Costly Cartels

Lawyers rarely go hungry and they may be about to feast on a billion dollar lawsuit relating to the airlines’ air cargo cartel, writes Roger Hailey, Air Cargo News Editor.

German rail and logistics giant Deutsche Bahn (DB) made a great media fanfare of its minimum $2.2bn claim in the US and German courts for damages relating to the fixing of security and fuel surcharges between 1999 and 2006.

That a cartel existed is not in doubt, given the airlines coughed up and were fined by various jurisdictions. Some executives also served time in jail.

The German operator’s logistics arm, DB Schenker, is now seeking damages and interest on what it overpaid in freight costs due to the cartel.

Whether other forwarders will join in, remains uncertain, and indeed some of them face a similar problem with their own cartel, although small beer com-pared with the airlines’. DB’s in-house anti-trust lawyer, Chris Rother, says that it is the refusal of the airlines to engage in talks on the ‘good faith’ settlement proposal from Schenker that has triggered the lawsuits.

Shippers have questioned whether the logistics com-pany suffered any major financial loss, as in most cases the end customer paid the surcharges.

But global shippers are unlikely to go to the courts, as washing one’s dirty linen in public is frowned upon.

DB Schenker’s action also acts as a deterrent, warning all those in the supply chain that honesty, trust and integrity should be at the forefront of all commercial relationships. Any court action will be lengthy and expensive.

There is also the risk that airlines – facing settlements in the hundreds of millions of dollars – will be less inclined to invest in their cargo divisions.

If so, that is the penalty we will all have to pay.