- December 11, 2014
- 1:59 pm
- John Caltagirone
- no comments
Deutsche Bahn Sues Airlines Over Cargo Cartels, Supplier Relationship Nightmare
A case that has been almost 7 years in the making, Deutsche Bahn is finally suing air freight companies for colluding to inflate air freight fees. The German rail company has filed two lawsuits totaling in approximately $3 billion against 13 airlines including Air France-KLM SA, British Airways, Australia’s Qantas Airways Ltd., Deutsche Lufthansa AG, Japan Airlines, and LAN.1
According to a Supply Chain 247 the company is asking for compensation for damages sustained by its cargo subsidiary Schenker from 1999 to 2006 for fixing fuel and security surcharges. Back in August, Schenker filed a complaint against a number of airlines in New York and now have filed a lawsuit in German city Cologne, headquarters to the alleged “whistleblowers” of the collusion, Deutsche Lufthansa.1
Interestingly enough we notice that there are no US airline companies that were sued. Gerd Becht, a Deutsche Bahn Management Board Member, stated during that period of time Deutsche Bahn was limited in its involvement in US commerce.2 Especially interesting due to the fact that Deutsche Bahn functions in about 130 countries, transporting an estimated 400 millions tons of cargo by rail, road, sea or air.3
Beyond the circumstances in which these airline carries compromised their relationship with Deutsche, it brings forward a theme largely recognized and evolving in supply chain, supplier relationship management. Reflecting on a recent event hosted by the Supply and Value Chain Center, Supplier Relationship Management: Finding Value in Partnerships, held on November 20, 2014, the Deutsche Bahn’s situation is relatable.
For supply chain managers, specifically in shipping industry, there are always questions of finding reliable and trusting suppliers. Value measurement becomes significant in determining metrics to determine success and determine the top or bottom line value to be generated by the relationship. Intrinsically it establishes a standard by which the different parties will operate.
In the official case report, it was determined that the air freight carriers (airline companies) had members of its organizations as part of IATA, International Air Transport Association, responsible for creating a fuel price index (FPI) of 100, based on the spot price. In the following years, a number of conferences and meetings were initiated and the air freight carriers proceeded to establish a price fixing scheme by replacing the initially established index with Lufthansa Cargo’s.4
Granted the complexity of the case, there is ample evidence to show that there seems to be little interaction between the airline carriers and the freight forwarders (Schenker) in regards to creating standardizations and little to none management of fostering a healthy and open relationship with the supplier.
-Riti Patel, Assistant, Supply and Value Chain Center
- http://www.supplychain247.com/article/deutsche_bahn_sues_airlines_over_price_fixing/amber_road
- http://www.bloomberg.com/video/deutsche-bahn-to-seek-2-2b-in-compensation-from-airlines-J0a3Gji3SxOgeGf5O_k9rg.html
- http://www.deutschebahn.com/en/group/im_blickpunkt/8559282/20141201_luftfahrtkartell.html
- http://www.aircargocartelclaims.com/