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Home Port News GCT New York files lawsuit after Maersk’s terminal move

GCT New York files lawsuit after Maersk’s terminal move

Maersk is the target of a lawsuit brought by a North American marine terminal operator after the Danish shipping giant cancelled a terminal services deal in favour of moving its boxes through a Maersk-owned site.

The lawsuit said the move will wipe out half of the container terminal’s revenue and put its financial future at risk. But Maersk says its deal allows for an early termination and its settlement offer is “generous,” given the impact of the coronavirus on shipping volumes.

Vancouver-based Global Container Terminals (GCT) filed the lawsuit in the US district court on 20 April, seeking to enforce an agreement it had with Maersk since 2015. The lawsuit alleges that if the deal is breached, GCT’s New York marine terminal “will cease to be a going concern and its continued viability will be jeopardised.”

Three Maersk-Hamburg Sud services call at GCT New York, one European service and two South American services. The strings account for over half of the ocean container shipping business at GCT New York, which is located on Staten Island and is the main handler of the city’s garbage barges.

GCT New York handled around 5.1 million loaded containers in 2018, while the lawsuit says Maersk business accounts for 153 vessel calls and US$52.6 million in revenue last year.

GCT said in March 2020 it caught wind of Maersk’s wholly owned subsidiary APM Terminals “attempting to induce” Maersk and Hamburg Sud to end calls at GCT New York, despite having an agreement in place for vessel calls through the end of 2021.

Maersk subsequently rerouted two vessels to another terminal at the end of March. Maersk formally alerted GCT New York about ending the vessel calls in a letter dated on 10 April, saying its vessels would cease calls on 1 May.

In the letter, Maersk cites a clause allowing for an early end to the GCT New York deal with payment of a termination fee based on expected volumes. Maersk said it would pay a termination fee of just over US$2 million, which it said is a “generous estimate given the uncertainty related to Covid-19.” Maersk also offered an additional consideration of US$3.4 million.

GCT New York expected total revenues of US$124.7 million this year, with operating earnings of US$30.3 million. If the Maersk services end, GCT New York projects a US$7 million operating loss for 2020.

Mike Angell
US Correspondent

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