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DOJ Accuses Chinese Container Makers of Pandemic Price Scheme
U.S. Prosecutors Say Companies Agreed to Limit New Unrefrigerated Container Output
Key Takeaways:
- The Justice Department charged four major shipping container makers and top executives with colluding to limit production during the COVID-19 pandemic.
- Prosecutors said the cartel triggered a global container shortage, and prices more than doubled from 2019 to 2021.
- One Singamas executive was arrested in Paris in April as the case proceeds against China-based companies accused of concealing the conspiracy.
The U.S. Justice Department said May 19 that it had filed criminal charges against four of the world’s largest makers of shipping containers and their top executives for allegedly colluding to raise prices during the pandemic.
China International Marine Containers Co., Dong Fang International Container Co., CXIC Group Containers Co. and Singamas Container Holdings, along with two unnamed co-conspirator companies, agreed to limit the production of new unrefrigerated shipping containers between 2019 and at least 2024, prosecutors said in the indictment, which was filed in January and unsealed this week.
All the companies are based in China. Among the seven indicted individuals were Boliang Mai, Siong Seng Teo and Yuqiang Zhang, who were the chief executives of CIMC, Singamas and CXIC, respectively, during the period covered by the indictment.
One of the individuals, Vick Nam Hing Ma, a marketing executive at Singamas, was arrested in April in Paris while attempting to board a flight to Hong Kong, according to Assistant Attorney General Omeed Assefi, speaking at a news conference May 19 announcing the charges.
The cartel “triggered a global shortage of shipping containers,” Assefi said, and prices “more than doubled between 2019 and 2021.”
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CIMC, Dong Fang, CXIC and Singamas didn’t immediately respond to requests for comment sent after business hours in China. The Chinese Embassy in Washington did not immediately respond to a request for comment on behalf of the individuals.
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China Cosco Shipping Co., the Chinese state-owned marine conglomerate, bought Dong Fang and the dry freight container business of Singamas in 2019. Singamas, whose major shareholder is Singapore’s Pacific International Lines, now produces specialized containers.
Cosco Shipping Group ranks No. 11 on the Transport Topics Top 50 list of the world's largest global freight companies.
According to the indictment, the conspiracy began as early as March 2019, when company executives began discussing prices and supply of containers.
Prosecutors said executives from CXIC, Dong Fang, CIMC and an unnamed company met Nov. 14, 2019, in Shenzhen, China, where they discussed limits on the hours each production line would run as well as installing video surveillance in each others’ factories to police the agreement. Singamas joined the conspiracy early the following year, according to the indictment.
The companies signed a written agreement memorializing the conspiracy in March 2020, according to the indictment. The companies also attempted to expand their agreement to refrigerated containers, though an executive at an unnamed company declined to participate due to its “compliance policies,” according to the indictment.
The executives repeatedly tried to conceal their actions, prosecutors alleged, and one unnamed Singamas executive raised “the concern about antitrust violations” and the potential to be “sued by clients.”
The second half of 2020 saw rising demand for products shipped from overseas as consumers in the U.S. and elsewhere binged on computers and equipment to work at home or decorate their houses, and imports of masks and other pandemic-related goods soared.
But a shortfall of shipping containers led to backups at U.S. ports and increased costs for importers across the country, according to U.S. trade officials.
Brian Antonellis of Fleet Advantage discusses how fleet leaders should be thinking about capital planning with the 2027 NOx emissions rules on the horizon. Tune in above or by going to RoadSigns.ttnews.com.
Three Chinese companies account for the majority of cargo containers produced worldwide: CIMC, Dong Fang and CXIC, according to U.K. maritime research consultants Drewry.
A 2022 report by the U.S. shipping regulator suggested the three companies — all of which are state-owned and controlled — were slow to ramp up production in response to demand during the COVID-19 pandemic as “part of a deliberate strategy to manipulate prices.”
In 2021, Danish shipping company A.P. Moller-Maersk A/S announced the sale of its subsidiary Maersk Container Industry to CIMC but abandoned the deal in response to U.S. antitrust concerns. At the time, the Justice Department said those two firms accounted for 90% of refrigerated shipping container production worldwide in Chinese state-owned or state-controlled entities.
Maersk ranks No. 7 on the global freight TT50.
Successfully bringing U.S. antitrust cases against Chinese companies for price-fixing is extremely difficult. In the 2010s, U.S. companies waged a lengthy campaign to seek damages from Chinese manufacturers who allegedly fixed prices on vitamin C. Although a jury sided with the U.S. buyers and ordered about $150 million in damages, the Supreme Court later ruled in favor of the Chinese companies, who argued that Chinese law required the price-fixing.
