FMC greenlights $2 million Hapag-Lloyd penalty on detention and demurrage

Stade, Germany – May 11, 2022: Ultra-large container ship AL NEFUD,  operated by Hapag-Lloyd,  on Elbe river heading to Hamburg, bulk carrier SCHÖNRAIN passing by.

The Federal Maritime Commission (FMC) has approved a settlement agreement reached between its Bureau of Enforcement (BoE) and Hapag-Lloyd AG (Hapag-Lloyd) where the ocean carrier will pay a $2 million penalty addressing alleged violations on detention and demurrage practices.

The 8 June order approving the settlement agreement follows a 22 April 2022 Initial Decision issued by the Commission’s Administrative Law Judge (ALJ) finding Hapag-Lloyd violated the law by “knowingly and willfully” failing to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing or delivery property – by unreasonably refusing to waive detention charges.

“To restore full confidence in our ocean freight system, vigorous enforcement of FMC rules is necessary,” FMC Chairman Daniel Maffei said. 

“Specifically, we must ensure powerful ocean carriers obey the Shipping Act when dealing with American importers and exporters. 

“The case that was concluded today is just part of an ongoing effort to investigate any conduct alleged to violate FMC rules – and in particular, the interpretive rule on detention and demurrage charges.”

The ALJ ordered an $822,220 civil penalty and for Hapag-Lloyd to cease and desist their violative actions. 

The case was initiated by the Commission on November 10, 2021, at the request of BoE and following their investigative work.

The $2 million civil penalty will be paid to the U.S. Department of the Treasury and will be deposited into the General Fund.

In August 2021 the FMC launched an expedited inquiry into the timing and legal sufficiency of ocean carrier practices with respect to certain surcharges as part of its investigation into the US maritime sector.

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