US furniture manufacturer MCS Industries, based in Easton, Pennsylvania, accuses two shipping giants, COSCO and MSC and their competitors in the Asia-US Pacific trade, of violating the US Shipping Act since the start of the pandemic, charging exorbitant rates on the spot market and increasing profits at the expense of its customers.
The complaint was presented by MCS Industries, to the Federal Maritime Commission, in which it declares “to have experienced firsthand this misconduct on the part of global shipowners, since they have unreasonably refused to negotiate and negotiate”. Unlike the pre-pandemic practice, several shipping companies refused to negotiate or provide service contracts to MCS, and those who provided such service contracts, including COSCO and MSC, refused to provide the carrying capacity that was requested. and it needed, despite having continued to operate at or near pre-pandemic capacity ”. Maritime carriers refused to execute even those limited service contracts, forcing MCS instead to buy space on the inflated spot market ”. The practice has allowed COSCO, MSC and other carriers “unprecedented bumper profits”, as a container in 2019 cost about $ 2,700 on the US West Coast China route and today costs $ 15,000 or more on the spot market.
MCS’s complaint comes after the FMC announced plans to monitor nine of the largest container operators operating in the US market to find out if they are using their power to raise their customers’ costs. Subsequently, FMC Commissioner Rebecca Dye issued a series of interim recommendations, including amending the Shipping Act, to address congestion and disruption along the container supply chain. Lawmakers have already drafted a bipartisan bill that would ban sea carriers from refusing to book exports.
In its complaint, MCS explained that it had entered into a contract with COSCO, under the US Shipping Act regulations, in effect from January 1, which provided for a minimum number of TEUs for COSCO to ship from China, Hong Kong and / or Indonesia in the United States at agreed prices. As of May, COSCO refused to provide MCS with more than a share – 1.6% – of the space allocated in the contract, which forced MCS to book in the spot market with other carriers at higher prices or not ship at all.
This practice has cost MCS over $ 600,000 so far, and therefore asks FMC to verify, after investigating, whether carriers have “unreasonably refused to deal or trade with MCS”.
The Mediterranean Shipping Company (MSC) announced that it was “surprised” by the complaint filed by MCS Industries with the Federal Maritime Commission and reported that it had not received “any formal complaint from MCS Industries prior to filing”; that many of the allegations are vague and unsubstantiated and erroneously addressed to MSC; not to acknowledge the alleged deficiencies in the booking of cargo assignments envisaged for this customer; that it is not illegally selling the space allocated to MCS Industries to other shippers.
Furthermore, also strongly reject the allegation of collusion between carriers made in the complaint filed by MSC Industries. Indeed, MSC and COSCO are not part of the same container shipping alliance and have no active cooperation via Vessel Sharing Agreement (VSA) or Slot Charter Agreement (SCA) anywhere in the world.