HMM and Yang Ming accused of breaching contract with US shipper
South Korea’s flagship carrier HMM and Taiwan’s Yang Ming Marine Transport have become the latest liner operators to be accused by shippers of failing to fulfill service obligations.
MSRF, a gourmet food producer, has filed an official complaint with the Federal Maritime Commission (FMC) against HMM and Yang Ming, alleging that the duo conspired to breach its shipping contracts with them and manipulated freight rates.
MRSF’s accusation comes after FMC commissioner Rebecca Dye announced on 1 June that the unprecedented consumer demand amid the Covid-19 pandemic had pushed up freight rates and there was no evidence that liners colluded to fix freight rates. Nevertheless, President Joe Biden passed the Ocean Shipping Reform Act on 17 June, promising to “crack down on ocean carriers whose price hikes have hurt American families”.
In its complaint, MRSF noted that China-US West Coast freight rates shot up nearly 10-fold since 2019, from US$2,700/FEU to US$25,000/FEU.
MRSF said that shippers have been forced into an artificially inflated spot market and accused HMM and Yang Ming of refusing to fulfill the minimum slot quantity commitments specified in their contracts. This allegedly pushed MSRF to buy space on the inflated spot market, which resulted in them suffering damages of over US$2.2 million.
HMM and Yang Ming are preparing their defences and the FMC has until 22 December to decide on the case.
In July 2021, US furniture maker MCS made a similar complaint against MSC and COSCO Shipping Lines to the FMC, but resolved its dispute with COSCO two months later. Its case against MSC is pending.