COSCO Shipping is facing a potential fine of up to $16.7 million in the United States due to a delay of more than seven months in paying the compensation amount determined by the Federal Maritime Commission (FMC).
Details of the Fine
The Federal Maritime Commission has issued an order requiring COSCO Shipping to explain why it should not be fined for failing to comply with a previous decision of the Commission in a timely manner. This dispute arises from detention and demurrage costs related to Agribusiness Holdings, operating under the name Bridgewell Agribusiness.
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The principal amount of compensation was only $24,328.80 plus interest, but the company missed the payment deadline set for January 20 and withheld payment for 223 days, despite repeated calls from the complainant and then the regulatory body.
Legal Consequences and Future
Under current U.S. laws, the Federal Maritime Commission can impose civil penalties of $14,988 per day for each violation, which increases to $74,943 if the violation is proven to be willful. Considering the 223-day delay, this fine could range from $3.3 million to $16.7 million for COSCO.
The Commission has stated that COSCO's behavior raises questions about the willfulness of the violations and also raises broader concerns regarding compliance with FMC's mandatory orders. In the original case, it was found that COSCO did not properly issue invoices related to detention and demurrage costs. The FMC notice in January administratively finalized the compensation ruling and made payment by January 20 mandatory.
COSCO is now required to submit a report by December 1 explaining why a penalty should not be imposed for this delay and to provide communications related to the payment delay. The FMC's final decision is expected to be issued by April 30 of next year.
This case comes at a time when oversight of detention and demurrage practices in the United States has increased, and the FMC continues to pursue shipping companies over invoicing issues and compliance with regulations.
