Shipping Lawyer Port and Terminal Law 2 — Questions and Answers
Question 1: What is 'demurrage at the port' (also called 'port congestion demurrage') and how does it differ from charter party demurrage?
- They are identical concepts
- Port congestion demurrage refers to extra shipping charges for container retention beyond free time at terminals, distinct from charter party demurrage for vessel detention (Correct answer)
- Port demurrage is a government-assessed fee
- Charter party demurrage applies only to bulk cargo
Correct answer: Port congestion demurrage refers to extra shipping charges for container retention beyond free time at terminals, distinct from charter party demurrage for vessel detention
Container demurrage (port/terminal charges) is assessed by carriers/terminals for retaining containers beyond the free time allowance, while charter party demurrage compensates shipowners for vessel detention beyond laytime.
Question 2: What is a 'Maritime Transportation Security Act' (MTSA) Facility Security Plan?
- A vessel emergency response plan
- A mandatory security plan for port facilities handling certain vessels, outlining measures to prevent transportation security incidents (Correct answer)
- A customs bond requirement for port operators
- A labor union agreement for dockworkers
Correct answer: A mandatory security plan for port facilities handling certain vessels, outlining measures to prevent transportation security incidents
MTSA requires owners/operators of regulated port facilities to develop, implement, and maintain a Facility Security Plan (FSP) approved by the U.S. Coast Guard.
Question 3: What is 'general average security' required by ship owners from cargo interests?
- A bond posted by the vessel owner in port arrest proceedings
- A guarantee (cash deposit, bond, or letter of undertaking) cargo interests must provide before cargo is released when general average is declared (Correct answer)
- An insurance certificate required for dangerous goods
- A financial assurance for cargo damage claims
Correct answer: A guarantee (cash deposit, bond, or letter of undertaking) cargo interests must provide before cargo is released when general average is declared
When general average is declared, cargo owners must provide security (typically through their insurer's Letter of Undertaking) to the shipowner guaranteeing their proportional contribution before cargo is released.
Question 4: Under the Shipping Act of 1984, what is an 'ocean common carrier'?
- Any vessel operating in U.S. waters
- A person who holds itself out to provide ocean transportation for compensation, operating vessels or as an NVOCC (Correct answer)
- A U.S.-flagged vessel required by the Jones Act
- A carrier with a U.S. Coast Guard Certificate of Inspection
Correct answer: A person who holds itself out to provide ocean transportation for compensation, operating vessels or as an NVOCC
An ocean common carrier under the Shipping Act is a person holding itself out to provide ocean freight transportation, whether operating vessels or as a Non-Vessel Operating Common Carrier.
Question 5: What is a 'service contract' under the Shipping Act of 1984?
- A vessel management agreement
- A written contract between a shipper and ocean carrier offering a specific rate for a minimum volume of cargo over a defined period (Correct answer)
- A port labor agreement
- A stevedoring services agreement
Correct answer: A written contract between a shipper and ocean carrier offering a specific rate for a minimum volume of cargo over a defined period
A service contract is a confidential agreement between a shipper and ocean carrier committing the shipper to tender a minimum cargo volume in exchange for a negotiated freight rate.
Question 6: What is 'detention' as a separate charge from 'demurrage' in container shipping?
- A government hold on cargo
- A charge for retaining the carrier's equipment (container) beyond the free time after it leaves the terminal (Correct answer)
- A fee for late vessel arrival
- A penalty for misdeclared cargo weight
Correct answer: A charge for retaining the carrier's equipment (container) beyond the free time after it leaves the terminal
Detention charges accrue when a shipper retains carrier-owned containers outside the terminal beyond the allowed free time, as opposed to demurrage for keeping containers inside the terminal.
Shipping Lawyer Port and Terminal Law 2
What is 'demurrage at the port' (also called 'port congestion demurrage') and how does it differ from charter party demurrage?