Fines are once again a key issue in the international container shipping industry. Container shipping company Maersk has reached a settlement of $1.9 million with the US regulator FMC over potential breaches of the US Shipping Act. The case centres on detention charges which, according to the authorities, were wrongly charged to third parties in the logistics chain.
Detention charges arise when containers are returned later than contractually agreed. During the coronavirus pandemic, this issue spiralled completely out of control. Ports were full, terminals were gridlocked and lorry drivers were sometimes literally driving round in circles without finding a place to return empty containers. Meanwhile, the bills just kept coming. For many companies, it felt as though they were being made to pay for a problem over which they had little control.
According to the Federal Maritime Commission, Maersk has agreed to a so-called ‘civil penalty payment’. While the shipping company does not officially admit liability, the settlement does involve repayments and waivers to affected parties. Maersk is also reported to have committed to ceasing this practice and ensuring future compliance with the rules.
In addition, the shipping company intends to clarify the terms and conditions in its bills of lading. That may sound administrative, but it is precisely in those documents that disputes often arise regarding liability, days off and additional costs. In practice, the small print can sometimes be worth millions.
Although $1.9 million sounds like a hefty sum, Maersk appears to have got off relatively lightly. This is because competitor MSC was previously hit with a much higher fine of over $22 million. In doing so, the FMC is demonstrating that the US authorities are taking tougher action against container shipping companies which they believe are going too far with additional surcharges.
For many shippers, the subject remains a sensitive one. During the pandemic, container shipping lines posted record profits, whilst importers, hauliers and freight forwarders struggled with delays, overcrowded terminals and sky-high rates. In some cases, companies had to pay thousands of dollars for containers they could not even return because terminals simply had no more space.
The Maersk case highlights that regulators worldwide are taking a more critical look at detention and demurrage charges. In the United States in particular, pressure is mounting on container shipping companies to operate more transparently and provide customers with greater insight into additional charges.
For logistics companies, this means that contracts, terms and conditions, and operational processes are becoming increasingly important. After all, it is not just about moving containers, but also about who bears which costs when the supply chain breaks down. And that is precisely where the debate usually arises.
…detention relates to the late return of containers outside the terminal. Demurrage, on the other hand, refers to containers that remain at the terminal for too long?
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