Bed Bath & Beyond Accuses MSC of Violating Shipping Regs, Unfair D&D Fees

Bed Bath & Beyond filed a complaint with the Federal Maritime Commission this week accusing Mediterranean Shipping Company of violating the terms of a service contract and unjustly assessing millions of dollars in detention and demurrage charges. The company said MSC failed to meet its service requirements, coerced Bed Bath & Beyond into paying "extracontractual prices and surcharges," and assessed fees when Bed Bath & Beyond couldn't pick up or return the containers.

Bed Bath & Beyond, which filed for bankruptcy earlier this year and is identified in the complaint as 20230930-DK-Butterfly-1, requested reparations for all charges "that the FMC determines did not comply" with the Shipping Act. The retailer also is hoping the FMC orders MSC to cease and desist all practices that violate U.S. shipping regulations.

The complaint is similar to the previous allegations filed by Bed Bath & Beyond this year, including one in April against Orient Overseas Container Line (see 2305010049) and another in September against Taiwan-based carrier Yang Ming (see 2309180038). In both cases, Bed Bath & Beyond accused the companies of failing to either provide the containers or vessel space it had been promised and of charging unfair detention and demurrage fees when port congestion prevented the retailer from picking up the containers.

In its latest complaint, Bed Bath & Beyond said it entered into two service contracts with MSC: one from July 2020 to April 2021 and another from May 2021 to April 2022. Each contract called for minimum cargo quantity commitments, but MSC, like the other carriers, "systematically failed" to meet those requirements, Bed Bath & Beyond said. The carrier instead allocated its space to other "higher-priced cargo" from other shippers to maximize profits, the complaint said.

It said MSC engaged in a "pressure campaign" to get Bed Bath & Beyond to pay peak season surcharges instead of the lower rates the two sides had already agreed to in their contract. The carrier signaled that paying peak rates was the only way to move Bed Bath & Beyond "to the front of the line" because "all of its other customers were agreeing to pay it," the complaint said. The retailer said MSC's imposition of these charges or spot market rates was "broad and programmatic."

During the 2021-2022 shipping year, MSC provided 40% less space than what was committed to Bed Bath & Beyond, the retailer said, resulting in a shortfall of more than 1,600 40-foot equivalent units for which the company "had to make alternate transportation arrangements at higher prices or forgo shipping such cargo altogether." That led to "excess freight charges paid, lost profits, and/or other business damage," Bed Bath & Beyond said. Had the company "been unable to secure any alternative carriage" that year, MSC would have cost the company profits that "would have amounted to an astronomical" $112.8 million dollars, the complaint said.

The retailer said it was "forced to pay" more than $5 million over the rates it would have paid had MSC charged the rates for the 2020 contract, and over $9 million in peak season surcharges for the 2021 contract.

Bed Bath & Beyond also said it paid over $23 million in detention and demurrage for both contracts, and a "substantial majority" were "unjustly and unreasonably assessed." The company said most of these charges were assessed despite the fact that it couldn't pick up or return the container due to "circumstances outside" its control, such as port congestion or equipment shortages.

MSC didn't respond to our request for comment.