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Samsung Electronics America fires D&D claims at carriers

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Samsung Electronics America (SEA), an importer of electronic goods into the US, has launched a salvo of lawsuits against multiple carriers alleging that shipping lines were selling door-to-door delivery services that they could not complete.

Last week Alphaliner reported on the latest claim by SEA at the Federal Maritime Commission (FMC) aimed at the South Korean line HMM, which allegedly levied 96,000 detention and demurrage (D&D) charges in error during the pandemic.

The HMM claim is the latest in a string of similar claims against carriers in the Pacific trades, including COSCO and its subsidiary, OOCL, Zim and SM Line.

In its latest action Alphaliner said the shipper: “Alleges that from mid-2020 HMM began ‘repeatedly and chronically failing to maintain just and reasonable practices in connection with its inland transportation obligations’.”

In the filing to the FMC, SEA lists eleven “unreasonable actions” that HMM had taken during the period in question that had resulted in excessive D&D charges, which Alphaliner says could run into the millions of dollars.

SEA alleges, among other things, that HMM restricted or rejected empty returns; claimed port congestion was an issue, with the carrier compounding delays: claimed shortages of trucks, rail and both road and rail chassis: there was a failure by HMM to provide support or locate containers and the carrier unilaterally rerouted cargo.

In addition to the above failings the shipper claims that HMM, “began dramatically increasing amounts for alleged D&D charges resulting from HMM’s inland transportation failures”.

SEA maintains that these 96,000 incidents relate to freight moved under door-to-door contracts, meaning that the carrier had undertaken to pick-up, transport and deliver the goods to the required inland destinations.

At the height of the pandemic congestion and equipment shortages meant that cargo was often stranded at ports, while empties could not be delivered. SEA alleges under the contracts agreed the carrier should bear the responsibility for all D&D charges and the costs of delay.

It is claimed that the line instead withheld delivery of cargo until all D&D charges were paid, in contravention of the US shipping laws.

The FMC docket also outlines the discussions between SEA and HMM, which the shipper said were held in good faith, HMM decided not to address the offer of mediation, but said it would rather address each of the 96,000 issues individually.

In a final attempt to reach a settlement SEA and HMM met in February this year: “In the Renewed Demand, SEA highlighted the substantial data and documentation supporting the claims that had already been provided to HMM, an enhanced analysis of the damages suffered as a result of HMM’s actions and made a final request that HMM agree to engage in meaningful settlement negotiations before a mediator." HMM once again declined to participate in mediation, which ultimately resulted in the filing to the FMC on 5 June.

In a similar complaint against Chinese operator COSCO, SEA alleges that the carrier, after agreeing to investigate SEA’s complaints, the shipper said: “In the ensuing weeks, and ultimately months, there was no meaningful dispute resolution progress made. Indeed, it became apparent to SEA that COSCO was unwilling or unable to even meaningfully evaluate its own charges, and in significant instances COSCO did not know and could not substantiate COSCO’s own charges and invoices on SEA Containers that had been issued and paid.”

In another case brought against, COSCO subsidiary OOCL, SEA again alleges that the carrier would not negotiate over the charges, leading to the filing of charges with the FMC.
In the case of Zim, the inland complaints are similar to those described to other carriers, however, in addition to these charges, SEA alleges that Zim engaged in retaliatory action following the shipper’s complaint, in contravention of FMC regulations.

“In response to Complainant’s efforts to address ZIM’s shipping and charging practices, resolve disputes, and dispute invoices, ZIM threatened to retaliate, and in fact retaliated, against Complainant and SEA Containers with respect to delivery of cargo and refusing available cargo space accommodation.”

Such action, if proved, could add to the eventual costs to the carrier in fines.