October 14, 2010, 3:33 PM

A battle over shipping rates

A lawsuit alleges that UPS and FedEx conspire to lock in shipping rates.

Lead Photo

AFMS Logistics Management Group, a shipping consultant to retailers and other shippers, has filed a complaint in federal court charging United Parcel Service of America Inc. and FedEx Corp. of antitrust violations by refusing to work with AFMS and similar firms to revise rate contracts on behalf of shipping clients.

AFMS, based in Portland, OR, charges that UPS and FedEx have “induced and persuaded” shippers not to deal with it, and that UPS and FedEx have threatened to raise the rates of any shipping clients who share their shipping data with outside consultants for the purpose of seeking re-negotiated rates from the two carriers.

UPS will vigorously defend itself against the AFMS complaint, a spokeswoman says. “Our take is that the lawsuit is trying to require UPS to deal with its customers through an intermediary—and that only adds costs for our customers,” she says.

FedEx provided no immediate comment.

The legal complaint, which AFMS initially filed Aug. 5 in U.S. District Court for the Central District of California, says that UPS and FedEx started refusing to work with third-party rate negotiators in the fall of 2009. Since then, AFMS claims that it has lost from $15 million to $20 million in business, according to a copy of the complaint reviewed by Internet Retailer. AFMS alleges in the complaint that the carriers are violating the federal Sherman Antitrust Act and seeks damages of up to about $60 million, or treble the value of actual damages, as permitted under antitrust law.

Maxwell Blecher, an attorney for AFMS at the Los Angeles law firm Blecher and Collins PC, says that AFMS re-filed its complaint yesterday with “additional allegations evidencing collusion” between UPS and FedEx in refusing to work with firms like AFMS that help shippers negotiate rates.

Although AFMS is the only plaintiff listed in its complaint, other transportation consulting firms that offer similar services say that they have also been significantly hurt by the refusal of UPS and FedEx to work with them on rate contracts. “No question, this has impacted us by at least a couple million dollars,” says Tony Nuzio, president of ICC Logistics Services Inc. in Hicksville, NY. “UPS and FedEx know third-party negotiators really understand the shipping business and save their clients a lot of money.”

UPS, however, contends that it prefers to deal directly with clients to improve shipping arrangements. “We have always said we want to deal directly with our customers, look at everything in their shipping systems and processes and see how we can help them be more efficient,” the spokeswoman says.

 

 

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