News / ONE faces $18m claim by shippers for 'failure to accept contracted volumes'

Photo: © Homiel | Dreamstime.com

Japanese carrier group ONE is on the hook for one of the largest claims lodged in a single complaint to the US Federal Maritime Commission (FMC) since a rule change under the Biden administration.

Filing the claim with the FMC on 11 June, two complainants, QVC and Cornerstone Brands, are accusing ONE of “systematically” failing to meet contracted capacity commitments amid the high spot rate heyday of the pandemic, and instead accepting shipments at the more lucrative rates.

According to the filing: “QVC’s records indicate that the respondent [ONE] carried only approximately 47.75% of its service commitment under the service contract, for a shortfall of at least 627 feu, or 52.25% less than committed.

“This shortfall forced QVC to obtain alternative space at much higher prices or else forgo shipments entirely. On information and belief, during the 2021–2022 shipping year, the additional incremental cost of replacing ONE’s shortfall was at least $7.7m.”

Cornerstone claims its shortfall was 57.6%, or 662 feu, and that as a consequence of being forced onto the spot market, the company had to pay “at least” $10.49m to replace the capacity contracted to ONE.

Referencing a series of email exchanges between May and September 2021, the filing notes how logistics managers for both complainants were pushing the carrier to provide contracted allocations, but to little avail.

The filing added: “When one of [the] complainants’ logistics providers reached out to ONE in August 2021 regarding its failure to release the full contracted-for allocations for weeks 36 and 38 out of Ningbo, China, ONE’s Shanghai office replied with a single word: ‘No’.”

And it alleges: “ONE’s failure to provide contracted space was part of a practice by preferring higher-priced freight, as shown by ONE’s reported soaring revenues and profitability.”

Collectively, the extra cost to QVC and Cornerstone of more than $18.18m makes it one of the biggest single claims since the Ocean and Shipping Reform Act (OSRA) became law in mid-2022.

Since then, the FMC has heard some 50 cases alleging violations by container lines and logistics companies, with claims cumulatively sought coming close to $100m.

Additionally, QVC and Cornerstone also accuse ONE of imposing more than $1.7m of “unjust and unreasonable” surcharges, “due to either the acts or omissions of ONE, or other circumstances over which [the] complainants and their respective agents and service providers had no control”.