Wednesday, August 27, 2014

Freight Forwarding and Logistics Group May be Calling the Kettle Black

The Cartel Squabbles Go on and On
Shipping News Feature

US – WORLDWIDE – Schenker, the freight forwarding and logistics subsidiary of Deutsche Bahn, has filed a complaint in New York federal court claiming damages from air cargo carriers Air France, KLM, Martinair, Cargolux, Qantas, SAS, and All Nippon Airways. Schenker alleges that the defendants illegally conspired to fix fuel and security surcharges for airfreight shipments from, to and within the United States beginning in 1999 until at least 2006, though the exact amount of the damages suffered by Schenker and its affiliated companies has not yet been determined.

The irony of the suit will not be lost on many in the shipping community, Deutsche Bahn / Schenker were themselves a part of the infamous ‘Gardening Club’ anti-trust scandal making a settlement agreed with the Court in New Zealand alone for NZ$1.1 million. In this latest case a number of worldwide competition authorities, including the European Commission, have found that numerous air cargo carriers were involved in a global price-fixing conspiracy to the detriment of freight forwarders and have imposed substantial fines on the companies involved.

In the proceedings initiated by the US Department of Justice, all the defendants named in the Schenker complaint entered into guilty pleas and accepted significant penalties á la Gardening Club. Also in the United States, a number of air cargo carriers have also entered into settlement agreements both with class action plaintiffs and individual claimants in order to avoid protracted civil lawsuits. Schenker however, opted out of the settlement agreements entered into by the named defendants in connection with the class action lawsuit choosing to pursue the matter alone.

This paves the way for other forwarders that found themselves in a similar position, being overcharged for services, to sue the carriers, and it could go on to see cases filed all over the world which could potentially cost the airlines that much more having already settled the suits, dependant on whether the litigation in New York proves successful. One then is left to wonder who actually stands to gain from such an individual action by a forwarder. Schenker has obviously paid the illegal surcharges but it would be a strange situation if they chose to absorb what appeared at the time to be perfectly legitimate costs.

Having passed the rates onto its customers one might ask how the amounts recovered through the Court might be disbursed to the shippers or consignees involved? It will surely be a forensic exercise to ensure all the German headquartered group’s customers are reimbursed in full and leaving Schenker with nothing but an enhanced, and reformed, reputation.

To judge the state of the industry in this regard of late simply enter a keyword such as cartel into the News Search box at the head of the page.

Schenker AG v. Societe Air France, et al., case number 1:14-cv-04711.