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New York Terminal Fights to Keep Maersk, Hamburg Sud from Cancelling Service on May 1

A.P. Moller Maersk notified Global Container Terminals (GTC) in a letter dated April 10 that Maersk Line and Hamburg Sud vessels would cease calls to its Staten Island terminal on May 1. The 2 container lines will move their vessel calls to a nearby terminal in Port Elizabeth, New Jersey operated by APM Terminals (APMT). Maersk said it was willing to pay a settlement of $5.5 million, which includes an early termination fee of $2.1 million and $3.4 million as additional consideration.

GTC Seeks Restraining Order

GTC requested an emergency restraining order from a New York court to prevent Maersk and Hamburg Sud from pulling out. In Monday’s court filing, GTC USA’s President, John Atkins, claimed that its agreement with Maersk runs through December 31, 2022 and that early termination of the agreement could not occur before December 31, 2021 and only if six-month’s notice is given. Atkins argues that the notice was sent 20 months before it was allowed and without cause for termination. He said the notice was sent on “the Good Friday public holiday… in the midst of the ongoing COVID-19 emergency in the metropolitan area… [with] a mere 2- days’ prior notice in the middle of an unprecedented and crippling global pandemic.”

Atkins alleged that Maersk and Hamburg Sud are attempting the move to Port Elizabeth “for the financial benefit of their sister company, APMT, which is a direct competitor of GCT… [and that Maersk’s] reprehensible conduct is magnified by the fact that Maersk is essentially stealing business from GCT to give to its own corporate affiliate, APMT.”

Maersk’ and Hamburg Sud’s services through the Staten Island facility account for 60% of the terminal’s ocean container business, which represents 46% of all box throughput, including local barge business. The departure of the 2 container lines “will have immediate and catastrophic effects on the business and financial well-being of GCT and its employees, which are exacerbated by the timing of the purported termination,” Atkins said. GTC is one of the top employers on Staten Island, and the early loss would put all of Staten Island’s longshoreman jobs at risk and would “reverberate through the Staten Island economy and have adverse tax-revenue effects for the city and state of New York.”

Maersk’s Response

In a written statement to FreightWaves in response to the allegations, a spokesman for Maersk said, “Maersk can confirm that it is currently involved in an ongoing contract dispute with Global Container Terminals… We can also confirm that Global Container Terminals alleged in its lawsuit that if Maersk ceases to call [at] Global Container Terminals that Global Container Terminals will cease to be a going concern… We believe claims that Global Container Terminals, which is owned by multi-billion-dollar investment funds, will go out of business as a result of this contract dispute to be intentionally inflated to create unnecessary fear during this time of uncertainty and the product of a litigation strategy to distract from the contractual rights and remedies that Global Container Terminals previously negotiated and now regrets”.

Maersk said the $2.1 million termination fee was “a generous estimate given the uncertainty related to COVID-19,” and that the additional consideration of $3.4 million should “satisfy all obligations.”

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Source:

  • American Shipper/FreightWaves, New York terminal scrambles to block Maersk’s exit