Are you struggling to understand the new OSRA regulations and their impact on demurrage and detention charges? You're not alone. The recent changes have caused confusion throughout the shipping industry.
This article aims to clarify everything you need to know about OSRA and how to ensure you're not being overbilled on container fees.
What is OSRA?
The Ocean Shipping Reform Act (OSRA), implemented in May 2024, aims to bring transparency and fairness to demurrage and detention billing practices. It establishes clear guidelines for what information invoices must include and how disputes can be resolved.
Key Provisions of OSRA:
Billing Parties: Invoices can only be sent to the Beneficial Cargo Owner (BCO) or the consignee, not both simultaneously.
Invoice Content: Specific details like the container's availability date, free days offered, and applicable rates must be included. Missing information makes the invoice non-binding.
Timeframes: Invoices must be issued within 30 days of the charges being incurred, and BCOs have 30 days to dispute them.
Dispute Resolution: Billing parties must attempt to resolve disputes within 30 days of a request.
What does this mean for you?
Know your rights: Familiarize yourself with OSRA regulations to ensure you're not being charged unfairly.
Scrutinize invoices: Carefully examine invoices for required information and discrepancies.
Don't be afraid to challenge: If an invoice seems wrong, request clarification or file a dispute.
FMC’s final rulemaking on detention and demurrage went into effect May 28. There likely will be a period of adjustment as stakeholders in the shipping industry become accustomed to the new OSRA regulations. While the Federal Maritime Commission (FMC) is responsible for enforcing OSRA, it may take time for all ocean freight carriers to implement the new billing procedures fully.
Here's what you can do:
o Be proactive. Familiarize yourself with your rights and responsibilities under OSRA.
o Communicate with your ocean freight carrier partners. Inquire about their compliance plans with the new regulations.
o Request compliant invoices. If you receive an invoice missing any of the required
What are the Common Reasons for Demurrage Fees?
o Customs clearance delays: Port congestion, incorrect or incomplete documentation, or lack of storage space at the terminal can lead to delays and demurrage charges.
o Unexpected events: Mechanical breakdowns or inclement weather can disrupt terminal operations and cause demurrage.
What are the Common Reasons for Detention Fees (Per Diem Fees)?
o Inland transportation delays: Delays getting the container from the port to its destination can result in detention fees.
o Warehouse delays: Delays unloading or loading the container at the warehouse can also lead to detention charges.
o Unexpected events: Bad weather, strikes, or natural disasters can delay the return of the container.
o Poor communication: Miscommunication between parties involved (shipper, consignee, carrier) can also result in detention fees.
But What is Actually the Ocean Shipping Reform Act (OSRA)?
Passed in 2022, OSRA aims to bring fairness and transparency to demurrage and detention billing. Here's a breakdown of its key provisions:
So, What does OSRA mean for BCOs, consignees and trucking firms?
o OSRA limits the responsibility of paying detention and demurrage charges to the entity that has the direct transportation contract with the ocean carrier or VOCC – most typically a BCO or shipper.
o A consignee for the container can also become a billed party for a per diem invoice under the FMC rulemaking, even if it did not originally contract for ocean freight transportation.
o OSRA stops per diem charges from being sent to parties, such as trucking firms, who did not negotiate contract terms for ocean transportation or storage of cargo with the billing party.
Does the OSRA regulation also apply to rail and/or port storage?
Yes. It applies to rail if it’s an intermodal shipment and contracted by the ocean freight carrier, for example, to move to an inland location.
OSRA applies to detention and demurrage charges levied by both ocean carriers and marine terminal operators.
Since port storage charges often involve container detention, they fall under the regulations.
How will OSRA be enforced?
The FMC established an interim process for submitting charge complaints and has hired additional staff to investigate complaints.
As of May 10, 2024, the FMC is in the process of creating an interim “one-stop” website for submission of comments, complaints, concerns, and requests for investigations to serve as a bridge while a longer-term product is developed.
Can a trucking company, broker or intermediary party still pay the detention and demurrage charges on behalf of a contracting party?
The OSRA regulations do not specify who is responsible for paying the charges. However, they have clarified who could be billed. If the BCO is billed, they can choose to involve a broker in the payment process, but the ultimate responsibility for paying the charges lies with the BCO.
If an ocean freight carrier sends detention invoices directly to the trucking firm, should the Beneficial Cargo Owner (BCO) or the consignee request the SSL to send the invoice to them instead?
Yes. Under OSRA, the invoice should be sent to the party who contracted for the transportation or storage, usually the Beneficial Cargo Owner (BCO) or the consignee.
If you are the BCO and the ocean freight carrier is sending invoices to the trucking firm, technically this means the invoice isn’t valid and shouldn’t be paid.
> > > Only invoices sent to the right party are valid.
Is the ocean freight carrier required to provide documentation that their bills are accurate?
o Yes. OSRA mandates that invoices include specific information to demonstrate compliance with the regulations.
o You are not obligated to pay the charges if any required information is missing.
o Failure to include the required information on a demurrage or detention invoice eliminates the billed party's obligation to pay the applicable charge.
Does demurrage need to be paid before we can attempt to pick up the import container after 5/28?
Not necessarily. OSRA prohibits VOCCs from withholding cargo solely due to unpaid demurrage charges if the invoice is not compliant. They also can require “payment upon receipt” for demurrage. However, unpaid demurrage charges may accrue further.
Can ocean freight carriers still prevent trucking firms from picking or returning carriers due pending invoices before 5/28?
No. The OSRA regulations, effective May 28, 2024, prohibit VOCCs from taking any action to prevent cargo pick-up or container return due to unpaid detention or demurrage charges if the invoice is not compliant with the new requirements.
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