Giti Tire (USA) Ltd. has filed a complaint with the Federal Maritime Commission against a shipping carrier for its invoicing practices related to the “millions of dollars in unreasonable demurrage and detention charges” the tiremaker was billed.
In the complaint, Giti says in a period from 2021 to 2023 it used Flexport International LLC to ship containers from an overseas port to the U.S. The “large majority” of those shipments arrived in the U.S. ports of Long Beach, Los Angeles and Savannah.
Giti says the “hundreds” of invoices it received in 2022 and 2023 violate the Shipping Act because they don’t include precise details that allow the tiremaker to verify they are accurate. The complaint notes 13 specifics the invoices are supposed to include, such as the “date that the container is made available,” “the container number or numbers,” the start and end dates of free time, “the applicable detention or demurrage rule on which the daily rate is based,” etc.
Because those details weren’t spelled out, Giti’s complaint says a U.S. code is triggered that eliminates its obligation to pay the charge. The code says, “failure to include the information required under subsection (d) on an invoice with any demurrage or detention charge shall eliminate any obligation of the charged party to pay the applicable charge.”
Additionally, Giti alleges that Flexport’s practices “violate the Shipping Act provisions prohibiting unjust and unreasonable practices and unreasonable charges.”
Giti says it was charged detention and demurrage fees on days the specified port was closed, including weekends and holidays, and the container couldn’t be returned. “Such charges did not incentivize the movement of containers or function to promote cargo fluidity.”
The tiremaker also says the carrier invoiced Giti for detention and demurrage fees that Flexport had also billed to other parties, such as the motor carrier. (The complaint notes Flexport is defined as a “non-vessel-operating common carrier.”)
Giti says some of the accessorial charges on the invoices were “excessive,” and in some cases four- or five-times the market rate.
The tiremaker says it has asked Flexport to address all of these issues, but the company declined other than to provide a document it called an “OSRA addendum” which it said supplied the missing data. Giti says Flexport has not reissued complete invoices and the tiremaker “has no way to assess the accuracy of Flexport’s charges.” The tiremaker says the carrier was unwilling to adjust the invoices in lieu of the stated issues.
As a result, Giti filed the complaint to seek resolution. Giti says its resulting damages total more than $12.7 million — $12,724,433 to be exact.
Additionally, here’s how Giti breaks down the demurrage and detention charges that appeared on its bills:
- $5,341,580 – for holiday and weekend days the port wasn’t open or available to receive containers.
- $4,545,735 – fees that lacked specific information as required by the Shipping Act.
- $7,204,243 – charges that are “excessive and unreasonable.”
- $66,675 – duplicate charges that were also billed to another party, such as a motor carrier. (Giti notes this amount is likely “significantly higher,” but has so far been undetected because invoices didn’t contain enough detail.)
Giti notes there may be some duplication in some of the fee categories above, but that it isn’t seeking double recovery for any of those charges. Giti is seeking a refund or elimination of its payment obligations for what it calls the “non-compliant invoices and charges,” as well as “reparations for the unlawful conduct described above,” plus interest and legal fees.
Flexport has 25 days to respond.
