drayage truckers. The new billing standards implemented aim to address abusive late fees imposed on truckers and shippers by ocean carriers and terminal operators.

However, the League argues that the simplified billing provision in the rule has inadvertently shifted the burden of late fees onto shippers, potentially leading to increased administrative costs. Under the new regulation, drayage truck drivers are no longer responsible for demurrage and detention fees, even in cases where they may have caused delays in cargo pickup or return.

The League points out that this places an unfair burden on shippers, who may now have to shoulder additional costs unless otherwise specified in their agreements. This change in billing standards may result in increased complexity and financial implications for shippers, as they navigate the new rules set forth by the Federal Maritime Commission.

Inclusion of Truckers in Ocean Transportation

The inclusion of truckers in ocean transportation contracts has been a point of contention, as highlighted by NITL general counsel and Thompson Hine LLP partner, Karyn Booth. According to Booth, the billing provision within the rule proposed by the FMC appears to segregate truckers from the billing process. This could potentially diminish the truckers' motivation to swiftly retrieve or return containers from ports, as they may not be responsible for demurrage and detention fees unless contractually obligated by the shipper.

The concerns raised by NITL members revolve around the potential financial burden placed on truckers for delays beyond their control. This could result in truckers having to cover costs upfront and seek reimbursement through contractual agreements. As a result, shippers are advised to carefully review their contracts with ocean carriers and truckers to navigate this new rule effectively.

NITL Executive Director Nancy O’Liddy highlighted the challenges faced by smaller shippers who may not have dedicated departments to handle such contract changes. The potential increase in costs for these shippers could be significant, as they may be required to pay invoices upfront and then navigate the reimbursement process with truckers. It is essential for all parties involved to proactively address these implications and ensure clear contractual relationships are established to mitigate any financial repercussions.

The Intermodal Motor Carriers Conference

The Intermodal Motor Carriers Conference of the American Trucking Associations commended the recent regulatory change for its more accurate assessment of invoicing responsibilities. IMCC Executive Director Jonathan Eisen expressed optimism about the new rule, stating that it will foster direct collaboration between ocean carriers and customers, thereby enhancing efficiency and expediting dispute resolutions within the supply chain.

During a hearing for his reconfirmation as FMC chairman, Daniel Maffei highlighted the benefits of the new rule in curbing container late-fee billing abuses by ocean carriers. Emphasizing that such fees should serve to facilitate cargo movement rather than bolster company profits, Maffei affirmed the FMC's commitment to enforcing the rule rigorously.

However, concerns were raised by some, including Booth, regarding the potential implications of the FMC's contract-based billing provision. This provision places sole responsibility on the contracting shipper, irrespective of fault, prompting questions about whether the incentives for freight fluidity are appropriately aligned.

In contrast, NITL advocated for a conduct-based rule that would attribute demurrage and detention charges to the party causing delays in container pick-up or return. Booth cautioned that the effectiveness of the new rule in improving fluidity remains to be seen, given its blanket assignment of billing responsibility to the shipper regardless of fault. The impact of this approach on encouraging responsible conduct in the transportation industry is yet to be fully understood.

In Conclusion

The new FMC rule has introduced significant changes to the drayage trucking industry, impacting various stakeholders including truckers, shippers, and businesses involved in the supply chain. This revised regulation emphasizes the importance of adherence to safety and compliance standards, promoting a more efficient and sustainable operating environment for all entities involved. While the adjustment process may present challenges for drayage truckers initially, the long-term benefits of enhanced safety and streamlined operations are anticipated to yield positive outcomes for the industry as a whole. With proper understanding and proactive measures, drayage truckers can navigate these changes effectively and contribute to a more robust and resilient logistics landscape.

If you want to stay updated with a wide range of trends, actionable insights, and innovative solutions in the trucking, freight, and logistics industry, stay connected to us.

Moreover, If you are looking for more information about drug and alcohol testing as a truck driver, visit LabWorks USA.

Our DOT Consortium's friendly team will be more than happy to discuss any concerns you may have and work with you to ensure you are always fully compliant, especially with random DOT drug and alcohol testing. Moreover, if you need help with FMCSA Clearinghouse registration, we can further support you.