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Wan Hai Agrees to Civil Penalty with FMC over D&D Fees

Wain Hain settlement over D&D fees
Wan Hai agreed to $950,000 in civil penalties as part of its settlement with the FMC (file photo)

Published Mar 15, 2023 4:00 PM by The Maritime Executive

Wan Hai Lines’ settlement agreement with the U.S. Federal Maritime Commission over its detention and demurrage policies has been accepted by an administrative law judge after two previous attempts were rejected last year. The carrier is now agreeing to pay $950,000 in civil penalties as well as refunds of charges in the latest effort to crack down on D&D fees by the FMC.

The case dates to December 2021 and focuses on detention charges Wan Hai had imposed at least 21 times in the spring of 2021. In the original filing on December 30, 2021, the FMC reported the charges invoiced ranged from $125 to $1,550 per container. At issue was the inability of the shippers to return containers due to the congestion in the southern California ports.

Throughout the surge in container volumes during the pandemic, the FMC had been outspoken reminding carriers of the rules regarding D&D fees. Those charges however became one of the most hotly contested issues leading to many complaints filed by shippers. This case pre-dated the passage of the Ocean Shipping Reform Act which in part was driven by the complaints of shippers over the policies of the carriers.

An initial settlement was proposed in this case in June 2022 that called for an $850,000 civil penalty for Wan Hai. The carrier also agreed to cease collection attempts with respect to detention assessed against the shipments and publish new contact details for submitting all disputes or requests for waiver or refund of detention charges and train employees on new policies.

In June 2022, Chief Administrative Law Judge Erin Wirth issued an opinion rejecting the first proposed settlement. The judge wrote, “The settlement agreement sets out a procedure that is potentially confusing. Moreover, it is not clear that the requirements to take screen shots on two days within three hours of appointment release and the statement regarding dual transactions are reasonable requirements.”

The first denial was appealed leading to a second decision in December 2022 that again rejected the proposed settlement reiterating that the judge found that the agreement “lacks clarity” and might not be consistent with FMC rules. Again, the judge cited the proposed procedure for contesting detention charges finding that the agreement sets out a procedure that is potentially confusing.

The approved settlement changes the terms with Wan Hai now agreeing to cease and desist from knowingly assessing detention charges without an equipment return location, when locations are not accepting container chassis, or where appointments are unavailable. This is in addition to increasing the penalty by $100,000.

The complaints over locations that were not accepting reservations or not providing adequate return windows are a frequent complaint cited by shippers to the FMC. Last year, after the passage of the reform act the commission reported a strong increase in the number of complaints filed. In February 2023, the FMC opened its latest investigation with this one against MSC. Many of the major carriers have been cited in complaints to the commission as they also work to detail and set procedures for the new rules set out by the reform act on key issues such as D&D.