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Hapag-Lloyd Fined for 14 Shipping Act Violations

Hapag-Lloyd was ordered to pay a logistics company $822,220 after a judge determined the ocean carrier had racked up 14 Shipping Act violations.

The decision, handed down Friday by an administrative law judge with the Federal Maritime Commission (FMC), stemmed from an investigation that began last November and related to a question of whether Hapag-Lloyd had incorrectly levied detention fees on 11 empty containers moved by Golden State Logistics.

Carriers assess detention fees on customers that do not return empty containers back to the terminal within a specified timeframe. The return process usually requires an appointment to bring the empties back to a terminal.

Golden State, based in Rancho Dominguez, Calif., is a logistics company that offers port drayage and transportation out of the Los Angeles and Long Beach ports among other services.

The logistics company contended it had attempted to return the empty containers and was unable to schedule an appointment to bring the empties back. The containers, as a result, were returned past the due date and Golden State was charged a detention fee.

The carrier said it assessed $8,125 in fees, while an invoice had the total at $10,135, according to the FMC ruling.

The judge determined that, while not all of the late fees were unfairly charged, the lack of appointments to return the 11 containers made it “unreasonable” to charge detention, calling the assessment “punitive” and the charges “serve no additional purpose when a lack of appointments at [Hapag-Lloyd’s] designated location prevent timely return.”

The judge found Hapag-Lloyd violated the law “by imposing and refusing to waive detention charges where there were insufficient appointments to return these empty containers.”

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“We are thoroughly looking into this ruling and will then decide upon further legal action,” a Hapag-Lloyd spokesperson said in an email to Sourcing Journal.

The ruling comes amid continued criticism by some in the shipping community over ocean carrier practices around detention and demurrage fees and container rates among other things, prompting attempts to reform current law.

The Senate approved the Ocean Shipping Reform Act (OSRA) earlier this month, following the House’s passage of its version of the bill in December. Congress will now work on a final version that will then go before President Biden.

OSRA aims to tackle a number of maritime issues and marks the first time in nearly two decades a major overhaul has been crafted for the Shipping Act. The legislation would require carriers to report imports and exports loaded onto ships in the United States, gives the FMC greater power to investigate carrier fees and promotes more information sharing.

The FMC has been tackling the issue of fees for some time now.

The agency, more recently, was asked by shippers in 2016 to create a rule that would specify when it would be considered unreasonable to charge detention and demurrage.

“The rule followed years of complaints from U.S. importers, exporters, transportation intermediaries and drayage truckers that ocean carrier and marine terminal operator demurrage and detention practices unfairly penalized shippers, intermediaries and truckers for circumstances outside their control,” the FMC said at the time of the rule’s implementation.

The conclusion from an investigation into the matter found “a situation marked by” increasing charges, complexity around the charges and a lack of clarity and consistency on the policies surrounding the fees.

A final rule established in April 2020 aimed at clarifying when the FMC could look into unfair demurrage and detention policies.