News / Cosco facing $1.2m claim over disputed D&D charges to NVOCC

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Allegations of multiple violations of the US Shipping Act are spreading gloom over Cosco this holiday season, after an NVOCC levelled a claim against the carrier, with the Federal Maritime Commission (FMC), for $1.2m.

California-headquartered MAC Industries has accused Cosco of claiming detention and demurrage charges (D&D) for a shipment no longer under its control, and prematurely cancelling a contract when MAC disputed the charges.

“Immediately after MAC disputed the unlawful detention invoicing, Cosco initiated a series of escalating retaliatory actions [and] failed to offer any commercially legitimate explanation for these abrupt reversals,” claims MAC’s filing.

It further notes that “the timing – within days of the detention dispute – creates a clear inference of retaliation”, and points out that this sort of behaviour is prohibited under the US Shipping Act.

MAC also claims Cosco had “identified it as a key trade partner”, and had “encouraged” the NVOCC to increase its volumes from 400 teu to “1,000 teu. and possibly to 2,500 teu”.

On 1 October, MAC acted on Cosco’s encouragement and increased its volumes to 1,000 teu through to 30 September 2026 and, having “materially relied on Cosco’s representations”, began shifting volumes accordingly.

But on 7 November, it found itself contending with Cosco’s efforts to terminate the contract early – only for the Chinese carrier to again shift course on 11 December and reinstate the contract for the full term.

“This occurred without any intervening change in MAC’s conduct and without Cosco identifying any lawful or commercial justification for its earlier suspension of cooperation, booking cancellations, or attempted contract termination,” MAC said.

“The timing and substance of Cosco’s 11 December communication therefore confirm the prior adverse actions could not be sustained on a lawful basis and reflect Cosco’s implicit acknowledgment that those actions were improper once subjected to scrutiny.”

During the interim, MAC claims, it was forced to divert business to alternative carriers, resulting in lost volumes, in the case of its work for Supreme and Gemini, and reduced margins for consignments through Port Klang.

In total, it claims to have not only seen customers faith in its business diminish but that it lost 27 bookings through cancellation, with documented economic harm, not counting “recoverable damages and potential civil penalties” of between $700,000 and $1.2m.

While substantive, it is dwarfed by the $18.1m claim by Cornerstone Brands and QVC against ONE, and the $14.7m suit against Yang Ming by retailer Dollar General, claiming the carrier failed to meet minimum volume commitments.

But even these fail to compare with the massive $37m-plus sought by Bed, Bath and Beyond’s administrators from OOCL– the biggest claim since the passage of the bipartisan Ocean and Shipping Reform Act (OSRA) in mid-2022.

Indeed, OSRA has provided significant work the for the FMC, which has heard more than 50 cases against container lines and logistics companies, with the money involved cumulatively surpassing $100m.