Target’s Insurer Sues Maersk for $5.8 Million
A new lawsuit claims that Maersk owes Target $5.8 million for losing dozens of containers back in 2021.
Starr Indemnity & Liability Co., the insurer for Minneapolis-based Target, filed the lawsuit in in the Southern District of New York. The complaint alleges Maersk was negligent when it lost 57 containers filled with Target goods in the Pacific Ocean.
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The Maersk Eindhoven containership can haul 13,100 20-foot-equivalent units (TEUs). It briefly failed during turbulent seas off of northern Japan on Feb. 17, 2021 en route from Xiamen, China, to Los Angeles.
A Maersk spokesperson told Sourcing Journal that the company is reviewing the complaint, but decliend to comment on the lawsuit. Sourcing Journal reached out to Starr and Target.
At the time of the incident, Maersk reported that the ship couldn’t be steered when the engines shut down for three to four minutes. It was later confirmed that the shutdown occurred when an indicator recorded low engine oil pressure and triggered a safety feature.
Around 260 containers were lost overboard during the incident while 65 were damaged on deck.
The ship turned around and docked at a terminal in Yokohama, Japan for minor repairs. On March 2, the Eindhoven resumed its voyage and arrived at Los Angeles by March 21. Starr claimed Maersk was negligent because it failed to discharge all the containers at the Port of Los Angeles and deliver the cargo in good order.
According to the lawsuit, the 57 lost containers were collected Jan. 12-Feb. 4, when the Eidenhoven loaded goods from the ports of Phnom Penh, Cambodia and Yantian, China for transport to California.
The suit values the cargo at just over $5.8 million, but Starr claims it has not been paid for the losses. The insurer reserved the right to increase the value of loss while also seeking a judgment against both Maersk and the Eindhoven.
Further, the insurer is asking the court to detain the vessel and order it to be sold to satisfy the judgment.
The cargo incident occurred when Target was enjoying breakneck e-commerce spending at the peak of the Covid-19 pandemic.
While the mass merchant has since fallen back to Earth, it saw revenue rise 23.4 percent to $24.2 billion in the first quarter of 2021 on net income of $2.1 billion.
Just one month prior to the Eindhoven event, another Maersk vessel, the Maersk Essen, lost nearly 750 containers in heavy seas while operating on the same route.
Nearly 4,000 containers went overboard in 2020 and another 2,000 in 2021, according to data from the World Shipping Council. The trade association reported losses had fallen to just 661 in 2022.
While container loss can be a problem for the maritime shipping industry, it accounts for just a fraction of the cargo volume sailing the seas. Only a small percentage of the approximately 250 million containers transported by ships each year are lost at sea. May’s World Shipping Council survey reported that an average of 1,566 containers were lost per year from 2008-2022.
Last year marked the lowest loss rate since the survey started in 2008, with 0.00026 percent of total containers shipped.
Although this case doesn’t fall under the purview of the Federal Maritime Commission (FMC), shipper complaints related to ocean freight are drawing attention to problems at sea.
In the 12 months through September, the FMC resolved 36 cases related to excessive charges and contract breaches by ocean carriers, with civil penalties and reached settlements totaling almost $3 million.
That’s not even accounting for private cases brought to the commission such as that of Florida-based furniture retailer OJ Commerce. In June, the FMC ruled that Maersk subsidiary Hamburg Süd owed the company $9.8 million for breach of cargo service agreements. Bed Bath & Beyond currently has two active complaints with the FMC against Orient Overseas Container Line Limited and Yang Ming.
