US indicts China container cartel in global conspiracy case
Washington, May 22
The US Justice Department has charged four major shipping container manufacturers and seven executives in an alleged global conspiracy to restrict supply and fix prices during the Covid-19 pandemic.
Prosecutors said the conspiracy ran from November 2019 through January 2024. It involved efforts to limit production and raise prices for standard dry shipping containers used in global trade.
The companies charged are Singamas Container Holdings Ltd., China International Marine Containers (CIMC), Shanghai Universal Logistics Equipment Co. Ltd. operating under the Dong Fang brand, and CXIC Group Containers Co. Ltd.
The scheme roughly doubled container prices between 2019 and 2021. The Department of Justice said prosecutors said company profits surged during the global supply chain crisis caused by the pandemic.
One executive, Vick Nam Hing Ma of Singamas, was arrested in France on April 14. US officials are seeking his extradition. Six other executives remain at large.
According to prosecutors, executives met in Shenzhen in November 2019 to discuss ways to raise shipping container prices.
The indictment said the companies agreed to limit production shifts and factory operating hours. Prosecutors also alleged they agreed not to build new factories.
The companies allegedly installed 87 surveillance cameras across 49 production lines to monitor compliance with the agreement. Prosecutors said they also created a penalty system for companies that violated production limits.
US authorities said the conspiracy later expanded to include limits on production for specific customers, including US-based shipping lines, container lessors and logistics firms.
From September 2022 through November 2023, the companies allegedly agreed to cap overall cargo volume production. Prosecutors cited internal presentations referring to "Total Allowable capacity" and "allowable quota" targets.
"Global price-fixing cartels strike at the heart of our economic liberty. The defendants held hostage the world's supply of ocean shipping containers during the Covid pandemic when our supply chains needed it the most," said Acting Assistant Attorney General Omeed A. Assefi.
Associate Attorney General Stanley Woodward said the department was targeting "criminal actors most responsible for manipulating markets to profit from a global pandemic".
The Justice Department said CIMC's container business profits rose from about $19.8 million in 2019 to nearly $1.75 billion in 2021. Singamas reported a loss of about $110 million in 2019 before posting profits of about $186.8 million in 2021.
The defendants face charges under the Sherman Antitrust Act. Individuals could face up to 10 years in prison. Companies could face fines of up to $100 million or more.
— IANS
Reader Comments
As someone working in logistics, I can tell you this cartel affected everyone globally. Indian ports like Mundra and Nhava Sheva saw container shortages that delayed exports worth crores. The fact that profits went from $19 million to $1.75 billion for CIMC tells you everything about their greed. 😤
While I understand the US is taking action, I hope India also investigates how this affected our trade. During the pandemic, our textile and auto parts exporters were at the mercy of these container rates. The government should work with international bodies to ensure such cartels don't exploit developing nations like ours.
Interesting that this is coming from US DOJ now. Where were they during 2020-2021 when the crisis was at its peak? Better late than never I suppose. But I'm skeptical - will they actually extradite executives from China? Let's see how this plays out. 🧐
This is why we need to strengthen Indian shipping and container manufacturing. Why should we depend on Chinese companies for something so critical to our trade? Atmanirbhar Bharat in logistics is the need of the hour. Our port infrastructure needs to be backed by indigenous container production capacity.
The amount of organization in this conspiracy is astounding - meeting in Shenzhen, installing cameras to monitor production, creating penalty systems. They literally created a monopoly board game in real life. But I'm concerned about how this will affect current shipping rates and supply chains that are still recovering.
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