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FMC Regulation

The Federal Maritime Commission (FMC) has recently implemented a regulation to prevent steamship companies from improperly billing importers for demurrage, per diem, and other charges without proper backup documentation. While this regulation promotes transparency and fairness, it also significantly changes how invoices are managed and received. Importers and logistics providers must understand these changes to avoid potential delays and additional costs.

The Core of the New Regulation

The FMC’s new rule, which took full effect on May 28, mandates that all invoices from steamship companies must be sent exclusively to the Consignee. This means that any charges related to demurrage, per diem, and other fees will no longer be communicated to the Notify Parties listed on the Bill of Lading (B/L). While this rule ensures that the Consignee receives all necessary billing information directly, it introduces several challenges for importers and their logistics partners.

Potential Impact on Your Supply Chain

  1. Communication Gaps: Previously, logistics providers like Edward J. Zarach & Associates, acting as Notify Parties, could monitor and manage shipment invoices. With the new regulation, we will no longer receive these invoices directly. This creates a potential communication gap, as we may not be immediately aware of charges that must be addressed.
  1. Risk of Delays: Unpaid invoices can lead to problematic delays in cargo release. If invoices are overlooked or not promptly paid by the Consignee, pier demurrage and additional costs could result. This not only affects the timely delivery of goods but also adds to the overall expense of the shipment.
  1. No Access to Billing Amounts: Steamship companies will no longer provide logistics providers with the billing amounts. This means that we, as your logistics partner, cannot verify or assist with the payment process directly, potentially complicating the financial management of your shipments.

Steps to Mitigate the Impact

To navigate these changes effectively, importers must take proactive measures:

  • Enhance Internal Communication: Ensure that your finance and logistics departments know the new regulation and the importance of promptly processing invoices from steamship companies. 
  • Set Up Alerts and Reminders: Implement systems to monitor the receipt of invoices and set up reminders for timely payment. This can help avoid any overlooked invoices and prevent delays.
  • Collaborate with Your Logistics Provider: Although we may not receive invoices directly, Zarach remains committed to supporting you. Keep us informed about received invoices and any potential issues so we can provide guidance and assistance as needed.
  • Educate Your Team: Make sure your team understands this regulation’s implications and is trained to handle the new billing process efficiently.

The new FMC regulation on demurrage and per diem billing represents a direct shift in how import-related charges are communicated and managed. While it aims to enhance transparency, it also introduces challenges that importers must address to avoid disruptions. By staying vigilant and fostering strong communication with your logistics provider, you can navigate these changes effectively and maintain the smooth flow of your supply chain.

Contact Edward J. Zarach & Associates Today

At Zarach, we are dedicated to helping our clients adapt to industry changes and maintain efficient logistics operations. Please contact us if you have any questions or need assistance with the new FMC regulation. Together, we can ensure that your supply chain remains robust and resilient.