The Federal Maritime Commission (FMC) and Hapag-Lloyd on Wednesday agreed to a settlement in which the container line will pay a civil penalty of $2 million to address alleged violations related to their detention and demurrage practices.

The settlement is the latest development in a saga that dates back to mid-2021, at the height of COVID-induced disruption, when a California-based firm was assessed $10,135 in detention charges by the Hamburg-based container line. The dray carrier filed a complaint with the FMC arguing it should not have been assessed the fees because Hapag-Lloyd did not provide adequate access to appointments at terminals where it was to return 11 containers, and then did not agree to waive those fees against GSL.

As a result of an investigation into the case, the FMC’s Bureau of Enforcement (BOE) recommended Hapag-Lloyd pay a $16 million penalty, but that number was knocked down significantly by a US administrative law judge in late April. That decision saw the penalty reduced to $882,220.

The case could well be a bellwether for future actions against shipping lines relating to what shippers and drayage providers consider unfair assessment of demurrage and detention fees, also called storage or per diem. The FMC has encouraged those parties to bring cases forward and has been particularly focused on the issue of excess penalties collected by shipping lines in situations out of the control of shippers or their drayage representatives.

The regulatory environment around detention and demurrage charges, which the FMC has been investigating for nearly a decade, is set to change significantly when Congress as expected passes the Ocean Shipping Reform Act following reconciliation of different House and Senate versions.

It is anticipated that the resulting law would reign in what shippers have long claimed to be unfair charges, where fees are assessed when circumstances are beyond the control of the shipper or its trucker. Examples would be the inability to return a container in time to avoid detention, as in the GSL case, or the inability to pick up a container to avoid demurrage.

(JOC)