Singapore shipping veteran, SBF chair Teo Siong Seng and others accused by US of price fixing

[SINGAPORE] Seven executives of shipping container companies, including Singaporean shipping veteran Teo Siong Seng, have been accused by the United States of colluding to fix the prices of dry containers from November 2019 until at least January 2024.

As a result, the prices of standard shipping containers are said to have roughly doubled between 2019 and 2021, noted the US Department of Justice in a statement on May 19.

Through this alleged scheme, four of the world’s largest shipping container manufacturers saw their profits increase almost a hundredfold during the Covid-19 pandemic and the ensuing global supply chain crisis, the department said.

The four companies are China International Marine Containers (CIMC), CXIC Group Containers, Shanghai Universal Logistics Equipment, and Singamas Container Holdings.

Based on court documents filed on Jan 22 and unsealed on May 19, it is alleged that executives from four companies – CIMC, CXIC Group Containers, Shanghai Universal Logistics Equipment, and a fourth, unnamed company – met at CIMC’s headquarters in Shenzhen, China, on or around Nov 14, 2019.

There, they were believed to have agreed to restrict their output of shipping containers through several means, including limiting the number of shifts and hours that each production line for containers could run daily, and using video surveillance to ensure the container firms stuck to their agreed-upon quotas.

They were also said to have established financial penalties for any firm caught producing more than its allotted share.

During the meeting, the firms’ representatives allegedly said Singamas and another unnamed company would join the agreement later.

About a week later, an executive at Singamas was said to have informed Teo, its chief executive, that “all the (six) factories” would meet on Dec 3, 2019, in Shanghai to discuss “production capacity and (the) healthy development of (the) container industry”. The six factories referred to those belonging to the four firms that met earlier, as well as Singamas and the other unnamed company.

SEE ALSO

More ships arrive in Singapore as Iran war disrupts Middle East routes, but fewer refuelling here

Can Singapore help shape the future of the ocean?

Singapore sells less marine fuel in April amid war-induced tight supply

Singamas is a subsidiary of shipping company Pacific International Lines (PIL), where Teo is executive chairman.

Teo, who is also chairman of the Singapore Business Federation (SBF) and sits on the Singapore Economic Resilience Taskforce, was later allegedly told about the plans to artificially restrict container production. An agreement was formalised some time in February 2020, and signed by the six firms the following month.

In September 2020, the alleged conspirators were said to have agreed to restrict the number of shipping containers they would produce for certain customers based in the US, Europe, China and elsewhere, although court documents did not elaborate.

Some time in July 2022, Teo is alleged to have said in a meeting with other executives from his firm that Singamas preferred having a monthly total quota, rather than daily working-hour restrictions.

Court documents indicate this shift was executed from at least September 2022 to November 2023, with a sample document allegedly presented to Teo outlining the “total allowable capacity” and “allowable quota” for those months.

In the end, prices of 20-foot shipping containers more than doubled, from about US$1,600 to more than US$3,500 from 2019 to 2021.

Larger container sizes also saw similar price increases, with court documents adding that the profits of CIMC’s container manufacturing business increased from 137 million yuan (S$25.7 million) in 2019 to 11.3 billion yuan in 2021.

Singamas, meanwhile, saw its net income go from a loss of about US$110 million in 2019 to a profit of about US$186.8 million in 2021.

The US court documents also alleged attempts to conceal the collusion. It cited how in December 2019, Teo responded via e-mail to a Singamas executive’s report about a meeting between the six companies involved, allegedly saying that “we also need to keep low key”.

He also allegedly agreed to a suggestion from a Singamas board member to delete the e-mail thread discussing the matter.

Some time in March 2022, another Singamas executive reviewed a slide deck prepared by Teo for an investor presentation on the firm’s 2021 annual results, advising Teo that the topic of market discipline be omitted “due to anti-trust issue”.

One of the indicted executives is Chinese national Vick Ma, the marketing director of Singamas, who was arrested in France on Apr 14 while attempting to fly to Hong Kong. She is currently awaiting extradition to the US, said US Acting Assistant Attorney-General Omeed A Assefi.

The other people accused are Mai Boliang, who was president and chief executive of CIMC before becoming the firm’s chairman in August 2020; Huang Tianhua, vice-president of CIMC; Wan Yongbo, general manager of CIMC’s Operation Management Centre; Li Qianmin, general manager of Shanghai Universal Logistics Equipment; and CXIC Group Containers’ chief executive Zhang Yuqiang. All are Chinese nationals.

The Straits Times has contacted Teo and Singamas for comment. THE STRAITS TIMES