Cargo containers piled up at a marine terminal at the Port of Los Angeles in March 2022. Photo courtesy Port of Los Angeles
The Federal Maritime Commission (FMC) has delivered a significant ruling in a contentious shipping dispute, awarding Samsung Electronics America (SEA) $3.68 million in reparations against ZIM Integrated Shipping Services Ltd.
The Initial Decision, issued on April 22nd by Chief Administrative Law Judge Erin M. Wirth, addresses critical issues surrounding demurrage and detention practices in maritime shipping.
The case originated from SEA’s complaint regarding “store-door” shipments, where ZIM handled both ocean and inland transportation. SEA initially sought over $12 million in damages, citing nearly 10,000 disputed charges across approximately 3,000 containers.
At the heart of the dispute were several alleged violations of the Shipping Act, including unjust and unreasonable practices in property handling, retaliation, refusal to deal, inadequate invoice information, and unreasonable charges, taking place during the COVID-19 supply chain disruptions between May 2020 and June 2022.
The evidence revealed that 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.
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”.
The final award of $3,680,339 was based on expert testimony and substantiated evidence. This decision underscores the need for clearer practices and improved communication between carriers and consignees to prevent similar disputes.
The ruling sets an important precedent for disputes regarding demurrage and detention practices, particularly in assigning responsibility, and underscores the FMC’s broader crackdown on “unreasonable practices” in container shipping.
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