US Company Accuses Danish Carrier of Violating Shipping Laws, Overcharging by $900,000
Connecticut-based electronics manufacturer Hubbell Inc. accused freight forwarder DSV of violating U.S. shipping regulations by failing to provide the required service under a negotiated contract, Hubbell said in an Aug. 28 complaint to the Federal Maritime Commission. The manufacturer also accused DSV, headquartered in Denmark, of assessing $900,000 in overbilled or “improper” charges.
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Hubbell said DSV’s actions violated the Shipping Act and are “unjust and unreasonable,” adding that the forwarder feigned “regulatory compliance concerns as a means to obscure and/or coerce” renegotiations of contracts. The manufacturer asked the FMC to order that DSV "cease and desist" from its "unlawful conduct” and pay Hubbell reparations.
“DSV’s actions and practices at issue have been repeated and ongoing for a lengthy period of time,” the complaint said, adding that they are “likely to continue unless DSV is directed to cease and desist in this proceeding.”
Hubbell said the two companies agreed to enter into contracts for shipments between the U.S. and China in April 2022. Although Hubbell signed the agreements on April 1, it said DSV didn’t sign the agreements and instead told Hubbell in May that it needed to make some "modifications to the wording” after discovering “some FMC compliance issues.”
Hubbell said the proposed revisions amounted to “material and substantive changes well beyond regulatory issues,” including by creating “conflicts and ambiguity with the termination provisions” of one of the contracts. DSV also sought to include a reference to its “DSV Rules Tariff,” revise the minimum quantity commitment “shortfall terminology” and add language that "would be needed or appropriate" for separate service agreements, the complaint said.
In September, DSV told Hubbell, which had not agreed to the changes, that it “no longer wanted or needed Hubbell to sign” the revised service contract because it had “worked out the filing situation with the FMC,” the complaint said. DSV emailed Hubbell: “Attached please find a copy of the rates that have been submitted to the FMC.” Hubbell said the email included revised service contracts that "contained significant non-economic terms attempting to again revise the terms of the” original agreements.
Hubbell said it “reviewed the proposed drafts and sought to reconcile the drafts with” DSV’s FMC concerns, but the “proposed language still went well beyond ‘some technical updates.’” The “proposed revisions would have changed the terms to Hubbell’s detriment,” the complaint said.
Hubbell also said DSV’s charging practices “revealed significant overcharges” in “excess of $900,000.” The complaint said the overcharges stemmed from surcharges “not in accordance" with the service contracts, including “Peak Season Surcharges not properly chargeable under agreed upon rates and terms” and “erroneous and/or misrepresented freight billing.” The manufacturer also said it was overcharged for detention and demurrage fees, adding that DSV's charges included “repeated billing errors and discrepancies,” such as improper calculation of demurrage days, rates and double billings.
In December 2022, Hubbell said, it gave DSV a 90-day early termination notice as part of its master service arrangement with the forwarder. DSV responded with new proposed agreements in January 2023 that would have eliminated that 90-day termination provision from "applying to the revised” service contracts, the complaint said. Hubbell said it didn’t agree to the new terms.
In March, DSV responded to Hubbell’s original December termination notice, which took effect “almost three weeks before,” to dispute the 90-day termination clause. In an April response to DSV, Hubbell expressed “concerns with respect to DSV’s FMC regulatory compliance generally” and pointed to its overcharges that “appear to violate the Shipping Act and which Hubbell is considering its legal rights to pursue against DSV.”
The next month, DSV sent Hubbell three separate invoices charging Hubbell $560,000, $496,000 and $608,000. DSV also filed a lawsuit at a Delaware federal court, accusing Hubbell of improperly terminating the service contract, among other things, the complaint said. DSV told the court that Hubbell caused it to suffer at least $2.5 million in damages.
DSV did not respond to our request for comment.