US Shipper Says in FMC Complaint That Taiwan Container Company Violated Service Contract
A U.S.-based shipper said a Taiwanese container shipping company violated Shipping Act regulations when it failed to supply agreed upon cargo capacity. MSRF, based in Illinois, said Yang Ming Transport “refused to provide more than a fraction of the cargo capacity that MSRF requested and needed” and violated the terms of their contract, forcing MSRF to buy cargo space on the “inflated” spot market. In an August complaint filed to the Federal Maritime Commission, MSRF said the FMC should investigate Yang Ming’s practices and order the container shipping company to pay “reparations.”
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
MSRF said Yang Ming violated its service contract with MSRF from May to December 2021 by “providing MSRF with hardly any of the agreed allotments of space on their respective ocean vessels, and instead forcing MSRF to make alternate transportation arrangements at substantially higher spot market prices.” MSRF said Yang Ming provided it with “only” four of the 100 containers agreed to in the contract, which MSRF needed for shipments from ports in Asia to the U.S. and from ports in the U.S. back to Asia.
MSRF said Yang Ming “unjustly and unreasonably disrupted the previously stable and well-established structure of the global ocean freight industry” by undermining service contracts. MSRF said it's now “forced to agree in advance to exorbitant rates for whatever portion of its needed capacity global ocean carriers are willing to cover with service contracts,” make up the difference on the spot market and then “rush” again to the spot market each time Yang Ming “refuses to honor its limited service commitments.”
Since the beginning of the COVID-19 pandemic, global ocean carriers, including Yang Ming, have “unjustly and unreasonably exploited customers, vastly increasing their profitability at the expense of shippers and the U.S. public generally,” MSRF said. The shipper said containers in 2019 that may have cost $2,700 to ship from China to the U.S. West Coast now may cost $25,000 “or more” on the spot market.
Yang Ming didn’t immediately comment. The FMC on Aug. 22 issued deadlines for both parties to agree to a schedule for the completion of discovery and participate in a preliminary conference with the FMC’s Office of Consumer Affairs and Dispute Resolution Services. The FMC said an initial decision is required to be issued in one year.