Florida furniture and household goods importer OJ Commerce LLC (OJC) has offered new findings in its legal complaint against Maersk-owned ocean liner Hamburg Sud, in a case being closely watched for its implications to the broader shipping community.
The company said in a filing with the Federal Maritime Commission (FMC) last week Hamburg Sud engaged in “repeated and systematic violations” of the Shipping Act when it failed to adhere to terms of its service contract with OJC.
The Ocean Shipping Reform Act of 2022 (OSRA22), which was signed into law in June, granted greater power of authority to the FMC to ensure competition and investigate complaints related to carrier detention and demurrage charges. Specific to the OJC case, OSRA22 prohibited “retaliation and other discriminatory actions” on the part of carriers against shippers.
OJC began working with Hamburg Sud in June 2020. Terms of the deal between the two companies called for shipments to be “reasonably spaced” throughout the contract’s life, ending May 31, 2021. That spacing amounted to eight twenty-foot equivalent units (TEUs) each week and was later increased to 10 TEUs weekly in August of 2020.
OJC alleges the Maersk-owned liner was not meeting the terms of the contract and reached out to the carrier about the missed capacity. OJC said it asked for additional ship capacity to make up for the past shortfalls.
A former Maersk risk management executive admitted in internal emails the company was behind at the time by 56 containers and “This is a very bad case for us which we will likely lose,” in urging space be allotted to OJC, according to the importer’s FMC filing.
The missed TEU obligations under the contract continued, which OJC said in an email to Maersk was “causing significant economic harm and interruption of business,” while it raised the possibility of taking legal action.
While internal emails presented in the OJC filing suggested the issue of capacity shortfalls was to be addressed, the furniture importer said Maersk turned around and retaliated against the company by refusing to negotiate terms of a new contract or make up for not meeting its originally agreed-upon services.
Former Hamburg Sud vice president Juergen Pump sent an internal email to a Maersk employee saying, “We should not engage in any renewal discussions with customer in light of the potential litigation. I would also not provide them with space under the existing contract.”
Attorneys for OJC called “this one-paragraph smoking gun email” proof of the company’s retaliation.
Maersk’s decision to cut ties with OJC meant the importer had to obtain cargo space in the pricier spot market.
“But often OJC was unable to secure shipments, and in most cases, was forced to forgo making shipments of goods to the United States altogether because the spot rates became too expensive to justify the cost of the container freight,” the OJC filing said.
Attorneys for OJC argue the company is entitled to damages based on the losses it accrued due to not having its contract fulfilled. The losses and how they were calculated were redacted in the FMC filing.
“Maersk robbed OJC of its only affordable way of shipping its products,” the company’s filing said and went on to say that if damages are not awarded, “Maersk—and undoubtedly other carriers—will continue to willfully violate the Shipping Act because it is more profitable to do so than comply with the law.”
OJC first filed its complaint against Hamburg Sud with the FMC in November of last year. Hamburg Sud will now have the chance to respond to OJC’s most recent filing.