Claim for US$12.3 million! Logistics giant Flexport sues cargo owner

This incident stems from the fact that Flexport, as a non-vessel operating common carrier (NVOCC), accepted cargo from BCO cargo owner Giti between 2021 and 2023, and was responsible for transporting hundreds of batches of tires from Giti to the Port of Long Beach, California.

As a NVOCC, Flexport not only arranged international shipping for Giti's goods, but also assumed the responsibility of the ocean carrier and issued the bill of lading. We also take full responsibility for the smooth delivery of the goods to their final destination.

According to the contract signed between the two parties, Giti is responsible for paying all costs related to cargo transportation, including those assessed by vessel operating carriers (VOCCs), non-vessel operating common carriers (NVOCCs) and marine terminal operators due to the container being transported. Demurrage fees incurred when the container is detained outside the port for longer than the allowed "container-free period".

Flexport filed a legal complaint last Friday, claiming that Giti Tire failed to pay any demurrage fees, saying the fees accumulated up to US$12.3 million. Although Flexport clearly informed Giti Tire of the demurrage charges on many occasions and made every effort to assist it in retrieving the container and returning it to the port in order to minimize or avoid the occurrence of demurrage charges, Giti Tire still failed to return the container in time. , leading to a cumulative increase in costs. Giti's refusal to pay the demurrage fee is the inevitable result of its failure to return the containers despite Flexport's repeated urging.

Flexport stated that Giti Tire’s unpaid demurrage fees exceeded US$12.3 million. However, Giti disputed the amount of compensation and believed that the figure was “excessive.” At present, no evidence has been found of any dispute between Giti Tire and the US Federal Maritime Commission (FMC) regarding these allegations. Flexport said that although Giti Tire has accepted most of the invoices and admitted that it owes at least $7 million in debt, Giti has still "refused to pay any money." Under the terms of the contract signed by the parties, Flexport is entitled to receive all withdrawal costs, including reasonable attorneys' fees and a late fee of 1.5% per month of unpaid amounts, or the highest interest rate permitted under applicable law, whichever is lower.

Therefore, Flexport maintains that it is entitled to require Giti Tire to pay damages totaling $12.3 million, plus pre- and post-judgment interest, court costs and all other related expenses.

On April 8, a California court proposed the use of alternative dispute resolution (ADR) to avoid lengthy and costly litigation. The ADR process includes a variety of methods including settlement conferences hosted by a district judge assigned to the case or a Santa Barbara judge, court mediation panels, and private mediation. The court requires both parties to present their preferred ADR options at an initial scheduling meeting, the specific date of which will be notified separately.