A recently signed California law prohibits marine terminal operators and others from assigning harsh fees due to delays on the movement of equipment used by truckers and freight operations. Gov. Gavin Newsom signed AB 2406 into law on Sept. 30, and it is expected to take effect on Jan. 1, 2023.
“Hopefully AB 2406 will result in significant changes to these unfair and unjust detention and demurrage charges,” Matt Schrap, CEO of the Harbor Trucking Association, reportedly said. “AB 2406 reflects the new reality and is a welcome update in light of appointment systems, chassis pools (and) Ocean Carrier Alliances.”
Industry leaders have long sought relief from excessive container storage fees (demurrage) and fees on the late return of equipment (detention) for more than a decade. Terminal operators and intermodal equipment providers had wide-reaching opportunities to levy fees even when delays were not under the control of truckers or freight carriers.
Trucking organizations and third-party logistics companies threw their support behind AB 2406 during the first quarter of 2022. The following outfits sent a letter of support to California lawmakers: American Trucking Associations, the Harbor Trucking Association, the California Trucking Association, and the Western States Trucking Association. The Agriculture Transportation Coalition, Gemini Shippers Association, and the U.S. Forage Export Council, among others.
“You had all these empty containers piling up at our members’ yards because the trucks were not being told where to take them,” Chris Shimoda, head of government affairs at the California Trucking Association, reportedly said. “The whole concept of detention charges really broke down during the congested period, where even if you wanted to pick up a loaded container you were being prevented from doing so for reasons that were out of your control.”
Shimoda indicated that — at no fault of their own — truckers and freight carriers were stung by levies as high as $300 per day. Under AB 2406, regulations detail a half-dozen conditions when detention and demurrage fees are limited or banned. Instances include congestion experienced at California ports, terminals not having available pickup or return availability, as well as cargo vessel disruptions.
The incoming law is an update to the existing SB 45, which was implemented in 2005. Rising imports and stagnant infrastructure and freight agility made SB 45 something of a dinosaur. Trucking companies and advocacy organizations have gone on the record stating it was outdated, if not insufficient from the get-go.
“SB 45 has been the law since 2005, but it had little to no effect on unfair (detention and demurrage charges) due to the language being outdated,” Shimoda reportedly said.
The California law comes on the heels of Congress and the Biden Administration enacting the Ocean Shipping Reform Act of 2022. The federal law tasks the Federal Maritime Commission to investigate and prevent excessive detention and demurrage charges.
Sources: freightwaves.com, joc.com
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