ONE and Wan Hai Pay $2.65M in FMC Fines Over D&D Practices
The Federal Maritime Commission is continuing its enforcement efforts regarding the fees charged by carriers reporting that Ocean Network Express (ONE) and Wan Hai Lines agreed to pay a combined amount of $2.65 million to settle FMC actions related to detention and demurrage fees plus restitution to shippers. Both of these settlements related to actions brought by the FMC independent of the numerous complaints filed by individual shippers with the FMC against a range of carriers.
The FMC had been outspoken on the issue of D&D fees during the surge in shipping volumes experienced during the pandemic. Before the 2022 passage of the Ocean Shipping Reform Act, the commission had issued directives to carriers and terminals regarding their fee practices. D&D fees were one of the issues shippers complained to Congress about and became one of the drivers of the reforms.
“The agreements being announced today send a clear message to the international shipping community that ocean carriers must fully comply with the U.S. legal obligations,” said Federal Maritime Commission Chairman Daniel Maffei. He commended the Bureau of Enforcement, Investigations, and Compliance for its efforts calling the results “meaningful civil penalties, and relief for impacted shippers.”
The FMC is highlighting that the settlement reached with ONE incorporates a significant new compromise provision with the carrier agreeing that in addition to paying civil penalties, it will also furnish restitution to impacted shippers in the form of refunds and waivers. ONE entered into the settlement with the FMC in April agreeing to pay a $1.7 million civil penalty. The settlement related to the FMC’s investigation over assessing detention charges when appointments were unavailable during allocated free time to return equipment. The FMC had not yet launched a formal enforcement action against ONE.
Wan Hai settled an enforcement action that had been initiated at the end of 2021 by the FMC. The case stemmed from information the FMC developed showing that during the spring of 2021, Wan Hai charged detention charges at least 21 times that the FMC believed were violations. The specific instances resulted in charges ranging from $125 to $1,550 per container.
Wan Hai agreed to pay $950,000 in civil penalties to address allegations that it failed to observe and enforce just and reasonable practices regarding its charges related to empty container returns. In addition to payment of a civil penalty, Wan Hai also refunded the impacted shippers all detention charges collected under the invoices and has implemented corrective actions to prevent future violations.
In recent months, many carriers and terminals have been revising their policies and procedures in advance of the expected FMC rule implementing the elements of the Reform Act related to their business practices and fees. One of the most common shipper complaints is unavailable or inaccurate return times as well as fees being charged on days such as holidays when it is not possible to return containers.
Prior to these settlements, the FMC highlights that in June 2022 Hapag Lloyd paid $2 million in civil penalties to resolve allegations stemming from how it assessed detention charges.