GLOBAL
Container Terminals (GCT), the
operator of the facility on Staten Island in New York, is seeking an emergency
restraining order through the law courts to stop Maersk
Line and
Hamburg Sud from leaving and
switching over to the nearby port Elizabeth in New Jersey, a site operated by
AP Moller-Maersk subsidiary, APM
Terminals (APMT).
Maersk said in a letter on April
10 that Maersk Line and Hamburg Sud vessels would stop calling at GCT New York
by May 1. It said it was willing to pay a settlement of US$5.5 million,
including an early termination fee of $2.1 million and additional consideration
of $3.4 million.
GCT USA president John Atkins
claimed in a court filing that its agreement with Maersk lasted until December
31, 2022, and could be terminated at the earliest on December 31, 2021, and
provided if six months' notice is given, reported New York's FreightWaves.
Mr Atkins said the termination
notice was sent without cause 20 months before it was allowed on "the Good
Friday public holiday... in the midst of the ongoing Covid-19 emergency in the
metropolitan area... [with] a mere 20 days' prior notice in the middle of an
unprecedented and crippling global pandemic."
He said: "The timing could
not be worse with social distancing and stay-at-home directives in place and
attendant concerns about the spread of infections making an emergency
management response... extremely difficult."
He alleged that Maersk and
Hamburg Sud are attempting to 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 [its early contract
termination] is magnified by the fact that Maersk is essentially stealing
business from GCT to give to its own corporate affiliate, APMT".
He said the services operated by
Maersk and Hamburg Sud through GCT's Staten Island site account for 60 per cent
of the terminal's ocean container business and 46 per cent of all box
throughput including local barge business. Maersk's departure "will have
immediate and catastrophic effects on the business and financial well-being of
GCT and its employees".
Mr Atkins maintained that GCT is
one of the top employees on Staten Island and the early loss of Maersk's
business would put all of Staten Island longshoreman jobs "at risk as it
jeopardizes the viability of GCT's business".
GCT alleged in its complaint that
the Maersk action could cause the Staten Island terminal to "cease to be a
going concern" and would "reverberate through the Staten Island
economy and have adverse tax-revenue effects for the city and state of New York".
Asked by FreightWaves for a
response to the allegations in the court filing, a Maersk spokesman sent a
written statement. "Maersk can confirm that it is currently involved in an
ongoing contract dispute with Global Container Terminals," the statement
said. "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," said Maersk.
Vancouver-based GCT operates four
terminals, two in British Columbia and two in the US (in Staten Island and Bayonne,
New Jersey). It is owned by three very large institutional investors: the Ontario
Teachers' Pension Fund owns 37.5 per cent, IMF Investors owns 37.5 per cent and
British Columbia Investment Management 25 per cent. These three entities have
aggregate funds under management totalling $534 billion.
In its termination letter, Maersk
said its $2.1 million termination fee was "a generous estimate given the
uncertainty related to Covid-19", on top of which it was offering the
"additional consideration" of $3.4 million to "satisfy all
obligations".
The termination fee calculation
relates to volume credits that would have been issued. Mr Atkins countered that
"this termination fee is not intended as a proxy for damages that GCT may
suffer as a result of any breach by Maersk resulting in premature termination;
instead, it is to refund the volume discounts which were solely provided to
Maersk in exchange for extending the term of the agreement to December 31,
2022.
"If not for these promises
and commitments from Maersk, GCT would not have reciprocally agreed to the
volume discount programme and favourable contract rates set forth in the [2018]
amendment."
Source : HKSG.
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