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:
https://lnkd.in/gdcUp6V2
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!
Sign up for our email list at https://lnkd.in/eqfZJShQ
Look for our podcast episodes - NOW AVAILABLE:
https://lnkd.in/g4YUbxjs
** As always the guidance here is general and for educational purposes only, it should not be construed to be legal advice and there is no attorney-client privilege created by this video. If you need an attorney, contact an attorney. **
#ByLandAndBySea
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:
https://lnkd.in/gdcUp6V2
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!
Sign up for our email list at https://lnkd.in/eqfZJShQ
Look for our podcast episodes - NOW AVAILABLE:
https://lnkd.in/g4YUbxjs
** As always the guidance here is general and for educational purposes only, it should not be construed to be legal advice and there is no attorney-client privilege created by this video. If you need an attorney, contact an attorney. **
#ByLandAndBySea
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Speaker 1:Everything goes into effect May 28th, except contents of invoice, which is those, those 13 billing requirements. That's going to be section 541, so CF 46, cfr 541.6, and that's due to pending office of management and budget approval, omb. So the contents of invoice it might line up right, it might still be the same, but what they're saying is that they can't guarantee that it'll be that day so forthcoming. But I mean, those were part of some things that were included with AASRA anyways. So contents of invoice, I mean, I don't that. I don't think that's too much of a big deal.
Speaker 1:This new rule defines billing practices for detention and demerge, with the main purpose of simplicity and identifying what is being billed by whom. I'm gonna say that again, the Commission actually put that in their text what is being billed and by whom. They just wanted to still it down. That was the intention of this rulemaking. They really wanted to get some clarity around the whole thing. So through this final rule, the FMC clarified who may be invoiced, right. That's. That was kind of there. What's being billed by whom, information to be included in the invoices, right. So what is being billed?
Speaker 1:The timeline for invoicing this is going to be, I think, one of the biggest changes. I have clients all the time telling me that they're getting bills months, years, sometimes years, sometimes. Now the timeline for invoicing, I mean, it shrinks it way up right, we're talking about 30 calendar days and then requirements for clear invoice dispute processes and I think that that is going to also be a very effective new thing. That wasn't maybe necessarily changed when kind of everyone was changing their D&D billing practices over the summer in advance of this rulemaking coming out, kind of in anticipation of the final rule, but this dispute resolution mechanisms or dispute processes that companies who issue issue D&D invoices will now have to have so that they can be questioned, right If something on that invoice has a maybe something's incorrect, maybe it's just a simple clerical incorrect thing, you can dispute it and say, hey, you got this wrong and you know. Or if you're like I though my containers were not there during that time dispute process right, this will be helpful. This will help get some of those conversations started earlier, instead of having the FMC and their dispute mechanism processes being the only option or kind of one of the only options, this kind of keeps it in a business relationship.
Speaker 1:So this dispute process, so what are the kind of the key takeaways of being, of what's being changed here? Right, I mean, I wanted to distill down really the themes of what's happening here. So the key takeaways? Right, clarity, clarity. We went and I've said this before we went from you could write $2,000 on it on a bar napkin with just scribbled pen, nothing else, and pass it through and say, hey, this is your Demerge Bill. There wasn't a requirement of clarity and of course nobody was doing that, but like I don't think so, right, maybe there just wasn't, it wasn't far off from that. I mean, maybe put it on a legal size paper and put invoice and detention to merge, but I mean same thing. It could just say $2,000 detention to merge. There wasn't a requirement of clarity, there weren't container numbers required, there weren't time periods required, none of the kind of general things, due date of the invoice or who it's being sent to. Right, that was one of the things the Commission talked about was if it was being sent to multiple people sometimes it was being paid by multiple people was what some of the commenters were saying and so that invoice might be triple paid, so that the clarity. Clarity is a big one. Timeliness, I think that is I keep saying that's going to be one of the largest changes for the better.
