Shipper Alleges That Hapag-Lloyd "Created Logistical Paralysis"

FMC complaint
Shipper alleges in an FMC complaint that Hapag could have warned to port congestion impacting containers (Port of NY NJ file photo)

Published Jul 3, 2023 12:26 PM by The Maritime Executive

Shippers continue to file complaints with the Federal Maritime Commission alleging over the past few years during the surge in volumes that carriers violated the Shipping Act of 1984 and the Ocean Shipping Reform Act. Most of the complaints are seeking relief from Detention and Demurrage fees (D&D) or in some complaints costs incurred because carriers forced the shippers to buy space in the spot market when contracted space was not available. 

In a new complaint filed on June 30, lawyers for an Illinois importer and broker of fruit juices, argue that carriers had a broader obligation during delays and congestion in ports. In addition to seeking relief for D&D costs, lawyers for Rahal International argue that Hapag-Lloyd through its actions “created logistical paralysis at the Port of New York and New Jersey,” between April and June 2022 costing the company nearly three-quarters of a million dollars in damaged product as well as unreasonable D&D fees, fees from their drayage carriers, and storage costs for empty containers.

“The violations arose from Hapag’s failure to provide adequate facilities for the return of empty containers while continuing to accept business and charge excessive ocean freight fees with knowledge of the lack of facilities and without providing alternatives, as well as, the resulting logistical paralysis that precluded Rahal from its retrieval of loaded containers,” writes William M. Fennell, Esq. of the law firm Giuliano McDonnell & Perrone, representing Rahal.

Hapag declined to comment on the case. The complaint was filed at the end of last week and the company’s lawyers will review and in due course file a response with the FMC. 

The complaint contends that Hapag continued to accept containers with the knowledge that it lacked the capacity or facilities to handle and store returned containers. They cite the build-up of empties at the Port of NY/NJ at least a year prior and again in the spring of 2022 which impacted the shipper and its drayage provider.

“Hapag failed to advise Rahal of the backlog of empty containers again building up in and about the Port of New York and New Jersey in and around April 2022,” they write in the complaint. They cite the carrier’s failure to send vessels to clear the backlog in the port and to provide the shipper reasonable free time while the port congestion would delay returns. They write that Hapag “effectively and unilaterally impounded chassis and used them as de facto storage platforms” for empty containers at the shippers’ expense.

The complaint makes the argument that “Hapag failed to offer to deviate or otherwise change the destination of Rahal’s goods that Hapag was carrying to the port.”  

They go on to cite seven specific laden containers that Rahal shipped with organic apple juice that arrived in the port on May 15-16, 2022 but were not available for pickup until June 8 to 15. When the apple juice reached the company’s facilities, it was determined it had underwent fermentation and testing showed that resulted in excessive aerobic plate, yeast, and mold counts. As a result, the complaint states that the shipper sustained actual damages of nearly $200,000 for deteriorated, spoiled and/or otherwise unfit product.

The total complaint cites just over $715,000 in injuries and damages. In addition to the damages to the product, they argue the company was charged nearly $300,000 in unreasonable D&D fees. Included in the damages are also more than $150,000 in excess haulage fees, and over $63,000 in extra expenses.