Swiss Megaship Operator Rejects Allegations Of Collusion By US Shipper

Geneva-based container line giant MSC Mediterranean Shipping Co. has denied allegations of collusion and contract violations by an American home furnishings manufacturer claiming its customer's accusations are unsubstantiated.

MSC said it was "shocked" to learn of accusations made by Easton, Pennsylvania-based MCS Industries in a complaint filed at the Federal Maritime Commission. The complaint alleges that MSC, China's COSCO Shipping Lines and their competitors are violating U.S. maritime laws by reneging on their container contract commitments for vessel space, forcing MCS and other customers into the spot market where MCS alleges rates have been boosted artificially by the carriers.

"MSC received no formal complaint by MCS Industries in advance of the filing, or in relation to the subsequent accusations made in the media, many of which remain vague and unsubstantiated and are incorrectly targeted at MSC," the company asserted in a statement on Thursday.

"While MSC is still studying some of the contents of this particular complaint, the company does not recognize the alleged shortcomings in booking the cargo allocations provided for this shipper. Furthermore, MSC is not illegitimately selling space allotted to MCS Industries under its service contracts to other shippers."

MCS President and CEO Richard Master acknowledged that while he didn't formally contact senior management at MSC or COSCO, "our operations people have been reaching out to them, asserting our contracts and explaining that we were not receiving the service that we contracted for," Master told FreightWaves.

Master said he is also convinced that Chinese manufacturers and shippers are receiving more space and at lower rates, "which advantages them vis-a-vis American companies like MCS," he said. "There' are essential fairness and level playing field issues we think the FMC should investigate and consider."

MSC asserted in its response, however, that "the company does not recognize the alleged shortcomings in booking the cargo allocations provided for this shipper. Furthermore, MSC is not illegitimately selling space allotted to MCS Industries under its service contracts to other shippers."

MSC also rejects the accusation of collusion between carriers alluded to in the complaint. "MSC and the shipping line COSCO are not in the same container-carrying alliance and as such have no operational cooperation by way of [a] vessel-sharing agreement (VSA) or slot charter agreement (SCA) anywhere in the world," the carrier stated.

"MSC continues to make great efforts to provide its customers with continued service during extraordinary market conditions and will engage through appropriate channels and official processes, as required, with a view to refuting baseless claims and providing accurate sets of facts. MSC is also reviewing whether, when viewed against the true facts, any of the allegations amount to defamation."

Matthew Reynolds, an antitrust attorney whose firm, Huth Reynolds LLP, is representing MCS, explained that the complaint filed at the FMC only alleges violations under federal shipping laws.

"That said, however, I think it is absolutely possible that there's potential for antitrust or competition issues here," Reynolds told FreightWaves. "Anyone looking at the allegations made by MCS, combined with recent actions by Congress and federal regulators and the complaints of shippers widely reported in the media, could easily ask whether there is some sort of improper collusion occurring among carriers."

COSCO has not yet responded to requests for comment.

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Click for more FreightWaves articles by John Gallagher.

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