Friday, August 24, 2007

Trucking firms face lawsuit over fuel surcharges

Several big trucking companies, including YRC Worldwide Inc., are facing a federal lawsuit alleging that they colluded to fix shipping rates through fuel surcharges since 2003.

Farm Water Technological Services Inc. of Brawley, Calif., is seeking class-action status for a suit filed late last month in U.S. District Court in Southern California.

The suit names 11 of the biggest less-than-truckload carriers in the United States, including Overland Park-based YRC, the biggest U.S. trucking company.

YRC operates two big carriers, Yellow Transportation and Roadway Express. Other big carriers included in the suit are Arkansas Best Corp. and Con-Way Inc. Also named are UPS Inc. and FedEx Corp., both of which operate less-than-truckload units.

YRC did not respond to a request for comment. Another carrier dismissed the allegations as baseless.

“UPS Freight is prepared to vigorously defend itself against these allegations that we believe are without merit,” said Ira Rosenfeld, a company spokesman.

UPS Freight was known as Overnite Transportation Co. before being bought by UPS in 2005.

Farm Water Technological, which distributes irrigation and other farm equipment as Water Tech, makes its allegations against the carriers as a whole in the lawsuit.

Water Tech contends that the LTL trucking industry is highly consolidated and that cooperation among companies is greater than in other industries. When gas prices began to rise sharply in 2003, all the carriers imposed a fuel surcharge.

“Higher fuel costs in fact were merely the pretext and an opportunity for defendants to agree among themselves to impose collusive ‘fuel surcharges,’ ” the lawsuit states.

The suit also contends that trucking experts and the companies have acknowledged that higher fuel prices have led to greater profits.

Water Tech’s legal action is the latest in a transportation industry riven in recent months by antitrust pricing allegations.

An Arizona company filed a lawsuit in May alleging that the five biggest railroads, including Kansas City Southern, fixed rates through fuel surcharges. Last year the Justice Department began investigating alleged price fixing among air cargo companies.

While railroad customers have complained frequently to federal regulators about the lack of price competition among railroads, the issue has not been as prevalent among trucking customers.

According to a recent report in Traffic World, a survey found that 62 percent of trucking shippers said fuel surcharges were becoming more negotiable than in the past.

Diesel fuel prices also are down compared with this time last year. Furthermore, FedEx Freight reduced its fuel surcharge by 25 percent last month, citing customer complaints about it.

Water Tech is seeking damages three times the amount it and other trucking customers have incurred since July 30, 2003.

The other trucking companies named in the suit are Averitt Express, Jevic Transportation Inc. and its owner, Sun Capital Partners IV, New England Motor Freight Inc., Old Dominion Freight Line Inc., R+L Carriers Inc. and Saia Inc.

1 comment:

Hino said...

Very interesting article. thank you.