The Federal Maritime Commission reports that the U.S. Court of Appeals for the D.C. Circuit recently upheld the FMC’s determination that detention fees levied on a trucker by an ocean common carrier during a three-day port closure were unreasonable.
According to an FMC press release, this case concerned detention fees issued to a trucker for its late return of a shipping container and chassis when a port was closed over a holiday weekend and the trucker had no practical ability to return the equipment to the port before the closure. The FMC had thus concluded, by applying its interpretive rule on detention and demurrage, that these fees did not effectively incentivize freight fluidity. It also determined that none of the carrier’s explanations justified the fees under the circumstances of the case and that the carrier had not provided sufficient evidence about its costs related to the late equipment return.
The FMC states that the D.C. Circuit “fully endorsed” its application of the interpretive rule and affirmed that the Commission can rely on its expertise and experience to balance competing incentives when determining whether detention and demurrage fees will encourage the efficient flow of equipment through the ocean shipping supply chain. The court also affirmed that the burden is on carriers to provide evidence in adjudications showing how their fees may serve a compensatory purpose.
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