The incident dates back to the period from 2021 to 2023, when Giti Tire employed Flexport as a Non-Vessel Operating Common Carrier (NVOCC) to transport hundreds of batches of its tires to the Port of Long Beach, California.

As an NVOCC, Flexport arranged international shipping for Giti Tire's goods, assumed the responsibility of a maritime carrier, and issued bills of lading.

According to the contract, Giti Tire was responsible for paying all costs related to the transportation of goods, including demurrage fees charged by VOCC, NVOCC, and marine terminal operators for containers exceeding the allowed "free time" (free demurrage period) outside the port.

Flexport filed a lawsuit last Friday, alleging that Giti Tire had not paid any demurrage fees, amounting to over $12.3 million. Flexport stated that Giti Tire was well aware of these fees because Flexport had repeatedly and explicitly informed Giti Tire of the related costs and made every effort to assist Giti Tire in retrieving and returning the containers to the port to minimize or avoid demurrage and related costs. However, Giti Tire did not return the containers, allowing the costs to accumulate and refusing to pay these fees, which was a direct result of Giti Tire's failure to return the containers despite repeated urging from Flexport.

Flexport claimed that Giti Tire owed over $12.3 million in unpaid demurrage fees, but the defendant argued that this figure was "excessive." Currently, there is no evidence of any dispute between Giti Tire and the Federal Maritime Commission (FMC) regarding these fees.

However, Giti Tire accepted most of the invoices and acknowledged that it owed at least $7 million. Despite this, Flexport stated that Giti Tire still "refused to pay any amount."

According to the terms of the contract between Giti Tire and Flexport, Flexport is entitled to collect all collection fees, including reasonable attorney fees and a late fee of 1.5% per month on the unpaid balance, or the highest late fee allowed by law, whichever is lower.

Therefore, Flexport is entitled to seek damages totaling $12.3 million, plus interest, legal fees, and all costs incurred before and after judgment.

Recently, the court suggested that both parties consider Alternative Dispute Resolution (ADR) because litigation is time-consuming and costly.

The ADR procedures offered by the California courts include settlement conferences presided over by a judge designated for the case, court mediation panels, and private mediation. Parties must present their preferred ADR approach at the initial scheduling conference, the date of which is yet to be determined.