This dispute originated in 2020 when a trucking company, TCW, borrowed a shipping container and chassis from Evergreen Shipping to transport goods from the Port of Savannah to a Yamaha plant in Georgia. Under their agreement, TCW had a limited window of free time to return the equipment before incurring daily detention fees. Due to a pandemic-related closure at the Yamaha plant, TCW could not retrieve the equipment until May 23. Furthermore, the Port of Savannah was closed to new deliveries from May 23 through May 25. TCW returned the equipment on May 26, incurring a seven-day delay on the container and a twenty-two-day delay on the chassis. Evergreen invoiced TCW for detention charges covering the period when the port was closed. TCW argued these charges were unjust because it was physically impossible to return the equipment during the closure. The Federal Maritime Commission initially sided with TCW, but the D.C. Circuit vacated that decision in 2024, ordering the Commission to conduct a more nuanced analysis of the incentive principle. On remand, the Commission again found the charges unreasonable, leading to this second petition for review.
The court applied a deferential arbitrary and capricious standard of review, focusing on whether the Commission's decision was supported by substantial evidence and consistent with the Shipping Act of 1984 and its Interpretive Rule. The court identified three crucial facts that Evergreen had conceded: first, the delay was caused by the Yamaha plant closure; second, the Port of Savannah gates were closed and could not accept deliveries during the disputed dates; and third, Evergreen incurred no costs due to the delay. The court held that these facts provided ample grounds for the Commission to conclude that charging detention fees during the port closure could not serve the primary purpose of the Shipping Act, which is to promote 'freight fluidity.' The court rejected Evergreen's argument that the Commission abandoned the 'incentive principle' for a new 'freight fluidity principle,' clarifying that the Interpretive Rule explicitly defines the incentive principle as a tool to promote freight fluidity. The court further addressed Evergreen's claim that the Commission ignored extenuating circumstances, such as the contractual agreement and advance notice of the closure. The court found the Commission properly considered these factors but correctly determined they did not outweigh the fundamental inability of the fees to incentivize faster return or compensate for costs when the port was closed. The court noted that carriers do not have an unbounded right to contract for unreasonable fees and that the 'once on detention, always on detention' bright-line rule was not supported by the evidence.
The Federal Maritime Commission's Order on Remand stands, requiring Evergreen to retain the disputed detention fees while the underlying dispute remains unresolved in favor of the Commission's finding of unreasonableness. This decision reinforces the Commission's authority to evaluate detention charges based on their actual effect on freight fluidity rather than strict contractual adherence. It establishes that carriers cannot enforce detention fees for periods when physical barriers, such as port closures, make equipment return impossible, provided the carrier has not suffered compensable costs. The ruling limits the 'once on detention, always on detention' argument, requiring a fact-specific analysis of whether fees serve their intended purpose in each instance.