Statement on FMC’s approval of the $2 million settlement agreement with Hapag-Lloyd

Commissioners Carl W. Bentzel and Max Vekich commend the Commission’s Bureau of Enforcement for its work in reaching a $2 million settlement agreement with Hapag-Lloyd with regards to unreasonable assessment of detention and demurrage charges. The Commission must continue its work to address unjust and unreasonable practices for the benefit of U.S. exporters and importers. Shippers are already paying freight rates at all-time high levels due to an imbalance in the supply and demand of ocean transportation services. The improper assessment of demurrage and detention charges compounds the difficulties confronting shippers at the worst possible time.

Based on the facts found by the Administrative Law Judge (ALJ) in the initial decision issued in Docket No. 21-09, we agree that Hapag-Lloyd violated 46 U.S.C. 41102(c) by unjustly and unreasonably assessing detention charges when there were insufficient appointments available. However, while the ALJ assessed a penalty for each day that detention was unreasonably assessed (14 days), we believe that under 46 U.S.C. § 41107(a), each day of a continuing violation constitutes a separate violation. As determined by the ALJ, Hapag-Lloyd’s unjust and unreasonable practice was to assess detention and demurrage when there were insufficient appointments available. Accordingly, each day that this practice was in place should constitute a separate violation.

We have more work to do in reviewing the assessment of detention and demurrage. We anticipate that we will soon be considering proposals to strengthen protections against unfair assessment of such charges, as well as other unfair billing practices. Further, we will be following up with Commission staff to ensure that Hapag-Lloyd complies with the terms and conditions of the settlement agreement. Finally, we will remain vigilant in addressing other potentially unreasonable practices which hinder an already overburdened supply chain. It is our priority to do everything we can to keep the cargo moving.

Carl W. Bentzel and Max Vekich are Commissioners with the U.S. Federal Maritime Commission. The thoughts and comments expressed here are their own and do not necessarily represent the position of the Commission.