Taiwan Carrier Failed to Provide Container Space, Charged Unfair D&D, Bed Bath & Beyond Says
Taiwan-based carrier Yang Ming Marine Transport Corp. violated the Shipping Act by not providing agreed upon space, charging "extracontractual prices and surcharges” and charging unfair detention and demurrage fees, Bed Bath & Beyond said in a recent complaint to the Federal Maritime Commission. Bed Bath & Beyond is seeking reparations for the "injuries" caused by Yang Ming, telling the FMC that it may have been subject to more than $700,000 in unfair charges.
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.
The retail company said Yang Ming took advantage of "price inflation" during the COVID-19 pandemic and "unfairly exploited its customers." Yang Ming "engaged in a practice of systematically failing" to meet its commitments, the company said.
Bed Bath & Beyond and Yang Ming entered into a contract for the 2021-2022 shipping year that specified "minimum quantity commitments" of cargo to be shipped and other commitments to provide space for the cargo, the complaint said. In the contract, Yang Ming allocated 1,000 40-foot equivalent container units (FEUs). Instead, they gave Bed Bath & Beyond 149 FEUs, the complaint said, and Bed Bath & Beyond was forced to find space on the spot market "at enormous expense during a period of unprecedented high spot prices," it said. This 851 shortfall in container space cost Bed Bath & Beyond at least $6,645,288.80.
Instead of providing space for the shipments, Yang Ming "systematically failed" to meet those commitments and instead allocated the space to "higher-priced" cargo from other shippers to maximize its own profit, the complaint said. During 2021, Bed Bath & Beyond said Yang Ming "reaped a net income" of $5.39 billion, a 1,258.86% increase from 2020, the complaint said.
"Consequently, Yang Ming’s profits surged considerably, while shippers and the broader public in the U.S. had to shoulder the increased freight costs in the form of cost increases and inflation," the complaint said. This was damaging to Bed Bath & Beyond, the company said, which was "forced to" file for bankruptcy in April.
Yang Ming also coerced Bed Bath & Beyond and other shippers to pay "extracontractual prices and surcharges," the complaint said. This included "Peak Season Surcharges," which was a "precondition" for Yang Ming to meet "a portion" of their service commitments, Bed Bath & Beyond said. This was done to keep rates "in line with market levels," making them either lose their cargo or pay "spot market prices," Bed Bath & Beyond said. Those peak charges led to Bed Bath & Beyond overpaying by at least $294,841, it said.
Bed Bath & Beyond also said many of Yang Ming's detention and demurrage charges were assessed for time periods when Bed Bath & Beyond couldn't "pick up containers at the ports, or return empty containers promptly," due to circumstances outside of its control, "such as congestion at ports and shortage of equipment." In total, Bed Bath & Beyond paid at least $746,790.79 in detention and demurrage charges.
Yang Ming has taken the position that its service contract is "illusory" and that it isn't subject to "any service commitment whatsoever," Bed Bath & Beyond said. Yang Ming filed a complaint April 20 with the U.S. District Court for the Southern District of New York alleging that Bed Bath & Beyond is continuing to press claims and that "no such liability [for damages] lies under the Service Contract," Yang Ming said.
"Yang Ming’s behavior suggests a conscious pattern of entering into service contracts with shippers at quoted prices with the intention of not actually meeting its service commitments under such service contracts at the agreed-upon rates," Bed Bath & Beyond said. "Instead, Yang Ming either imposed additional charges beyond the contract rates, such as PSS, or neglected to provide transportation to the contracted shippers, at all."
Bed Bath & Beyond is hoping that the FMC will investigate Yang Ming's conduct, issue an order stating they violated the Shipping Act, issue an order telling it to stop the conduct, issue an order requiring Yang Ming to pay reparations, order an additional award "doubling" any reparations violated under the Shipping Act as a result of Yang Ming's retaliatory conduct, and issue any other orders or relief the "FMC deems just and proper," the complaint said.
Yang Ming did not respond to our request for comment.
This is not the first time this year that Bed Bath & Beyond has filed a complaint with the FMC. In April, the company filed a complaint against Orient Overseas Container Line Limited, accusing the shipping company of violating its contract and issuing unfair detention and demurrage charges (see 2305010049).