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Shipper Seeks FMC Relief from $2M in D&D Saying COSCO Should Divert Cargo

Port of New York containers
Shipper argues with the Port of NY/NJ backlogged COSCO should have diverted traffic (file photo)

Published Jan 11, 2024 8:12 PM by The Maritime Executive

 

While the shipping community continues to wait for a new ruling from the Federal Maritime Commission on the detention and demurrage (D&D) charges, a Texas-based shipper is also filing a complaint seeking up to $2 million in relief for what it sees as unfair and unjust charges. The shipper is the latest in a growing number of complaints the FMC received charging that carriers exploited customers during the congestion at ports and delays resulting from the surge in volumes in the pandemic.

“COSCO refused to divert shipments to less crowded ports and also failed to extend the number of free days before accessing the charges,” asserts a Houston, Texas-based importer of lighting products, Visual Comfort & Co. (VCC), in a complaint filed with the FMC on January 4. During 2021 and 2022, VCC says it shipped thousands of containers with COSCO and is incurring still mounting D&D charges.

The company reports current D&D charges and yard storage expenses of $1.219 million. They note that the charges are currently accruing and they believe they are now approaching $2 million.

The complaint alleges that COSCO was aware of the problems in ports and that the carrier “unjustly and unreasonably exploited customers, vastly increasing their profitability at the expense of shippers, increasing the cost of freight and goods sold to the American public in general.”

They specifically cite as an example the massive backlogs that developed in mid-2022 at the Port Authority of New York and New Jersey Marine Terminals which lacked sufficient capacity to take back all the empty containers. They contend that carriers such as COSCO were not loading back the boxes in sufficient quantities. Not only they said did this result in a lack of storage space but also tied up and made unavailable chassis equipment which was holding the empties that could not be moved into the yards.

“The financial and operational burdens for storing these containers were unfairly and inappropriately forced upon shippers, among other parties not at fault,” they contend in the complaint. They highlight that the FMC in its Interpretative Rule said the purpose of D&D is to incentivize cargo movement while saying because carriers were not moving containers, there was no way shippers could be incentivized to move the boxes and return the empties.

Despite the mounting problems, VCC says COSCO continued to accept its goods for ocean common carriage and for receipt, handling, storage, and/or delivery through those ports. They say because of the congestion the charges could not serve as a financial incentive to promote freight fluidity. They argue that COSCO should have diverted containers to other ports if it was unable to clear the backlog at its terminals or have provided additional time. They also argue that COSCO’s billing failed to provide sufficient details on the charges.

The issue of use and the purpose of D&D fees is a persistent complaint among shippers and became a central issue in the 2022 reform of the U.S.’s Ocean Shipping Act. The FMC has acknowledged a dramatic increase in the number of complaints, developing several resolution methods to quickly resolve the smaller complaints, while a number of the major carriers are being forced to respond to the broader issues in large claims such as the new complaint from VCC. The FMC is expected early in 2024 to issue new policies for the fees.