Bankrupt US-based retailer Bed Bath & Beyond is continuing to claim that the shipping industry and its business practices during the pandemic were a factor in the company having to cease trading earlier this year.
In its latest move BB&B has filed a complaint with the Federal Maritime Commission (FMC) seeking reparations totalling more than $15m from Yang Ming for denial of service, premium fees, and detention and demurrage (D&D) charges incurred in 2021 and 2022.
The filing, submitted by the company on September 12th, is part of a series of legal moves by BB&B, which is attempting to seek restitution which would contribute to the bankruptcy settlements. In April the company filed a complaint with the FMC against Orient Overseas Container Line (OOCL) and OOCL (Europe), alleging that the carrier had exploited price inflation in container shipping, as well as “deliberately” denying space to the retailer. BB&B alleged that this caused $25m in excess costs as well as an additional approximately $6.4m in D&D fees, which BB&B contends were a result of OOCL’s business practices between 2020 and 2022.
Yang Ming in April 2023 filed a complaint of its own, in the Southern District of New York, Federal Court. They sought to block BB&B’s claims of $7.8m in actual costs due to the issues cited with the service provided and fees imposed by the carrier. A week after the filing BB&B informed the court of its voluntary bankruptcy petition and in June the court issued an automatic stay of “the commencement or continuation” of a judicial action based on the bankruptcy. The court case could proceed if BB&B resolves the bankruptcy.
In its filing to the FMC, the former retailer cites many of the same issues as before, contending that “Yang Ming took advantage of price inflation in the container shipping sector and unfairly exploited its customers.” They allege that the carrier “engaged in a practice of systematically failing to meet its service commitments,” resulting in enormous expense to BB&B, and then filed a “retaliatory declaratory judgment complaint,” in the US District Court. Like the complaint against OOCL, they allege that Yang Ming flouted its service commitments, engaged in a practice of coercing the shipper, charged unreasonable D&D fees when it was not possible to return containers, and refused to negotiate.
The kernel of the legal case is an annual service contract signed by BB&B that began on May 1st 2021, for the transport of 1,000 FEUs. BB&B alleges that the carrier provided no space during the first month of the contract, and that, when confronted, it admitted that it had over-committed to its customers. During the 12-month period BB&B say that Yang Ming carried just 149 FEUs, 85 percent less that the 1,000 FEUs agreed in the contract. That, said BB&B, resulted in more than $6.6m in costs to the retailer as it was forced to find other space for its containers. The company further contends that Yang Ming coerced them into paying nearly $300,000 in surcharges, and charged nearly $750,000 in D&D fees, and that Yang Ming refused refunds on the fees.
BB&B cited nearly $7.7m in costs, BB&B is seeking an award of reparations. Under FMC rules they are seeking that the amount be doubled. This is based on what BB&B claims is a conscious pattern which constituted violations of the Shipping Act.
The complaint highlighted that this was one of numerous similar complaints now before the FMC, each of which cites denial of service. Many shippers have alleged that the carriers failed to honour previously signed service contracts, amid a surge in shipments and capacity constraints. Each of the complaints contends that carriers was in fact putting the previously contracted space into the significantly more profitable spot market. Several service complaints have been settled under confidential terms while most of them remain in front of the FMC.