Saturday, January 8, 2011

Express Freight Carriers Scoff At Antitrust Allegations

2011 Sees More Shipping Cartel Accusations
Shipping News Feature

US – After last years shameful performances which saw numerous freight forwarders and air carriers having to fork out billions (yes, billions)of dollars in fines throughout the States, Europe and beyond, it was to be hoped the New Year would offer a chance for a rebuilding of relationships between some shipping groups and their customers.

November saw a suit lodged against two of the giants of the world’s express delivery groups UPS and FedEx by Oregon based AFMS, a shipping consultancy group who offer clients a service to investigate and negotiate better rates with the major carriers on behalf of their customers. Operating a sort of extended price comparison site, this type of third party freight auditor is able to use experience and tools like consolidated cargo rates to set off one carriers rates against another and negotiate the best possible terms.

UPS and FedEx stand accused of shutting out AFMS and their ilk and have been quick to deny in the strongest terms any idea of a conspiracy, both making it clear that they had always competed ‘aggressively’ for the same business. Both companies offer extremely convoluted tariffs, which they claim is in an attempt to offer the widest range of services to enable direct customers to choose the most favourable rates for their cargo.

The problem facing any multinational is that so many other freight and haulage operations today, they actively promote their third party logistics (3PL) operations, effectively admitting that they subcontract a proportion of their work to other carriers, presumably at the best negotiated price. It may seem then to the authorities a little harsh that; just because someone employs a consultant to obtain the best price, they can have carte blanche to renege on negotiated contracts or refuse to deal with individual companies who are obtaining their own revenue as commission on the rate reductions they have obtained from a carrier.

If any carrier is found to have discriminated against a money saving consultancy the best they can hope for is that they are permitted to refuse service, at worst they are instructed this is forbidden by the Court and fined. A more effective tactic might well be simply to insist on advance payment by third parties, few of whose clients will welcome up front payments for large consignments, AFMS apparently numbers the Sony Corporation amongst its clients, but this may not always be workable if clients already pay in advance.

Some press reports suggest that AFMS have alleged conspiracy between UPS and FedEx plus intimidation of companies who have been negotiating indirectly. All will be revealed when the motions for dismissal which the two carriers have lodged with the Court are heard later this month.