News / Cosco hit by $2m compensation claim for 'unfair' D&D charges

Cosco is facing a $2bn compensation claim after a complaint of unfair application of detention and demurrage (D&D) charges lodged with the US Federal Maritime Commission (FMC).

Lighting supplier Visual Comfort & Co (VCC) claims Cosco refused to extend the number of days shippers and their agents had to collect boxes or return empties despite delays outside their control brought about by the pandemic, incurring heavy D&D fees.

It claims for the period January 2021 to December 2022, daily demurrage, detention and yard storage charges totalled more than $1.29m.

Despite the pandemic causing spikes in demand and drop-offs at ports, VCC said the Chinese state-owned carrier refused to divert vessels to emptier gateways to help speed up delivery and collection of containers.

It alleged: “For example, by mid-2022 Cosco knew that the lack of return locations for empty containers had reach crisis level proportions at the port of New York/New Jersey.

“Marine terminals did not have sufficient storage to take back all of the empties, because carriers like Cosco were not loading back boxes in sufficient quantities. As such, financial and operational burdens were unfairly and inappropriately forced upon shippers.”

A poll of drivers conducted by the Port Authority of New York and New Jersey resulted in every respondent claiming that even when a returned location opened, they were unable to get an appointment to return empties, leaving them to hold onto them.

And 94% said they had been sent home early, due to a shortage of chassis loaded with empties, and 77% said their customers were receiving daily charges and no return locations.

Citing the FMC’s interpretative rule on the purpose of D&D charges – to “incentivise the swift collection, or delivery, of boxes” – VCC claims Cosco’s refusal to expand the number of free days at the height of Covid-induced delays “failed” to achieve this.

Seeking $2m in compensation, VCC said this was based on the fact that, while the D&D fees had been around $1.29m, there was ongoing financial damage as a consequence.