Top Container Shipping Line Slapped With A Fine Of $822,220

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  • FMC fined Hapag-Lloyd $822,220 in civil penalties for 14 violations – $58,730 for each offence – of the US Shipping Act.
  • The investigation found that the company had incorrectly applied detention and demurrage (D&D) charges to 11 containers handled by California drayage firm Golden State Logistics (GSL).

A recent news article published in the Safety4Sea states that FMC fines Hapag-Lloyd after determining detention charges are ‘unreasonable’.

D&D charges levied to GSL

The D&D charges levied to GSL amounted to $10,135, but FMC said the penalties were punitive in nature as the carrier had “knowingly and wilfully” applied the D&D charges despite GSL being unable to return the containers.

More specifically, FMC’s Bureau of Enforcement (BOE) had originally claimed that the fine should be $16.5m, because “a significant penalty is required to both deter Hapag-Lloyd’s violative behaviour and ensure future compliance” with the FMC’s interpretive rule on D&D, adopted in 2020.

However, it accepted that it did not provide the burden of proof for certain days that D&D fees were levied and thus reduced the overall penalty.

However, the BOE did establish that GSL had made every attempt to return the containers, but was unable to do so as there were insufficient appointment slots to make the deliveries.

Charges are levied to expedite the flow of cargo

In addition, BOE noted that D&D charges should not have been levied because they could not have served the interpretive rule, which states the charges are levied to expedite the flow of cargo and equipment.

The record contains contemporaneous evidence of good faith attempts to return these eleven containers well before free time expired and there is no evidence of extraordinary circumstances which would justify imposition of all of these detention fees

the FMC case record states.

The case also established the charges were “knowingly and wilfully” applied erroneously, as Hagag-Lloyd knew the FMC’s interpretive rule but applied them nonetheless.

After the issuance of the interpretive rule, Hapag-Lloyd reviewed its procedures with respect to the assessment and waiver of detention charges, and concluded its existing procedures were in compliance with the interpretive rule

the case document states.

What did the VOCC audit program announce?

Recently, the US Federal Maritime Commission’s Vessel-Operating Common Carrier (VOCC) Audit Program announced that it will expand its scope to also evaluate how shipping lines are serving U.S. export shippers.

This came after the launch of two investigations. The first against Wan Hai Lines is is investigating charges related to container returns. The second one is against ONE and will investigate the business practices and fees charged by the company.

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Source: Safety4Sea

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