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Liner agentís slip-up results in hefty fine by US Customs & Border Protection

12 November 2015

International Transport Intermediaries Club (ITIC) has highlighted how a careless mistake by a liner agent resulted in the imposition of a fine of almost $300,000 by the US Customs and Border Protection.

The liner agent, working for a non-US carrier, correctly manifested a shipment of nine reefer containers for discharge in Seattle, Washington. The vessel was also carrying more than a hundred empty containers due for discharge at Seattle.

On departing the load port, the agent received instructions to discharge all the empty containers upon arrival at Oakland, California, rather than in Seattle. While in the process of changing the port of discharge on the empty containers from Seattle to Oakland, the agent also mistakenly changed the port of discharge on the nine loaded refrigerated containers which were sitting underneath the empty containers.

The refrigerated containers were duly discharged upon arrival at Oakland, leaving the agent with the problem of getting them to Seattle as per the carrier's commitment under the bill of lading and in compliance with the terms of the US Merchant Marine Act 1920 (The Jones Act), under which all merchandise transported by water between US ports must be carried on US-flag ships. (It was not possible to move the cargo by road or rail because the containers were overweight.)

The agent contacted the US Customs and Border Protection (CBP) about the erroneous discharge, in the mistaken belief that the notification to CBP was sufficient. CBP, however, took the position that a written application had to be made for the movement to be properly authorised. That application had not been made, and an initial penalty of $1.17m was assessed by CBP. Following numerous exchanges with the authorities, the fine was ultimately reduced to $292,478, being
25% of the initial penalty. This amount, less the policy deductible, was reimbursed by ITIC.