Japan Forwarders Fined for Price Cartel

The Japan Fair Trade Commission fined 12 international freight forwarders a total of approximately $94.7 million for forming a cartel to raise air cargo charges.

Among the 12 companies fined by the anti-trust authority on March 18 are the nation's three biggest international freight forwarders -- Nippon Express Co., Kintetsu World Express and Yusen Air & Sea Service.

YAS is the core logistics unit of Nippon Yusen Kabushiki Kaisha (NYK Line), Japan's biggest shipping firm by group sales.

The largest fine was imposed on Nippon Express, which must pay approximately $26.1 million. KWE and YAS were fined $15.6 million and $18.1 million respectively.

Nippon Express, KWE and YAS all released comments pledging to strive to prevent a recurrence of a similar incident.

Among the nine other companies punished is MOL Logistics (Japan), the core logistics subsidiary of Mitsui O.S.K. Lines, Japan's second-biggest shipping firm by group sales. MOL Logistics (Japan) was ordered to pay $1.7 million.

The other companies are Nishi-Nippon Railroad, Hankyu Hanshin Express Holdings, Nissin, Vantec World Transport, "K" Line Logistics, Yamato Global Logistics Japan, Hanshin Air Cargo and United Aircargo Consolidators.

The JFTC fined the 12 international freight forwarders, claiming that they illegally restricted competition by forming a cartel to add fuel surcharges and airport security charges to air cargo service charges. The JFTC has been looking into the case since last April.

According to the JFTC, the 12 companies negotiated the arrangement at meetings of the Japan Aircargo Forwarders Association and the practice continued from 2004 to 2007. They dissolved the cartel only after European Union and U.S. anti-trust authorities began investigations in 2007. Fuel surcharges were rapidly rising around the world in those years amid rises in crude oil prices.

Japan's market for international air cargo services totals over $5.23 billion per annum. Nippon Express, KWE and YAS have a combined market share of nearly 50 percent. The 12 companies fined on Wednesday, including the three biggest international freight forwarders, have a combined market share of around 75 percent.