US shipping association lodges FMC complaint against Maersk

Terneuzen, Holland - feb 3, 2019: a big cargo ship sails next to the seawall of the westerschelde sea towards antwerp with big white and grey clouds in the sky

A US-based shipping association has lodged a complaint with the Federal Maritime Commission (FMC) alleging carrier Maersk to have violated a 2020 shipping contract.

U Shippers Group Inc. made the complaint to the FMC on 30 August, alleging violations of the Shipping Act from a contract entered in June 2020.

In the contract, the complainant noted, Maersk committed to providing minimum space on its carriers for U Shippers members.

At the same time, Maersk was introducing a new online booking platform, Twill. Still in development stages, Maersk and U Shippers reached an agreement for the association to use the booking system exclusively for a two-year period.

The association, in exchange, would use the platform with its members.

The complaint noted that beginning in late 2020 or 2021, Maersk undertook a “series of acts” designed to shut out U Shippers from utilising space committed under the Service Contract.

In January 2021, through June 2021, Maersk repeatedly declined to provide the shipping volume it committed to in the Service Contract, U Shippers alleged.

The refusal to provide space forced U Shippers members to obtain space on other vessels at inflated spot market rates.

Additionally, U Shippers alleges that the Service Contract obligated Maersk to pay U Shippers a Volume Incentive Program (VIP) based on the number of containers shipped by Maersk.

The failure to provide space, U Shippers continued, reduced the amount of VIP payments U Shippers was entitled to under the contract. “This unreasonable practice resulted in a cash flow shortage for U Shippers,” the association added.

READ: Maersk completes $3.6 billion acquisition of LF Logistics

“Instead of selling the cargo space actually allotted to U Shippers under its Service Contract, Maersk denied U Shippers its allocated space and then sold such space to the highest bidder on the very same spot market to which their conduct forced U Shippers’ members to turn,” the complaint continued.

U Shippers alleged that Maersk’s actions constitute eight violations of the Shipping Act including unreasonable and undue preference to shippers other than U Shippers; and unfair or unjustly discriminatory action.

“As a result of the above actions and Shipping Act violations by Maersk, U Shippers and its members have been damaged monetarily,” the complaint concludes.

Through lost fees and higher shipping costs from alternative carriers, the association claims its members have lost $180 million and currently accruing and to be further demonstrated in lodging the complaint.

Maersk has continued to engage in “substantially similar conduct” with other shippers, the association added.

The proceeding has been assigned to Office of Administrative Law Judges, wrote William Cody, Secretary at the FMC.

The initial decision of the presiding officer in this proceeding shall be issued by 30 August 2023, and the final decision of the Commission will be issued by 15 March 2024.

Late last year home furniture supplier MCS Industries settled with COSCO Shipping Lines (CSL) for a confidential sum following the July 2021 filing of a complaint unfair rate pricing and collusion.

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