Carrier Charged More Than $1M in Unfair Detention and Demurrage, Distributor Says
PKDC, a Colorado-based furniture distributor, accused ocean carrier CMA CGM of refusing to meet its commitments to the distributor, coercing "extracontractual" payments from PKDC, and charging detention and demurrage for situations outside the distributor's control. The furniture distributor, in a complaint to the Federal Maritime Commission dated May 10, said it paid over $1 million in unreasonable detention and demurrage and that CMA CGM cost it over $12 million by refusing to meet its quantity commitments under the service contract.
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The furniture distributor said it entered into a contract with CMA CGM from 2021 to 2022 with a minimum quantity commitment and agreed upon rates. CMA CGM failed to meet the minimum quantity commitment despite repeated requests from PKDC, "creating a shortfall" that "increased from week to week," the complaint said.
As a result, PKDC was forced to seek "alternative carriage" at ocean freight rates "far in excess" of the service contract rates, the distributor said. PKDC also had to book alternate shipping, and pay additional fees to move cargo into Colorado. This led to time sensitive goods often arriving late, leading to "lost sales and profits," PKDC said.
PKDC also paid unfair detention and demurrage, saying many of the detention and demurrage charges were assessed when appointments were unavailable, when "dual move requirements" had been made, or containers or equipment were unavailable.
CMA CGM also rejected shipments that were "valid" under the service contract and tried to add additional costs through peak season surcharges, PKDC said. PKDC said these were intentional moves to take advantage of high spot market rates by "refusing to comply" with contractual agreements in favor of shippers who would pay a higher price.
At the end of the service contract, PKDC said it was told by a CMA CGM account manager that the carrier had "'overcommit[ed] and under deliver[ed]."
PKDC is asking the commission to investigate the carrier, order it to stop violating the Shipping Act and require CMA CGM to pay it reparations for the alleged conduct. CMA CGM didn't respond to our request for comment.