The Federal Maritime Commission has announced that an ocean carrier will pay a $2 million civil penalty to settle charges that it violated the FMC’s May 2020 rule on unreasonable demurrage and detention fees on cargo containers. This penalty amount is higher than the $822,220 previously ordered by an FMC administrative law judge.

The ALJ found that the carrier imposed and refused to waive detention charges on 14 days when the drayage company was making a “concerted effort” to return empty containers but the carrier had insufficient appointments for doing so. The drayage company notified the carrier of this problem and asked for help in resolving it, the ALJ said, but the carrier did not suggest other options for returning the containers or identify other locations that had sufficient available appointments. As a result, the judge said, no amount of detention could have incentivized the return of these containers and the carrier’s policy and practice of assessing detention against them anyway is unreasonable.

As part of a settlement agreement the carrier has agreed to modify its policy with respect to the submission of requests for waivers or refunds of detention charges and to conduct a training session on the FMC demurrage and detention rule for all employees involved in the billing of detention, demurrage, or per diem or the handling of related disputes. However, the FMC states that these and other remedial measures the carrier agreed to will not be considered as creating a safe harbor insulating future conduct from being found unreasonable or unjust or otherwise in violation of the Shipping Act.

An increasing number of shippers are filing complaints alleging unreasonable detention and demurrage charges and the FMC has clarified its policies to encourage them, including by reassuring shippers that carriers can’t retaliate against them. For more information on the feasibility of filing a complaint, or any of ST&R’s other FMC-related services, please contact Jason Kenner (at (212) 549-0137 or via email), Andy Margolis (at (305) 894-1021 or via email), or Ned Steiner (at (202) 730-4970 or via email.)

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