Bankrupt Bed Bath & Beyond Goes After Container And Shipping Companies

Bankrupt Bed Bath & Beyond goes after container shipping lines

- May 1 headline at Freightwaves

Kind of an interesting story if true. Bed, Bath, and Beyond contracted for a specific number of containers to haul their ordered product to the US. From the way the allegations go, the Container Company/Shipper failed to provide the containers and sold the space on the ships to others for a higher amount. 


Bed, Bath, and Beyond (BBBY) has claims suing OOCL, the subsidiary of China’s Cosco, for ~ $32 million, and another $7.8 million in claims against Taiwan’s Yang Ming. Other than collecting damages, BBB may just be attempting to maximize the value returned to the debtors, according to one publication.

However, not supplying contracted containers and cargo space is a serious issue for the company and for other container users. Unless there is some type of clause in the contract, the container company is on the hook for the containers and the contracted cargo space. If both companies sold the space, I would think they would be on the hook for more than just costs and loss of sales due to no inventory.

The Bed, Bath, and Beyond allegations mirror those of numerous other cargo shippers in the wake of the pandemic that caused supply chain crisis. For example, another company, MCS Industries, has been filing claims against Cosco and MSC since August 2021.

“BBB had an MQC for 2,100 forty-foot equivalent units under its July 1, 2020-June 30, 2021, contract with OOCL. It said there was a shortfall of 624 FEUs. Calculated this loss equated to $2.2 million in additional shipping costs. BBB also had an MQC for 3,796 FEUs under its May 1, 2021-April 30, 2022, service contract with OOCL. It claimed OOCL came up 1,363 FEUs short, equating to $9.4 million in extra freight costs.” - Freightwaves

In another Federal Maritime Commision (FMC) complaint, MCS Inc. claimed several carriers refused to negotiate with it. Those negotiating with MCS were Cosco and Mediterranean Shipping Co. MCS claims the shippers “refused to provide more than a fraction of the cargo capacity MCS requested.”

According to MCS, the two carriers “changed their practices in a parallel and seemingly coordinated fashion, depriving MCS of its contractually agreed space allotments." Cosco and Mediterranean Shipping Co were selling MCS’s capacity. Amongst the sale was space actually allocated to MCS under its service contracts and then subsequently withdrawn. Withdrawn to the highest bidder on the spot market to which MCS was forced to turn to because of their actions.

During the months of May and June MCS alleged Mediterranean Shipping Co. provided 35% of the contracted space and Cosco provided “an infinitesimal 1.6%.” Of course both Cosco and Mediterranean Shipping Co are contesting MCS claims vigorously claiming they are false.

Federal Maritime Commision (FMC) announced plans to audit nine of the largest container carriers operating in U.S. markets, including Cosco and MSC, to find out if all or any were using their market power during the pandemic to overcharge shippers on detention and demurrage fees. The audit program, according to the agency, will also “provide additional information beneficial to the regular monitoring of the marketplace for ocean cargo services.”

I will have to check on the audit to see what became of it. 

If this is true, it would be a factual accounting of companies taking advantage during the pandemic. More to come later.

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