The logistics arm of Deutsche Bahn has taken a dozen carriers to court both in Cologne and New York to get compensation for alleged financial losses suffered as result of a cargo cartel (CargoForwarder Global reported). But what are these legal actions based on and why were they launched by means of a major PR campaign? A look behind Schenker’s curtain reveals the motive of this specific strategic move.
Schenker’s parent Deutsche Bahn (DB) announced the anti cartel complaints of its logistics arm with much fanfare. Media were purposefully informed, press releases issued, interviews and
statements given by DB’s legal department. It was said that thousands of documents containing incriminating evidence were handed over to the courts proving the illegal practices of the carriers
involved, substantiating the financial damages suffered by Schenker.
In fact, the much trumpeted lawsuit news came as a real bombshell to the cargo community, particularly the defendant airlines, dominating the headlines in many international papers and the business press.
But why all this fuss?
The answer is simple: To intensify the pressure on the defendants by building a strong backdrop of threats, using the media as mouthpiece. By deliberately putting pressure up, Schenker wanted and goes on intending to pave the way for reaching a favorable out-of-court settlement with the accused.
This, because from all what’s known the firm’s case seems to be based on rather shaky foundations, as legal experts have confirmed to CargoForwarder Global. Any plaintiff who believes to have become the victim of antitrust infringement must be able to exercise his right to compensation effectively by giving the court precise evidence about the exact financial damage occurred at a certain date and on which specific trade lane this happened.
The backfiring risk
It remains to be seen if Schenker is well advised with its legal actions since the logistics giant will have to disclose its own calculations and billing procedures. A not unrealistic scenario is that the state-owned logistics mammoth passed on the prices demanded by airlines for transporting shipments on behalf of the forwarding agent on a one-to-one basis, including fuel and security surcharges, to the freight payer, be it the shippers or consignees. On top, Schenker might have demanded from their clients a service commission of, for example – ten percent on the total sum.
So, the question arises as to where the forwarding agent has suffered any financial damage occurred by the cargo cartel? It’s really hard to detect from an outside view but the courts in Cologne and New York might find this out when working their way through the thousands of documents and vouchers submitted by the plaintiff.
In contrast, it could happen that the entire issue backfires on Schenker should the outcome of the court case prove that the DB subsidiary was not financially harmed but has benefitted from higher airline charges incurred by price fixing arrangements instead.
Lengthy court proceedings play into Schenker’s hands
In the meantime, the court case is getting quite costly for all parties involved day after day. “We have a number of specialized attorneys entrusted with the case. The longer the proceeding is lasting the more expensive it becomes for us,” stated an airline manager. This also seems to be part of Schenker’s and their lawyer’s strategy for reaching an out-of-court settlement with the defendants, by indirectly persuading them that a friendly agreement might be cheaper than a lengthy court proceeding with attorneys’ fees running into millions.
Airlines haven’t set up any accruals
However, in spite of getting nervous most of the accused cargo airlines remain quite relaxed. A leading manager of one of the airlines involved in the legal dispute stated when approached by CargoForwarder Global: “it seems that the entire case is a major PR campaign launched by Schenker to intimidate the carriers involved as much as possible for paving the way to reach an out-of-court settlement with as many defendants as possible.” As is in the case of this individual cargo airline no accruals have been set up because the probability that the risk will occur is deemed to be low.