News / Flexport sues BCO for $12.3m of unpaid box detention charges

© Mykhailo Polenok

Flexport has filed a $12.3m lawsuit against customer Giti Tires, claiming it refused to pay an extensive list of detention fees, leaving Flexport to pick up the bill.  

Between 2021 and 2023, Giti hired Flexport as a non-vessel-operating common carrier (NVOCC) to arrange the transport of hundreds of shipments of tyres to the port of Long Beach, California. 

As NVOCC, Flexport arranged international ocean transport for Giti’s cargo, undertook ocean carrier liability and issued bills of lading.It also arranged the drayage of Giti’s shipments to the final destination.  

Under the contract, Giti was responsible for paying all charges associated with the transport of the cargo, including detention fees, assessed by VOCCs, NVOCCs and marine terminal operators for the time a container spends outside the port beyond allowed ‘free time’. 

On Friday, Flexport lodged a legal complaint that Giti Tires had failed to pay any of its detention charges, a sum that exceeds $12.3m, it claims.  

Flexport said: “Giti knew of the charges for detention, as Flexport clearly and repeatedly advised Giti of them. Flexport made every effort to assist Giti to retrieve and return the containers to the ports to minimise or avoid the detention and related charges.  

“But Giti failed to return the containers and allowed the charges to accumulate. Giti refused to pay the detention charges, which were the direct result of Giti’s failure to return the containers despite repeated urging from Flexport to do so.”

Flexport says Giti’s unpaid detention charges exceed $12.3m, but the defendant described this as “excessive”. The Loadstar found no evidence of disputes between Giti and the US Federal Maritime Commission (FMC) relating to these charges.  

Giti has, however, accepted the majority of its invoices and admitted it owes at least $7m, but despite even this, Flexport claims, has “refused to pay any of the amount”.  

The terms and conditions in Giti’s contract with Flexport state that Flexport would be entitled to all costs of collection, including reasonable attorney’s fees and the lesser of either a late payment fee of 1.5% per month of the outstanding balance due, or the highest rate permitted by applicable law. 

“Accordingly, Flexport is entitled to damages from Giti totalling $12.3m, plus pre- and post-judgment interest, court costs and all expenses”, claimed Flexport. 

Yesterday, the court recommended the parties engage in alternative dispute resolution (ADR), due to the lengthy and expensive nature of the litigation.  

The ADR processes the Californian court offered are a settlement conference before the magistrate judge assigned to the case or the magistrate judge in Santa Barbra, the court mediation panel, and private mediation. The parties must present their preferred ADR option at the initial scheduling conference, date unconfirmed.