Bankrupt Bed Bath & Beyond Seeks Millions From Ocean Carriers

  • Bankrupt Bed Bath & Beyond Seeks Millions From Ocean Carriers

    Bankrupt Bed Bath & Beyond Seeks Millions From Ocean Carriers

    Bankrupt retailer Bed Bath & Beyond is seeking tens of millions of dollars from container shipping lines, claiming the carriers willfully abandoned service commitments at the height of supply-chain turbulence to reap enormous profits from the market turmoil.

    The home-goods retailer says in a complaint filed with U.S. maritime regulators that Hong Kong-based Orient Overseas Container Line pursued “brazen price gouging and profiteering” that cost Bed Bath & Beyond $31.7 million in extra freight charges, along with additional costs and lost profits.

    The filing April 27 at the Federal Maritime Commission came days after Bed Bath & Beyond filed for bankruptcy protection and said it planned to wind down its business.

    Taiwan-based carrier Yang Ming Marine Transport earlier last month filed a lawsuit in federal court in Manhattan seeking to block the retailer from pursuing a similar claim for $7.8 million, plus other costs, over allegations the shipping company breached ocean transport contracts. The container line says in its suit that Bed Bath & Beyond has sought the payment directly from Yang Ming but that the carrier rejects the claim.

    The disputes mark the latest in a string of cases importers have launched against container lines in the wake of the disruptions during the pandemic that sent transport costs soaring, with spot rates to get goods onto packed vessels skyrocketing and carriers imposing extra charges for boxes held at heavily-congested terminals.

    Some shippers reported freight costs rising 10-fold as carriers recorded record profits totaling tens of billions of dollars.

    Bed Bath & Beyond’s April 27 filing at the FMC appears to be one of the more far-reaching of the complaints, alleging aggressive and continuing action by OOCL to turn away hundreds of the retailer’s boxes while offering the company space on vessels from Asia to the U.S. at premium prices.

    The retailer is seeking to recoup as much money as possible as it winds down its business and looks to pay off creditors after filing for chapter 11 bankruptcy.

    Kalia Wong, a spokeswoman for OOCL, said the carrier has a track record of maintaining regulatory compliance and strong customer relationships. “We will continue to work with our customers and all relevant authorities to resolve any disputes in a professional, efficient and amicable manner,” Ms. Wong said.

    A representative for Bed Bath & Beyond didn’t immediately respond to a request for comment.

    The complaints spurred Congress to pass the first major overhaul of ocean shipping regulations in more than 20 years last summer, a measure strengthening the process for importers and exporters to file claims against ocean carriers with the FMC, a Washington, D.C.-based regulator. The law emboldened importers to file hundreds of complaints spurring carriers to refund or waive almost $950,000 in fees so far.

    Bed Bath & Beyond says it was forced to pay OOCL extra fees to send its freight on the carrier’s vessels or to use other carriers at inflated prices during the market turmoil that included enormous backups at U.S. ports. Bed Bath & Beyond also claims OOCL unfairly assessed charges for freight delays outside of the retailer’s control.

    The complaint includes emails from OOCL to Bed Bath & Beyond that the retailer says show the carrier auctioning space on vessels at ever higher prices.

    In one such email, an OOCL employee writes to a Bed Bath & Beyond employee that space on a ship is filling up quickly and that the retailer won’t be able to secure space without paying thousands of dollars in surcharges. “It is not our intention to gouge, but to position [Bed Bath & Beyond] to secure space on the vessel listed below,” the OOCL employee writes, according to the retailer’s complaint.

    Disagreements between shippers and carriers are relatively common as the companies navigate changing market demands, capacity and often-volatile spot pricing. Those disputes are often resolved when the sides negotiate their next contracts. Because Bed Bath & Beyond is going out of business it isn’t constrained by the prospect of alienating carriers.

    By: Paul Berger / WSJ

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