MCS Industries, a US home decor company, has sued ocean container carriers MSC and Cosco, charging they have failed to meet contractual obligations in violation of the 1984 US Shipping Act.

Supply Chain Digest Says...   The question of whether the FMC decides the enormous jumps in rates and feed were simply the result of market forces or carrier collusion will be closely watched.     What do you say?   Click here to send us your comments       Click here to see reader feedback

The company sued under the jurisdiction of the Federal Maritime Commission (FMC) last week, and seeks $600,000 in damages.

The container shipping sector has been in chaos for nearly a year, with sky high spot rates, often large additional fees just to guarantee a container gets on its scheduled ship, and many carriers said to be ignoring contract rates and forcing shippers to pay spot market dollars. (See Container Carriers are laying on Big Extra Fees on Top of Sky High Rates.)

It cost about $2700 to ship a 40-foot container from China to the US west coast in 2019. Today, that same container move is costing 15,000, said MCS in the suit.

MCS Industries claims in the legal filing that “foreign-owned” shipping lines have “Unjustly and unreasonably exploited customers, vastly increasing their profitability at the expense of shippers and the US public generally, which bears increased freight cost in the form of inflation.”

As first reported by theLoadstar.com, MCS claims that since the beginning of the Covid-19 pandemic, ocean container carriers have colluded to distort the market at the expense of shippers.

According to the lawsuit, “Global ocean carriers began taking parallel and strikingly similar actions to prop up ocean carriage pricing and improve their profitability at the expense of shippers and the public."

The suit alleges, for example, that the two carriers commonly used the tactic of cancelling scheduled sailings to affect the supply-demand balance far in the carriers' favor.

MCS Insutries' CEO Richard Master said in an interview with TheLoadstar that the company had earlier this year signed with container carriers that included rate hikes of 70-80%, but “we didn’t get the containers [agreed to] and the prices spiraled up over a period.”

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The question of the FMC will decide whether the enormous jumps in rates and feed were simply the result of market forces or carrier collusion will be closely watched

SCDigest expects other shippers to lodge similar actions soon.

What do you think of MCS's suit? Will other shippers soon do the same? Let us know your thoughts at the Feedback section below

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