German international shipping and container transportation company Hapag-Lloyd, A.G., has been ordered to pay $822,220 in penalties for violations of the U.S. Federal Maritime Commission’s detention and demurrage regulations.
The order came from Erin M. Wirth, Chief Administrative Law Judge at the FMC, after finding that Hapag had charged container detention fees even when appointments to return containers were unavailable.
The Initial Decision was served on April 22, 2022.
In its defense, Hapag said that they waive fees on days when no appointments were provided but if appointments are available, they would charge detention. If they don't, Hapag said truckers would simply wait until there were no more appointments available for a day to claim a waiver of detention charges.
Golden State Logistics, a drayage company, presented evidence that they could not obtain any of the appointments offered. Golden State Logistics showed the ALJ the screenshots they took when they were unable to obtain container return appointments and that they contacted Hapag to alert them of appointment unavailability.
The ALJ sided with Golden State Logistics finding that the trucker acted in good faith to return the containers.
The FMC’s Bureau of Enforcement (BOE), which filed the action before the ALJ, initially asked for a penalty $16.5 million against Hapag-Lloyd. This represents a penalty for each day the unlawful detention charges were outstanding after Hapag was presented with evidence that appointments were unavailable until the date BOE filed its action before the ALJ.
The ALJ found this excessive with no case law to support such a calculation. Instead, the ALJ found that 14 days of detention were charged when insufficient appointments were available and issued a fine for each day detention was charged.
Higher penalty amounts were applied because the ALJ found that Hapag knew about the FMC’s detention and demurrage rule but did not take steps to comply with the rule or train staff on handling disputes under the new rule.
Hapag can still appeal the ALJ’s initial decision.
Hapag is facing two similar cases where Florida-based banana importer, One Banana North America Corp., and a California-based trucking provider, Orange Ave Express, Inc., alleged that Hapag engaged in unreasonable container return.