News / Bankrupt retailer Bed Bath & Beyond sues OOCL for $37.65m

02/05/2023

US retailer Bed Bath & Beyond, which last week filed for bankruptcy protection, has filed a claim of $37.65m against OOCL, alleging exploitative and unjust business practices during the pandemic.

The retailer has filed its complaint with the FMC, alongside increasing numbers of other angry shippers.

It’s not hard to see why, from this initial set of complaints. As Bed Bath and Beyond (BB&B) noted, despite contracted minimum quantity commitments of cargo to be shipped and corresponding vessel space, OOCL “systematically failed” to meet the requirements and sold the space on to higher-paying customers, leaving BB&B to find capacity on the much costlier spot market, “at enormous expense”.

In fact, it said, only 70% of the required capacity in 2020 was provided and that “much of the freight actually moved … was moved only after [BB&B} agreed to [OOCL’s] demands for exorbitant premium pricing”. Between October 2021 and March 2022, OOCL provided just 52.9% of the contracted space.

BB&B also pointed out that many D&D charges were incurred because it was unable to pick up containers owing to congestion, shipping line policies and numerous other problems, including social distancing orders.

It also complained that surcharges, such as for peak season, should have been included in its pricing, according to its contract – yet the retailer was still charged.

The filing includes a slew of emails from OOCL suggesting BB&B pay more and revealing: “OOCL did not attempt to conceal that it was actively auctioning space to the highest bidder, rather than meeting its service commitment.”

One email from OOCL stated: “We are not looking to gouge, but stating the reality of the current market environment for any extra space. Please advise if BBB[Y] would accept a $5,800 per 40ft GP/HQ PSS on top of their primary contract pricing. This would position BBB[Y] at just around the $7,000 mark.”

BB&B, working through its bankruptcy, added that OOCL’s container transport business made a 2021 operating profit of $7.36bn, up 642% from the previous year. The retailer has been forced to launch a liquidation sale and said it would use its Chapter 11 bankruptcy proceedings to find outside buyers that may be able to keep the business going, or at least purchase some of its assets. It has been allowed to borrow $40m to stabilise its operations and begin a sales process.

In January, BB&B reported its third-quarter results, ending 26 November. It made a loss of $100m, on net sales of $1.25bn.