The roll-on/roll-off shipping companies that move cars, trucks and heavy equipment are facing a challenging year.
Reporting first quarter results in May, Wilh. Wilhelmsen Holding, half-owner of Wallenius Wilhelmsen Logistics, said it had seen a continued drop in shipping volumes and a less favorable cargo mix, and expressed concern about “development within the high and heavy segment.”
Overhanging the industry is an inquiry by competition authorities in Japan, Europe, Canada and the United States to ascertain whether there is evidence of any legal infringement related to possible price cooperation between carriers and allocation of customers.
Wilh. Wilhelmsen noted last year the mere fact that investigators asked for information “does not mean that the companies have engaged in anti-competitive behavior.”
Interestingly, however, the South American carrier CSAV, which operates pure car truck carriers (PCTCs) as well as containerships, said when it reported its first quarter results that “in connection with investigation proceedings for infringement of antitrust laws in the car carrier business” its board of directors had decided to “make a provision of $40 million for the potential costs that the company may be liable to pay in the future as a result of these proceedings, based on the volume of the car carrier business in the different traffics that the company has operated at a global level.”
CSAV is a relatively small player in the car carrier business, not even included in a list of the 10 largest operators of PCTCs on the Website of the shipping information service Dynamar.
In May, the law firm Susman Godfrey filed a class action lawsuit in U.S. District Court in Jacksonville, Fla., on behalf of consumers against CSAV, Wallenius Wilhelmsen and various affiliated companies including Eukor, as well as the Japanese carriers NYK, MOL, “K” Line, and the shipping arms of Nissan and Toyota, alleging they “participated in a combination and conspiracy to suppress and eliminate competition in the vehicle carrier services market by agreeing to fix, stabilize and maintain the prices of, vehicle carrier services sold to vehicle manufacturers and others in the United States.”
Warren Burns, Susman Godfrey partner and lead attorney on the case, told American Shipper the suit is being filed on behalf of consumers who purchased new cars or leased them where the price included a shipping charge.
He noted his firm has a long history of filing such suits, “vindicating consumer rights through antitrust class actions where we have a chance to claw back overcharges and return them to our clients.”
Burns said the cost of automobile shipping began to rise sharply about five years ago and economists to whom his firm has spoken “are saying, even taking into account rising oil costs, you can’t explain the dramatic increases we see beginning in 2008.”
Burns added that he expects similar suits may be filed by other firms in different courts, which will probably result in this going into a multi-district litigation posture where his firm would seek to get the cases consolidated.