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Maersk files lawsuit against powerful railroad companies in the US

Maersk accuses the four largest railroad companies in the US of having illegally fixed fuel surcharge prices at "extraordinary meetings, phone calls and e-mails" from 2003 to 2008. The railroad companies reject the accusations.

Photo: Sun Yilei/Reuters/Ritzau Scanpix

A.P. Moeller-Maerk has launched a large-scale court battle against the US' four major and powerful railroad companies.

ShippingWatch can reveal that Maersk has filed a lawsuit against the four biggest railroad companies in the US, namely BNSF Railway Company, CSX Transportation, Norfolk Southern Railway Company and Union Pacific Railroad Company.

The four railroad majors account for close to 90 percent of US rail transport, and Maersk is a top customer at several of the railroad companies.

But according to the Danish container shipping line, the four railroad companies have for years been fixing the fuel surcharge prices that customers such as Maersk must pay.

In 2003, the four largest United States-based Class I railroads engaged in an extraordinary series of meetings, phone calls, and email communications through which they embarked on a conspiracy"

Maersk

Maersk claims that the chief executives of the four railroad companies through an "extraordinary series of meetings, phone calls, and email communications" coordinated prices during the period from 2003 to 2008.

"In 2003, the four largest United States-based Class I railroads engaged in an extraordinary series of meetings, phone calls, and email communications through which they embarked on a conspiracy – under the guise of a fuel cost recovery program – to apply and enforce rail fuel surcharges across their customers in order to generate profits," writes Maersk in the subpoena.

The case was filed at a district court in New Jersey, and the complaint was filed in late 2019.

The documents do not reveal which claim Maersk has filed against the railroads. Maersk tells ShippingWatch that the company declines to comment as the case is ongoing.

All four railroads reject the accusations by Maersk.

Describe the Maersk charges as pure "fiction"

The four railroads control and operate the US' large railroad network, which traverses the country. The west coast is operated by BNSF and Union Pacific, while CSX Transportation and Norfolk Southern Railway operate the east coast railroads.

According to Maersk, senior executives from the four companies began to meet in the spring of 2003, after the railroads had for years been strained on their revenue due to fierce competition among the companies.

"The purpose of these communications was to discuss, and agree upon, FSC policies and practices intended to apply across-the-board to shippers industry-wide," writes Maersk.

According to Maersk, this meant that the four railroads had in 2004 synchronized their fuel surcharges for freight carloads and intermodal transport.

"The conspiracy had stripped Maersk — one of BNSF's largest customers — of its negotiating power," writes Maersk.

20121105-150322-6-1920x1077we.jpg
Warren Buffet acquired BNSF in 2009 in a transaction worth USD 44 billion. Photo: Rick Wilking/Reuters/Ritzau Scanpix

According to Maersk, the alleged conspiracy has hit the company with losses, as Maersk has paid more for freight than it would if the railroads had not coordinated prices.

On the other hand, the railroad companies have, says Maersk, been "pocketing billions of dollars in profits" that far exceeded the companies' real costs for fuel for the individual customers.

All four railroads reject the accusations by Maersk.

BNSF, which was later acquired by US billionaire investor Warren Buffet, denies the charges by Maersk, calling them pure "fiction", according to a response to the court from one of the company's lawyers.

The railroads acknowledge that their chief executives have met on several occasions, but deny that this happened in order to coordinate fuel surcharges.

That they have then still discussed the surcharges is, says BNSF, because the railroads are required by US laws to partake in cooperation with the other railroad companies, as none of the railroads operate rails that cover all of the country.

Hit by many lawsuits

The complaint from Maersk comes after an appeal court in the US last year rejected a class action lawsuit filed against the four railroads in 2007.

This means that a long list of customers, including Maersk, have independently filed cases against the four railroads. A total of 37 lawsuits have been filed.

These allegations are not new and we have strongly denied these accusations for well over a decade"

BNSF

"These allegations are not new and we have strongly denied these accusations for well over a decade," writes BNSF in a comment to ShippingWatch.

Competitor CSX Transportation maintains that the fuel surcharges are entirely legal.

"CSX has and will continue to defend these cases as its fuel surcharge practices were arrived at and applied lawfully," writes the company.

English Edit: Daniel Logan Berg-Munch

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