Consultant’s Insight: FedEx, UPS, DHL face collusion allegations in India

As FedEx and UPS adjust their global and domestic networks to match declining volumes, both face an investigation from the Competition Commission of India , India’s antitrust body, according to Reuters. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] The two U.S. parcel carriers, DHL and other domestic carriers are being investigated for alleged collusion on discounts and tariffs. The complaint comes from the Federation of Indian Publishers , which said DHL, FedEx, UPS, Aramex and some domestic firms exchanged commercially sensitive information regarding volumes, charges and discounts on courier and storage services offered at airports before deciding on rates, according to Reuters. The inquiry began in October 2022 and an early assessment from the Competition Commission of India (CCI) stated that parcel carriers “appear to be sharing commercially sensitive information amongst themselves ... for taking joint or collective decision to arrive at tariffs.” If proven, the alleged collusion could result in fines up to three times the profit for each year the fees were fixed or 10% of annual revenue for each year of violation, whichever is greater. The investigation is ongoing and the CCI plans to analyze the evidence until March. Bonn, Germany-based DHL, FedEx and UPS have all denied the allegations and are cooperating with the CCI. Growing market in India The investigation comes as the global spotlight shines on India as a manufacturing location and a growing e-commerce market. India is experiencing strong economic growth. S&P Global Ratings expects the country to remain the fastest-growing major economy for the next three years and to become the world’s third-largest economy by 2030. DHL, FedEx and UPS have all made significant investments in the country. In 2022, DHL Supply Chain announced a 500 million euro ($548.4 million) expansion plan over the next five years to grow its warehousing capacity, workforce and sustainability initiatives in the country. FedEx has invested $100 million in a technology and digital innovation center in India and has established a strategic alliance with India-based Delhivery , a provider of express parcel transportation, freight, cross-border, supply chain and technology services. UPS in August opened a technology center in Chennai, India, focused on advanced technologies such as AI , automation and robotics, making it easier for customers to do business. UPS recently announced plans to triple the facility’s footprint to 190,000 square feet. A recurring theme This is not the first time DHL, FedEx and UPS have faced such charges, Reuters noted. France’s competition regulator in 2015 levied $739 million in fines across 20 companies, including FedEx and DHL, for colluding on price increases for parcel deliveries from 2004 to 2010. Spain’s National Commission for Markets and Competition fined UPS, TNT , DHL, FedEx and several other companies in 2023 for creating a cartel in which the companies entered a “noncommercial nonaggression pact” and divided the market among themselves. Correos Express , a state-owned company, paid the largest of the fines, $21.5 million, followed by: UPS, which paid $21.2 million; FedEx-owned TNT, which paid $17.8 million; DHL, which paid $5.5 million; and FedEx, which paid $2 million. Editor’s note: All amounts have been converted to U.S. dollars.

Consultant’s Insight: FedEx, UPS, DHL face collusion allegations in India

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