The retailer in its complaint filed last month argued that the shipping line had “coerced,” “exploited” with price inflation in container shipping, and “deliberately” denied space, as part of an organized campaign to profit from the disruptions in the shipping industry. They alleged a breach of two annual freight contracts between the carrier and the shipper in which they received as low as 53 percent of the contracted container space. Bed Bath & Beyond alleged it incurred an extra $25 million in additional shipping costs as well as $6.4 million in D&F fees.
In its initial complaint, the retailer cited the text of email messages between the company and carrier as examples of coercion. The emails showed the carrier telling the company that space was limited and looking for higher-rate shipments. OOCL does not deny the messages saying the industry was impacted by capacity shortages due to delays and disruptions but that it invested in providing capacity and service options and “worked cooperatively” with Bed Bath & Beyond.
“On the other hand, repeatedly and without explanation (Bed Bath & Beyond) failed to manage its own supply chain, exacerbating the bottlenecks faced by other shippers and the ability of (OOCL) to reposition its containers to Asia in order to serve its customers’ unprecedented demand for service,” they write in the response filed with the FMC on May 22.
OOCL denies the accusations that it “somehow drove up freight rates, created artificial scarcity, unjustly and unreasonably exploited customers, and refused to deal with,” Bed Bath and Beyond. The carrier notes there were no monthly or quarter carriage requirements or guaranteed space per sailing in the contracts. Further, they contend that the retailer neglects that the 2020 service contract was amended from 4,200 TEU to 2,171 TEU. Similarly, they state that the 2021 service contract was changed from 7,592 TEU to 3,061 TEU.
“Now, as Bed Bath & Beyond has entered bankruptcy and apparently moves forward towards liquidation, it has embarked on an unfortunate campaign to distort and obfuscate the relevant facts, contracts, and law, in order to secure an unwarranted return,” OOCL writes in its response.
The carrier responds to the complaint by saying that the retailer is asking the FMC to “invent contract requirements that were not bargained for or agreed.” They also question the jurisdiction of the FMC over a breach of service contract citing the Shipping Act which says such actions should be in an appropriate court.
With its claims of $32 million in damages, the Bed Bath & Beyond complaint is the most widely publicized but it is just one of several similar actions filed with the FMC based on shippers’ experiences over the past two years. Samsung has filed complaints against both Zim and SM Line for service problems that resulted in higher costs while smaller shippers have also alleged they were not given the space contracted for from the carriers during the pandemic. One of the shippers, a Pennsylvania furniture company, settled with COSCO but the majority of the complaints are still working their way through the process at the FMC.