FMC Investigating Wan Hai as it Continues to Target D&D Fees
After repeated warnings over unfair fees and announcing investigations into the D&D charges from the major carriers, the U.S. Federal Maritime Commission (FMC) on December 30, filed an order to start an investigation into the practices of Taiwanese shipping company Wan Hai Lines. Since early in the imports surge that created port congestion, the FMC has been focusing in on the fees in response to repeated complaints from shippers of excessive charges from carriers.
The order filled at the end of last week says, “The Commission has decided that an adjudicatory proceeding is required to determine whether Wan Hai is in violation,” of regulations as related to its practice of accessing detention charges. The FMC will be looking to determine if Wan Hai failed to follow the process and if it was unfairly charging shippers fees despite the FMC’s warnings to the overall industry about fee practices.
Wan Hai has 25 days to respond to the FMC. Then, under the process, the FMC will determine if civil penalties are appropriate. The Commission can also order the carrier to make specific changes in its business operations.
According to the filing, during the spring of 2021, Wan Hai charged detention charges at least 21 times with the invoices ranging between $125 and $1,550 per container. The FMC received specific complaints from a shipper. They will be looking at if the carrier either offered no return location, the designated terminal was not accepting the container’s chassis, or appointments were unavailable in the specified timeframe.
The FMC reports that the unnamed shipper protested the charges on these specific containers. The shipper provided Wan Hai “screenshots verifying these restrictions and requested a waiver.” Wan Hai reportedly denied the request on the ground that it did not control the appointment system for the return of the containers.
Wain Hai is currently the 25th largest carrier for imports according to the FMC handling over 176,000 import TEU in the first 11 months of 2021. They also carried over 46,000 export TEUs in the first 11 months making them the 18th largest export carrier from the U.S.
It is not the first instance of a specific investigation being launched while the FMC has made repeated warnings and begun broader investigations into the overall system related to demurrage and detention charges from the largest carriers. In September, another shipper filed a complaint with the FMC alleging that CMA CGM and Los Angeles terminal operator Fenix had charged exorbitant fees for containers at the terminal. During the summer, a Pennsylvania-furniture company filed charges at the FMC against MSC alleging unfair business practices and collusion with other shipping companies.
Early in 2021, the FMC ordered major carriers to submit information on their policies and D&D charges saying they were concerned it was contributing to the port bottlenecks. By the summer, the FMC said it was widening its investigation into the charges and launching an audit program of the major carriers while targeting refunds for shippers. Shippers were also successful at incorporating language related to the use of D&D fees into the U.S. Congress’ propose legislation that would overhaul the FMC and oversight of carriers. The legislation passed the U.S. House of Representatives late in 2021 and is expected to be on the Senate’s agenda this year.