AUSTRALIAN SHIPPERS will be closely watching further decisions from the Federal Maritime Commission after a judge upheld complaints by Samsung Electronics America over unjustifiable detention & demurrage charges.
Chief Administrative Law Judge Erin M. Wirth late last week ruled that Israeli carrier ZIM violated the US Shipping Act and must pay SEA some US$3.7 million. This followed a complaint lodged with the FMC in October 2022 that ZIM engaged in “unreasonable practices, retaliation, refusal to deal, and [sent] improper invoices for home appliance products shipped to the United States”.
SEA alleged that ZIM “shifted responsibility for demurrage and detention (D&D) charges in store-door moves”, citing unreasonable practices for nearly 10,000 separate charges on almost 3,000 containers, and sought damages of over $12 million – $10.8 million for D&D charges plus $1.4 million in additional costs.
Alleged violations of the Shipping Act included unjust and unreasonable practices in property handling, retaliation, refusal to deal, inadequate invoice information, and unreasonable charges, which occurred between May 2020 and June 2022 during COVID disruptions.
Evidence collected by the FMC showed ZIM, while responsible for inland transportation under through bills of lading, frequently billed SEA for demurrage and detention charges even when delays were beyond the consignee’s control. These delays often resulted from port congestion or carrier-imposed cargo holds.
gCaptain noted that Judge Wirth’s decision highlighted the complex nature of determining responsibility for shipping delays. As noted in the ruling, “Avoiding these charges for delay is like the dreaded group project… Sorting out responsibility is a complex undertaking… And, some delays are not the fault of either party.”
The Commission found that “multiple cargo holds were unreasonable practices which violated section 41102(c)”. These holds prevented timely delivery and generated additional demurrage charges, further escalating the dispute.
A critical factor in the decision was ZIM’s billing practices. The ruling determined that “numerous ZIM billing errors” demonstrated that the cargo holds were “not reasonable or justified by the facts”.
However, SEA was unable to prove that Zim was responsible for all D&D charges, and the FMC ruled that some were due to SEA’s customers’ inability to accept deliveries.
SEA also has active complaints before the FMC regarding COSCO, OOCL, SM Line and HMM.
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