COSCO Charged Unfair Detention and Demurrage, Causing Over $1 Million in Damages, Importer Says
Visual Comfort & Co. (VCC) filed an amended complaint against COSCO Shipping Lines Co., the Federal Maritime Commission said in a Feb. 14 Federal Register notice. In the complaint, which was filed with the FMC Feb. 6, VCC said that from January 2021 to December 2022, COSCO didn't divert shipments to less crowded ports or extend the number of free days when "circumstances outside VCC's control" affected the shipment, leading to more than $1 million in damages.
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VCC, an importer of lighting products, said that the charges assessed by COSCO were "not just or reasonable" because of circumstances "outside the control" of the shipper, such as congestion at ports and shortages of equipment. From January 2021 to December 2022, VCC shipped "thousands of unique containers" through COSCO, which charged the shipper for detention, demurrage and storage totaling more than $1.2 million, the shipper said.
VCC pointed to census data from 2018 to 2022 showing that volume at certain ports decreased while increasing at other ports. Even though volume increased at certain ports, COSCO refused to divert shipments to the less crowded ports and failed to extend the number of free charges before assessing detention and demurrage charges, it said.
VCC also said that by mid-2022 COSCO knew that the "lack of return locations" for empty containers had reached "crisis level proportions" at the Port Authority of New York and New Jersey. Marine terminals in New York and New Jersey didn't have "sufficient storage capacity" to take back all the empty containers because "carriers like COSCO were not loading back the boxes in sufficient quantities," the complaint said. This was "directly responsible" for increased dwell times on import containers, and the "exorbitant" charges from carriers, VCC said.
Because COSCO "did not act with sufficient urgency to clear empty containers and redirect traffic to less congested ports, terminals that accepted empty containers without restrictions became flooded with truckers" trying to return the boxes, leading to "unsafe gridlock conditions," making it impossible to access the terminal, VCC said. Despite that, the New York and New Jersey terminals were considered "'open for returns,'" so the free time wasn't adjusted to account for the gridlock and COSCO continued to accept VCC's cargo through those ports, the complaint said.
VCC alleges COSCO failed to enforce "just and reasonable practices" relating to VCC property and that its assessment of charges "constitutes unreasonable refusal to deal or negotiate" with VCC, the shipper said. VCC is asking for an investigation on the complaint, an order finding that COSCO is guilty, an order for COSCO to pay VCC for the damages, and anything else the FMC deems just and proper.
VCC said that the FMC's Fact Finding Investigation 29 states that "'the purpose of demurrage and detention are to incentivize cargo movement'" (see 292205190035). COSCO's detention and demurrage charges and its omissions that led to the charges were "incapable of incentivizing cargo movement and therefore unreasonable," VCC said.
COSCO didn't respond to a request for comment.