Samsung, HMM clash in US over shipping rates

 

 

Samsung Electronics and HMM are engaged in an escalating legal dispute concerning Samsung’s refusal to compensate the shipping company for freight transport services in the United States, according to documents from the U.S. federal and district courts, Tuesday.

HMM filed a complaint with the U.S. District Court for the Central District of California on July 1 (local time) to receive $13 million from Samsung Electronics America. The plaintiff claimed that the defendant breached its contractual obligations by failing to promptly settle charges for freight transport services.

“We decided to proceed with the lawsuit as Samsung did not pay for our services,” an HMM official said.

The lawsuit appears to be a retaliatory response to Samsung’s request for the Federal Maritime Commission (FMC) on June 5 (local time) to order HMM to compensate the electronics company for losses stemming from some 96,000 cases of demurrage and detention.

Demurrage charges refer to fees paid by cargo owners for using containers within ports beyond the free time allotted. Detention charges, on the other hand, are fees imposed for using containers outside of ports beyond the free time allowed.

Samsung’s U.S. operations characterized the charges made by HMM as “erroneous,” alleging that the shipping firm had consistently failed since mid-2020 to provide fair and reasonable inland transportation services, as well as in promptly removing containers from American terminals.

While Samsung did not specify the exact amount of compensation it sought in the FMC document, estimates suggest it exceeds $7 million. This amount is notably larger than the compensation claims Samsung previously made against China’s COSCO Shipping Lines, Hong Kong’s OOCL, Israel’s ZIM, and Korea’s SM Line.

When Samsung lodged the compensation claim last month, HMM criticized the conglomerate for rejecting additional discussions about the validity of the demurrage and detention charges.

A Samsung Electronics spokesman declined to comment on the ongoing litigations.

Maritime affairs experts believe that the U.S. Ocean Shipping Reform Act, which came into effect in 2022, could potentially give Samsung an advantage over HMM in their legal dispute. However, they acknowledge that it may still take some time for U.S. federal and district courts to come to conclusions on the matter.

The U.S. lawmakers passed the act following the global supply chain crisis during the COVID-19 pandemic. This legislation appears to be aimed at supporting American cargo owners against shipping firms and addressing inflation stemming from logistics price increases. Concurrently, the FMC initiated investigations into global shipping companies regarding their freight rates.

Based on these supportive measures, Samsung and other cargo owners have filed a series of lawsuits against global shipping companies, most of which ended in the victory of the cargo owners.

“The FMC will likely regard Samsung as an American cargo owner, due to the company’s large-scale investments in the country,” Korea Maritime Institute senior research fellow Lee Sung-woo said. “Considering the U.S.’ policy directions, it will be difficult for HMM to win the lawsuits.”

Source: Korea Times by Park Jae-hyuk