Tire Importer Says Shipping Industry Has Exploited Customers
Foreign Tire Sales Calls Prices 'Excessive and Unreasonable'
A tire importer has filed a complaint with the Federal Maritime Commission alleging that Evergreen Group, one of the world’s largest maritime shippers, has exploited its customers and manipulated the market to increase prices and profits.
Foreign Tire Sales Inc., based in New Jersey and founded by Richard Kuskin, says Evergreen and other global ocean freight carriers have “unjustly and unreasonably exploited customers … by substantially increasing their profits” at the expense of their customers, and at the expense of the American public “which has been forced to absorb higher product prices.”
Foreign Tire Sales filed its complaint with the Federal Maritime Commission on March 18th. The tire importer, which offers the Otani and ProMeter brands, says it had a service contract with Evergreen to provide shipping services from May 1, 2021, through April 30, 2022. That contract called for Evergreen to provide space for a minimum of 100 containers. (Each container is 40 feet high.) Foreign Tire Sales says as of the end of January, Evergreen had provided space for 17 containers — less than 20% of what it promised in the contract. As of the date of the complaint filing, the company says Evergreen had provided space for 19 containers.
Without access to those vessels, the tire importer says it has incurred additional expenses of $1 million to ship its goods on the spot market.
Foreign Tire Sales also alleges that Evergreen, as well as other carriers, created “the appearance of a lack of space in their ships” and continued to deny its customers, including Foreign Tire Sales, the promised space on their ships.
Instead, the tire importer alleges that the shipper gave space to non-vessel operators (NVOs) at inflated prices, which ultimately forced Foreign Tire Sales and others to pay higher prices in the spot shipping market.
“A 40-foot-high cube container which in 2019 cost $2,800 to ship from Thailand to New York now costs $20,000. More importantly, the difference between the rates that Evergreen agreed to are up to $15,000 per container less than rates charged by NVOs.”
Foreign Tire Sales calls those prices “excessive and unreasonable,” and says they have “destabilized what had been an orderly and well-established structure of the global ocean freight industry.”
That lack of stability has prevented the tire importer and other companies that need to move products “from securing reasonable, reliable service contracts in advance of procuring shipping space.” Foreign Tire Sales says it must pay the “exorbitant costs and fees” in the spot market.
And while the complaint is filed solely against Evergreen — ranked the seventh largest maritime shipper by the data analysts and consultants at Alphaliner — Foreign Tire Sales repeatedly points to the problem being larger than a single carrier.
“Evergreen and other international ocean freight carriers have organized themselves into collusive alliances at the expense of shippers such as (Foreign Tire Sales.)”
The tire importer notes that Evergreen was recently sanctioned by South Korea’s FairTrade Commission for price fixing and fined $2.8 million. A total of 23 shippers were sanctioned and fined — though The Maritime Executive reports those sanctions were related to activity from 2003 to 2018.
Foreign Tire Sales has asked the Federal Maritime Commission to investigate and force Evergreen to implement practices that would prevent the shipper from refusing to provide the allotted space at the rates previously agreed upon.
Foreign Tire Sales also is asking Evergreen to pay its $1 million-plus damages and legal fees.