Hapag-Lloyd's Failure to Provide Chassis Led to 'Unreasonable' Demurrage Charges, Complaint Says

Hapag-Lloyd violated U.S. shipping regulations when it failed to make containers available for pickup, causing demurrage charges for Wisconsin-based logistics company M.E. Dey to exceed more than $136,000, the company said in a complaint to the Federal Maritime Commission released last week. Dey said Hapag-Lloyd’s demurrage charges were “unreasonable,” and the FMC should require the ocean carrier to pay Dey reparations.

Dey said it contracted Hapag-Lloyd in August to transport 16 containers from the Netherlands to the U.S., adding that the containers were first shipped to South Carolina before being routed by rail by CSX, Hapag-Lloyd’s subcontractor, to CSX’s Nashville rail terminal. Dey’s trucker, New Age Logistics, was able to pick up three of the 16 containers from the Nashville terminal before the last free day on Sept. 7, the complaint said, but struggled to move the other containers due to a lack of chassis. New Age was eventually able to pick up three more containers but couldn’t move the others.

Dey said it made “repeated, daily requests for information regarding the status of the” remaining 10 containers as they continued to accrue demurrage charges during the next few weeks but was continually told the containers were unmounted and unavailable for pickup. CSX also “refused” to allow New Age to bring in its own chassis to move the containers, the complaint said, saying the containers were “in a stack that could not be accessed.”

CSX eventually told Dey the containers couldn’t be moved “due to Hapag’s failure to provide chassis on arrival,” and Dey couldn’t provide its own chassis “because the containers were owned by the steamship line.” CSX “further reported that the failure of Hapag to provide chassis to transport the containers at issue was why they were placed into stacks at the rail terminal,” the complaint said. “CSX reported that Hapag refused to accept any responsibility for this matter, that CSX could not request that Hapag approve that charges be waived, and that it was up to Dey to contact Hapag to request that they directly advise CSX to waive their storage fees.”

Dey said it tried to find a solution with Hapag-Lloyd, but the carrier “refused to take any action to reduce” the demurrage charges. Although a Hapag-Lloyd representative told Dey in October the carrier would waive the demurrage charges, which at the time totaled $153,000, Hapag-Lloyd didn’t follow through on the promise, Dey said.

“Hapag later sought to renege on that agreement to waive demurrage,” the complaint said, and sent a letter to Dey Dec. 1, saying its account would be “inactivated” and its “business relationship with Hapag severed” unless Dey immediately paid $156,932.90. “Later Hapag changed its position again, and agreed to waive its demurrage charges against Dey,” the complaint said. “However, Hapag did not and has not acted to waive or request that its subcontractor CSX waive the identically unjustifiable $136,500 in rail storage charges it was assessed.” Dey said it was eventually “forced” to pay the $136,500 in storage fees to pick up its containers.

Dey said the accrued charges were “solely the result of Hapag or its subcontractor, CSX,” adding it couldn’t pick up the containers “due to no fault of its own.” Hapag-Lloyd’s demurrage charges in this instance go against the FMC’s principle that fees should incentivize “freight fluidity,” Dey said, and violate the commission’s 2019 interpretive rule on reasonable detention and demurrage practices (see 1909130026). They also violated the Shipping Act, which prohibits a carrier from failing to “establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property,” the complaint said. Hapag-Lloyd didn’t comment.