Samsung Electronics Files Compliant against SM Shipping with US AuthoritiesSamsung Electronics Files Compliant against SM Shipping with US Authorities

Samsung Electronics has filed a complaint with the U.S. Federal Maritime Commission (FMC) alleging that detention and demurrage charges imposed by SM Line are unfair. This marked the first time a Korean shipper has reported a Korean shipping company to the FMC.

According to the shipping industry on April 24, Samsung Electronics’ American subsidiary filed a complaint with the US Federal Maritime Commission (FMC) on April 14 (local time), claiming that the detention charge and demurrage charge demanded by SM Line were too excessive. The FMC is set to investigate the case under the Shipping Reform Act of 2022 (OSRA 2022) which was enacted in 2022.

Detention charges and demurrage charges are typical ancillary charges. When a shipper rents a container or trailer and fails to return it within the free time allowed, a demurrage charge is imposed on the shipper. If the shipper does not move the container out of the container yard (CY) after the allowed time, the shipper must pay demurrage charges to the shipping company.

Demurrage and demurrage charges became an issue since the COVID-19 pandemic paralyzed U.S. ports and inland rail networks. Shippers complained that their shipping companies supposed to be responsible for the transportation of their cargoes, were asking for more money by shifting logistics tasks to others while the shipping companies refuted that they did that in accordance with contracts. After receiving more than 100 complaints from shippers, the U.S. government implemented a revised shipping reform act, expanding the FMC’s authority to look into detention and demurrage charges.

Samsung Electronics also filed a complaint with the FMC against Israeli shipping company ZIM last October. Samsung Electronics signed a contract with ZIM to transport containers in the United States. The Korean tech giant has claimed that ZIM imposed excessive demurrage charges that were not Samsung Electronics’s responsibility. ZIM charged Samsung Electronics with detention fees on about 7,000 occasions and demurrage and demurrage charges on about 2,000 occasions from late 2020 to 2022. In particular, Samsung Electronics has asserted that ZIM violated U.S. shipping laws by threatening to retaliate against Samsung Electronics such as refusing to release containers due to non-payment of fees.

The bone of contention in Samsung Electronics’s lawsuit against SM Line is expected to be who is responsible for the detention and demurrage charges.
Source: Business Korea