News / BBBY administrators in $1.25m contract breach claim against Evergeen

Bed, Bath and Beyond’s administrators have their sights on another shipping line, pursuing Evergreen with a claim via the US Federal Maritime Commission (FMC) for some $1.25m.

Lodged this week, the complaint includes allegations that the carrier was in breach of FMC regulations relating to service, that it only met just 20% of agreed capacity commitments and improperly applied detention and demurrage charges over a two-year period.

The filing states: “In 2020–2021, despite committing to provide 1,250 feu of cargo space to [BBBY], Evergreen provided 256.84 feu – only 20% of what was committed.

“There was only minor improvement in 2021-2022, where despite committing 750 feu, Evergreen provided 455.92 feu. As a result of Evergreen’s shortfalls, [BBBY] was forced to seek carriage from other sources at higher rates, or forgo shipments completely.”

The furniture supplier, whose administrators are trying to pull it back from bankruptcy, claimed that in turning to the spot market it was forced to pay some $4m extra.

Together with Evergreen’s failed service commitments, administrators also circled on what they claim were the carrier’s “extracontractual prices and surcharges” as a precondition to meeting the service levels it did provide.

It said: “Evergreen set up a dynamic with BBBY to bargain for its space on an ongoing basis, rather than provide allocations pursuant to Evergreen’s existing service commitments based on the existing contractually agreed rates.”

Citing communication between BBBY and Evergreen during the period, the FMC submission claims the container line’s surcharges were “merely a vehicle to renegotiate rates” – a strategy that seemingly included the carrier pitching its clients against one another, with the complaint. Backing this is an email claiming some customers were willing to pay as much as $1,000 extra on top of contracted rates.

In targeting Evergreen, the BBBY administrators are adding to a steady stream of complaints they have lodged against Covid-era carrier practices that include a huge $38m claim against OOCL.

They say in each instance the sense of déjà vu was apparent, the complaints alleging similar practices by carriers looking to take advantage of the pandemic-induced chaos.

Coming in the build-up to Long Beach’s TPM conference in a little over a week, the filing only adds to what will be a hot-button issue: D&D, FMC and unfair carrier practices.

The Loadstar team will be out in force at TPM – come and find Gavin, Jack and Mike