Speaker 1:Overall right, because if the intention is the fair and efficient movement of goods, that's the FMC's whole mission. Right, it's the fair and efficient movement of goods, it's the fluidity of goods movements. Timeliness, right, having a time period, that this must be, that this business must be conducted. Right, that the, that the surcharges of a detention to merge, which under, you know, the, the incentive principle that the FMC has adopted, that Congress adopted through ASRA and put into the CFR, the regulations, if, if the Incentivization of the movement of 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 the week. So you should go watch that hearing. It was over in the Senate Even just this week commissioner died or at her nomination hearing, was saying that it really is so important. That's what we're here for.
Speaker 1:Detention to merge is for the incentivization of the movement of goods. It needs to continue and encourage the movement of goods and so this timeliness piece Forces that, at least on the on the billing side of things. Right, you're not going to get a bill a year later that says two thousand bucks container with no container number and D&D. You won't. So now, and and it's there are now it's 30 calendar days. There are not 30 calendar day requirements for the invoice. There are now 30 calendar day requirements for the invoice to be issued and the dispute resolution filing and An attempted resolution to a dispute filing. So 30 days to issue the invoice, 30 days to pay the invoice or File a dispute, and then there's a 30 calendar days and remember, this is our, these are all calendar days another 30 calendar days For an attempted resolution to dispute filing. I mean, there they're.
Speaker 1:The FMC didn't say, look, you have to always have it wrapped up. But they said you have to attempt to dispute to To solve it. Because that was another complaint that was seen in the comments was that sometimes there might be an email to know where or a telephone line to know where, and Having and how do you kind of force that side of things. So having an attempted resolution of dispute filing to also be required on a 30 day calendar day requirement kind of helps with that right and the another another kind of key theme here, the emphasis on the direct Contractual relationship. This was something that they kept talking about. They wanted to make sure that these invoices Were only being issued to the person who knew it best. So the FMC really kept with that direct contractual relationship or consignee, they said, or or ultimate receiver of the goods, but the only only that direct contractual relationship could be sent the invoice.
Speaker 1:Truckers have been talking about this a lot of rage. Providers have been talking about this a lot because now they're not required to pay. They didn't know what the terms of the contracts were, right, how could they dispute it? And that's what the FMC was saying how could they dispute it if they didn't know what the terms were for the detention emerge if they said well, you told me five free days and you only wrote three free days. The, the drage providers maybe didn't know that. And so who would? The direct contractual relationship, and that's what the FMC's point here was by having it Required that who's on the hook for the bill? The directly contractual relationship person, the people who knew the negotiated contract. Anybody can pay, the truckers can still pay for it, but who's being sent the invoice? Only the person who knows it best.
Speaker 1:So, like I said, today was just kind of to go over the highlights. So what? What's in the new rule? Right? What's in the new rule effective May 28th? The purpose it establishes minimum information that must be included on or with emerged in detention invoices, right? So very, very basic it's. It's establishing this minimum information. It's creating some clarity.
Speaker 1:The scope now this is what we talked about last week. This is what we're gonna continue to kind of break down. But it includes ocean common carriers, of course, marine terminal operators. That was the big question. We didn't know if MTOs were gonna be included. They are. Or NVO CC's non-vessel operating common carriers does not govern billing relationships, though, between ocean common carriers and MTOs on that scope right. So what the FMC said was that they are going to kind of rely on that commercial relationship Between the ocean common carriers and the MTOs for those billing relationships. So this rule doesn't cover that.
Speaker 1:Definitions it defines divergent attention as any charges, including per diem charges, assessed by ocean common carriers, mtos or NVO, cc's related to the use of marine terminal space and, for example, land, because they wanted to capture that through bill of lading. So It'll be interesting to see how this gets Interpreted and brought into kind of operational sense because there were a lot of questions Throughout this whole process on does this cover rail yards? They're saying marine terminal space, for example land, and I don't know if that's kind of a nod toward the inland side or if that's just a nod toward Okay, obviously the yard is land. That'll be interesting to see if, if, where, where that is. But there was some discussion about a through bill of lading and capturing that. So Continue along with the definition, mvocc is related to the use of marine terminal space, example land or shipping containers, but not including freight charges. So that's what they said.
