Shipper files complaint with FMC against China Shipping in demurrage and detention dispute it lost in arbitration.
A shipper has filed a complaint with the Federal Maritime Commission claiming it has been charged for more than $600,000 in detention and demurrage for cargo that never reached its final destination in China.
JC Horizon, based in Ontario, Calif., made the complaint against China Shipping Container Lines (CSCL) after losing an arbitration in February in New York that was conducted under the rules of the Society or Maritime Arbitrators (SMA). CSCL has since been merged into COSCO Shipping.
The dispute revolves around the shipment in 2014 of 38 containers of distillers dried grain with solubles (DDGS), a byproduct of the ethanol industry that is used as animal feed.
The containers were stuffed in Chicago, transported by train to Los Angeles and loaded on a ship to be delivered in Huangpu, China. The containers were discharged in Nansha with the intent to transport them by barge on the Pearl River to their final destination in Huangpu.
The complaint says, “Discharging the containers at Nansha was a decision CSCL made on its own. There is no reference in the parties’ bill of lading or service contract to Nansha as the port of discharge or place of delivery.”
JC Horizon’s complaint says while the containers were at sea on the way to China, its buyer expressed concern because the shipment was scheduled to arrive during the Chinese holiday known as Golden Week and that the marine terminal in Nansha would be closed. It also said the importer was concerned the DDGS might not arrive before a China Inspection and Quarantine (CIQ) permit expired.
According to its complaint, “JC Horizon ultimately decided not to make any change to the port of discharge. Instead, JC Horizon found a different buyer who would take delivery of the cargo at Huangpu. Accordingly, the original bill of lading was never modified. That bill of lading and communications between JC Horizon and CSCL expressly show that Huangpu remained the port of discharge/place of delivery.”
It says, “CSCL never delivered the cargo to Huangpu. Instead, it unilaterally decided to unload the containers at Nansha and indefinitely hold them there.”
JC Horizon said it lost the buyer because of CSCL’s decision to hold the cargo. When it found a new customer in Vietnam, CSCL demanded payment of detention and demurrage.
The containers remained in Nansha for over nine months when the CSCL moved them to Hong Kong and disposed of the cargo.
The SMA arbitrators hearing the case said the threshold factual question in dispute between the two companies was whether the parties agreed that CSCL “would promptly move the containers to Huangpu from Nansha on discharge from the vessel.”
JC Horizon argued the extensive email exchanges between the two companies were evidence of such an agreement, while CSCL argued to the contrary and gave evidence an agreement to hold the cargo at Nansha until JC Horizon provided it with revised instructions as to the consignee and place of delivery and surrendered the outstanding bill of lading against which a new bill of lading would be issued.
The arbitration panel found the email exchanges and connected facts support CSCL and found the carrier “did not breach the contract by holding the cargo at Nansha, following its discharge there and not arranging for its transfer to Huangpu” and that CSCL’s “applicable tariff sets forth the rates of detention charges that carrier claims and that the contract also supports carrier’s claims for indemnification in respect of demurrage charges of the terminal at Nansha, as well as carrier’s incidental expenses for disposing of the cargo at Hong Kong.”
But in its complaint to the FMC, JC Horizon says CSCL violated the Shipping Act. It says “service contract and tariff at issue here do not permit CSCL to impose charges for detention and demurrage for a shipment that never reached its agreed-upon destination” and to “unreasonably refuse to deal or negotiate.”
JC Horizon says the $600,000 that CSCL demanded for detention and demurrage was “substantially more than the value of the cargo itself, which was to be sold to the original buyer for less than $400,000.”
JC Horizon fights fees in cargo dispute
