Shippers scrambling for alternatives as box lines divert from closed ports
Video footage of the 4,300 teu MSC Arushi R (pictured) departing Houston yesterday, sparsely loaded with ...
DSV: STAR OF THE WEEKDSV: FLAWLESS EXECUTIONKNIN: ANOTHER LOWWTC: TAKING PROFITMAERSK: HAMMEREDZIM: PAINFUL END OF STRIKE STLA: PAYOUT RISKAMZN: GOING NOWHEREAMZN: SEASONAL PEAK PREPARATIONSJBHT: LVL PARTNERSHIPHD: MACRO READING AND DISCONNECTSTLA: 'FALLING LEAVES'STLA: THE STEEP DROP
DSV: STAR OF THE WEEKDSV: FLAWLESS EXECUTIONKNIN: ANOTHER LOWWTC: TAKING PROFITMAERSK: HAMMEREDZIM: PAINFUL END OF STRIKE STLA: PAYOUT RISKAMZN: GOING NOWHEREAMZN: SEASONAL PEAK PREPARATIONSJBHT: LVL PARTNERSHIPHD: MACRO READING AND DISCONNECTSTLA: 'FALLING LEAVES'STLA: THE STEEP DROP
The 38-page complaint against MSC, which bankrupt Bed Bath & Beyond (BBBY) has filed with the FMC, reveals in full the intricate details and frustrations felt by shippers during the pandemic.
It’s hard not to feel a bit sorry for the poor employees at BBBY and forwarder Yusen, they had to face MSC’s internal wranglings and, apparently poor internal communication, as rates went up, and up and up. As did surcharges, and D&D fees.
In fact, according to BBBY, MSC’s per-container average profit on BBBY shipments was $66,924.07. (A far cry from current circumstances.)
BBBY claimed that in 2020, it paid an additional $5.5m above the rates it had contracted; in 2021, it paid $9m over the contracted rate; and in 2020 to 2022, it paid some $23m in detention and demurrage charges imposed by MSC, which were “unjustly and unreasonably assessed”. It called on the FMC to assess these charges.
Just two containers, which BBBY said it was unable to return to MSC, cost it $37,780 and $40,360 in detention charges.
BBBY also claimed that lost profits, owing to MSC’s actions, totalled an “astronomical” $112.8m.
“Complainant also suffered other injuries, to be calculated at trial,” says the claim.
And it says that such was MSC’s “wilful retaliatory conduct”, that damages should be doubled.
BBBY – which, according to claims in another court case filed this month by employees, knew in 2019 it might well go bankrupt – hasn’t added together all the claims it is making. But it is clearly hoping for a significant payout.
MSC has, of course, yet to respond to the claims, but the issues will feel familiar to many shippers.
In September 2020, when MSC blanked sailings in advance of Golden Week, BBBY was livid, and said: “I understand its typical to do blank sailings during this time when the Chinese factories are closed, but this year is different.
“Freight is backlogged everywhere and, as an importer I have to believe there’s enough freight within the alliances to justify a sailing or two during this time, from at least the larger origin ports, to help alleviate this situation.
“Unless it’s the carrier’s intent to continue to unrealistically constrict supply to keep spot market rates at historic highs??”
And a series of increasingly frustrated emails show that MSC kept asking BBBY to pay peak season surcharges, or spot rates, if the shipper wanted to use its contracted space. There are a lot of ‘everyone else is paying up…’ emails from MSC.
A typical email from a Yusen employee to BBBY noted: “We must confirm to change the following booking under the premium rate contract. Otherwise, they’ll cancel the booking.
“Due to the tight time and space/eqt issue recently, we have to accept it in order to ship this cargo as plan. However, it’s really unacceptable on this sudden notice, which leaves us no choice but to accept.”
With different regions charging different rates, and sometimes MSC’s local offices didn’t even know the rate, the end result was confusion, claimed BBBY, which caused it to miss sailings.
“We can’t afford any more miscommunications issues like this, so pls ensure that all impacted origin offices are clear on what rate needs to be used so Yusen knows how to make these bookings,” it wrote to MSC.
BBBY claimed: “The damage done to [BBBY’s] business as a result of MSC’s misconduct, alleged herein, was extreme and debilitating.”
It also noted the recently revealed profits of MSC by Italian paper Il Messaggero, reporting 2022 revenues of €86.4bn and net profits of €36.2bn – and its “reported” €63bn in cash reserves “even after spending on increasing its fleet size”.
That must hurt. But relief for bankrupt BBBY, which is now involved in multiple court cases, may not be sufficient for its many creditors.
As one wry note on LinkedIn put it: “Grasping at straws by a broken business model and classic ambulance chasing by attorneys… At worst the shipping costs expedited the bankruptcy by a few months and you don’t see $WMT $BBY $COST $AMZN etc whining…
“Can’t begrudge them though, if I was a creditor of the estate, I’d probably also support these sort of gambles…”
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