Speaker 1:Demergent extension is Properly issued invoice, direct contractual relationship are properly issued in voices and they added a consignee when ultimate recipient of cargo or final delivery. So those are the only, that's the only person who is responsible for this bill. The direct contractual relationship for properly issued invoices Added the consignee timeline. So the billing party must issue within 30 calendar days to have to issue this invoice within 30 to calendar days from the last date of Demergent retention. So if it's an nvo cc, this is this is kind of. This is kind of a Interesting little switch that the FMC kind of nodded toward. So if the nvo cc, if it's the nvo cc, they must issue within 30 calendar days from when they received it. Because right, because sometimes the nvo cc Might be receiving the invoice but then also passing it through, so they have 30 days to receive it. And then they have another 30 calendar days from the issuance date of the invoice received. And then at least 30 calendar days must be allowed from invoice issuance for dispute. So at least 30 calendar days allowed from invoice issuance For disputes. Disputes must be attempted to be resolved within 30 calendar days received. This keeps it simple.
Speaker 1:At some point in the comments they were talking about 16 90. This keeps it simple. That look 30 calendar day chunks. That's what we're sticking to and actually at the notice of proposed rulemaking stage. So the last stage, uh, from last December 2022, 13, 14. Oh gosh, it's art. It's march 14 months ago, I suppose, um, what they were saying was that most of the commenters were saying, look, 30 days is no big deal, that's fine, we can make that happen. Most bills happen within that time.
Speaker 1:There were a few concerns saying, look, our systems aren't ready for this and that's partly why the fmc gave 90 days. Also, it's not like this 30 day was a surprise, because we've been talking about it now for about 14 months at least, like beyond that, and and quite a few people have already kind of started to make those changes in their systems. But if you haven't definitely do that, this is going to be the rule Um, come, come may. So, uh, it's effective upon. So the next part this is the part that's effective upon omb approval. So this is the part that's not effective may 28th but will be effective upon omb approval.
Speaker 1:And this is the dnd invoice Um, contents right, so it's the identifying information. So the build lading, the container number, ports of discharge for imports Um, the basis for why the build party is the proper party. Uh, we have timing information, so the invoice date, the invoice due date, the allowed free time in days and start and end dates of free time, container availability for imports, the earliest return date for exports and specific dates for when dnd were actually charged. So at one point there was some discussion over Well, tell us the dates that aren't included, like give us the whole whole chunk and then tell us the dates that aren't included within, like that was going to be too complicated. It's.
Speaker 1:The f&c said look, if it goes like monday to wednesday and then it wasn't thursday then just write that monday, wednesday, friday, saturday, you know, or well, I shouldn't say the weekends, right? Um, that's still kind of up and that's still being talked about. That's the evergreen case. But, um, basically that's what they said look, chunk it up, let's just show me the dates that it that it's effective for, and part of why they wanted to do that was just for the clarity, right, they wanted to keep it simple. They wanted to also make it something that you could follow the paper trail but like check your work, and so that's part of that.
Speaker 1:Timing information is so that the invoice recipient can look at it, do the math themselves, make sure it all lines up with their data and what they have on their records and that they can say, yep, they got that right. Those are, those are the dnd Charges, those were the dates. Um, I see the rate here clearly and 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, the applicable dnd rule. So where in the tariff or the schedule or the service contract? What rule are we pulling from for this amount? Um, and specific rates for the applicable tariff rule or service contract? Right, so what was the actual rule that was being? What was the actual rate being used in that dnd rule?
Speaker 1:Dispute information this is a big one. This is a new thing, um, I think it was probably partially A practice previously, but now it's going to be required. So, dispute information, so contact info for dispute requests. And this was that telephone number to know where. Email address to know where. I've heard that a few times. I'm not everybody right, but there were a few times when they said they just couldn't get a hold of anybody because we kept calling and emailing and nobody got a hold of us.
Speaker 1:So, contacting for for dispute resolution, for dispute requests publicly accessible website showing detailed description of info or documentation for dispute request. So if you are one of those issuing invoice people, you need to have on your website what do you need? What documentation do you need if somebody wants to Dispute one of your invoices? So that needs to be on the website, right, detailed description of the info or documentation that's required for dispute request and then define timelines for dispute requests, right? So that was also included and and I think that this, this dispute request thing is going to be uh important and and hopefully potentially Take some loads off of the FMC. We we have the charge complaints process, for sure, but this will hopefully kind of keep it in that business relationship side of things, which I think would be Good, obviously, but I think that that's going to be a helpful thing so that people feel like they have a voice with their, with their business partners. Um, and the 30 days for attempted dispute resolution that's going to be a big one too.
