A U.S. Federal Maritime Commission (FMC) administrative law judge has ruled in favor of Flexport, dismissing a $33.7 million demurrage and detention claim filed by exercise equipment manufacturer Peloton. The dispute centered on charges incurred during the congested pandemic-era shipping period. This decision establishes an important precedent regarding liability for port and terminal fees in "store door" shipping arrangements, where the freight forwarder or carrier is responsible for the entire transport chain, including final delivery to the consignee.
The core of Peloton's argument was that Flexport, as the Non-Vessel Operating Common Carrier (NVOCC) managing their shipments, should be held responsible for the demurrage and detention charges because Flexport controlled the movement of containers. However, the judge determined that under the specific "store door" terms, Peloton, as the consignee, ultimately held control over the final delivery process, including the ability to pick up containers from the port and return empty equipment. The ruling emphasized that the consignee's operational control over the last mile of delivery was a key factor in assigning responsibility for the charges.
For freight forwarders and operations managers, this ruling provides critical clarity on liability in "store door" contracts, particularly concerning demurrage and detention. It reinforces the importance of meticulously drafted contracts that clearly define responsibilities for container pickup, return, and associated charges, even when an NVOCC manages the end-to-end logistics. Forwarders should review their "store door" agreements to ensure that the allocation of risk for these fees is unambiguous, especially in volatile market conditions. Shippers, on the other hand, need to understand that even with a comprehensive logistics service, their operational capabilities and control over cargo reception can impact their financial liability for delays.
