Hamburg Sud faces $10 million in damages for Shipping Act violation

Hamburg Sud faces $10 million in damages for Shipping Act violation

The Federal Maritime Commission (FMC) has ruled against Hamburg Sud, a subsidiary of Maersk, in a case brought by OJ Commerce (OJC).

The FMC’s Chief Administrative Law Judge published a new initial decision on 7 June, stating that there is evidence that Hamburg Sud violated the US Shipping Act by refusing to deal with OJC and retaliating against it.

OJC, a Florida-based e-commerce home goods retailer, sought damages of $100 million. However, the FMC ruling disagreed with OJC’s calculation and determined an actual injury of $4.6 million.

The FMC also decided to award double damages “given that the violation was knowing and willful”.

Consequently, Hamburg Sud has been ordered to pay OJC reparations of $9.8 million.

READ: Maersk merges Hamburg Süd and Sealand

The case began in December 2021 when OJ Commerce filed a complaint against Hamburg Sudamerikanische and its US operation, Hamburg Sud North America.

OJC claimed that the carrier had breached its freight contract by failing to transport 30 containers and wrongfully billing demurrage charges.

The court dismissed claims related to unreasonable business practices and the carrier refunded the demurrage charges.

OJ Commerce later amended its complaint in February 2022, alleging retaliation and refusal to deal.

The judge noted that while carriers are not obligated to grant contracts to every potential customer, they are prohibited from shutting out a customer without legitimate transportation-related reasons and from retaliating against shippers.

In this case, the judge found evidence that Hamburg Sud chose to “disengage” with OJC due to the litigation risk posed by the shipper’s threat to file an FMC complaint.

Hamburg Sud and Maersk are currently reviewing the judgment.

READ: US shipping association lodges FMC complaint against Maersk

The FMC ruling marks one of the largest judgments awarded for a violation of the Shipping Act and carriers’ actions during the pandemic.

Earlier in April, a new bipartisan bill granted the FMC the power to block anticompetitive agreements among ocean carriers and marine terminal operators.

The U.S. House of Representatives said its goal was to ensure that the FMC can fully enforce the law and promote fair, competitive markets in the ocean shipping industry.

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