Business & Investment

U.S. companies sue “joint” shipping companies for price fixing

U.S. manufacturers have allowed two of the world’s largest shipping companies to renew their container service contracts for imports from Asia and instead charge other shippers exorbitant shipping charges in the spot market. I blame you.

In a complaint filed with the Federal Maritime Commission on Wednesday, Easton, Pennsylvania-based MCS Industries is a manufacturer of household furniture, COSCO Shipping Lines in China, MSC Mediterranean Shipping in Switzerland, and Asia and the United States. Blame its competitors in trans-Pennsylvania. It has violated the Marine Transportation Act since the inception of the pandemic, while increasing profits at the expense of its customers.

“MCS has directly experienced this illegal activity by shipping companies around the world because it unfairly refused to do business or negotiate with MCS,” the company said in a complaint. “In a complete break from pre-pandemic practices, some shipping companies refused to negotiate or offer service contracts to MCS. [COSCO and MSC]Respondents refused to provide more than part of the cargo capacity required and required by the MCS, despite continuing to operate at or near the pre-pandemic capacity as a whole. “

To make matters worse, MCS said that COSCO and MSC would “subsequently engage in the general practice of refusing to execute even under these limited service contracts, and instead buy space in the MCS-expanded spot market. I forced them to do it. “

YTD as of July 31, West Coast trade between China and the US, average daily price of 40ft container (US $). Source: SONAR
For more information on FreightWaves SONAR, click here

This practice is provided to COSCO, MSC, and other carriers.Unprecedented storm benefitsMCS claims that a container, which could cost about $ 2,700 to ship from China to the US West Coast in 2019, will cost more than $ 15,000 in the current spot market.

Market power Audit in progress

MCS complaints occur just weeks after the FMC announces its next plan. Audit 9 of the largest container carriers operating in the US marketFind out if they are using market power to overcharge the shipper for detention and detention charges, including COSCO and MSC. According to the authorities, the audit program also “provides additional information to help monitor the market for marine freight services on a regular basis.”

Last week, FMC Commissioner Rebecca Dai had a series of Provisional recommendations Consideration by government agencies and Congress (including amendments to the Marine Transportation Act) to address congestion and disruption along the container supply chain. One recommendation is to better protect shippers, their agents, and drag trackers against maritime carriers threatening to deny space on vessels in retaliation for complaining to the FMC. .. Rejected by the World Shipping Council, Represents a career.

Congressmen are already Legislation To deal with allegations of abuse by shipping companies, especially to affect US exporters. A bipartisan bill, expected to be proposed by Democrat John Garamendi and Democrat Dusty Johnson, prohibits shipping companies from refusing to book exports.

Minimum space rejected

MCS explained in detail of the complaint that it had entered into a written service agreement with COSCO in accordance with the regulations of the US Marine Transportation Act that came into effect on January 1. According to the MCS, the contract required a minimum of 20 feet worth of units. When COSCO ships from China, Hong Kong, Indonesia at the price agreed to the United States.

However, despite its minimal commitment, COSCO refuses to offer more than a portion (1.6%) of the contract’s allotted space, making MCS far more in the spot market with other carriers. I am forced to make a high reservation. Price or not shipped at all.

“Based on information and belief, COSCO not only violates the Marine Transportation Act in a similar manner with respect to other shippers, but also Chinese shippers with wider space allocation than those provided to MCS. We discriminate against US shippers such as MCS by supporting them, “the company claims. MSC has accused it of providing 35% of the space required for the contract.

$ 600,000 damages and count

MCS makes profits for two carriers at the expense of shippers by organizing under three major alliances, claiming that MCS jointly controls 90% of trans-Pacific trade. Claims to be getting. “These collaborative maritime alliances give respondents the opportunity and opportunity to coordinate discriminatory practices such as those claimed here,” said MCS.

The company claims that the cost of MCS has so far exceeded $ 600,000 due to its market power and five allegations of violations of the Marine Transportation Act, which continues to occur. The company asks the FMC to confirm that the carrier “unjustly refuses to do business or negotiate with the MCS” after investigating the allegations.

The company also told distributors “legitimate and reasonable practices to prevent respondents from refusing to provide space allocated to MCS at the price agreed under their respective service contracts with MCS. We are seeking orders to implement those service contracts. “

COSCO and MSC could not comment immediately.

Click here for more Freight Waves articles by John Gallagher.

U.S. companies sue “joint” shipping companies for price fixing U.S. companies sue “joint” shipping companies for price fixing

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