Speaker 1:So certifications this got included. I don't know how I feel about the certifications, right, I think that this is a little bit of it's fine, um, so invoices must include a statement that charges are consistent with FMC rules on detention. To merge Fine, right, it has to include a statement. This is these charges are consistent with FMC rules on detention. To merge Okay, so there's a certification, uh, and then also a billing parties performance did not cause or contribute to underlying invoice charges. Previously, that said, the ocean common carrier, or whatever it said, um, it basically was saying that the common carriers performance did not cause or contribute. My big question was well, it's not always the common carrier issuing these. So, uh, if, if you're saying, well, the ocean common carriers performance Did not cause or contribute, you're the mto issuing it, it's like, why are you letting them off the hook when I'm the one? So I, I like that. They changed it to billing parties performance did not cause or contribute to underlying invoice charges. Um, but still, I mean, I don't know these certifications. I mean, if you write that on there, it's not like I don't know it's, it's not like it's automatically true, maybe they just wanted people to have that pause of Making sure that they put it on there so that you feel a little guilty or you somehow like it checks you, uh, but that's fine. Certifications, right. So invoices must include a statement that the charges are consistent with FMC rules and that the billing parties performance did not cause or contribute to underlying invoice charges. So that's the highlights, right? Those are the overview. That's what's in this text.
Speaker 1:If you want to just quickly see Not all the discussion about what's happening next, but what's happening next, what the language of the law will be, what will be the new reg of part 540? Go to the last four pages, right? The whole rule is about 115 pages. If you go to the last four, maybe five pages, you can see the rule very clearly. It's it's completely written out of what the text will say. You can go, you can fast forward through all that other stuff. It's important. The other stuff is important. It's a. It's justification, it's it's discussion. It's why did we take this comment? We're going to take that comment under consideration. We're going to see how this rule goes and maybe make some modifications come in the future. We're going to see how case law interprets this. I mean, the fmc talks about a lot of different things in those 110 pages, but the last five pages or so are really just the, the, the simple law of the text. So if you want to go check out what does this rule, without all the discussion, but what will this rule require. Go check out those last five pages.
Speaker 1:But, as always, this is not legal advice. This is provided simply for general and educational purposes. If you need an attorney, contact attorney. And also, accuracy and direct application should be confirmed Independently. Right, you need to go check anything that I'm saying. Go check to see how it applies to you. Right, because there's going to be a little bit of a nuance Depending on your role in the in the supply chain ecosystem, as, as commissioner die always calls it, the ecosystem.
Speaker 1:That's the highlight, that's the overview. That's the simple podcast for today. So, as always, the guidance here is general and for educational purposes. It should not be construed to be legal advice directly related to your matter. If you need an attorney, contact an attorney. But if you have specific legal questions, feel free to reach out to me at my legal company, skull Strategies.
Speaker 1:Otherwise, for the non-legal questions, the e-learning and general industry information and insights, the webinars of what this rule means I have been asked to do quite a few of those. I'm happy to do it. I'm happy to provide webinars for your employees and just general overview. Come find me at the Maritime Professor. That's something that we do there. The industry training that's what we do with the Maritime Professor. Happy to do it. I'm putting together those e-courses that I talked about forever ago and then I went and had a baby. So now we're putting the e-courses together again. So if you like these videos, let me know, comment, like and share. If you want to listen to these episodes 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 the Maritime Professor. And, while you're at it, check out our website Maritime Professor.
Speaker 1:The e-courses are coming. I've jumped back into them. I'm excited about it. I am going to be putting together a detention and merge e-course, so keep an eye out for it. But go over to themaritimeprofessorcom sign up for the email list. I don't send out a newsletter on there, but I will let you know when the courses drop and start getting more active. So until next week, this is Lauren Began, the Maritime Professor, and you just listened to by Landon by C, and if you're at TPM this week, have a great time. All right, see you next time.