Appeals Court Backs FMC in Landmark Detention Charges Ruling Against Evergreen

A federal appeals court has affirmed a key ruling by the Federal Maritime Commission (FMC) against Evergreen Marine regarding container detention fees. This decision may increase scrutiny on how carriers impose fees and reinforce the Commission's standard for "freight fluidity."

On Tuesday, the United States Court of Appeals for the District of Columbia Circuit rejected Evergreen's request for review and supported the FMC's order, which determined that the carrier acted unreasonably by charging a truck driver detention fees during a three-day closure of the Port of Savannah.

While the charge in question was only $510, the implications go far beyond this amount.

The core issue was whether ocean carriers can charge detention fees when a truck driver cannot return equipment. This concern has been a major topic in the industry, especially during the supply chain disruptions caused by the pandemic.

The court agreed with the FMC that the charges went against the Shipping Act's requirement for carrier practices to be "just and reasonable." The ruling emphasized that such fees should not simply punish delays but also promote freight fluidity.

The court noted that the main purpose of detention charges is to encourage efficient cargo movement, agreeing with the Commission's view that fees assessed when empty containers cannot be returned are “likely to be found unreasonable.”

This case stemmed from a 2020 shipment for Yamaha Motor Company passing through the Port of Savannah. A COVID-related shutdown at a plant delayed the trucker’s ability to pick up the container, and the planned three-day port closure prevented a timely return. Despite these circumstances, Evergreen charged detention fees.

The FMC deemed these charges unreasonable, stating they couldn't motivate a quicker return in such conditions. Evergreen contested this reasoning, claiming the Commission incorrectly prioritized the concept of "freight fluidity" over the incentive principle in the FMC's 2020 guideline.

The appeals court dismissed Evergreen's argument completely.

Judge Harry Edwards noted for the panel that “freight fluidity has always been integral to the incentive principle,” asserting that the Commission’s approach was a direct application of the existing rule.

This ruling is significant because it reinforces the FMC's authority to consider not only contract terms or whether free time has expired but also whether a charge serves a valid operational purpose.

The court also rejected Evergreen's claim that simply having a contractual agreement justified the fees, supporting the FMC's perspective that contracts must adhere to reasonableness standards under the Shipping Act. Furthermore, the court pointed out that Evergreen admitted it faced no costs due to the delay, weakening any compensatory claims for the fees.

Although the case revolves around specific circumstances, maritime lawyers and cargo stakeholders are likely to interpret it more broadly.

This decision strengthens the FMC's efforts to enforce regulations on detention and demurrage, which have increased in recent years through rulemaking, investigations, and enforcement actions regarding carrier billing practices.

For motor carriers, cargo owners, and shippers, this ruling could make it easier to challenge fees assessed under unworkable operational conditions.

For ocean carriers, the ruling may suggest that courts will show significant deference to the FMC in determining what constitutes “unreasonable” practices under the Shipping Act.

For the Commission, this is a meaningful judicial endorsement of a crucial regulatory principle in the post-pandemic era.

For an agency that has long argued that detention charges should enhance cargo flow rather than act as revenue generators unrelated to performance, the court's message is clear: freight fluidity remains the essential guiding principle.