Shipping companies sway in high-profile profit case

MCS Industries, a Pennsylvania-based furniture maker, filed a scathing lawsuit against two of the world’s largest shipping carriers on August 3, alleging profiteering, collusive behavior and violation of the US Shipping Act. The accused shipping companies – Cosco in China and Mediterranean Shipping Co. in Switzerland – have just filed their responses. Unsurprisingly, they did not apologize.

In his Complaint filed with Federal Shipping Commission (FMC), MCS claimed that several carriers refused to negotiate with it and those that did, including Cosco and Mediterranean Shipping Co., “refused to provide more than a fraction of the cargo capacity requested by MCS”.

Then, according to MCS, the two carriers “changed their practices in a parallel and seemingly coordinated manner, depriving MCS of its contractually agreed space allocations and instead selling their respective capacity – including the space actually allocated to MCS in the under its service contracts, and then subsequently withdrawn — to the highest bidder in the spot market to which their behavior forced MCS to turn.

MCS alleged that in May-July, Mediterranean Shipping Co. provided only 35% of the space required under the contracts and Cosco provided “an infinitesimal 1.6%”.

Shortly after the complaint was filed, Mediterranean Shipping Co. issued a press release strenuously denying the allegations, stating that it was “reviewing whether … any of the allegations amounted to defamation”. This filed its official response with the CMF on Thursday. coconut filed his answer Monday.

Cosco did not mention the defamation, but he questioned whether MCS had committed perjury.

The carrier said MCS’s “infinitesimal 1.6%” space allocation claim “is simply a lie. It is clear that this eye-catching claim about the service during the period May-July 2021 – which was repeated twice in the MCS complaint, attested under penalty of perjury by MCS and repeated in several media accounts – is a falsehood. statement of material fact to the court”.

The carrier said “MCS has not confirmed any reservations with [Cosco] during the month of June in all the ports of origin usually used by MCS to present its containers to [Cosco] for transport and did not even use all the space offered and confirmed to MCS in July.

Cosco said MCS has signed a contract that runs from January 1, 2021 to April 30, 2022, for 500 twenty-foot equivalent units. Cosco said it had transported 92 TEUs for MCS through August, with eight months remaining in the contract, and the contract had no monthly or quarterly transport requirements.

Mediterranean Shipping Co. said in its filed response that it had a service contract with MCS effective May 1 and that “any non-carriage of MCS goods was in accordance with the agreement … and attributable to non-compliance of MCS or other causes outside MSC’s control.”

The Swiss carrier denied having deprived MCS of its space allocation to sell it to the highest bidder. “MSC does not sell allocated space before the prescribed deadline,” he said.

He called the allegation of collusion with Cosco “absurd” and “completely and utterly untrue.”

Both carriers blamed today’s service issues and record prices on COVID-era disruptions.

According to Cosco, “the current congestion…and challenges facing ship-operating carriers to meet capacity demand have been triggered by unprecedented and unanticipated record growth in U.S. imports, coupled with onshore COVID restrictions. These unforeseen global trade shifts have compounded shipping delays and pushed every part of the domestic intermodal supply chain to the limit.

“[Cosco] neither created last year’s precipitous decline nor this year’s dramatic increase in demand, but both impacted available capacity [it] could bring to market.

Mediterranean Shipping Co. said it “reasonably coped with unprecedented disruptions in international shipping caused by substantial increases in demand at the same time as unprecedented port congestion effectively limited vessel capacity and created substantial operational difficulties for carriers”.

He argued that the dispute should be resolved by arbitration in New York, as specified in the maritime contract. Cosco also argued that the FMC lacked jurisdiction, calling the claims of a boating law violation “false”.

The outcome of this highly publicized dispute is still a long way off. The discovery process will take another five months. The FMC will render its initial decision by August 3, 2022 and its final decision is not expected until February 17, 2023.

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