Shipper Alleges Evergreen Deliberately Refused Contracted Space

An importer of after-market auto body parts from Asia, CertiFit, is the latest shipper to file a complaint with the Federal Maritime Commission seeking reparations from Evergreen for violations of the Shipping Act of 1984. The complaint stems from early in the pandemic and alleges that carriers “unjustly and unreasonably exploited customers by substantially increasing their profits at the expense of shippers.”

The complaint alleges that Evergreen “initiated a practice of systematically failing to meet its quantity commitments,” under its service contract, and like the complaints of many other shippers, CertiFit reports it was forced into the spot market at significantly increased expense, but that it also received a lower level of service on its shipments. They contend that Evergreen was benefitting from the unreasonable practice by being able to sell previously contracted capacity on the spot market or to other shippers willing to pay a higher premium.

Evergreen’s unreasonable practices were “knowing and deliberate and were not due to a lack of available space,” according to the complaint. CertiFit reports that after securing space on the spot market, its containers traveled on Evergreen ships which “demonstrates that the respondent did, in fact, have capacity to carry the complainant’s containers pursuant to its service contract.” In other instances, they report that their containers were transported on vessels belonging to OOCL, an alliance partner of Evergreen.

CertiFit had a service contract for 1,000 TEU (445 40-foot boxes) to be transported primarily from Taiwan as well as Hong Kong, China, and South Korea to Salt Lake City, Utah or Memphis, Tennessee between April 2020 and April 2021. During that time, they report that Evergreen only transported 35 percent of the contracted volume forcing the shipper to seek carriage from other sources at higher rates or forgo shipments. They allege that Evergreen’s conduct suggests “a deliberate practice of entering into service contracts based on quoted rates while not expecting to fulfill the service commitments.”

The complaint says that Evergreen refused to accept loaded shipping containers in Asia under the service contract. In addition, they state that Evergreen refused to provide empty containers in Asia for loading. CertiFit also cites the blanking of sailings that deprived shippers of capacity by creating artificial scarcity in the market driving dramatically increasing prices on the spot market.

In addition to paying significantly higher spot rates, CertiFit says it was usually provided a lower level of service. Under the sport market agreements, they report that loaded shipping containers would only be delivered to the nearest railyard instead of the company’s facilities. They say that this resulted in an additional cost of drayage trucking and less time for unloading and returning containers before daily container and chassis detention charges began to accrue.

The deliberate actions of the carrier they report have damaged the shipper by at least $750,000, or in an amount to be shown in the evidence of the case. CertiFit is seeking reparations as well as an order to preclude Evergreen from refusing to provide CertiFit with its allotted space at the rates agreed upon in future service contracts.

The complaint was filed on May 4 and served to Evergreen at the end of last week. The carrier has 25 days to respond.