COULD this significant decision out of the United States strengthen scrutiny of detention charging practices across the shipping industry?
A U.S. federal appeals court has upheld a ruling by the Federal Maritime Commission (FMC) that ocean carriers cannot charge detention fees when those charges do not achieve their intended purpose, which is encouraging the efficient movement of cargo.
The case involved US$510 in detention charges issued after a trucking company was unable to return an empty container because the Port of Savannah was closed for three days over the Memorial Day holiday.
Evergreen argued that the charges encouraged customers to return containers before the planned port closure, rather than waiting until it reopened. However, the court found that once the closure was in effect, there was no practical way for the container to be returned, meaning the charges could not have encouraged faster equipment returns and were therefore unreasonable.
The decision reinforces an important principle: detention and demurrage charges should act as an incentive to improve cargo flow, not simply become a source of additional revenue when circumstances are outside a customer's control.
The court also noted that if a carrier seeks to justify charges on the basis of recovering costs, it should be able to demonstrate that those costs were actually incurred.
While this is a U.S. decision under the Shipping Act, it will no doubt be watched closely by carriers, freight forwarders, trucking companies, importers and exporters around the world as the industry continues to focus on fair and transparent charging practices.