- U.S.-based furniture company MCS Industries has lodged a complaint with Federal Maritime Commission (FMC) against global container lines for violating their contractual obligations.
- MCS’ complaint comes just weeks after the FMC announced plans to audit nine of the largest container carriers operating in U.S. markets.
- The audit was to find out if they are using their market power to overcharge shippers on detention and demurrage fees.
A Pennsylvania-based shipper has lodged a formal complaint against two global shipping lines, reports the Loadstar.
In a $600,000 lawsuit filed with the Federal Maritime Commission (FMC) last week, MCS Industries, a family-owned home furnishings business, claims MSC and Cosco failed to meet contractual obligations, in violation of the 1984 US Shipping Act.
Exploiting the Covid-19 disruption
In its statement, MCS argued that container lines have “unjustly and unreasonably” exploited customers, including two major shipping lines COSCO and Mediterranean Shipping Co (MSC).
“International steamship lines have been operating in tandem to exploit the Covid-19 disruption to profiteer at the expense of U.S. consumers. They have used the relative unavailability of services to create a frothing demand to exact exorbitant prices for their services,” Richard Master, CEO of MCS Industries, wrote in his letter.
“They now charge rates that have grown seven to ten times the prices charged two years ago.”
Surging container rates
Furthermore, the carrier lines have allegedly ignored their contractual obligations, refusing to provide agreed-upon container space in order to take extortionate profits on market.
As a result, container rates that in 2019 and 2020 that were $2,700 from China ports to the U.S. had grown above $15,000.00 in July 2021, nearly a sixfold increase in less than two years, according to the statement.
What is more, from May 2020 through April 2021, shippers were forced into the spot market for fifty or more percent of their previously contracted requirements, all at higher rates, MCS stated.
Exploiting profit opportunities on spot market
Recently, U.S. President Joe Biden also noted that “the global container shipping industry has consolidated into a small number of dominant foreign-owned lines and alliances, which can disadvantage American exporters.”
These ocean alliances give respondents venue and opportunity to co-ordinate “discriminatory practices” such as those alleged herein to violate contracts with shippers like MCS in favor of exploiting profit opportunities on the spot market, MCS claims.
Importers all around the world have been faced with surging freight costs due to lockdown measures because of COVID 19 pandemic, and the Suez Canal blockage which happened in March this year.
Global trade was disrupted as hundreds of ships had to wait to pass through the 193km canal. About 15% of world shipping traffic transits the Suez Canal, the shortest shipping route between Europe and Asia.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: The Loadstar
