A New York District Court ruled against the Global Container Terminals’ (GCT) request to stop Maersk from moving three of its shipping services from GCT’s New York container terminal to a different one that Maersk owns, APM Terminals Elizabeth, New Jersey.
To simplify it even further — it took a court decision to allow a shipping company to move its business from one container terminal to a different one.
This all got started when Maersk notified GCT that it planned to stop calling at GCT New York as of 1 May and offered a “generous” settlement to terminate the agreement.
Maersk said in a letter on April 10 that Maersk Line and Hamburg Sud vessels would cease calls at GCT New York by May 1. It said it was willing to pay a settlement of $5.5 million, including an early termination fee of $2.1 million and additional consideration of $3.4 million. GCT wasn’t having any of that though.
GCT USA President John Atkins claimed in a court filing Monday that its agreement with Maersk ran through Dec. 31, 2022, and could only be terminated early on Dec. 31, 2021, and only if six months’ notice is given.
He said 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.”
Maersk’s departure “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 maintained that GCT is one of the top employees on Staten Island and the early loss of Maersk’s business would put 100% 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.”
APM Terminals Elizabeth, New Jersey
Maersk said the below:
“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,”
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.”
In the end, it took a court to decide who was right and the court went with Maersk.