A Profit Of $67000 Per Case? MSC Faces A Huge Claim Of $347 Million!

November 28th, DK Butterfly-1 Inc. A lawsuit was filed with the US Federal Maritime Commission (FMC) against Switzerland-based MSC Mediterranean Shipping, accusing the shipping giant of violating the Shipping Act of 1984, profiteering during the epidemic and seeking compensation of up to 347 million US dollars.

 

The complaint alleges that MSC, the world's largest shipping company, took advantage of rising prices during the outbreak, resulting in higher freight costs and eventually forcing the company, formerly known as Bed Bath & Beyond (BBBY), to file for bankruptcy. The complaint alleges that MSC systematically failed to meet its agreed minimum quantity system (MQC) service pledge, reducing capacity when space was already scarce and unfairly allocating space to higher-priced cargo to maximise its profits. This forced BBBY to seek shipping space on the spot market at a high cost, leading it to file for bankruptcy in April.

 

The complaint also alleges that MSC's conduct is not limited to failure to fulfil its performance pledge. The shipping company encourages customers, including BBBY, to accept peak season surcharges and impose unfair demurrage and demurrage on shippers, despite uncontrollable conditions such as port congestion and equipment shortages. BBBY insists that MSC's approach is deliberate and not subject to any external restrictions.

 

 

According to BBBY, MSC's average profit per container in BBBY transportation is $66924.07, a far cry from the current situation. Just two containers (BBBY said it could not return MSC) resulted in demurrage charges of $37780 and $40360.

 

The complaint alleges that MSC's practices caused economic losses to Bed Bath & Beyond and other shippers. The lawsuit reportedly seeks damages of up to $347 million.

In its testimony to FMC, BBBY claimed that MSC should pay compensation for its suspected illegal acts, which should include the company's legal fees and interest. The company said in its complaint that FMC should consider an "additional decision to double the amount of compensation"because of MSC's retaliation".

 

The complaint includes a claim for loss of profits of nearly $113 million, in addition, when the shipper enters the spot market, the shipper is forced to pay a total of more than $5.5 million in PSS fees and more than $9 million in additional rate costs. The total amount of the claim may exceed $347 million.

 

In addition, $23 million of detention and demurrage were paid for the rental and re-delivery of container equipment beyond the control of the shipper.

 

Of course MSC has not yet responded to the claim but these issues are familiar to many shippers.

 

The lawsuit alleges that a series of frustrating emails showed that if BBBY wanted to use its contract space, MSC kept asking it to pay peak season surcharges or spot rates. There are a lot of "other people are paying" from MSC. Donovan's email.

A typical email from Yusen Logistics employees to BBBY states: "We must confirm that the following reservation is changed in accordance with the insurance rate contract, otherwise the reservation will be cancelled."

Due to the shortage of time and space as well as the shortage of equipment, we have to accept the goods in order to ship the goods as planned. However, this sudden notice is so unacceptable that we have no choice but to accept it. " BBBY claims that because different regions charge different fees, sometimes MSC's local offices don't even know it, and the end result is chaos, causing it to miss its flight.

"We can no longer afford such miscommunication problems, so please make sure that all affected originating offices are aware of the rates to be used so that Yusen knows how to make these bookings," the company wrote to MSC.

BBBY cited similar recent FMC rulings in favour of shippers, including OJ Commerce's case against Maersk Hamburg Sud. Like Maersk, Hamburg Sud failed to meet their contractual obligations, BBBY said.

 

BBBY and its successor, DK Butterfly-1, claimed that MSC was not the only company to break its performance pledge, citing a lawsuit brought by MCS Industries Inc against COSCO and others, in which MSC was one of the defendants.

 

According to the shipper, MSC was found to have similarly been in breach of its contractual obligations in a case that the presiding judge described MSC's failure to meet its contractual obligations as being of "national significance".

 

The judge added that "one of the largest container shipping companies in the world is trying to take advantage of unprecedentedly high freight rates to force shippers with service contracts, such as plaintiffs, through systematic non-compliance with their minimum number of space bookings, resort to the spot market to book space".

 

Moreover, the MCS case allegedly showed that a substantial majority of the detention and demurrage charges were unlawfully levied, given that they did not meet the requirement of speeding the flow of freight through the supply chain, but rather penalised the shipper, who had no means of picking up freight or redelivering container equipment due to port congestion or a lack of chassis equipment.

 

Disclaimer: this article is reproduced for the purpose of transmitting more information.

If any source is incorrectly marked or infringes upon your legitimate rights and interests, please contact us with the ownership certificate, and we will correct and delete it in time. Thank you.