FMC Complaints: Samsung Files Against Zim; Trucker Files Against MSC
The Federal Maritime Commission received two new complaints filed on October 25 against two large carriers alleging overcharging for detention and demurrage (D&D) fees as well as abusive business practices that contributed to the accumulation of the fees and disrupted their businesses. Electronic and appliance giant Samsung is seeking a cease-and-desist order and reparations for injuries caused by Zim, while a California-based logistics company, MVM, charges that MSC ran up $800,000 in charges and then locked the company out of the terminals costing it 95 percent of its business. These are the latest in a series of complaints the FMC has received against major carriers related to their business practices dating back to 2020 and the beginning of the surge in container shipment volumes.
Many of the complaints have focused on D&D charges that piled up as shippers and truckers reported problems making reservations or finding capacity at yards. The FMC repeatedly warned carriers and terminal operators about their practices and the D&D fees became one of the issues leading to the passage of the 2022 Ocean Shipping Reform Act. In addition to the fees, the latest complaints focus on the failure to complete delivery services, threats of retaliation, and failure to deal, all violations of the Shipping Act.
Samsung Electronics America (SEA) charges that it was relying on Zim to provide “store door” delivery as part of its contracts, but that carrier “fell far short of its responsibilities and obligations,” since late in 2020. As part of its freight contracts with Zim, Samsung contracted for inland deliveries to distribution centers and customers of containers coming from overseas.
“As a result of Zim’s unreasonable practices, SEA has been forced to pay excessive and unlawful charges (D&D) … and has been forced to undertake and perform the ocean carrier's inland transportation responsibilities in order to continue to import its products sold to American consumers,” they write in the complaint. “As a result of Zim’s conduct, SEA has sustained serious and substantial injuries and monetary damages, including paying erroneous detention and demurrage charges.”
Samsung says that it incurred “since 2020 in excess of 2,000 individual demurrage charges and in excess of 7,000 detention type charges,” although it did not specify a dollar amount for the fees. They allege that Zim “proffered various excuses relating to alleged chassis shortages, trucker shortages, inclement weather, and port and terminal congestion matters, which were neither within the control of SEA nor the responsibility of SEA under the store door terms.” Among the charges in their complaint are also issues related to threats of retaliation and they contend that Zim has refused the release of SEA containers due to the unpaid fees and other issues.
Also starting in 2020 and continuing until MVM became insolvent at the end of February 2022, the California logistic company charges MSC’s business practices contributed to piling up $800,000 in per diem fees. They charge that MSC failed to provide adequate time for returning the containers and constantly changed the returning dates of the containers, sometimes by more than three weeks, forcing MVM and our clients to pay for storage and chassis fees. When they arrived at the yards they often experienced delays of up to eight hours.
“Since we refused to pay it, MSC has rescinded MVM permit to access its terminal since March 2022,” charges MVM. “Unfortunately, 95 percent of our clients used MSC and lost all that business.” After the company was shut down, MVM got MSC to reduce the fees to $380,000, “but our access to the terminal has not been reinstated.”
Both companies filed with the FMC requesting hearings on their charges of violations of the Shipping Act. In 2022 alone, shippers have also filed complaints with the FMC against CMA CGM, Hapag-Lloyd, HMM, Maersk, ONE, Yang Ming, and Wan Hai, as well as terminal operators.