Government

CU Lines claims Amazon backed out of service contract as ocean rates fell

By Michael Angell

China United Lines is alleging that Amazon unexpectedly walked away from an ocean services contract as freight rates nosedived in 2023 , according to a complaint the independent carrier filed with the US Federal Maritime Commission . It further claims Amazon avoided paying

volumes of cargo ” that it would ship , the complaint said . The contract outlined minimum quantity commitments ( MQCs ) and terms for early termination of the contract .

Amazon , though , wanted to cancel the contract in 2023 after CU Lines said that spot trans-Pacific rates fell below the rates in the service contract . The cancellation required Amazon to pay for the unused MQCs , which CU Lines says amounted to $ 31.5 million .

While CU Lines alleges that Amazon initially agreed to the penalty , it claimed the e-commerce giant subsequently backed out of paying damages by saying the contract was terminated for cause .

Amazon , according to the complaint , claimed that a post on China ’ s WeChat forum from CU Lines highlighting its relationship with the online retailer violated terms of their contract . CU Lines claimed that its WeChat post came after Amazon published an earlier WeChat post about working with CU Lines , ending any confidentiality agreement about the relationship .

CU Lines says Amazon avoided $ 31.5 million in payments by exiting its ocean service contract . Shutterstock . com

$ 31.5 million in damages for exiting the service contract .

The complaint is a rare instance of a container line accusing a shipper of not living up to a service contract . CU Lines alleges Amazon violated US shipping law by falsely obtaining competitive ocean freight rates through a service contract that Amazon could not fulfill .

CU Lines ’ complaint , served in mid-January , said that Amazon entities acting both as a shipper and a non-vessel-operating common carrier ( NVO ) entered into a twoyear service agreement with CU Lines covering the 2022 and 2023 contract years .

Primarily operating intra-Asia networks , CU Lines was one of several niche carriers that entered the trans-Pacific market in 2021 thanks to the strong rate environment at the time . However , CU Lines ended its trans-Pacific service in 2023 as spot rates began dropping .

The carrier offered Amazon “ substantially lower rates ” than its published tariff rates based on the “ significant

Amazon did not respond to requests for comment . CU Lines ’ complaint says Amazon violated a section of US shipping law that bars entities from using “ unjust or unfair device or means … to obtain ocean transportation for property at less than the rates or charges that would otherwise apply .”

That rarely invoked section of US shipping law is also being used by Hong Kong-based carrier OOCL , a subsidiary China state-run COSCO Shipping , in a cross complaint that it filed against Samsung in December .

Samsung , which filed complaints against OOCL and Cosco over detention and demurrage charges it received from the carriers , is alleged by OOCL to have made a similar violation by “ demanding refunds and waivers of future charges and bringing legal proceedings against ocean carriers .”

email : michael . angell @ spglobal . com

54 Journal of Commerce | March 3 , 2025 www . joc . com