A UK retailer has filed suit against Maersk for $13.9 million, claiming breach of contract in rate increases and services. Argos, a common sight on the British high street, said in court documents that Maersk Line had reneged on the freight rates set under its contract. Argos accused Maersk of walking away from a deal to transport 5,000 40-foot equivalent container units (FEU) from the Far East to Britain in 2010 and another 5,000 in 2011. The company said that it was informed by Maersk in January that the shipper could no longer guarantee space for the containers at the price agreed, and that Argos would need to increase the payment from $930 to $2,730 dollars per FEU. The outcome of the lawsuit will be watched closely by U.S. importers who have continually complained about the shortage of vessel space for imports from Asia and about the increases above rates set under their annual trans-Pacific shipping contracts. Maersk announced in January that it was increasing its prices on cargo shipped between South Asia and Europe, and in a statement claimed: "The rate increase is necessary to continue to operate our services with the high level of reliability our customers have come to expect from Maersk Line."
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First they cut the services because there is not enough freight then they raise the rates because their ships are full.
Supply and demand determines rate levels. Argos was not complaining when rates were at a record low. Now that market demand has them returning to a more realistic and sustainable level they want to sue? $2700 to move a container full of their product from Asia to the UK is a great value and accounts for a minimal portion of the overall cost of the goods. Maybe they should stop complaining and focus on sourcing more products manufactured locally.
I agree that supply and demand has all to do with this. But the demand is higher than ever and the supply is cut by the shipping lines to raise prices.