Target's Insurers Sue Maersk for $5.8 Million Over Lost Containers: A Closer Look

In a recent legal development, the insurance company representing retail giant Target Corporation has taken legal action against Maersk, seeking over $5.8 million in compensation for containers lost overboard during a maritime incident that occurred in 2021. The lawsuit, filed by Starr Indemnity & Liability Company on behalf of Target, was lodged in the Southern District of New York on October 19, 2023.

The incident in question took place aboard the Maersk Eidenoven containership, a vessel with a capacity of 13,100 TEU, on February 17, 2021, while it was navigating approximately 45 nautical miles off the coast of Northern Japan. Maersk's initial report indicated that the ship encountered an engine stoppage in adverse sea conditions, rendering it unable to maneuver and resulting in a severe roll. Subsequent investigation revealed that the ship's engines shut down due to low engine oil pressure, activating a safety feature.

Although the ship quickly regained propulsion power, it returned to Yokohama, Japan, where it discharged 65 damaged containers and conducted inspections. The survey confirmed that the vessel had lost 260 containers in the ocean east of Japan. Remarkably, the ship itself sustained only minor damage, and all necessary welding and repairs were performed in Yokohama before the vessel resumed its voyage to Los Angeles in early March.

According to the lawsuit, between January 12 and February 4, 2021, cargo was delivered to the ports of Phnom Penh, Cambodia, and Yantian, China, for transportation aboard the Maersk Eidenhoven to California. It is alleged that roughly 57 containers, containing various consumer goods, were handed over to Maersk. However, upon reaching its port of discharge, the suit contends that Maersk failed to discharge the containers and deliver the cargo in good order. The insurers argue that the entire cargo was lost overboard due to negligence or breach of duty by Maersk and the Maersk Eidenhoven.

The estimated value of the lost cargo is slightly above $5.8 million, and the insurance company emphasizes that they have not received payment for the cargo. They retain the right to increase the claimed value of the loss and are also seeking a judgment against Maersk and its vessel. Furthermore, they are requesting that the court arrest the vessel and order its sale to satisfy the judgment.

While this legal dispute is expected to be resolved through negotiations between Maersk and its insurers, it underscores the ongoing challenges faced by the shipping industry in preventing container losses. The years 2020 and 2021 were particularly challenging for the industry, with significant casualties primarily attributed to adverse weather conditions. Data from the World Shipping Council reveals that nearly 4,000 containers went overboard in 2020, and an additional 2,000 in 2021.

To address this issue, the industry has been focusing on improving how large vessels handle adverse weather conditions as a step toward reducing container losses. Numerous companies are also actively developing devices and systems to enhance container security within racks and minimize movement during inclement weather.

Notably, the World Shipping Council reported a significant reduction in losses to just over 660 containers in 2022. Nevertheless, efforts are underway at the International Maritime Organization (IMO) to enhance the monitoring and reporting of container losses, signaling the industry's commitment to enhancing safety and security in maritime transportation.