November 1, 2010, 12:00 AM

Shipping consultant takes UPS and FedEx to court for refusing to negotiate on rates

AFMS Logistics Management Group, a firm that negotiates shipping rates on behalf of retailers, has charged in federal court that UPS and FedEx refuse to work with it while colluding to keep rates high.

Paul Demery

Managing Editor, B2B E-commerce

UPS and FedEx say they compete to offer the best deals to shippers. But AFMS Logistics Management Group, a firm that negotiates rates on behalf of retailers and other shippers, has charged in federal court that the two carriers collude to keep rates high.

AFMS, based in Portland, Ore., 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 and FedEx say they will each vigorously defend themselves against the AFMS complaint. "We're confident the lawsuit is without merit and we plan to vigorously defend against it," a FedEx spokeswoman says, adding: "There is much competition between us and UPS."

A spokeswoman for UPS adds: "Our take is that the lawsuit is trying to require UPS to deal with its customers through an intermediaryÑand that only adds costs for our customers."

In the legal complaint, which AFMS filed in U.S. District Court for the Central District of California, AFMS claims that it has lost from $15 million to $20 million in business. AFMS alleges 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.

paul@verticalwebmedia.com

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