The Last Gasp of Bed, Bath, and Beyond

Two weeks ago I wrote about the causes of the corporate murder of Bed, Bath, and Beyond.  While the company is as dead as Julius Caesar and the remains have been thoroughly scavenged by jackals, there is still one last chapter about the demise of the company.  I need to tell you the other half of the story.

Wait!  Haven’t I seen numerous recent television commercials for BB&B offering me all sorts of remaindered junk for incredibly cheap prices?  Of course you have, but that company is actually Overstock.com who bought the name of the defunct company.  They own the name and they can call themselves Bed, Bath, and Beyond, but it is not the same company where you used to shop for towels.  When companies like Polaroid, Bell and Howell, or Sharper Image go bankrupt, marketing companies buy the name and use it for advertising purposes, hoping to milk any remaining goodwill and legitimacy the name still generates.   This is why no one tried to purchase the name “Enron”.

The defunct corporation, that we will now call Used-To-BB&B, is still going through the bankruptcy process and one of the last pieces of business is it’s $37.65 million lawsuit filed with the Federal Maritime Commission against Overseas Orient Container Line, the company that brings its merchandise from China to ports in California.

Think back just a few years to when we were all staying home for just a few days to “flatten the curve” of new Covid cases.  Those few days turned into quite a few months and all over the globe, factories shut down, dock workers neither loaded or unloaded ships, and with all the ships waiting their turn to be unloaded, the waters off the coast of California began to look like a seagoing used car lot.  

When a cargo container was unloaded, there were no trucks waiting to haul the container away, so those containers of merchandise took up most of the storage space in the dockyard.  Since there were no workers to load an empty container back on the ship, what little storage space left was overcrowded with empty containers.  Depending on your political party, this was either a mild kink in the supply line or a galloping clusterfuck.

Since freight companies don’t make any money while ships sit idling at anchor and both the banks holding the loans on the ships and the crews on the ships expect to be paid whether the ship moves or not….the shipping companies started to playing dirty.  They began charging extra for “expedited” shipping, which was basically nothing more than moving a ship up to the front of the line to be unloaded first, if and when both dock workers and trucks could be located.

Since the shipping companies were under contract to provide timely service at a set price, the extra fees do seem something that Used-To-BB&B might be able to sue about.  But the shipping companies added to the extra fees by charging both demurrage and detention fees.  Let me explain—no, that will take too long, let me sum up.

Demurrage refers to the extra charges incurred when the consignee (the party receiving the cargo) exceeds the allowed free time for the use of a shipping container at a port or container yard.  Since the filled containers couldn’t be removed from the shipping yard because of the congestion in the port and the shortage of trucks, this hardly seems fair.  Even if the congestion were magically removed, the ports were closed due to the need for social distancing.  Effectively, the shipping companies wouldn’t allow the containers to be picked up but were charging extra because they weren’t.

Detention charges, on the other hand, are incurred when the shipping container is retained by the consignee or shipper outside the port or container yard for longer than the allowed free time.  This charge by the shipping companies was really cute since the container couldn’t be returned because the ports were closed, and even if they were open, the containers could only be returned if you had an appointment and the shipping companies refused to give anyone an appointment.  And even if you had an appointment, and the port magically opened, there were no trucks to return the container.

So, Used-To-BB&B had merchandise sitting offshore that they had paid for but couldn’t get delivered unless they paid extra.  Then, they were charged extra because they couldn’t get a truck to pick up the freight because the trucks weren’t running and the port was closed.  When they finally did get the merchandise, they were charged extra because they couldn’t get an appointment to return the empty container with trucks that weren’t running to a port that was closed.

These extra fees and charges were not what bankrupted the company, though that is exactly what is being claimed by Used-To-BB&B in court.  In the long run, I’m not sure how interested the Federal Maritime Commission will be in finding for a company that no longer exists, and against the shipping companies that work daily with the commission.  Only time will tell, and even if Used-To-BB&B wins, the funds collected will not come close to paying off all of the outstanding debts.

I am sure about one thing, though.  The lawyers on both sides will make a fortune.