Hapag-Lloyd Container Backlog Led to 'Logistical Paralysis,' Unfair D&D Fees, Importer Tells FMC
Hapag-Lloyd violated U.S. shipping regulations by failing to establish adequate facilities to return empty containers to the Port of New York and New Jersey and unfairly charging detention and demurrage for containers caught in the "logistical paralysis" of its own making, Rahal International said in a June 30 complaint to the Federal Maritime Commission. Rahal, an Illinois-based importer and distributor of fruit and vegetable juices, said backlogs and delays created by the shipping line damaged some of its juice shipments, leading to hundreds of thousands of dollars in damages.
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Rahal accused Hapag-Lloyd of failing to provide enough facilities for customers to return empty containers starting in March 2021, "if not earlier," the complaint said. As a result, Hapag-Lloyd created a backlog of empty containers at the Port of New York and New Jersey but continued to handle shipments into the port despite lacking "sufficient practices and facilities" to store the containers, the complaint said.
Rahal pointed to one instance before April 2022 when it or its overseas suppliers contracted with Hapag-Lloyd to carry fruit products through the Port of New York and New Jersey. The importer said it received the products but couldn't return the empty containers because there was no space to return them.
During April to June 2022, Hapag-Lloyd again failed to provide "reasonable free time" for Rahal to return containers, and failed to bring in vessels to sweep up empty containers or obtain additional facilities as they had done in previous years, the complaint said. Rahal also said its drayage providers were unable to use their chassis because they had to hold empty Hapag-Lloyd containers, the complaint said. The drayage providers were forced to use their yard and storage space for some of the empty containers, the complaint said, adding that Hapag-Lloyd made promises for appointment-based returns that were "impracticable, inaccurate, misleading, and/or unusable."
Rahal said "on some days there were no return locations offered by Hapag, the locations offered by Hapag had no available appointments, the terminal operator was not accepting containers from Hapag, or the appointments were cancelled in the course of the drayage provider’s attempt to return an empty container." It also said Hapag-Lloyd "effectively and unilaterally impounded chassis and used them as de facto storage platforms for Hapag’s empty containers at Rahal’s expense and detriment as a direct consequence of Hapag’s failure to provide reasonable practices and adequate facilities to handle and store Hapag’s empty containers at the Port of New York and New Jersey."
This led to Rahal incurring "additional expenses from its drayage providers" and various drayage providers being unwilling to retrieve the cargo because they "risked having their chassis rendered unusable whilst" Hapag-Lloyd "remained unwilling and/or unable to accept empty containers," the complaint said.
Hapag-Lloyd also issued Rahal $298,911.16 in detention and demurrage charges for "containers unremovable from the port whilst Hapag was unwilling and/or able to handle the return of its empty containers." The importer added that the shipping line failed to extend the free time for return, calling the charges "unreasonable and excessive."
Rahal also said it faced delays picking up its products from the ports "because of the logistical paralysis Hapag created." Imported apple juice in the container "underwent a fermentation process that resulted in the bins containing the apple juice swelling," leading to additional handling costs, the complaint said. Further testing found that the fermentation in the apple juice resulted in "excessive aerobic plate, yeast, and mold counts," which meant the apple juice could not be "sold as intended," Rahal said. This led to damages of "no less than $198,798.11 in connection with the damaged juice," and a total of at least $715,631.83 in damages as a result of Hapag-Lloyd's practices, the complaint said.
Rahal asked the FMC to order Hapag-Lloyd to cease and desist from violating the Shipping Act, put in place "lawful and reasonable practices," pay for damages and make any orders it deems "proper." Rahal also requested an oral hearing with the FMC.
Hapag-Lloyd did not immediately respond to our request for comment.