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MSC Fires Back Denying Accusations of Collusion and Space Allocation

MSC denies allegations of collusion and space allocation in FMC complaint
MSC file photo

Published Aug 6, 2021 2:16 PM by The Maritime Executive

Container shipping line Mediterranean Shipping Company (MSC) fired back responding to charges of collusion and failing to honor freight contacts filled against it and COSCO Shipping Lines with the Federal Maritime Commission. In a letter to customers released to the media, MSC rejected the allegations made by a Pennsylvania furniture company.

“MSC is shocked to learn of the accusations,” the letter starts by saying. While acknowledging that it is still studying the complaint, MSC denies the broad accusations and the media coverage, saying the issues “remain vague and unsubstantiated and are incorrectly targeted at MSC.” 

The Federal Maritime Commission officially served the suit against MSC and COSCO on August 3, posting the full complaint for public review. In the filing with the FMC, a furniture company named MCS Industries alleges that the shipping companies have been taking advantage of the 2021 recovery in container shipping unfairly treating small shippers such as itself. Among the allegations are that the shipping companies “unjustly and unreasonably exploited customers, vastly increasing their profitability at the expense of shippers and the U.S. public generally.” 

The 15-page complaint details actions starting with the blanking of sailings early in the pandemic and even when they restored capacity, the furniture company says the carriers have “refused to provide more than a fraction of the cargo capacity that MCS requested and needs.” The company says it has been financially harmed by having to buy space in the spot market. Between May and July 2021, MCS says that the carriers have provided “only small fractions of the space required under the Service Contracts—specifically, just over one-third (approximately 35 percent) by MSC and an infinitesimal 1.6 percent by COSCO.”

They go on to accuse the entire shipping industry of being in collusion to drive up pricing. The complaint points out that the alliances formed by the major carriers “collectively control over 90 percent of all transpacific trade.” MCS says it has incurred in excess of $600,000 in damages so far due to the carriers’ business practices.

MSC told customers that it does not recognize the alleged shortcomings in booking the cargo allocations. “MSC is not illegitimately selling space allotted to MCS Industries.”

The letter goes on to reject the accusations of collusion pointing out that MSC and COSCO are in separate alliances. They said that they have no shipping agreements with COSCO.

MSC said it is “refuting baseless claims and providing accurate sets of facts.” They said they would review the allegations as possible defamation, while also noting that it had not received a formal complaint from MCS before its FMC filing.

The case is likely to be closely followed as many shippers continue to complain about the lack of space and freight rates which continue to set new records. Most experts believe that the current market conditions are likely to prevail through the remainder of 2021.