Shipping Giants ONE and Wan Hai Settle with $2.65 Million in Civil Penalties - Sobel Network Shipping Co., Inc.

Shipping Giants ONE and Wan Hai Settle with $2.65 Million in Civil Penalties

The Federal Maritime Commission (FMC) recently announced that two major shipping companies have collectively paid a total of $2.65 million in civil penalties, resolving allegations of misconduct brought forward by the FMC’s Bureau of Enforcement, Investigations, and Compliance.

Ocean Network Express Ptd. Ltd. (ONE) entered into a compromise agreement with the FMC in April to address allegations of violating 46 U.S.C. § 41102(c). The company was accused of imposing detention charges when appointments were unavailable during the allocated free time for returning equipment. As part of the agreement, ONE agreed to pay a civil penalty of $1.7 million.

A notable aspect of the agreement with ONE is the inclusion of a significant new provision. In addition to paying civil penalties, the shipping line has committed to providing restitution to affected shippers through refunds and waivers. ONE has also expressed its commitment to adhering to the Ocean Shipping Reform Act of 2022 and the Interpretative Rule on Detention and Demurrage.

In a separate development, the FMC reached a settlement agreement with Wan Hai Lines, Ltd. and Wan Hai Lines (USA) Ltd. (Wan Hai) to close an Order of Investigation and Hearing (Docket No. 21-16) issued by the commission in December 2021.

Wan Hai agreed to pay $950,000 in civil penalties to address allegations of violating 46 U.S.C. § 41102(c) by failing to uphold just and reasonable practices concerning charges related to empty container returns. Alongside the civil penalty payment, Wan Hai refunded all detention charges collected from affected shippers under the invoices in question. The company has also taken corrective actions to prevent future violations and ensure compliance with the FMC’s Interpretive Rule on Detention and Demurrage.

Earlier, in June 2022, Hapag Lloyd AG paid $2 million in civil penalties to resolve allegations of violating 46 U.S.C. § 41102(c) in their assessment of detention charges.

It is important to note that a compromise agreement, like the one reached with ONE, is established before the FMC initiates formal enforcement action against the targeted entity. On the other hand, a settlement agreement, as seen with Wan Hai, concludes an ongoing enforcement proceeding. Neither ONE nor Wan Hai admitted to any violation of the law.

Civil penalties are directly deposited into the General Fund of the U.S. Treasury. The FMC does not receive any revenue from the imposition of civil penalties.