A tire importer has filed a complaint with the Federal Maritime Commission alleging Evergreen Group, one of the world’s largest marine shippers, exploited its customers and manipulated the market to drive up 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 “unfairly and unreasonably exploited their customers…dramatically increasing their profits” at the expense of their customers, and at the expense of the American public “who have been forced to absorb rising product prices”.
Foreign Tire Sales filed its complaint with the Federal Maritime Commission on March 18. The tire importer, which offers the Otani and ProMeter brands, says it entered into a service contract with Evergreen to provide shipping services from May 1, 2021 to April 30, 2022. This contract provided for Evergreen to provide space for a minimum of 100 containers. . (Each container is 40 feet tall.) Foreign Tire Sales says that by 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 the complaint was filed, the company says Evergreen had provided space for 19 containers.
Without access to these vessels, the tire importer says it incurred an additional $1 million in expenses to ship its goods to the spot market.
Foreign Tire Sales also alleges that Evergreen, along with 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-shipping operators (NVOs) at inflated prices, which ultimately forced Foreign Tire Sales and others to pay prices higher in the spot shipping market.
“A 40-foot-tall cubic container that cost $2,800 in 2019 to ship from Thailand to New York now costs $20,000. More importantly, the difference between the rates Evergreen accepts is up to $15,000 less per container than the rates charged by NVOs.
Foreign Tire Sales calls the prices “excessive and unreasonable” and says they have “destabilized what was an orderly and well-established structure of the global shipping industry.”
This lack of stability has prevented the tire importer and other businesses that need to move products “from securing reasonable and reliable service contracts before securing shipping space.” Foreign Tire Sales says it has to pay the “exorbitant costs and fees” in the spot market.
And while the complaint is filed only against Evergreen — ranked the seventh largest ocean shipper by Alphaliner data analysts and consultants — Foreign Tire Sales repeatedly points out that the issue is bigger than just one carrier.
“Evergreen and other international ocean freight carriers have formed 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 – although the reports of the maritime executive these penalties were linked to the activity from 2003 to 2018.
Foreign Tire Sales asked the Federal Maritime Commission to investigate and force Evergreen to implement practices that would prevent the shipper from refusing to provide allocated space at previously agreed-upon rates.
Overseas tire sales also asks Evergreen to pay more than $1 million in damages and legal fees.