Results of the Investigation into Excessive Demurrage and Detention Fees
Previously, the U.S. Federal Maritime Commission launched an investigation into the country’s port congestion with an eye to shipping carriers’ responsibilities, which included empty container returns, declining certain exports in favor of empty sailings to China, and excessive demurrage and detention fees.
The FMC found that rates of billing on demurrage and detention fees had risen dramatically over the last year, but when examined in context with the high rate of port congestion, the overall rise wasn’t concerning. However, in some cases, these billings were extreme with rates hitting up to $200 per container. The Shipping Act requires that D&D fees be incentivized to keep the flow of cargo moving, rather than punitive. When a carrier has done everything it can to comply, but congestion prevents that compliance, D&D fees should be waived. This has resulted in the FMC working directly with shipping lines on transparency and new policies across the ocean supply chain.
The Commission also found German carrier Hapag-Lloyd to be in violation of the U.S. Shipping Act on fourteen counts. Hapag-Lloyd billed Golden State Logistics (GSL) $10,135 for eleven containers that the company made every good faith effort to return on time, but could not, due to lack of sufficient delivery appointments available. GSL notified the carrier, asked for help to find a solution, such as other locations in which appointments were available, and Hapag-Lloyd was unwilling to assist.
Hapag-Lloyd has been fined $822,220 for these violations and the Bureau of Enforcement believes it should have been more. The BOE said, “a significant penalty is required to both deter Hapag-Lloyd’s violative behavior and ensure future compliance.”
While this decision has been seen as a win for the haulers disputing D&D charges, this is not an end to D&D fees. They will continue to be utilized to keep the flow of cargo and equipment moving.
If you have any questions about this issue, or any others related to your cargo, or want to discuss any D&D charges you feel are invalid, please reach out to your Coppersmith representative.