Container Line Calls Allegations of Shipping Act Violations 'Entirely False'
Orient Overseas Container Line denied allegations that it violated U.S. shipping regulations, saying a complaint filed by Bed Bath & Beyond (BBBY) in April (see 2305010049 and 2305020019) was "an unfortunate campaign to distort and obfuscate the relevant facts, contracts and law, in order to secure an unwarranted return." The container line said neither the statements in BBBY's complaint "nor the text of the contracts themselves" support claims that OOCL breached its contracts.
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BBBY told the Federal Maritime Commission that OOCL violated the terms of multiple service contracts and failed to make space available for BBBY's cargo. In its May 22 response, OOCL denied those allegations and others, including that the container line "exploited customers" and "refused to deal with BBBY," calling the accusations "entirely false." OOCL said it, along with other carriers, was facing "unprecedented challenges" during the time of the contracts from July 2020 to April 2022, including pandemic restrictions, supply chain congestion and "record growth" of U.S. imports.
Rather than try to drive up freight rates and create "artificial scarcity," OOCL said, it "invested in providing new capacity and service options, and worked cooperatively with BBBY and other shippers to provide the highest levels of service quality under extraordinary circumstances." OOCL also said that while it tried to meet BBBY's demands, BBBY "repeatedly and without explanation failed to manage its own supply chain," exacerbating bottlenecks for other shippers and for OOCL as they dealt with supply chain challenges.
The shipping line also said the FMC lacks "subject matter jurisdiction" over BBBY's claims, saying the shipping regulations don't cover breaches of contract, which must be handled by the U.S. court system. BBBY can't "unilaterally expand the agency’s jurisdiction by relabeling contract-based claims as Shipping Act violations," the complaint said.
Although the Ocean Shipping Reform Act of 2022 did give the FMC authority to regulate cargo space accommodations under service contracts, the conduct alleged was done before the bill was enacted, OOCL said. "The Commission cannot repurpose other provisions of the Shipping Act in novel and unintended ways, in order to reclaim regulatory powers that Congress specifically removed," OOCL said. OOCL added that BBBY misinterpreted the Shipping Act, stating that the FMC regulates practices done on a "normal, customary, and continuous basis," not for a specific contract.
OOCL asked the FMC to dismiss the complaint with prejudice, award attorney's fees and costs to OOCL and issue any further relief "as may be appropriate." The company also requested an oral hearing.