News / Shipper returns to FMC with claim against HMM for contract failure and unfair fees

Photo: VesselFinder

Shipper Butterfly-1 (the rebranded Bed, Bath, and Beyond) has instigated more proceedings with the US Federal Maritime Commission (FMC), levelling accusations that HMM essentially “held the company hostage”, with some $39.7m in profits under threat.

Among allegations against the South Korean carrier are that it failed to meet contracted service commitments, “coerced” extracontractual surcharges from Bed, Bath, and Beyond, and, over a 14-month period, imposed $4m in detention and demurrage charges.

The complaint states: “These charges were not just or reasonable, because of circumstances outside the control of [the] complainant and its agents and service providers, such as congestion at ports, lack of appointments, and shortage of equipment.

“Records also reflect the astronomical scale of the charges for idling containers (charges that would in many instances run into multiple tens of thousands of dollars) that HMM imposed, despite HMM failing to schedule appointments for those very same containers.”

Butterfly-1 also claims that HMM’s failure to honour its contracted service commitments added some $440,000 in additional charges over 2020, after a 62.37 feu shortfall over the period.

A year later, that additional cost surged to $8.9m, paid to secure capacity from the open market in 2021 as it claims HMM failed to carry more than a quarter of the contracted 2,000 feu, while the extracontractual charges added up to $430,000 in 2020 and $2.9m in 2021.

And Butterfly-1 claimed it had no other option, noting: “The lost profits sustained by [the] complainant on a per-container basis substantially exceed the excess costs incurred by [the] complainant’s purchase of alternative carriage.

“Had we been unable to secure any alternative carriage for HMM’s service commitment shortfall of 593.74 feu during 2020-2021 and 2021-2022, our lost profits would have amounted to at least an astronomical $39.7m,” it added.

Precisely how much in damages is being sought is not clear from the filing, but based on figures above, it could be well over $16m, with the South Korean carrier joining a list of other container lines Butterfly-1 is pursuing.

However, that will not be the highest damages sought for alleged Covid-era carrier practices, Butterfly-1 having lodged a claim for an initial $38m – potentially rising to $44m – against OOCL, with BAL Container Line, Evergreen, MSC, and Yang Ming also on the hook.